7.1.1  Employee Plans

Manual Transmittal

September 19, 2014

Purpose

(1) This transmits revised IRM 7.1.1, Rulings and Agreements, TE/GE Administrative Procedures and Programs, Employee Plans.

Material Changes

(1) IRM 7.1.1 has been updated throughout to reflect current versions of annual revenue procedures and IRM procedures..

Effect on Other Documents

IRM 7.1.1, dated July 31, 2010, is superseded.

Audience

TE/GE Employee Plans

Effective Date

(09-19-2014)

TE/GE Employee Plans
Robert S. Choi
Director, Employee Plans
Tax Exempt and Government Entities Division

7.1.1.1  (09-19-2014)
Overview

  1. This IRM 7.1.1 describes the administrative procedures governing employee plans matters, which are under the jurisdiction of the Director, Employee Plans of the Office of the Commissioner, Tax Exempt and Government Entities Division (TE/GE).

  2. The following topics are covered in these sections:

    1. IRM 7.1.1.1, Overview, provides an overview of the administrative procedures applicable to Employee Plans (EP) personnel.

    2. IRM 7.1.1.2, Jurisdiction of EP Technical, Examinations and Determinations, defines Letter Rulings, Determination Letters, Opinion Letters, Information Letters, Closing Agreements, Advisory Letters, Oral Guidance and Nonbank Trustees, and lists the applicable jurisdictions for these and other EP programs.

    3. IRM 7.1.1.3, Assistance to Determinations, Voluntary Compliance, and Examinations, provides procedures for submitting cases for technical advice, procedures for requesting technical assistance and procedures for the issuing memoranda providing technical or procedural guidance.

7.1.1.1.1  (09-19-2014)
Administrative Procedures

  1. Administrative procedures are generally set forth in revenue procedures. Revenue procedures are published in the Internal Revenue Bulletin (IRB), which is published weekly.

  2. The Service issues interpretations to taxpayers to advise them or their authorized representatives, upon written request, of the proper application to specific situations of the provisions of the internal revenue laws, related statutes and regulations, or revenue rulings (which, if the number is added, may be abbreviated, e.g., Rev. Rul. 2000–36) and other precedents published in the IRB. This is done to promote voluntary compliance with, and consistent administration of, the internal revenue laws in accordance with the intent and purpose of Congress.

  3. The following revenue procedures relate to matters that are under the jurisdiction of the Office of the Commissioner, Tax Exempt and Government Entities Division (TE/GE) and generally, are published on an annual basis in the IRB:

    Letter rulings and other guidance Rev. Proc. 2014-4
    Technical Advice Rev. Proc. 2014-5
    Employee Plans determination letters Rev. Proc. 2014-6
    Applicable user fees Rev. Proc. 2014-8

    See Exhibit 7.1.1-1, List of Major Employee Plans Revenue Procedures Currently in Effect, for complete citations.

  4. These procedures cover the following matters:

    • Letter rulings

    • Determination letters

    • Information letters (general correspondence)

    • Opinion letters

    • Technical advice

    • Closing agreements

    • Advisory letters

    • Oral guidance

    • Nonbank trustee requests

  5. Additional information and procedures for EP specialists are provided in the Internal Revenue Manual.

    Example:

    The EP Audit Closing Agreement Program (Audit CAP) , which is referred to in Rev. Proc. 2014–4, and described in Rev. Proc. 2013-12, 2013-4 IRB 313 is also described in IRM 7.2.2, Employee Plans Compliance Resolution System (EPCRS).

  6. Rev. Proc. 2011-49, 2011-44 IRB 608, establishes a unified program for the issuance of opinion letters and advisory letters in the instance of Master and Prototype plans and volume submitter plans. See Rev. Proc. 2007-44, as modified by Rev. Proc. 2008-56.

  7. Rev. Proc. 2013-22, 2013-18 IRB 985, sets forth the procedures for issuing opinion and advisory letters for 403(b) prototype plans and 403(b) volume submitter plans.

  8. Under Rev. Proc. 93-41, plan sponsors may apply for an administrative scrutiny determination letter under IRC 414(r).

  9. The policy of the Service is to focus on encouraging taxpayers (administrators and employers) to voluntarily comply with the income tax laws. As a result, many of the programs under the jurisdiction of the Director, Employee Plans apply with regard to avoiding plan disqualification.

  10. A coordinated system of correction programs, which is referred to as the Employee Plans Compliance Resolution System ("EPCRS") is set forth in Rev. Proc. 2013-12.

