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Employee Plans Compliance Unit (EPCU) - Completed Projects - Project with Summary Reports - Proposed Amendment Timely Executed (PATE) Project

Summary Report

This EPCU project focused on plan sponsors who filed for a determination letter between December 2006 and January 2011, with a proposed caveat. EPCU obtained records of plans receiving determination letters with proposed caveats from our internal sources.

The Employee Plans Compliance Unit (EPCU) was charged with determining probable compliance levels on the timely adoption of the caveats stated in the determination letter.

Project Benefits and Conclusion

Compliance checks were performed to determine if the proposed caveat(s) issued with the determination letter were timely signed or adopted.  This project was beneficial as it:

  1. Provided an avenue for following up on proposed caveat amendments.
  2. Alerted the retirement plan community of our presence, reinforcing the need to timely adopt caveat amendments.
  3. Allowed us to identify plans where the timely adoption of the caveat amendments was questionable.

The majority of responses indicated they had timely adopted the proposed amendment, with 15 (2.95%) of the 508 cases contacted sent to Employee Plans Examination as referrals, and 6 (1.12%) working with voluntary compliance (VCP).

This project allowed EPCU to gain insight into the level of compliance in the timely adoption of caveat amendments issued with determination letters. This project shows that a total of 21 (4.13%) of the 508 plans contacted did not timely adopt amendments. When these results are applied to the project universe of 9,497 plans, possibly 392 plan sponsors may not have made timely adoptions in this universe.


The focus of this project was to determine whether the designated caveat amendments were signed within the 90 day time frame, or if not, to determine the reason why. Table 1 below reflects the types of closures for the 512 cases included in the project.

Table 1

Referral to Examination No Change Cannot Locate Other Processing Error Employer In Bankruptcy PBGC Take Over Current/
Previous Audit
15 464 9 6 4 4 2 2 6

An analysis of the closures indicate the majority of cases involved were found to be in compliance or were already under review through an examination process, SCP/VCP or by the Pension Benefit Guarantee Corporation (PBGC).

Of the 15 plans closed as referrals:

  • 12 Did not respond to our inquiry.
  • 1 Filed for another determination letter, the determination agent will follow up on both.
  • 1 Had additional ESOP issues.
  • 1 Plan terminated in the merger year and had 401(b) issues.

The 6 cases closed in the “Other” category were closed for the following reasons:

  • 3 Organizations were subsidiaries and the parent organization timely adopted for all subsidiaries.
  • 2 Filed amendments using different EINs.
  • 1 Research showed plan has terminated.


Employee plan sponsors submit their written plan documents for review to receive a determination letter indicating their plan document conforms to the rules and regulations set forth for employee plans. This review is conducted by Employee Plans Rulings and Agreement (EP: R&A), who has the authority to issue a determination letter. Sometimes the determination letter is issued with a proposed caveat under 401(b) of the Internal Revenue Code (code). This code section allows a determination letter to be ruled on and grants an additional 90 days for the plan sponsor to sign the proposed amendment or proposed plan adoption.  The 90 day period begins with a date stated in Letter 2002 or Letter 4577.


The project was designed to determine the likelihood of a timely adoption of the amendment to the plan language under 401(b) of the code.

The project goals were to:

  1. Identify the universe of plan sponsors receiving determination letters with a proposed caveat during the stated period.
  2. Send compliance contact letters to a select sample of the plan sponsors asking them to:
    • Verify the proposed amendment(s) were signed within the period allowed. or
    • Provide an explanation why the proposed amendment was not timely signed.
    • Provide a copy of the determination letter with a copy of the signed amendment(s).

  3. Determine the reasons why plan amendments were not signed.
  4. Refer cases for Examination if the proposed amendment(s) was not signed in a timely manner.


This project focused sponsors having filed for a determination letter between December 2006, and February 2011, where a proposed caveat was issued. EPCU identified a total universe of 13,280 records, from which a statistically valid sample of 504 records was then extracted.

In the course of working the project, an additional 8 cases were added for a total of 512 cases sampled. These additional 8 cases were added for the following reasons:

  • 2 Same Sponsor Additional Plan Discovered Meeting Project Criteria
  • 1 Duplicate Case Added to Inventory System Same EIN, Plan & Name
  • 1 Case Added to RISE in Error Not in Sample
  • 4 Duplicate Cases Different EIN sample.

The sponsors contacted were asked to:

  1. Provide proof the amendment(s) were signed within the 90 day period or provide an explanation as to why it was not completed.
  2. Provide a copy of the determination letter (Letter 1132, 4577, or 2002) with a copy of the signed amendment(s).