Rev. Proc. 75-42

Section 1. Purpose

.01 This Revenue Procedure provides supplemental and revised procedures of the Internal Revenue Service pertaining to the issuance of opinion letters by the National Office as to the acceptability of the form of certain types of master and prototype defined contribution plans that do not include self-employed individuals, and the status for exemption of related trusts or custodial accounts.

.02 This revision is made to permit the issuance of opinion letters with respect to the acceptability of the form of these plans under sections 401 and 501(a) of the Internal Revenue Code of 1954, as amended by the Employee Retirement Income Security Act of 1974 (Public Law 93-406 1974-3 C.B.), approved September 2, 1974 (hereinafter referred to as "the Act").

Sec. 2. Background and General Information

.01 The general procedures of the Service relating to the issuance of rulings, determination letters, and opinion letters are set forth in Rev. Proc. 72-3, 1972-1 C.B. 698. Rev. Proc. 72-6, 1972-1 C.B. 710, provides the detailed procedures relating to the issuance of determination letters as to the qualification of employees' plans under sections 401 and 405 of the Code and to the exempt status of related trusts or custodial accounts, if any, under section 501(a). Rev. Proc. 72-8, 1972-1 C.B. 716 contains procedures relating to the issuance of opinion letters as to the acceptability of the form of master and prototype plans that do not include self-employed individuals.

.02 Rev. Proc. 72-6 was revised by Rev. Proc. 74-38, 1974-2 C.B. 492 to temporarily limit the issuance of determination letters thereunder to those plans that can qualify under the provisions of sections 401 and 405 of the Code, as in effect before the enactment of the Act. This limitation was necessary to enable the Service to develop guidelines for determining whether plans meet the provisions of the Act. At the same time, Rev. Proc. 74-40, 1974-2 C.B. 495, was issued to temporarily limit the issuance of opinion letters until those guidelines could be developed.

.03 Guidelines have now been developed for determining whether certain types of defined contribution plans meet the requirements of sections 401 and 405, as amended by the Act, thereby permitting publication of a Revenue Procedure authorizing the issuance of determination letters on those plans. The development of those guidelines also permits publication of this Revenue Procedure authorizing the issuance of opinion letters with respect to the acceptability as to form of certain master and prototype plans that do not include self-employed individuals. For purposes of this Revenue Procedure, the term "defined contribution" plan means a plan described in section 414(i) of the Code.

Sec. 3. Rulings and Opinion Letters

.01 Except for the plans described in subsection .02 below, the National Office of the Service, upon request, will furnish a written opinion as to the acceptability (for purposes of section 401 of the Code, as amended by the Act, and section 501(a)) of the form of any defined contribution, master or prototype plan that does not include self-employed individuals. If the form of plan includes a master trust or custodial account, a ruling will also be issued with respect to the exempt status of the trust or custodial account which forms part of the master plan.

.02 Subsection .01 above does not permit the issuance of opinion letters and rulings with respect to the following.

(1) A plan submitted by a sponsor other than a trade or professional association, a bank within the meaning of section 401(d)(1), an insurance company, or a regulated investment company.

(2) A plan which is the subject of a favorable written opinion issued by the National Office prior to the effective date of this Revenue Procedure pursuant to section 5.02 of Rev. Proc. 72-8.

(3) A money purchase pension plan (including a target benefit plan) that provides for excluding employees from participation on the basis of maximum age pursuant to section 410(a)(2) of the Code;

(4) A plan that includes a provision permitted under section 410(a)(5)(C) or section 411(a)(6)(B) with respect to the effect of a one-year break in service on the aggregation of years of service;

(5) A plan (including a target benefit plan) under which the test for prohibited discrimination under section 401(a)(4) is to be made by reference to benefits rather than contributions;

(6) A plan that permits the return of employer contributions for any reason other than because of the plan's initial failure to qualify or because of an excess remaining after its termination and the satisfaction of all plan liabilities;

(7) A plan that provides for forfeitures in the event of withdrawals of employee contributions or increments;

(8) A plan that permits any forfeiture of an employee's accrued benefit for cause; and

(9) A plan that permits the forfeiture of a terminated employee's nonvested interest prior to the time he has a break in service.

.03 In order to be entitled to a favorable opinion letter under this Revenue Procedure, the form of plan must conform to all requirements of the Internal Revenue Code in effect at the time the opinion letter is to be issued. However, opinion letters issued pursuant to this Revenue Procedure will not constitute an opinion whether the form of plan meets the requirements of the Act which are not applicable at the time the opinion letter is issued. Specifically, such opinion letters do not express opinions with respect to section 401(a)(11) of the Code, relating to plan provisions on qualified joint and survivor annuities, section 401(a)(12), relating to plan provisions on mergers, consolidations, etc. of plans, section 401(a)(13), relating to plan provisions restricting assignment or alienation of plan benefits, or section 415, relating to limitations on benefits and contributions under qualified plans.

.04 Plans with respect to which favorable opinion letters are issued pursuant to subsection .01 above may have to be amended subsequently to include or revise the provisions described in subsection .03 above. Such plans may also have to be amended if any provisions therein fail to meet the requirements of regulations adopted subsequent to the time the opinion letters are issued. Plans with respect to which favorable opinion, letters have been issued pursuant to this Revenue Procedure may be amended, without adverse affect, to meet the requirements of subsequently issued regulations.

Sec. 4. Determination Letters

.01 District Directors are authorized, to the same extent (and subject to the same limitations) provided in section 3 of Rev. Proc. 75-5, 1975-1 C.B. 645, to issue determination letters as to the qualification of a plan of a particular employer, if that employer has adopted a master or prototype plan that is approved by the National Office as to form.

.02 An employer requesting a determination letter authorized by this section must properly notify interested parties of the filing of the request in accordance with the provisions of regulations prescribed under section 7476(b)(2) of the Code and the instructions contained in Rev. Proc. 75-31, page 551, this Bulletin.

Sec. 5. Instructions To Sponsoring Organizations and Employers

.01 A sponsoring organization that desires a written opinion as to the acceptability of the form of a master or prototype plan (or as to the exempt status of a related trust or custodial account) should submit its request to the National Office of the Service in accordance with the provisions of section 6 of Rev. Proc. 72-8.

.02 Amendments to plans with respect to which favorable opinion letters have been issued under the authority of this Revenue Procedure will also be processed in accordance with provisions of section 7 of Rev. Proc. 72-8.

.03 A sponsoring organization requesting an opinion letter authorized by this Revenue Procedure shall submit a separate plan document for each type plan submitted (e.g. money purchase or profit-sharing plan). Each request shall be submitted on Form 4461, Approval of Master or Prototype Defined Contribution Plan, revised as of July 1975.

.04 Instead of the application required by sections 5.05, 7.05, and 7.06 of Rev. Proc. 72-8, an employer requesting a determination letter authorized by section 4.01 above shall file Form 5301, Application for Determination for Defined Contribution Plan, and Form 5302, Employee Census. Those forms are to be filed in accordance with the instructions therefor and accompanied by the schedules or additional material prescribed in those instructions.

Sec. 6. Effect on Other Documents

.01 Rev. Proc. 74-40 is hereby modified to permit the issuance of opinion letters on the acceptability as to form of master and prototype plans that do not include self-employed individuals, to the extent authorized by this Revenue Procedure.

.02 The general procedures of Rev. Proc. 72-8 continue to apply except to the extent they are inconsistent with this Revenue Procedure or with Rev. Proc. 74-40.

Sec. 7. Effective Date

This Revenue Procedure is effective September 19, 1975.

¹ Also released as TIR-1404, dated September 19, 1975.