7.1.1.1.2  (09-19-2014)
User Fees

  1. The Revenue Act of 1987, enacted December 22, 1987, requires, except in certain cases, the payment of user fees by taxpayers for rulings, opinion letters, and determination letters, etc. See Rev. Proc. 2014-8 and IRM 7.11.1.6, User Fees.

  2. Section 7 of Rev. Proc. 2014-8 provides a complete listing of the mailing addresses for requesting letter rulings, determination letters, etc.

7.1.1.2  (09-19-2014)
Jurisdiction of EP Technical, Examinations and Determinations

  1. The programs administered under the jurisdiction of the Director, Employee Plans are described in Rev. Proc. 2014-4, specifically with regard to the issuance of letter rulings and determination letters. A listing of the specific programs and the applicable EP function follows:

    If ...the plan sponsor request a ... Then...the jurisdiction is in...
    Letter Ruling Technical
    Opinion Letter Determinations
    Audit CAP Closing Agreements Examinations
    Determination Letter Determinations
    VCP Compliance Statements Voluntary Compliance
    VCP Closing Agreements Voluntary Compliance
    Compliance Statements Voluntary Compliance
    Advisory Letter Determinations
    Information Letter Technical, Examinations and Determinations
    Technical Advice Technical
    Nonbank Trustee Technical
    Administrative Scrutiny Determination Letter under IRC 414(r) Technical

7.1.1.2.1  (09-19-2014)
Letter Rulings

  1. A "letter ruling" is a written statement issued to a taxpayer (or his/her authorized representative) that interprets and applies the tax laws or nontax laws applicable to employee benefit plans to a specific set of facts.

    Note:

    Letter rulings, issued only by Technical, are delegated from the Director, Employee Plans, through the Director, EP Rulings and Agreements to the Manager, EP Technical and the Managers of the individual Technical Groups.

  2. A letter ruling found to be in error or not in accord with the Service’s current views, can be modified or revoked. The retroactive effect of such modification or revocation may be limited under the discretionary authority granted by IRC 7805(b). See Rev. Proc. 2014–4, section 13 for procedures under IRC 7805(b).

  3. The Director, Employee Plans is charged with interpreting the provisions of the Internal Revenue Code, regulations, and related statutes with respect to EP matters.

7.1.1.2.2  (09-19-2014)
Determination Letters

  1. A "determination letter" is a written statement issued by the Director, EP Rulings and Agreements in the Office of the Commissioner, Tax Exempt and Government Entities Division on a written inquiry by an individual or an organization that applies to the particular facts previously announced principles and precedents.

    1. A determination letter is issued only where a determination can be made on the basis of clearly established rules as set forth in the statute, Treasury Decision or regulation, or in a ruling, opinion or court decision published in the IRB.

    2. Where such a determination cannot be made, such as where the question presented involves a novel issue or the matter is excluded from the jurisdiction of EP Determinations by the provisions of this chapter, a determination letter will not be issued.

  2. The office of the Director, EP Rulings and Agreements issues determination letters as to the qualification of retirement plans under IRC 401, IRC 403(a), IRC 409 and IRC 4975(e) (7), and the status for the exemption of any related trusts or custodial accounts under IRC 501(a).

7.1.1.2.3  (09-19-2014)
Opinion Letters

  1. An "opinion letter" is a written statement issued by the Director, EP Rulings and Agreements in the Office of the Commissioner, Tax Exempt and Government Entities Division to a plan sponsor as to the acceptability (for purposes of IRC 401 and IRC 501(a)):

    1. Of the form of a master or prototype plan and any related trust or custodial account under IRC 401, IRC 403(a) and IRC 501(a).

    2. As to the conformance of a prototype trust, custodial account or annuity with the requirements of IRC 408(a), (b), (k), or (p) and IRC 408A as applicable.

      Note:

      The program in IRM 7.1.1.2.3 is commonly referred to as the "M & P Program."

  2. Opinion letters are issued on:

    1. Initial applications.

    2. Plan amendments.

    3. Master trusts involving the initial acceptability or amendment of such trusts if a part of an initial application or plan amendment of an IRC 401(a) plan.

  3. Section 6.02 of Rev. Proc. 2011-49 states that it is not applicable to Individual Retirement Accounts (IRAs) and Simplified Employee Pensions (SEPs). In addition, section 6.03 of Rev. Proc. 2011-49 enumerates 20 other instances in which opinion letters will not be issued.

