Determination, Opinion and Advisory Letter for Retirement Plans – Staggered Remedial Amendment Cycles
Sponsors of individually designed plans submit applications for determination letters once every five years, under a staggered system of 5-year cycles (Cycles A - E). Revenue Procedure 2007-44 establishes this system of remedial amendment cycles. A 6-year cycle applies to pre-approved plans. The IRS considers certain plan qualification requirements in its review of applications, as provided on the applicable Cumulative List for a plan's cycle.
Generally, the cycle that applies to an individually designed plan depends on the last digit of the sponsoring employer's identification number (EIN). The submission period for individually designed plans is towards the end of their cycle.
- 5-year remedial amendment cycle for individually designed plans
- 6-year remedial amendment cycle for pre-approved plans
Some exceptions apply in determining an individually designed plan’s cycle - see the chart for each cycle for details.
Revenue Procedure 2007-44 provides details on the remedial amendment period that applies to new individually designed plans, including rules extending the remedial amendment period to the end of the next applicable cycle if the remedial amendment period would be cut short due to the cycle submission date. See sections 5.03 and 14.04.
Plan amendments between cycles
Although individually designed plans must be submitted for determination letters once every five years, and the IRS will only consider changes as noted in the applicable Cumulative List in its review, the list of changes does not extend the deadline for plans to be amended for interim or discretionary amendments. See section 5 of Revenue Procedure 2007-44 for discussion of these rules, and special deadlines for governmental and tax-exempt employers. Revenue Procedure 2007-44, section 4, provides details on the plan qualification requirements the IRS will consider in its review of applications with respect to a particular Cumulative List. It clarifies that, except as otherwise provided on the applicable Cumulative List, the IRS will not consider in its review any:
- guidance issued or statutes enacted after the October 1 preceding the date the applicable Cumulative List is issued
- qualification requirements that become effective in a calendar year after the calendar year in which the submission period begins
- statutes first effective in the year in which the submission period begins where there is no guidance
Individually designed plans must be restated when they are submitted for determination letters. See sections 12.03 and 12.04 of Revenue Procedure 2007-44.
Generally the IRS will not review an off-cycle application submitted in a particular year until all on-cycle plans have been reviewed and processed. However, some types of off-cycle applications are given the same priority as on-cycle applications, including:
- terminating plans
- new plans whose next regular on-cycle submission period ends at least two years after the end of the off-cycle submission period
- applications submitted when the IRS requires a submission
- applications supported by an urgent business need (granted only in limited cases where exceptional circumstances exist)
- Revenue Procedure 2009-36 modifies Revenue Procedure 2007-44 by providing special rules for a governmental plan within the meaning of Internal Revenue Code Section 414(d).
- Revenue Procedure 2008-56 modifies Revenue Procedure 2007-44 by allowing new or late-filed pre-approved plans that are word-for-word identical to a mass submitter plan to file for letters during the two-year window for adopting employers to adopt pre-approved plans. Revenue Procedure 2008-56 also provides that employers who timely adopt pre-approved plans (including word-for-word plans) have retroactive reliance.
- A letter to DOL from the IRS concludes that an M&P sponsor’s amendment to reflect DOL’s guidance in FAB No. 2008-01 regarding fiduciary responsibility for collection of delinquent contributions will not jeopardize the preapproved status of an M&P plan or cause plans of adopting employers to be individually designed.
- Revenue Procedure 2007-44 was issued on June 13, 2007. The revenue procedure clarifies, modifies, and supersedes Revenue Procedure 2005-66, in which the IRS established a system of remedial amendment cycles under section 401(b) of the Code for individually designed and pre-approved plans.