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Types of Pre-Approved Retirement Plans

Pre-approved plans are either Master and Prototype (M&P) or Volume Submitter (VS). 

The IRS issues an opinion letter to an M&P plan sponsor if the plan document meets all legal requirements. The sponsor then makes its plan available for employers to adopt.

Master and Prototype (M&P)

An M&P plan consists of:

  • a basic plan document containing non-elective provisions
  • an adoption agreement containing elective provisions that an adopting employer selects
  • a trust or custodial account (which may or may not be included in the basic plan document)

Employers use the same trust or custodial account in a “master” plan, whereas each employer has a separate trust or custodial account in a “prototype” plan.

An M&P may be standardized or non-standardized (see Revenue Procedure 2015-36, Sections 4.09 and 4.10). A standardized plan generally has more required provisions in the plan and the adopting employer can make fewer changes (Revenue Procedure 2015-36, Section 5.09).

  • Standardized
    A plan designed to satisfy the qualification requirements solely based on its terms. An employer who adopts a standardized pre-approved plan can rely on the opinion letter issued to the pre-approved plan sponsor as if it were its own determination letter.

  • Nonstandardized
    A plan that provides plan design choices and elective provisions that do not ensure compliance with the nondiscrimination requirements (see Revenue Procedure 2015-36, Section 19).

M&P mass submitter

A “mass submitter” of an M&P plan is a U.S. business that submits opinion letter applications on behalf of at least 30 unaffiliated sponsors that have “word-for-word identical” plans to the mass submitter’s lead plan. Mass submitters who have met the “30 sponsor” requirement can submit additional applications for sponsors with identical plans and sponsors that have “minor modifications” to the mass submitter’s plan. In addition, if the mass submitter has additional plans, it can submit applications regardless of the number of sponsors for the other mass submitter’s plan(s).

Mass submitters usually have reduced procedural requirements and get expedited treatment from the IRS, because of the high volume of sponsors they represent, and the number of identical or near-identical plans they submit to the IRS. This makes it easier and more efficient for review purposes.

All of these terms have specific meanings. For example, the term “word-for-word identical plan” includes a “flexible” plan. This type of plan allows sponsors to select some options and still be a word-for-word identical plan.

M&P sponsor

A “sponsor” is a U.S. business that has at least 15 employer-clients (per Revenue Procedure 2015-36, section 4.07) that it reasonably expects to adopt the sponsor’s basic lead plan document by the required deadline. A sponsor can request opinion letters for an number of basic plan documents and adoption agreements provided it has at least 15 employer-clients in the aggregate, each of which is reasonably expected to adopt at least one of the sponsor’s basic plan documents.

A sponsor that does not use a mass submitter plan has different procedural requirements to apply for an opinion letter. “Substantially identical” plans may receive expedited review, even if they are not mass submitter plans.

Sponsors must make reasonable and diligent efforts to ensure that adopting employers of the sponsor’s M&P plan have actually received and are aware of all plan amendments and that such employers complete and sign new adoption agreements when necessary.

M&P adopting employer

An adopting employer is an employer that adopts a master & prototype or volume submitter pre-approved plan. An adopting employer must sign the adoption agreement when it first adopts the plan and must complete and sign a new adoption agreement for any restated plan. In addition, the employer must complete a new signature page if it modifies any prior elections or makes new elections in its adoption agreement.

Volume Submitter (VS)

A VS plan is a specimen plan (sample plan) of a VS practitioner that its employer-clients adopt on an identical or substantially identical basis. The IRS issues advisory letters to VS practitioners on the acceptability of the specimen plans’ form. The practitioner then makes its plan or plans available for employers to adopt. A VS plan consists of:

  • a specimen plan document that offers choices over plan terms
  • a trust or custodial account
  • may also have an adoption agreement containing elective provisions

VS mass submitter

A “mass submitter” of a VS plan is a U.S. business that submits advisory letter applications on behalf of at least 30 unaffiliated practitioners each of which is sponsoring, on a word-for-word identical basis, the same specimen plan. A VS mass submitter will be treated as a VS mass submitter with respect to all of its specimen plans provided the 30 unaffiliated VS practitioner requirement is met with respect to at least one of its specimen plans. (per Revenue Procedure 2015-36, section 13.06)

Mass submitters usually have reduced procedural requirements and get expedited treatment from the IRS, because of the high volume of sponsors they represent, and the number of identical or near-identical plans they submit to the IRS. This makes it easier and more efficient for review purposes.

VS practitioner

A VS practitioner is a U.S. business that represents to the IRS that it has at least 15 employer-clients (per Revenue Procedure 2015-36, section 13.05) that it reasonably expects to timely adopt a plan that is substantially similar to the VS practitioner’s specimen plan. This requirement is lowered for a specimen money purchase pension plan if a practitioner has at least one other type of specimen plan that meets the 15 employer-client requirement. A VS practitioner may submit more than one specimen plan for an advisory letter provided it represents to the IRS that it has at least 15 employer-clients in the aggregate, each of which is reasonably expected to adopt at least one of the practitioner’s specimen plans on a substantially similar basis.

VS adopting employer

The IRS announces the date by which employers must adopt approved restatements of VS plans for each 6-year cycle. Under certain circumstances, a VS practitioner may amend the plan on behalf of adopting employers, if the plan includes a provision authorizing the VS practitioner to do so.

Additional resources

 

Page Last Reviewed or Updated: 22-Jul-2015