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Abandoned Pre-Approved Retirement Plans

Revenue Procedure 2011-49 describes IRS procedures for issuing opinion and advisory letters. Sections 10.01 and 10.02 describe steps a sponsor/practitioner must take if it intends to no longer offer a pre-approved plan for adoption (abandoned plan). 

Steps to take when a pre-approved plan is abandoned

A sponsor/practitioner that intends to abandon a pre-approved plan must notify:

  • the IRS that it is abandoning the plan, and
  • all employers who continue to use the plan that the form of the plan has terminated and the employer’s plan will become an individually designed plan.

Example: A pre-approved plan sponsor currently maintains two profit-sharing plan specimen documents: one for a profit-sharing plan and another for a profit- sharing plan with a 401(k) feature. Both plans currently have opinion letters and all necessary interim amendments have been timely adopted.

During the second six-year cycle submission period, the sponsor decides to file only a single document consisting of a profit sharing plan with a detachable 401(k) feature. This sponsor should notify the IRS that the profit-sharing only plan will be abandoned.

The sponsor is not required to give an abandonment notice to employers who transfer to the newly approved profit-sharing plan with the detachable 401(k) feature. However, if any employers who adopted the profit-sharing only plan have not transferred to the profit-sharing plan with the detachable 401(k) feature, the sponsor must notify them that the pre-approved plan has been abandoned and that their plans will become individually designed plans.

Page Last Reviewed or Updated: 15-Nov-2013