Retirement Plan FAQs- Changes Relating to Form 5307 and Demos
1. What recent changes have been made to the Employee Plans Determination Letter Program?
Recent changes include:
- eliminating coverage and nondiscrimination demonstrations, and
- limiting Form 5307, Application for Determination for Adopters of Master or Prototype or Volume Submitter Plans, filings to those employers who have made limited changes to their volume submitter plans (Announcement 2011-82 and Revenue Procedure 2013-6).
These changes eliminated features of the determination letter program that were of limited utility to plan sponsors in comparison with the burdens they imposed. The changes are expected to improve our efficiency by reducing the time it takes us to process determination letter applications.
- What are the changes to the coverage and nondiscrimination demos?
Previously, a plan sponsor could submit Schedule Q (Form 5300), Elective Determination Requests, with its determination letter application and include data demonstrating compliance with coverage or nondiscrimination requirements.
We eliminated the option to request a determination on such demonstrations beginning:
- February 1, 2012, for plans with a 5-year remedial amendment cycle (other than terminating plans), and
- May 1, 2012, for terminating plans and plans with a 6-year remedial amendment cycle.
As a result, the determination letter may not be relied on with respect to whether the plan satisfies the requirements of IRC sections 401(a)(4) or (26) or section 410(b). However, we will continue to review whether a plan’s benefit or contribution formula satisfies the nondiscriminatory design-based safe harbor and IRC sections 401(k) and 401(m).
- What are the changes to Form 5307 applications?
Generally, employers who adopt pre-approved master & prototype or volume submitter plans can rely on the plan’s opinion or advisory letter that the form of the plan meets most qualification requirements.
As of May 1, 2012, we will accept determination letter applications filed on Form 5307 only from VS plan adopters who:
- modify the terms of the approved specimen plan, and
- have not made modifications that cause the plan to be treated as an individually designed plan.
We won’t review a volume submitter plan adopter’s “off-cycle” Form 5307 application until we’ve reviewed all on-cycle applications. Off-cycle applications are those filed on or after May 1, 2012, but before the plan’s next “on-cycle” submission period begins.
A Form 5307 application for a “new” defined contribution plan (that is, a plan whose initial remedial amendment period under Treas. Reg. section 1.401(b)-1 ended after April 30, 2010) that was filed before May 1, 2012, will be treated as an on-cycle application. A Form 5307 application for any other defined contribution plan that was filed before May 1, 2012, will be treated as an off-cycle application and might not be reviewed before the next two-year filing window available for pre-approved plans.
- What are the changes for Form 5300 applications for master & prototype and volume submitter plans?
Previously, pre-approved plan adopters had to file Form 5300 to get a determination letter for their plans if they made material changes to the plans. Announcement 2011-82 lists the existing circumstances and adds two other circumstances under which an application for a pre-approved plan must be filed on a Form 5300. Starting May 1, 2012, employers must file Form 5300 (instead of Form 5307) if they:
- add language to a pre-approved master & prototype plan to meet IRC sections 415 and 416 requirements because of required aggregation, or
- have a pre-approved plan with a normal retirement age earlier than 62.
- Which forms are affected by these changes?
|Form||Description of change||When this change took effect|
|Form 5300, Schedule Q||Demonstrations of coverage and nondiscrimination requirements no longer accepted||
|Form 5310, Schedule Q|
|Form 5310, Line 13 and 14e||Do not complete|
|Form 5300, Line 13||Do not complete|
|Form 5307, Line 11||Do not complete|
|Form 8717, Column A||Column does not apply|
|Form 5307||May be filed only by adopters who modify the terms of the specimen approved plan||