Determination, Opinion and Advisory Letter for Retirement Plans – Submission Procedures for Individually Designed Plans
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. The IRS considers certain plan qualification requirements in its review of applications, as provided on the applicable Cumulative List.
Generally, the cycle that applies to a 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. If you sponsor an individually designed plan, a chart is available so you can determine your cycle.
The following exceptions apply in determining a plan’s cycle:
Multiple employer plans (Cycle B)
Multiemployer plans (Cycle D)
Governmental plans (including multiemployer and multiple employer plans that are governmental) (Cycle C)
Plan maintained by multiple members of a controlled group or an affiliated service group (other than multiemployer, multiple or governmental plans), or certain jointly trusteed single employer plans use last digit of EIN on Form 5500 to determine cycle
In addition, certain employers (other than multiple, multiemployer, governmental or jointly trusteed plans) may choose alternative elections to determine the cycle when more than one plan is maintained.
Controlled groups or affiliated service groups can elect Cycle A
A parent/subsidiary controlled group can elect Cycle A or use last digit of the parent’s EIN. For a parent with no EIN, the EIN of the highest level entity in the U.S. can be substituted.
A centralized organization of related groups can elect to use the EIN of the centralized organization to determine the cycle.
Revenue Procedure 2007-44 provides rules for making these alternative elections (section 10) and also explains how to determine a plan’s cycle when the cycle changes as a result of an event such as a merger, acquisition, etc (section 11).
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.
User fees apply to determination letter applications. See the user fee schedule. Form 8717, User Fee for Employee Plan Determination Letter Request, must be submitted with the fee.
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
- Service requires a submission
- Urgent business need (granted only in limited cases where exceptional circumstances exist)