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Part 7. Rulings and Agreements

Chapter 11. Employee Plans Determination Letter Program

Section 1. Overview

7.11.1  Overview

7.11.1.1  (09-01-2002)
Overview

  1. Procedures are provided on the determination letter program in the employee plans area, on the following topics:

    • Subsection 1– 3: Overview of Determination Letter Program

    • Subsection 4–10: Case Processing Procedures

    • Subsection 11–19: Case Closing and Review Procedures

    • Subsection 20–22: Special Programs

  2. These procedures apply generally to EP specialists, group managers and reviewers in the area offices, unless otherwise noted. Technical screening procedures are provided in IRM 7.11.1.2.2.

  3. The IRS Restructuring and Reform Act of 1998 (RRA) enacted into law several provisions which impact the processing of EP determination letter applications. The provisions below are described in IRM 7.4.1. However, additional information relating to burden of proof requirements are provided in IRM 7.11.1.3.4.2.

    • § 3417 Notice of IRS third party contact

    • § 3411 Taxpayer confidentiality privilege

    • § 3001 Burden of proof

    • § 3705 IRS employee contacts

    • § 3706 Pseudonyms

  4. Reference to Headquarters (HQ) , formerly referred to as "National Office" , indicates the program is under the jurisdiction of the Director, Employee Plans Rulings and Agreements, (hereinafter referred to as the EP Division) under the Commissioner, Tax Exempt and Government Entities (TE/GE Division).

7.11.1.1.1  (09-01-2002)
Determination Letter Program

  1. The Employee Plans (EP) Determination Letter Program was established to provide a means whereby employers can submit their retirement plans to the IRS for review. The Service reviews the plan as to form and, in some areas, reviews operational features as well. When the plan meets the qualification requirements of the Code, a favorable determination letter is issued to the employer. This letter gives reliance to the employer, at least, as to the form of the plan.

  2. In addition, the Service has established special programs for master and prototype plans and volume submitter plans. These programs have special procedures and the lead or specimen plan in each category receives a unique type of favorable letter. A favorable letter will only be issued when a determination can be made on the basis of clearly established rules as set forth in statute, rulings, or in a ruling, opinion, or court decision published in the Internal Revenue Bulletin (I.R.B).

  3. Rev. Proc. 2002–6, 2002–1 I.R.B. 203 (revised annually) sets forth the procedures for requesting favorable determination letters under this program. This procedure is reissued annually for purposes of providing updates on new legislation, policy and procedures. See Exhibit 7.11.1–1 for a list of current Revenue Procedures, Announcements and Notices involving EP determination letter requests.

  4. The front-end processing of determination letter applications has been centralized under EP Determinations in Cincinnati, Ohio. All determination letter applications must be submitted to the Cincinnati Service Center in Covington, Kentucky. Volume Submitter requests must be submitted to the Volume Submitter Coordinator EP Determinations in Cincinnati, Ohio. See Exhibit 7.11.1–2 for applicable addresses.

  5. All cases will be technically screened in the Cincinnati, Ohio. That office will work as many cases as possible. All work that cannot be processed in Cincinnati, Ohio will be forwarded to other Area Offices for processing.

7.11.1.1.2  (09-01-2002)
Responsibility for Issuing Letters

  1. Delegation Order (D.O.) 112, as revised, authorizes the Director, Employee Plans Rulings and Agreements to issue or revoke determination letters relating to Employee Plans matters involving the provisions of IRC Sections 401(a), 403(a), 409, 501(a) and 4975(e). The Director EP Rulings and Agreements is also authorized to issue revocations of determination letters issued to collectively bargained plans and to plans in violation of the exclusive benefit rule because of certain fiduciary actions, but only with the consent of HQ. Area Managers are not authorized to issue or revoke determination letters.

