Rev. Proc. 69-5

Section 1. Purpose

The purpose of this Revenue Procedure is to describe the general procedures of the Internal Revenue Service for issuing determination and opinion letters relating to the qualification of pension and profit-sharing plans that 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 and custodial accounts 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 and profit-sharing plans, that include self-employed individuals, and that meet the applicable requirements of section 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.

Sec. 3. Determination Letters and Opinion Letters

.01 A determination letter as to the qualification of a pension or profit-sharing 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 69-1, page 381, this Bulletin, 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, Revenue Procedure 69-1 is equally applicable to plans and trusts that include self-employed individuals.

.02 District Directors 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 sponsor that is a trade or professional association, bank, insurance company, or regulated investment company as defined in section 851 of the Code. A determination as to the exempt status of a trust or custodial account forming part of a master or prototype plan will be made at the time of approval of the plan as to form, if the trustee or custodian is designated. 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 the sponsoring organization 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, that 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 that 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 Service 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 or custodial account. District Directors will issue determination letters, upon request, as to the qualification of individually designed plans and plans of employers who adopt previously approved master or prototype forms of plans. At the same time a determination will be made as to the exempt status of a related trust or custodial account where the funding organization is not specified by the sponsor.

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. 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 a bond purchase plan.

Sec. 5. Instructions to Sponsoring Organizations and Employers

.01 A sponsoring organization referred to in section 3.02 above, 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) should submit its request to the District Director in the district where the sponsoring organization maintains its principal place of business. Copies of all documents consisting of plan and trust instruments (including all amendments thereto) together with specimen insurance contracts (where applicable) shall be submitted with the request. Form 3672. Application for Approval of Master or Prototype Plan for Self-Employed Individuals, is to be used for this purpose.

.02 Subsequent to obtaining approval of the form of a master or prototype plan, a sponsoring organization may wish to amend such plan on behalf of all employers or only for future employers who may adopt the plan. Whether a sponsoring organization may effect such an amendment depends on the plan's administrative provisions.

1 If provision is made in the plan that each employer has delegated to the sponsor the power to amend the plan and that each employer shall be deemed to have consented thereto, the plan may be amended by the sponsor. If the plan contains no specific provision permitting the sponsor to amend such plan, but all employers consent in writing to permit such amendment, the sponsor may then amend the plan. However, where a sponsor is unable to secure the consent of each employer, the plan cannot be amended. In such cases any change will have to be effected by the adoption of a new plan, together with a new Form 3672. The new plan will be complete and separate from the old plan, and individual employers may, if they desire, substitute the new plan for the old plan.

2 In the first two instances mentioned above, where the plan has been properly amended, the sponsor shall submit, in lieu of Form 3672, a copy of the amendment and, if required, copies of the signed consent of each participating employer.

3 Upon approval of the amendment by the Service, an opinion letter will be issued to the sponsor containing the serial number of the original plan, followed by a Suffix: "A-1" for the first amendment, "A-2" for the second amendment, etc. Employers adopting the form of plan subsequent to the date of the amendment will use the revised serial number.

4 If a new plan is submitted, together with Form 3672 and copies of all documents evidencing the plan, an opinion letter bearing a new serial number will be issued to the sponsor and all employers who adopt the new plan shall use the new serial number. Employers who adopted the old plan will continue to use the original serial number. However, an employer who wishes to change to the new plan may do so by filing an amended Form 3673 with his District Director indicating the change.

.03 If a request submitted by an employer relates to the initial qualification, amendment, curtailment or termination of a plan that includes self-employed individuals and that does not utilize a master or prototype plan or trust, the general procedures for obtaining advance determinations as provided in Revenue Procedure 69-4, page 391, this Bulletin, will apply. In such cases, the employer must submit to the District Director all the information that is required by section 4 of Revenue Procedure 69-4 and that relates to plan provisions and coverage.

.04 An employer who desires an advance determination as to the status for qualification of a plan that utilizes a master or prototype form that has previously received a favorable opinion letter as to compliance with sections 401(a) or 501(a) of the Code, must file Form 3673, in duplicate, with his District Director. Similarly, an employer who desires a determination as to the status of a bond purchase plan under section 405(a), must file Form 3673. Information called for by section 4.02 of Revenue Procedure 69-4, however, is not required.

Sec. 6. Selected Districts in Regions To Issue Opinion Letters

Regional Commissioners of Internal Revenue have been authorized to select certain District Directors to issue opinion letters referred to in section 3, above, for other districts in their region. Sponsors of master and prototype plans will be notified by the District Director with whom the application is filed if such application has been transferred to another district for processing.

Sec. 7. Effect on Other Documents

The general procedures of Revenue Procedures 69-1 and 69-4 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, to the extent that the matter is not covered by the specific procedures and instructions contained in this Revenue Procedure. Revenue Procedure 64-30, C.B. 1964-2, 944, is superseded.

Sec. 8. Effective Date

This Revenue Procedure is effective on January 6, 1969, the date of its publication in the Internal Revenue Bulletin.