Fourth cycle preapproved 401(a) defined contribution plan providers Q&As


Q1: Do these procedures also apply to pre-approved 403(b) submissions?

A1: We are currently reviewing the 2nd cycle 403(b) plans based on Rev. Proc. 2021-37. Our latest revenue procedure, Rev. Proc. 2023-37, is a combination of the prior 401(a) Rev. Proc. 2017-41 and the 2nd cycle 403(b) Rev. Proc. 2021-37. In general, this new revenue procedure (Rev. Proc. 2023-37) is meant to be a viable document covering all 401(a) plans beginning with the 4th cycle and for 403(b) plans beginning with the 3rd cycle.

Q2: Is CPE available for this session?

A2: No, this was just an information meeting. There is no provision for CPE.

Q3: Have you ever considered posting to the IRS website copies of the opinion letters issued on each pre-approved plan?

A3: We do publish a list of the timely filed providers. The list addresses the name of the provider, city & state, file folder number, type of plan, and the letter serial number. All the letters are relatively identical except for some differences in the contents for a standardized versus a non standardized plan. For example, if two providers file for a non standardized profit sharing/CODA plan the body of the letters would read the same. The actual opinion letters contain other information such as an EIN which we would never publish.

Q4: Will user fees for Jan. 31, 2025, submissions be fixed in 2024?

A4: We do not anticipate changing fees that are so close to the end of a submission window. The annual revenue procedure is normally issued in the first week of January which creates a logistical problem that would not be customer oriented. As we noted in the meeting, it has been a number of years since we’ve had any major increases in user fees, and certain increases have already been built into Rev. Proc. 2024-4 which takes effect July 1, 2024. We expect the fees in place as of July 1, 2024, will be the same fees in place as of Jan. 31, 2025.

Q5: When will Cycle 4 LRMs be issued?

A5: All the defined contribution LRM’s (defined contribution, CODA, and ESOP) were made available on the IRS website Jan. 17, 2024. See Listing of Required Modifications (LRMs) for more information.

Q6: Does IRS intend to issue any model amendments for the Cycle 4 plans, for example, PEPs, student loan payments, and PLESAs?

A6: Student Loan payments and Pension Linked Emergency Savings Accounts (PLESA’s) are not on the Cumulative List. These areas require additional guidance which may include model amendment language. Pooled Employer Plans (PEP’s) were addressed via the changes made by section 101(a) of the SECURE Act which resulted in Section 413I being added to the Code, including proposed regulations issued on March 28, 2022. The SECURE Act and the proposed regulations indicated there would be model language. The model language is expected to be available when the final regulations are issued. Assuming it is available during our review process we intend to allow for its inclusion in the Cycle 4 plans and thus coverage by the opinion letter. Please note this is a change from what we indicated during the session.

Q7: What is the IRS position on discretionary matching contributions for the Cycle 4 DC plans?

A7: All elements of the discretionary matching formula must be definite, i.e. the allocation formula (which might include the defining of participant groups), computation period, and the need for a true-up. For those of you who were part of the 3rd cycle defined contribution submissions we had agreed on a compromise approach which will no longer be permitted.

Q8: Does the IRS plan to update its LRMs for future SECURE 2.0 guidance (e.g., all of the SECURE 2.0 distribution items relative to the 72(t) regs that are anticipated in March)? For example, domestic abuse distributions. No guidance to date, but upcoming regulations are mentioned.

A8: No, the IRS does not plan to update the LRMs for future SECURE 2.0 guidance for the 4th cycle defined contribution plans. Our reviews are based on the Cumulative List. There is language in the new CODA LRM XVI addressing domestic abuse distributions since this item is included on the 2023 Cumulative List. The language is not extensive which reflects the fact there is no guidance other than the statute.

Q9: Is the provider opinion letter fee going to increase from the current $300?

A9: We presume this question is regarding the word for word identical adopter filings under a Mass Submitter’s plan. The fee increases discussed during the meeting were only for mass and non-mass submitter lead plan documents. See earlier question above regarding user fees.

Q10: There will need to be an exception to the effective date where a provider is no longer maintaining the plan. Prior slide indicated that the employer would need to retroactively adopt a new pre-approved plan.

A10: We are not sure what is being asked here. We were only referring to taking the effective date of the employer’s plan back to the point of the discontinuance of the original provider. This is discussed in section 21 of Rev. Proc. 2023-37.

Q11: Cycle 4 is only applicable to volume submitter and not individually designed plans, correct?

A11: The term volume submitter is no longer applicable as both the master & prototype and volume submitter plans were all placed under one umbrella known as pre-approved plans which include standardized and non-standardized versions beginning with Rev. Proc. 2017-41. Rev. Proc. 2023-37 is designed only for pre-approved plans and not individually designed plans.

Q12: Can you repeat what you said about the effective date methods?

A12: We require plan restatements to use the current effective date method which means the overall effective date can be no earlier than the 1st day of the plan year in which the employer signs the restatement. In addition, all 2023 cumulative list items must set forth their applicable effective dates within them. Again, this method relates to the restatement of an employer’s plan. If an employer is adopting a 4th cycle DC qualified pre-approved plan to establish a plan, section 201 of the SECURE Act which amended Code section 401(b) is available.

Q13: What is the difference between a "qualified pre-approved plan" and "all pre-approved plans" in the revenue procedure?

A13: The distinction was made due to the inclusion of 403(b) plans which do not fall under the term “qualified”. We did not discuss the section on significant changes to the 403(b) pre-approved plans during the meeting as it was not relevant at this point in time.