  2. Delegation of this authority may be made as provided in D.O. 112, as revised.

7.11.1.1.3  (09-01-2002)
User Fees

  1. User fees may be required for each determination letter application submitted to the Service. Details are available in Rev. Proc. 2002–8, 2002–1 I.R.B. 252 (revised annually).

  2. Applicants must complete Form 8717, User Fee for Employee Plan Determination Letter.

  3. Each specialist is responsible for ensuring the correct user fee is submitted with the application.

  4. If the agent identifies an incorrect user fee was submitted, the agent will take action as indicated in the following table.

    If And Then
    Additional user fee is required or user fee check is dishonored. Case is a screening case 1. Agent will complete Form 5621 to document why additional user fee is required or indicate user fee check was dishonored.
    2. Case will be updated and forwarded to the Cincinnati area office as a user fee issue case. See Exhibit 7.11–1–2 for mailing address.
    Additional user fee is required or user fee is dishonored Case is a determination case 1. Agent will contact employer or representative to secure additional user fee.
    2. After securing additional user fee, agent will prepare Form 3198 providing the EIN, sponsor name, and plan number.
    3. Agent will send Form 3198 and check along with a copy of Form 8717 and the first page of the appropriate Form 5300 series application to the user fee clerk at the Cincinnati area office. See Exhibit 7.11.1–2 for mailing address.
    Refund of user fee required Case is a screening case or a determination case 1. Agent will document Form 5621 as to why a refund is due.
    2. Agent will prepare Form 1725 providing the EIN, sponsor name, plan number, amount and reason for refund.
    3. Form 1725 must be signed and dated by agents supervisor
    4. Agent will send Form 1725 along with copies of Form 8717 and the first page of the appropriate Form 5300 series application to the user fee clerk at the Cincinnati area office. See Exhibit 7.11.1–2 for mailing address.

  5. User fee cases received in Cincinnati will be assigned to a user fee coordinator.

  6. The user fee coordinator will make contact to secure any additional user fee. Once the additional user fee is secured, the agent will prepare Form 3198 providing the EIN, sponsor name, plan number, and instructions for the user fee clerk to process the additional user fee. Form 3198 and check along with copies of Form 8717 and the first page of the appropriate Form 5300 series application will be sent to the user fee clerk for processing.

  7. On all cases, whether a screening or determination case, the agent will hold the case file and not issue the final determination letter until the agent receives notification from the user fee clerk that the additional user fee has been processed.

7.11.1.2  (09-01-2002)
Description of Program

  1. A description of the EP determination letter program is provided, including a discussion of —

    • Issuance of determination letters

    • Applications used for requesting determination letters

7.11.1.2.1  (09-01-2002)
Areas Where Determination Letters Are Issued

  1. The Service will issue a determination letter with respect to completed or proposed transactions for initial qualification, amendment or restatement of:

    • Individually designed plans

    • ESOPs

    • Collectively bargained plans

    • Adopters of master and prototype plans

    • Adopters of volume submitter plans

    • Multiple employer plans

    • Foreign situs trusts

    • Group trusts

    • Terminations

    • Partial terminations

  2. Special procedures apply with regard to the following types of issues:

    • Affiliated Service group status under IRC Section 414(m)

    • Leased employees under IRC Section 414(n)

    • Minimum funding waivers under IRC Section 412(d)

  3. Pending Matters. If a request for a determination letter relates to a pending issue concerning the prior status of the plan or trust, regardless of whether a prior determination letter was issued, the request will be held until the pending issue is resolved.

  4. Group Trusts. A separate letter will be issued under IRC Section 401(a) for a group trust where qualified plans pool their funds. See Rev. Rul. 81–100, 1981–1 C.B. 326.

  5. Procedures on the EP/EO Determination System (EDS) are set forth in IRM 7.13.1 for EP personnel.

7.11.1.2.2  (09-01-2002)
Types of Favorable Letters

  1. There are several types of determination letters issued:

    • Favorable determination letter

    • Advisory letter

    • Opinion letter

  2. A favorable determination letter is a written statement issued by the Director, EP Rulings and Agreements in response to a written request on the qualification of a retirement plan under IRC Sections 401(a) or 403(a) and the exempt status of the trust under IRC Section 501(a).

