Rev. Proc. 77-23

Section 1. Purpose

This Revenue Procedure sets forth the procedures of the Internal Revenue Service for issuing notification and determination letters relating to certain qualified corporate-type defined contribution and defined benefit plans, and any related trusts or custodial accounts, 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. 1], approved September 2, 1974 (hereinafter referred to as the "Act"). It establishes a means whereby certain sponsors (as defined in section 3.01 below) of employee plans may submit such plans to Key District Directors listed in section 601.201(o)-4 of the Statement of Procedural Rules, 1975-2 C.B. 602, for approval as to form. Once a particular plan is approved, it is anticipated that it will be used as a field prototype plan on behalf of at least 10 adopting employers for each Region where the sponsor either maintains a principal place of business or office, or has clients. Service Regions are also listed in the same section of the Statement of Procedural Rules cited above.

Sec. 2. Background and General Information

.01 Rev. Proc. 77-22, this page, sets forth guidelines under which determination letters with respect to certain types of defined contribution and defined benefit plans will be issued to employers adopting corporate-type master or prototype plans or certain other types of plans.

.02 This Revenue Procedure establishes a program under which a sponsor of plans may obtain approval from Key District Directors of the form of a plan which the sponsor contemplates using as a field prototype plan in submitting determination letter requests on behalf of the sponsor's clients (i.e., adopting employers).

Sec. 3. Definitions

.01 The term "sponsor" means, for purposes of this procedure, a firm (other than a trade or professional association, bank, insurance company, or regulated investment company) that has at least 10 clients in each Region for which the sponsor requests a notification letter, as defined in subsection .02 below, with respect to a field prototype plan.

.02 "Notification letter" means the letter informing a sponsor that the plan is acceptable as to form and may be submitted on behalf of adopting employers.

.03 "Defined contribution plan" means a plan described in section 414(i) of the Internal Revenue Code, but for purposes of this procedure does not include plans which include self-employed individuals.

.04 "Defined benefit plan" means a plan described in section 414(j) of the Internal Revenue Code, but for purposes of this procedure does not include plans which include self-employed individuals.

.05 "Defined contribution field prototype plan" means a defined contribution plan for which a notification letter is issued pursuant to this procedure.

.06 "Defined benefit field prototype plan" means a defined benefit plan for which a notification letter is issued pursuant to this procedure.

Sec. 4. Notification Letters and Determination Letters

.01 A sponsor may receive separate notification letters for more than one defined contribution field prototype plan and defined benefit field prototype plan. However, a sponsor must submit a separate application for each field prototype plan. Also, different types of plans may not be combined in a single field prototype plan. For this purpose, unit benefit, fixed benefit, flat benefit, profit-sharing, stock bonus, money purchase, bond purchase, and employee stock ownership plans are each considered as a different type of plan.

.02 A favorable notification letter issued with respect to an approved field prototype plan will be generally honored in all district offices located within the Region where the Key District Director who issued the notification letter is located. In limited circumstances, recognition of a notification letter may be extended beyond Regional boundaries where such action is determined to be in the best interest of the Internal Revenue Service.

.03 Key District Directors will issue determination letters to adopting employers on plans submitted under this procedure pursuant to the provisions of Rev. Proc. 77-22.

Sec. 5. Instructions to Sponsors and Adopting Employers

.01 A sponsor requesting a notification letter may submit its request, whether or not accompanied by an adopting employer's request for a determination letter. In the case of a defined contribution plan, the sponsor must file Form 4461 (Rev. June 1977), Application for Approval of Master or Prototype Defined Contribution Plan. In the case of a defined benefit plan, the sponsor must file Form 4461-A (Rev. June 1977), Application for Approval of Master or Prototype Defined Benefit Plan. Such request must include an unexecuted copy of the plan and the trust or custodial account (omitting therefrom the identity of the sponsor, trustee or custodian).

