Home | Business News | Browse by Publication | M | Mondaq Business Briefing

IRS Finalizes New Employee Plan Determination Letter Procedures.

Article Excerpt
The Internal Revenue Service (IRS) recently finalized procedures for a new system of staggered remedial amendment periods and new procedures for retirement plan sponsors seeking IRS approval of amendments to file determination letters to ensure tax code compliance. With Revenue Procedure 2005-66, the IRS has set forth new procedures that include five-year staggered cycles for individually designed employee plans to file determination letters with the IRS and six-year staggered cycles for sponsors of pre-approved plans (master and prototype (M&P) and volume submitter plans) to file opinion, advisory or determination letters, with employers having approximately a two-year window to adopt their updated pre-approved plans. The new procedures also extend the remedial amendment period for compliance with the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) to the end of a plan's initial applicable cycle for both individually designed and pre-approved plans. Thus, for employers sponsoring individually designed plans in the opening cycle, the IRS will begin accepting determination letter applications on February 1, 2006, but the EGTRRA remedial amendment period will last until January 31, 2007.

Five-Year Staggered Cycles for Individually Designed Plans

Under the new determination letter program, every individually designed employee plan will have a five-year remedial amendment period. The IRS's goal is to create fixed, regular cycles for the adoption of remedial plan amendments under...