  3. An advisory letter is a written statement issued by the Director, EP Rulings and Agreements in response to a written request regarding the acceptability of the form of a specimen volume submitter plan under IRC Section 401 and any related trust or custodial agreement under IRC Section 501(a). See Rev. Proc. 2002–6, 2002–1 I.R.B. 203 and Rev. Proc. 2000–20, 2000–6 I.R.B 553.

  4. An opinion letter is a written statement issued by the Director, EP Rulings and Agreements as to the acceptability of the form of a master and prototype plan, on the initial acceptability and any amendments to the plan. Rulings may also be issued on the initial acceptability and amendment of master trusts forming parts of such plans. See Rev. Proc. 2002–4, 2002–1 I.R.B. 127 (revised annually).

7.11.1.2.3  (09-01-2002)
Areas Where Determination Letters Are Not Issued

  1. Determination letters will not be issued for applications involving (see Rev. Proc 2002–6, 2002–1 I.R.B. 203 (section 3.02)):

    1. IRC Sections 72, 79, 105, 125, 127, 129, 402, 403 (other than 403(a)), 404, 409(1) , 409(m), 412, 457, 511 through 515, and 4975 (other than 4975(e)(7)) unless these determination letters are authorized under section 7 of Rev. Proc. 2002–4, 2002–1 I.R.B. 127.

    2. Plans or plan amendments for which automatic approval is granted.

    3. Certain plan amendments that are not deemed to alter the qualified status of a plan under IRC Section 401(a).

  2. A determination letter will not be issued for certain plan amendments, including an amendment which —

    1. permits a trust forming part of a plan to participate in a pooled fund arrangement described in Rev. Rul. 81–100, 1981–1 C.B. 326,

    2. adjusts the maximum limitations under IRC Section 415 to reflect annual cost-of-living increases, other than an amendment that adds an automatic cost-of-living adjustment provision to the plan,

    3. includes language pursuant to Section 403(c)(2) of Title I of ERISA concerning the reversion of employer contributions made as the result of a mistake of fact.

  3. Plans that combine an ESOP (as defined in IRC Section 4975(e)(7)) with retiree medical benefits described in IRC Section 401(h) (HSOPS) . A plan is considered to combine an ESOP with an HSOP if it contains ESOP provisions and IRC Section 401(h) provisions. See section 3 of Rev. Proc 2002–6, 2002–1 I.R.B. 203 for a further discussion of ESOPs and HSOPS.

  4. In general, determination letters will not be issued for plans that combine an ESOP with an HSOP with respect to whether the —

    1. IRC Section 4975(e)(7) requirements are satisfied;

    2. IRC Section 401(h) requirements are satisfied;

    3. ESOP combined with an HSOP in a plan adversely affects its qualification under IRC Section 401(a).

7.11.1.2.4  (09-01-2002)
Application Forms

  1. Requests for a determination or opinion letter must be submitted on the proper application forms. See section 3 of Rev. Proc. 2002–6, 2002–1 I.R.B. 203.

    1. Form 4461, Application for Approval of Master and Prototype Defined Contribution Plan;

    2. Form 4461–A, Application for Approval of Master and Prototype Defined Benefit Plan;

    3. Form 5300, Application for Determination for Employee Benefit Plan, for individually designed plans and for adopters of pre-approved plans under certain circumstances;

    4. Form 5307, Application for Determination for Adopters of Master and Prototype or Volume Submitter Plans;

    5. Form 5309, Application for Determination of Employee Stock Ownership Plan, for initial determination or amendment regarding a plan intended to meet the requirements under IRC Sections 409 or 4975(e)(7) (Form 5309 is submitted as an attachment to Form 5300);

    6. Form 5310, Application for Determination Upon Termination, (a determination letter request regarding a partial termination must be submitted on Form 5300);

    7. Form 6406, Short Form Application for Determination for Amendment of Employee Benefit Plan.

7.11.1.2.4.1  (09-01-2002)
Master and Prototype Program

  1. Opinion letters regarding the qualification of master and prototype plans (M&P), prototype individual retirement accounts and prototype SEPs are issued by HQ.