.02 A sponsor's request for a notification letter must be accompanied by a covering letter requesting application of this procedure and containing the representation that the sponsor can reasonably expect the submitted field prototype plan to be adopted by at least 10 clients of the sponsor for each Region within which the sponsor submits a request for a notification letter. If a sponsor has offices located in more than one Region and has at least 10 clients within each Region where the sponsor has an office, separate requests for a notification letter shall be submitted to the appropriate Key District office within each Region. Each request for a notification letter must indicate any other Key District Offices to which requests for notification letters have been or will be submitted. A sponsor's request for a notification letter should be submitted as follows:

(1) If a sponsor has a principal place of business within a Region where such sponsor desires to request a notification letter, such request shall be submitted to the Key District Director having jurisdiction over the district in which the sponsor's principal place of business is located.

(2) If a sponsor has no principal place of business within the Region for which the sponsor is seeking a notification letter but maintains an office or offices within the jurisdiction of such Region, the sponsor's request for a notification letter shall be submitted to the Key District Director having jurisdiction over a district in which any of the sponsor's offices is located.

(3) If a sponsor maintains no principal place of business or office within the Region for which the sponsor is seeking a notification letter but has 10 or more clients with a principal place of business located in such Region, the sponsor's request for a notification letter shall be submitted to the Key District Director for any district in which the sponsor has clients located.

.03 A request for a notification letter, under the procedure contained in section 5.01 above, may include a plan containing elections in certain areas listed in section 5.04. All desired options and language related thereto with regard to the elective areas must be set forth in a separate document (adoption agreement) which must accompany the request for a notification letter.

.04 Elections by adopting employers will be permitted in the following areas:

(1) Provisions which, by necessity, must vary among adopting employers, such as the effective date, plan year, and names of fiduciaries;

(2) Age and number of years of service required for participation;

(3) Job classification if any required as a condition of participation in the plan;

(4) Vesting schedule;

(5) Benefit formula;

(6) Contribution and/or allocation formula;

(7) Provisions permitting voluntary employee contributions and the maximum rate of such contributions, if any;

(8) Provisions to conform to section 415 of the Code; and

(9) Method of computing years of service.

.05 Requests for determination letters by employers who adopt a sponsor's field prototype plan shall be submitted to the District Director for the district in which the employer's principal place of business is located. Such submissions shall be made on Form 5307, in accordance with Rev. Proc. 77-22. Form 5307 shall be completed by including therein the name of the sponsor's field prototype plan and the plan number assigned by the Service to such plan. Such submissions must include a copy of the notification letter sent to the sponsor and must be accompanied by a certification that the notification letter has not been withdrawn and is still in effect with respect to the plan being submitted, and that such plan has not been changed in any way. The submission must include an adoption agreement which details the options selected with regard to the elective areas contained in the field prototype plan.

.06 The issuance of a notification letter does not imply that employers who may adopt the field prototype plan have a qualified plan. Adopting employers desiring a favorable determination letter with respect to such plan should file a request in accordance with applicable regulations and procedures. With respect to an application for a determination letter on behalf of an adopting employer, the procedures set forth in Rev. Proc. 77-22 apply.

.07 Notification letters will not be issued with respect to plans which contain provisions that are susceptible of resulting in prohibited discrimination.

Sec. 6. Remedial Amendment Period

In the case of an employer who has adopted a field prototype plan, the remedial amendment period of section 401(b) of the Code that began on or after September 2, 1974, shall not end prior to the last day of the month that is six months after the month in which:

(A) The notification letter with respect to the request of the sponsor is issued by the Internal Revenue Service;

(B) Such request is withdrawn, or

(C) Such request is otherwise disposed of by the Internal Revenue Service.

This section applies only if the sponsor of such field prototype plan has, on or before December 31, 1977, filed a request for a notification letter with respect to the plan and the employer adopts a field prototype plan and requests a determination letter within the remedial amendment period (see section 1.401(b)-1 of the Income Tax Regulations).

Sec. 7. Effect on Other Documents

Rev. Proc. 77-22 is amplified.

Sec. 8. Effective Date

This Revenue Procedure is effective June 24, 1977.

¹ Also released as News Release IR-1845, dated June 24, 1977.