7.1.1.2.3.1  (09-19-2014)
Terms

  1. A "master plan" is a form of plan defined in section 4.01 of Rev. Proc. 2011–49 with a related form of trust acting as the funding medium for the plans of all adopting employers.

  2. A "prototype plan" under IRC 401(a) is a form of plan defined in section 4.02 of Rev. Proc. 2011–49 with a related form of trust that does not provide a single funding medium for the plans of all adopting employers.

  3. A "prototype plan" under IRC 403(b) is a form of plan defined in section 5.01 of Rev. Proc. 2013-22.

  4. Additional terms related to the M & P program for plans under IRC 401(a) are found in sections 4.03, etc. of Rev. Proc. 2011–49.

  5. Additional terms related to the pre-approved program for plans under IRC 403(b) are found in sections 6 and 9 of Rev. Proc. 2013-22.

7.1.1.2.4  (09-19-2014)
Information Letters

  1. An information letter (also referred to as a general information letter) is a written statement issued either by Technical, Examinations or Determinations that calls attention to a well-established interpretation or principle of tax law (including a tax treaty), without applying it to a specific set of facts.

  2. It is generally issued to a taxpayer when:

    1. An inquiry indicates a need for general information.

    2. A request does not meet the requirements for a letter ruling and the Service thinks general information will be helpful.

7.1.1.2.5  (09-19-2014)
Closing Agreements

  1. A "closing agreement" is a final agreement between the Service and a taxpayer on a specific issue or liability pursuant IRC 7121. See IRM 7.2.2, TE/GE Closing Agreements, Employee Plans Compliance Resolution System (EPCRS).

7.1.1.2.6  (09-19-2014)
Advisory Letter

  1. An "advisory letter" is a letter issued under the volume submitter program on a specimen plan. See sections 13-18 of Rev. Proc. 2011–49 for more information on the volume submitter program for plans under IRC 401(a) and section 7 of Rev. Proc. 2013-22 for more information on the volume submitter program for plans under IRC 403(b).

7.1.1.2.7  (09-19-2014)
Oral Guidance

  1. Service employees will discuss with and respond to inquiries from taxpayer(s) or their representative(s) involving general matters and also whether the Service will rule on particular issues relating to procedural matters about submitting requests for:

    • Letter rulings

    • Determination letters

  2. Taxpayers may obtain assistance regarding EP matters by calling the centralized customer service unit at (877) 829–5500 (toll-free number). See IRM 21.1, Accounts Management & Compliance Services Operations for additional information.

7.1.1.2.8  (09-19-2014)
Nonbank Trustee Requests

  1. The Service issues letters of approval for entities to act as a nonbank trustee (NBT) or a nonbank custodian for individual retirement arrangements (IRAs) established under IRC 408(a), (b) or (h) , or for an education IRA established under IRC 530, or a medical savings account established under IRC 220, or a health savings account established under IRC 223, assuming certain requirements specified under Treas. Reg 1.408–2(e) are met. See IRM 4.72.18, Nonbank Trustee Investigation Procedures for detailed procedures involving this program.

    1. Approval to act as a NBT is within the jurisdiction of the Director, Employee Plans at EP Technical.

    2. Approved NBTs are investigated for continued compliance by the Office of the Director, EP Examinations who reports its findings to the Director, EP.

7.1.1.3  (09-19-2014)
Assistance to Determinations, Voluntary Compliance, and Examinations

  1. The Washington, DC personnel provide technical support to Determinations, Examinations, and Voluntary Compliance. This support may be provided in written or verbal form. Written advice may be presented as technical advice, technical assistance or other memoranda, depending on the nature of the matter. The administrative authority for requesting technical advice is found in revenue procedures, e.g., Rev. Proc.2014–5.

    1. EP Determinations, EP Examinations, and/or EP Voluntary Compliance may request (or may be required to request) assistance on a technical issue raised during a determination letter request, an examination, or a request under VCP. Assistance may be provided in the form of technical advice or technical assistance.

    2. Advice may be provided due to passage of new legislation for which there is no published precedent. This support may be provided in the form of a memorandum to an EP Examinations Area manager, the Manager, EP Determinations, or an EP Voluntary Compliance Group Manager.

7.1.1.3.1  (09-19-2014)
Technical Advice

  1. "Technical advice" means advice or guidance in the form of a memorandum furnished by EP Technical upon the request of EP Examinations, EP Determinations, EP Voluntary Compliance or an Appeals Area Director, Area 4, in response to any technical or procedural question that develops during a proceeding on the interpretation and proper application of tax law, tax treaties, regulations, revenue rulings, notices or other precedents published by the Service to a specific set of facts. See IRM 7.1.5, Employee Plans Technical Advice Procedures for additional guidance on requesting technical advice.