  2. Forward applications for an opinion letter received in Area Offices to, Internal Revenue Service, Employee Plans Rulings and Agreements, Attention T:EP:RA:T:ICU and notify the applicant the application is under the jurisdiction of the Commissioner, (Tax Exempt and Government Entities).

7.11.1.2.4.2  (09-01-2002)
Other Applications

  1. A determination letter request involving a group trust may be made without submitting an application form. See Rev. Rul. 81–100, 1981–1, C.B. 326 and Rev. Proc 2002–6, 2002–1 I.R.B. 203.

  2. A written request for an advisory letter for the specimen plan of a volume submitter may be made by corresponding with the Volume Submitter Coordinator (VSC) in Cincinnati, Ohio. See Rev. Proc. 2002–6, 2002–1 I.R.B. 203, Rev. Proc. 2000–20, 2000–6 I.R.B. 553, and Exhibit 7.11.1–1.

7.11.1.2.5  (09-01-2002)
Processing Order

  1. Generally, the Service processes applications for determination letters in order of receipt and as expeditiously as possible. Supervisory personnel determine whether a request to process an application ahead of the regular order is warranted.

  2. The following types of applications should be given priority:

    1. Applications for determination upon termination of a plan (Form 5310).

    2. Defined benefit plans subject to Title IV of ERISA (PBGC plans).

  3. Process the following types of cases in the following manner.

    1. Applications from volume submitters or controlled groups should be processed in batches rather than in the order in which they are received.

    2. Mass submissions should be kept together and assigned to one specialist. If these cases must be divided among more than one specialist, their review must be coordinated.

7.11.1.2.6  (09-01-2002)
Verbatim Recordings

  1. Taxpayers may tape, make stenographic or other recordings of determination proceedings except where the taxpayer's behavior is disruptive.

7.11.1.3  (09-01-2002)
Public Inspection

  1. Public disclosure applies to applications filed (or documents issued) after September 2, 1974. IRC Sections 6104(a)(1)(B), (C), and (D) govern the material open to public inspection. See IRM 11.3, Disclosure of Official Information.

    Note:

    Exercise caution to ensure that those items not open to public inspection, as identified in IRC Sections 6104(a)(1)(C) and (D) , are not disclosed. This includes information from which the compensation of any individual may be ascertained and certain information relating to trade secrets, patents, processes, or national defense. In addition, only properly identified plan participants may inspect the plan file if the plan has less than 26 participants.

  2. Requests from the public for copies of employee plans documents or for permission to inspect employee plans documents will be referred to the Area Disclosure Officer. See also IRM 11.2.

  3. IRS personnel may not make notations on the application. However, notations may be made on the plan document to indicate the plan sections amended, the date of the amendments, and the plan document may be highlighted to facilitate easy reading.

7.11.1.3.1  (09-01-2002)
Materials Open to Public Inspection

  1. The right side of the administrative file contains material open to public inspection. It should be assembled, from top to bottom, as follows:

    1. Form 8326 - EP Transmittal Sheet, most recent copy;

    2. Index to the administrative case file, if applicable. (Prepare an index when a proposed adverse determination letter is issued or interested parties have commented and those comments have been rejected. The index will contain those items identified in section 601.201(0)(8) of the SPR as comprising the administrative record);

    3. File copy of unagreed report, it applicable;

    4. Form 8671 EDS computer generated form Employee Plan Case Closing Sheet, (2 copies);

    5. Determination letters for current application stapled ;

    6. Final letter to interested parties and the final letter to the employer regarding interested party comments;

    7. Form 8717, User Fee Request for Determination Application;

    8. Form 2848, Power of Attorney; and/or Form 8821 Tax Information Authorization and Form 12180, Third Party Contact Authorization Form, if applicable;

