Rev. Proc. 63-23

SECTION 1. PURPOSE.

The purpose of this Revenue Procedure is to describe the general procedures of the various offices of the Internal Revenue Service for issuing determination letters relating to the initial qualification of pension, annuity, profit-sharing, and bond purchase plans which cover self-employed individuals, under sections 401(a) and 405(a) of the Internal Revenue Code of 1954, as amended and added by Public Law 87-792, C.B. 1962-3, 89, and for issuing determination letters relating to the status for exemption of related trusts under section 501(a) of the Code.

SEC. 2. BACKGROUND AND GENERAL INFORMATION.

Public Law 87-792, the Self-Employed Individuals Tax Retirement Act of 1962, effective for taxable years beginning after December 31, 1962, accords certain tax benefits in connection with pension, annuity, profit-sharing, or bond purchase plans, which include self-employed individuals, and which meet the applicable requirements of sections 401(a) or 405(a) of the Code. A trust forming a part of such a plan is exempt from taxation as provided in section 501(a) of the Code. A custodial account described in section 401(f) of the Code is treated as a qualified trust for all purposes of the Code. A plan may also be funded with insurance company contracts (see section 403 of the Code) and face amount certificates (see section 401(g) of the Code).

SEC. 3. DETERMINATION LETTERS AND LETTERS OF OPINION.

.01 A determination letter as to the initial qualification of a pension, annuity, profit-sharing, or bond purchase plan, and the exempt status of a related trust or custodial account, if any, is not required as a condition for obtaining the tax benefits pertaining to the plan or trust. However, section 4.05 of Revenue Procedure 62-28, C.B. 1962-2, 496, permits District Directors of Internal Revenue to issue determination letters relating to the qualification of plans and as to the exempt status of related trusts. While originally applicable to plans and trusts covering only common law employees, that procedure is equally applicable to plans and trusts which include self-employed individuals.

.02 The National Office will, upon request, furnish a written opinion as to the acceptability (for the purposes of sections 401(a), 405(a), or 501(a) of the Code) of the form of any master or prototype plan designed to include groups of self-employed individuals who may adopt the plan, where the plan is submitted by a trade or professional association, bank, insurance company, or regulated investment company. As used here, the term "master plan" refers to a standardized form of plan, with a related form of trust (or custodial) agreement, where indicated, administered by a bank or insurance company each acting as the funding medium for the purpose of providing plan benefits on a standardized basis. The term "prototype plan" refers to a standardized form of plan, with or without a related form of trust (or custodial) agreement, which is made available by the sponsoring organization, for use without change by employers who wish to adopt such a plan, and which will not be administered by the sponsoring organization which makes such form available. The degree of relationship among the separate employers adopting either a "master plan" or a "prototype plan" or to the sponsoring organization is immaterial.

.03 Since a determination as to the qualification of a particular employer's plan can be made only with regard to facts peculiar to such employer, a letter expressing the opinion of the National Office as to the acceptability of the form of a master or prototype plan will not constitute a ruling or determination as to the qualification of a plan as adopted by any individual employer nor as to the exempt status of a related trust. A determination as to the qualification of a plan including self-employed individuals (as distinguished from approval of the form) will be made by the appropriate District Director of Internal Revenue, regardless of whether the plan or trust uses a master or prototype form. A determination as to the exempt status of a trust forming part of a master or prototype plan will be made by the National Office at the time of approval of the plan and trust as to form. Where the trust is not a part of a master or prototype plan, the exemption determination will be made by the appropriate District Director.

SEC. 4. DETERMINATION LETTERS AS TO QUALIFIED BOND PURCHASE PLANS.

A determination as to the qualification of a bond purchase plan will, upon request, be made by the appropriate District Director. Internal Revenue Service Form 3673, Application for Approval of Self-Employed Pension or Profit-Sharing Plan as Part of a Master or Prototype Form or any Bond Purchase Plan, shall be used for this purpose. Parts I and III of the form, when properly completed, will constitute an acceptable bond purchase plan.

SEC. 5. INSTRUCTIONS TO SPONSORING ORGANIZATIONS.

0.1 An organization referred to in the first sentence of section 3.02 above, which desires a written opinion from the National Office as to the acceptability of the form of a master or prototype plan (or as to the exempt status of a related trust) should submit its request to the National Office. Copies of all documents consisting of plan and trust instruments (including all amendments thereto) together with specimen insurance contracts (where applicable) shall be attached to the request. The request shall be submitted to the Commissioner of Internal Revenue, Washington, D.C., 20224, Attention: T:R:P. Internal Revenue Service Form 3672, Application for Approval of Master of Prototype Plan for Self-Employed Individuals, is to be used for this purpose.

.02 If a request submitted by an employer relates to the initial qualification of a plan which includes self-employed individuals and which does not utilize a master or prototype plan or trust, the general procedures for obtaining advance determinations as provided in Revenue Procedure 62-31, C.B. 1962-2, 517, will apply. In such cases, the employer must submit all of the information which is required by section 4.02 of Revenue Procedure 62-31 and which relates to plan provisions and coverage to the appropriate District Director.

.03 If an employer submits a request for a determination as to the status for qualification of a plan which utilizes a master or prototype form which had previously received a favorable opinion from the National Office as to conformance with sections 401(a), 405(a), or 501(a) of the Code, he must file Internal Revenue Service Form 3673. He is not required, however, to file separately the information required by section 4.02 of Revenue Procedure 62-31.

.04 The requests referred to in either of the two preceding paragraphs must be submitted to the District Director of Internal Revenue for the district in which the employer's principal place of business is located. Further information may be required when deemed necessary by the District Director.

SEC. 6. EFFECT ON OTHER DOCUMENTS.

The general procedures of Revenue Procedures 62-28 and 62-31 relating to the issuance of rulings and determination letters, are applicable to requests relating to the qualification of plans covering self-employed individuals under sections 401(a) and 405(a) and the status of related trusts under section 501(a) of the Code, as amplified by the specific procedures and instructions contained in this Revenue Procedure.

SEC. 7. EFFECTIVE DATE.

This Revenue Procedure shall become effective on October 14, 1963, the date of publication in the Internal Revenue Bulletin.