Pension & Benefits News Employee plan and exempt organization ruling procedures updated
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Tuesday, January 28, 2020

Employee plan and exempt organization ruling procedures updated

By Pension and Benefits Editorial Staff

The IRS has updated its procedures for employee plans (EP) to obtain guidance on issues under the jurisdiction of the Commissioner, Tax Exempt and Government Entities Division (TE/GE), Employee Plans Rulings and Agreements Office. The procedure also details the types of advice available to taxpayers, and the manner in which such advice is requested and provided.

In addition to minor non-substantive changes, including changes to dates, cross references and citations to other revenue procedures, the following changes are made:

  • Revisions have been made to provide that a determination letter issued on the qualified status of a plan will include the status for exemption of any related trusts or custodial accounts under Code Sec. 501(a), except for a determination letter submitted by an adopting employer of a pre-approved plan with respect to the third (and subsequent) six-year remedial amendment cycles applicable to pre-approved plans.
  • The “Appeals Office” has been changed to “Internal Revenue Service Office of Appeals (Independent Office of Appeals).”
  • A list of applicable documents that should be submitted to enable the IRS to process determination letter request applications more effectively has been provided.
  • A new category of determination requests submitted by an adopting employer (or a controlling member of a multiple employer plan, if applicable) of a pre-approved plan with respect to the third (and subsequent) remedial amendment cycles, pursuant to Rev. Proc. 2017-41 (Pension Plan Guide ¶17,299V-49) has been added. Additionally, modifications have been made to reflect that the IRS would accept determination letter applications for certain statutory hybrid plans from September 1, 2019 to August 31, 2020 and certain individually designed merged plans on an ongoing basis.
  • A sentence providing that a favorable determination letter does not constitute a determination with respect to the federal tax consequences of a lump-sum risk transferring program has been deleted, since IRS Notice 2019-18 provides that the IRS will no longer include a caveat in a determination letter expressing no opinion regarding the tax consequences of such lump-sum windows.
  • A provision describing certain special circumstances under which a determination letter may be submitted with respect to an individually designed plan on an ongoing basis, when that plan results from a merger of two or more plans maintained by previously unrelated entities, occurring in connection with a corporate merger, acquisition or other similar business transaction among unrelated entities has been added. The IRS will accept determination letter applications for certain individually designed merged plans on an ongoing basis, pursuant to Rev. Proc. 2019-20. Also, the IRS will accept determination letter applications for certain statutory hybrid plans from September 1, 2019 to August 31, 2020.
  • Procedures for an adopting employer of a pre-approved plan (or the controlling member, in the case of a multiple employer plan) to submit an application for a determination letter has been reorganized to include application procedures for defined benefit master and prototype (M&P) and volume submitter (VS) pre-approved plans with respect to the second six-year remedial amendment cycle and determination letters with respect to the third (and subsequent) six-year remedial amendment cycles.
  • Procedures for an adopting employer of a pre-approved plan that is eligible to submit on Form 5307, Application for Determination for Adopters of Modified Volume Submitter Plan, to request a determination letter with respect to the second and third six-year remedial amendment cycles have been revised.
  • User fees under the Voluntary Correction Program (VCP) of Employee Plans Compliance Resolution System (EPCRS) must be paid using www.pay.gov. Further, the IRS will no longer accept paper VCP submissions.
  • The mailing address for requesting letter rulings, opinion letters, advisory letters and determination letters from employee plans rulings and agreements have been updated.
  • Categories that applied to pre-approved plan sponsors and practitioners filing on-cycle during the second six-year remedial amendment cycle have been deleted since that on-cycle period expired.

Rev. Proc. 2020-4 is effective January 2, 2020.

Source: Rev. Proc. 2020-4.

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