    9. Most recent determination letter;

    10. Opinion, notification, advisory and prior determination letters;

    11. Application form and attachments (i.e. Schedule Q, explanations to the applications, including Notice of Merger, Consolidation or Transfer of Plan Assets or Liabilities), if submitted;

    12. Written correspondence between the Service and the applicant in chronological order (such as "10 day" letter, withdrawal letter, proposed adverse determination letter, etc.);

      Note:

      Amendments and revisions to the application should be separated from correspondence.

    13. Other documents issued to the applicant by the Service dealing with the qualification issue; (i.e. closing agreement);

    14. Interested Party Comments;

      Note:

      I

      nformant communications can not be disclosed and should not be maintained in the administrative file. See IRM 25.1, Fraud.

    15. Correspondence with interested parties, with respect to the written comments referred to above;

    16. Board of Director's resolution to terminate the plan, if applicable;

    17. Proposed amendments;

    18. Executed amendments;

    19. Plan and/or group annuity contract;

    20. Trust instrument;

    21. Notice to Interested Parties;

    22. Collectively Bargaining Agreements;

    23. Plans and/or amendments previously ruled upon;

    24. Supplemental data supporting the application, (i.e., statistical analyses on turnover data, coverage or allocation schedules, balance sheets, and receipts and disbursements statements). Miscellaneous materials and correspondence relating to the application, (e.g., specimen copies of individual life insurance contracts and formal announcements to employees);

    25. Form 5446 (Public Inspection Record); and

    26. Purge material for agreed/favorable letter cases.

    Note:

    Arrange in chronological order each category of material listed in items a.–z. that includes multiple items.

  2. Use Form 5446 to document when members of the public have examined the case file, as permitted by applicable disclosure regulations.

7.11.1.3.2  (09-01-2002)
Material Not Open to Public Inspection

  1. The left side of the administrative file contains material that is not open to public inspection. It should be assembled, from top to bottom, as follows:

    1. Form 5666, EP/EO Referral and attachments, if applicable;

    2. Form(s) 5464, Case Chronology Record. In chronological order.

    3. Form 6088, Distributable Benefits for Employee Pension Benefit Plans, if applicable;

    4. Form 5621, Technical Analysis Control Sheet.

    5. Demonstration 3, 5, 6 or 9 or other sensitive information which is not open for public disclosure. See I.R.M. 7.11.1.3.

    6. A copy of the official report when the Service makes an investigation regarding the facts as submitted by the applicant or in comments submitted by interested parties.

    7. Worksheets prepared by the specialist, including any Alert Guidelines Worksheets.

    8. Form 5456, Reviewer's Memorandum, and Form 5457, Response to Reviewer's Memorandum. Leave loose until accepted by the Quality Assurance Staff;

    9. Form 5402, Appeals Transmittal Memorandum, and Supporting Statement, along with any workpapers prepared by Appeals.

    10. Other miscellaneous materials not disclosable, as identified by disclosure regulations, and IRM 11.3, Disclosure of Official Information. (These materials include pertinent information from the old law plan file such as the determination letter, worksheets and application and including examination and deduction referrals).

    Note:

    Arrange in chronological order each category of material listed in items a.– j. that includes multiple items.

7.11.1.4  (09-01-2002)
Case Processing Procedures

Subsections 1.4 – 1.10 describe case processing procedures.