7.1.1.3.2  (09-19-2014)
Technical Assistance

  1. Technical assistance covers matters of general technical application furnished to EP Determinations, EP Examinations, EP Voluntary Compliance or an Appeals Office where the issues are not raised in connection with the examination of a taxpayer’s return, or a request for a determination letter, or the issues do not relate to a specific case under consideration by EP Determinations, EP Examinations, EP Voluntary Compliance or an Appeals Office.

  2. Technical assistance may involve any tax matter, but is generally requested where:

    1. A potential problem is recognized from a newspaper or a magazine article.

    2. State law or local law or an ordinance is recently enacted.

    3. Uncertainty exists regarding the interpretation of internal revenue laws, related statutes and regulations, published revenue rulings, revenue procedures, or any other published precedent.

  3. Technical assistance must be requested in writing. Memoranda should be addressed to the Director, EP Rulings and Agreements (SE:T:EP:RA).

  4. The memorandum containing technical assistance is signed by the appropriate Group Manager or the Manager, EP Technical. Generally, included in the memo is a statement:

    1. That the response is advisory only and does not represent an expression of the views of the Service as to the application of law, regulations, and precedents to the facts of a specific case.

    2. Whether the substance of the memorandum will be recommended for publication as a revenue ruling or revenue procedure.

7.1.1.3.3  (09-19-2014)
Memoranda to EP Determinations, EP Voluntary Compliance, EP Examinations or Appeals

  1. Memoranda may be issued to EP Determinations, EP Examinations, EP Voluntary Compliance or an Appeals Area Director, Area 4 which provide either technical or procedural guidance. Such guidance may be provided on matters of policy, new legislation or to clarify Service positions. These instructions are subsequently incorporated into the Internal Revenue Manual.

Exhibit 7.1.1-1 
List of Major Employee Plans Revenue Procedures Currently in Effect

Rev. Proc. 2013-22, 2013-18 IRB 985 Employee Plans 403(b) prototype and volume submitter programs
Rev. Proc. 2013-12, 2013-4 IRB 313 Employee Plans Compliance Resolution System (EPCRS)
Rev. Proc. 2014-8, 2014-1 IRB 242 Employee Plans and Exempt Organizations user fees
Rev. Proc. 2014-6, 2014-1 IRB 198 Employee Plans determination letters
Rev. Proc. 2014-5, 2014–1 IRB 169 Employee Plans and Exempt Organizations technical advice
Rev. Proc. 2014-4, 2014–1 IRB 125 Employee Plans and Exempt Organizations letter rulings, general information, and exempt organizations determinations
Rev. Proc. 2011-49, 2011-44 IRB 608 Employee Plans Master and Prototype and volume submitter programs
Rev. Proc. 2007-44, 2007-28 IRB 54 as modified by Rev. Proc. 2008-56, 2008-40 IRB 826 and Announcement 2011-82, 2011–52 IRB 1052 Employee Plans Staggered Remedial Amendment System
Rev. Proc. 2003-16, 2003-1 C.B. 359 Employees Waiver of the 60-Day Rollover Period
Rev. Proc. 2002-10, 2002-4 IRB 401 Employee Plans procedures for drafters of IRAs, SEPs and Simple IRA plans
Rev. Proc. 2000-41, 2000-2 C.B. 371 Employee Plans changes in actuarial funding request
Rev. Proc. 2000-40, 2000-2 C.B. 357 Employee Plans automatic changes in actuarial funding methods
Rev. Proc. 2000-17, 2000-1 C.B. 766 Employee Plans actuarial waiver of IRC 4971(b) tax
Rev. Proc. 98-59, 1998-2 C.B. 727 Employee Plans procedures for opinion letters for Roth IRAs (IRC 408A)
Rev. Proc. 97-29, 1997-1 C.B. 698 Employee Plans procedures for opinion letters for SIMPLEs
Rev. Proc. 93-41, 1993-2 C.B. 536 Employee Plans Administrative Scrutiny Determination Letters (IRC 414(r))
Rev. Proc. 91-44, 1991-2 C.B. 733 Employee Plans opinion letter program for SARSEPs (SEPs in effect on December 31, 1996 providing elective contributions)
Rev. Proc. 87-50, 1987-2 C.B. 647 Employee Plans procedures for IRC 408(a) and (b) IRAs

More Internal Revenue Manual