7.11.1.4.1  (09-01-2002)
Determination Letter Application Topics

  1. Procedures are provided for processing determination letter application cases, including such topics as —

    • Technical Screening

    • Tools and Extent of Analysis

    • Case File Preparation

    • Interested Party Concerns

  2. Information is also provided for cases containing certain technical and administrative issues, including:

    • Plan Terminations (Form 5310)

    • Remedial Amendment Period

    • IRC Section 105 Plans

    • IRC Sections 414(m) and (n)

    • Plans Not Timely Amended

  3. These procedures are for EP specialists, technical screeners and reviewers.

7.11.1.5  (09-01-2002)
Technical Screening

  1. Technical screening is a process of inspecting determination letter applications to close them on their merit or to limit the amount of review. Generally, depending on inventory levels, all technical screening is handled in Cincinnati, Ohio.

    1. It is an efficient process for reviewing a large number of applications.

    2. Technical screening is performed generally after the application is input on EDS, but before assignment to a specialist.

  2. Technical screening duties require experienced and technically qualified specialists.

  3. Consider the case on its merits, keeping in mind areas in which the greatest potential for noncompliance exists.

  4. Cases that cannot be closed on merit by the technical screener are assigned to a specialist as soon as possible.

  5. The technical screener assigns the case grade using the criteria in the Case Assignment Guide. See IRM 7.11.2, EP Case Assignment Guide.

  6. The technical screener generally resolves all user fee problems before closing the case on merit or assigning the case to a specialist since the EP User Fee Adjusment Clerk is located in Cincinnati.

7.11.1.5.1  (09-01-2002)
Technical Screening Procedures

  1. Technical screeners must prepare Form 5621 (Technical Analysis Control Sheet) and Form 5464–A (Case Chronology) for all cases. Prepare Form 5666 on cases closed on merit where there is a potential future operational problem.

  2. When a determination letter request is closed on merit on a plan that is subject to comments by DOL, PBGC, or interested parties, it must be closed off of EDS as soon as possible after expiration of the 60-day period. This 60-day period will permit receipt and consideration by the Service of any interested party comments.

7.11.1.5.1.1  (09-01-2002)
Analyzing Application

  1. If an application involves a type of plan for which area managers have not been authorized to issue a determination letter, contact the applicant by telephone and inform the applicant that the Service will not issue a determination letter for the plan as submitted.

    1. Refund any user fee paid with the application.

    2. Prepare Letter 1924(DO/CG), which is used as a closing letter.

    3. Close the case as a correction disposal, closing code 30.

  2. The technical screener will analyze the plan or parts of the plan in accordance with the screening guidelines and using the appropriate tools of analysis. See I.R.M. 7.11.1.6.

    1. The technical screener will assign the case if there is a potential disqualifying provision or if technical advice is to be requested.

    2. The technical screener will ensure that any conclusions regarding an application are consistent with any known, concurrent examination.

  3. After analyzing the case the technical screener will fax or call for additional information if the case can be closed with minimum contact.

  4. The technical screener will analyze the application as early as possible. However, a determination letter on a plan subject to comments by DOL, PBGC, or interested parties, may NOT be issued before 60 days have elapsed from the control date.

    1. This 60-day period will permit receipt and consideration by the Service of any comments.

    2. When interested party comments are received after the analysis of the plan, but prior to issuance of a favorable letter, appropriate consideration will be given to the comments. See Reg. 1.7476–2.

  5. Issue determination letters for plans not subject to the "right to comment" and "notification" procedures as soon as possible after receipt of a complete application. The following plans are not subject to the "right to comment" :

    1. A plan which has not at any time after September 2, 1974, provided for employer contributions, and

    2. A plan established and maintained by a society, order, or association described in IRC Sections 501(c)(8) or (9) if no part of the contributions to, or under, such plan are made by employers of participants in such plan.

    3. Specimen Plans (not the plan of any specific employer).

7.11.1.5.2  (09-01-2002)
Accelerated Processing Guidelines

  1. Accelerated processing criteria are used to technically screen terminations, amendments, and initial applications for determination letters. These are separated into the following three categories—

    • mandatory assignment

    • discretionary assignment

    • merit closures

7.11.1.5.2.1  (09-01-2002)
Mandatory Assignment

  1. The following cases must be assigned to a group for complete review:

    1. Specimen plans of Volume Submitter.

    2. Terminations of plans for which a favorable letter has not been issued.

    3. Safety Valve (described in Reg. 1.401(a)(4)-3(c)(3)).

    4. Cash Balance Plans

  2. The following cases have unique aspects that must be addressed. The case may be assigned for that aspect only or for broader review as deemed necessary.

    1. Plans that satisfy the coverage and/or nondiscrimination tests using one or more of these methods: (i) Permissive aggregation or restructuring, (ii) Average benefits test, (iii) General test plans not using the safety valve.

    Note:

    Plans in Category a. (nondiscrimination testing) may be moved into Discretionary Assignment if: (i) the application is screened by a specialist with substantial experience reviewing plans with these features and (ii) in the screener’s judgment, the plan clearly indicates compliance with the coverage and nondiscrimination rules.

7.11.1.5.2.2  (09-01-2002)
Discretionary Assignment

  1. This category includes all cases not specifically identified in the text on Mandatory Assignment IRM 7.11.1.5.2.1 and Merit Closures IRM 7.11.1.5.2.3, including cases involving the following plan features likely to present higher risk. The Technical Screener has the discretion to screen and merit close these cases or to assign these cases for one issue only or broader review as deemed necessary.

    1. Applications for initial determination letters (new plans)

    2. Terminations

    3. Separate line of business testing for either IRC Sections 401(a)(26) or 410(b)

    4. Availability of benefits, rights and features

    5. Leveraged ESOP's

7.11.1.5.2.3  (09-01-2002)
Merit Closures

  1. These plans present the lowest risk and can usually be closed on merit.

    1. Adopters of an M&P or Volume Submitter plans that do not fall into Mandatory or Discretionary Assignment.

    2. Individually designed safe harbor plans that do not fall into Mandatory or Discretionary Assignment.

    Note:

    The technical screener is required to check coverage on all cases that are not assigned.

7.11.1.6  (09-01-2002)
Tools and Extent of Analysis

  1. Form 5621 is used by the technical screener to identify issues for review by the EP specialist. However, it is the specialist’s responsibility to ensure the qualification of the retirement plan, by expanding the scope of the review, if necessary.

    1. Explain unusual issues in the "Remarks" section on Form 5621. (Indicate appropriate notations on the "Amendments secured" section of Form 5621.)

    2. Prepare Form 5621 for cases assigned to the group that were technically screened but not merit closed.

    3. A properly completed Form 5621 contains the preparer’s name and initials, the date prepared, the type of case, the worksheets used, and any other pertinent information.

    4. Correct and complete (if necessary) Alert Guideline Worksheets.

  2. In addition to the specialist’s knowledge, training, and experience, tools are available to assist the specialist in analyzing plans. These include Alert Guidelines, which consists of Worksheets and Explanations and Plan Deficiency Checksheets.

    1. "Worksheets" contain various questions designed to determine a plan’s compliance with the more important areas of ERISA and subsequent pension laws, and are used to evaluate all applications that are not closed on merit.

    2. "Explanations" include technical explanations of the more important areas of ERISA are used in conjunction with the "Worksheets" .

    3. Plan Deficiency Checksheets are standard paragraphs on plan language and are available to specialists on an electronic database (EDS).

    4. Areas of concern identified by the technical screener on Form 5621.

  3. Following is a list of the Alert Guidelines.

    No. Topic Worksheet
    Form #     		Explan.
    Document #
    1 Min. Participation 5622 6388
    2 Min. Vesting (DC plan) 5623 6389
    2a Min. Vesting (DB plan) 5624 6390
    3 Joint and Survivor 5625 6391
    4 Miscellaneous 5626 6392
    5 Cov. & Nondiscrim. Std. (DC) 5627 6393
    5A Cov. & Nondiscrim. Std. (DB) 9638 9242
    5B General Test 9639 9241
    5C Permitted Disparity NA 9240
    6 Limits on Contrib. & Benefits 8384 7001
    7 Top-Heavy Requirements 8385 7002
    8 Employee Leasing 8386 7003
    9 Distributions 8387 7004
    10 Affiliated Service Grps 8388 7005
    11 Employee & Matching Contrib. 8799 7334
    12 401(k) Requirements 9002 7335
    13 401(h) 13069 11433
    N/A Plan Termination Standards 6677 6678

7.11.1.6.1  (09-01-2002)
Extent of Analysis

  1. The extent of the analysis is dependent upon a number of factors including, but not limited to, the size and type of plan. The categories of analyses are as follows:

    • Complete Analysis

    • Issue Only Analysis

7.11.1.6.1.1  (09-01-2002)
Complete Analysis

  1. A complete analysis is an in-depth review of all plan provisions which affect the plan’s qualification under the Code.

  2. The types of plans which require complete analysis are:

    1. Plans with more than 750 participants (except plans of employers adopting a previously approved master or prototype plan or volume submitter plan), (use Worksheets to analyze these plans).

    2. Volume Submitter Advisory Letter requests (as described in Rev. Proc. 2000–20, 2000–6, I.R.B. 553), (use Worksheets or the LRM's to analyze these requests).

    3. ESOPs filed on Form 5309, Application for Determination of Employee Stock Ownership Plan. See IRM 4.72, EP Examination Guidelines.

    4. Plans that have not been timely amended.

7.11.1.6.1.2  (09-01-2002)
Issue Only Cases

  1. Issue only analysis is an in-depth analysis of limited plan provisions that affect a plan’s qualification. Some plans, because of their nature, do not require all plan provisions to be analyzed. If the technical screener classifies the application as an "issue only" assignment, only those issues are analyzed unless the specialist recognizes major problems. Then, with group manager approval, the scope of the review may be expanded.

  2. The plans that fall in this category include:

    1. Plans of an employer adopting a M&P plan or volume submitter plan. Complete only the coverage and discrimination "Worksheets" . Since the general plan provisions have been previously approved, limit the analysis to the elective areas of the plan and their effect on coverage, discrimination, and the requirements of IRC Sections 415 and 416. These plans fall within a category of plans generally accepted (on the merits of the information submitted) and closed by the technical screener.

    2. Collectively-bargained plans filed on Form 5300. Since coverage and discrimination are not generally a concern when reviewing a collectively-bargained plan, complete all "Worksheets" except, coverage and discrimination.

    3. State and local government employee retirement plans. Complete all "Worksheets" but do not raise discrimination issues. If such plans qualify under IRC Section 401 in all other aspects, treat as qualified plans. Also, do not raise the issue of whether the trust of such plans is subject to tax on its income (because the discrimination issue is not raised). See Regs. 1.401(a)(4)–13(b) & (c).

  3. Analyze plans that have an outstanding favorable determination letter for the latest Code and regulation changes with regard to the —

    1. Extent of the amendments submitted,

    2. Areas covered by the "Worksheets" not previously completed, and

    3. Discrimination issues, if any.

  4. Plan amendments submitted with Form 6406 are plans previously analyzed for compliance with the latest IRC and regulation changes. These plans do not need to be analyzed to determine if the plan is discriminatory unless it is readily evident such analysis should be made.

  5. Plan provisions that are the subject of interested party comments require a thorough analysis. This includes using appropriate Worksheets.

7.11.1.6.1.3  (09-01-2002)
Additional Information Requests

  1. If all the necessary or required information has not been submitted, inform the applicant. An applications may be returned because it is incomplete.

    1. Use Form Letter 1012(DO/CG), Letter for Missing Data/Information, to return the application.

    2. Use closing code 03, incomplete submission.

    Note:

    The 270-day period for declaratory judgment purposes, and the control date for EACS purposes, does not begin until the IRS receives a completed application.