Rev. Proc. 69-24

Section 1. Purpose.

This Revenue Procedure modifies Revenue Procedure 69-5, C.B. 1969-1, 395, to limit the extent to which District Directors will issue determination letters (1) on pension and profit-sharing plans that include self-employed individuals, under section 401 of the Internal Revenue Code of 1954, as amended by Public Law 87-792, C.B. 1962-3, 89, and (2) on the status for exemption from Federal income tax of related trusts and custodial accounts under section 501(a) of the Code.

Sec. 2. Background and General Information.

.01 Public Law 87-792, the Self-Employed Individuals Tax Retirement Act of 1962, effective for taxable years beginning after December 31, 1962, provides certain tax benefits in connection with pension, profit-sharing, and bond purchase plans that include self-employed individuals and that meet the applicable requirements of section 401 or 405(a) of the Code. A related trust or custodial account, if any, is exempt from taxation as provided in section 501(a) of the Code.

.02 A determination letter as to the qualification of a pension, profit-sharing, or bond purchase plan, and the exempt status of any related trust is not required as a condition for obtaining the tax benefits pertaining to the plan or trust. However, section 3.03 of Revenue Procedure 69-5, authorizes District Directors of Internal Revenue to issue determination letters, upon request, as to the qualification of individually designed plans. Also, under these procedures an employer adopting a master or prototype plan previously approved as to form and requesting a determination has been required to file 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. If the request involved a bond purchase plan, the requirement has been for proper completion of only Parts I and III of Form 3673, which constituted a bond purchase plan.

.03 Adopting the procedures for prior approval of the forms of master and prototype plan arrangements was prompted by the substantial number of self-employed individuals who were expected to, and in fact did, avail themselves of the tax benefits provided by P.L. 87-792.

.04 An analysis of the pension and profit-sharing activities with respect to the use of Form 3673 indicates that there is no necessity of separate approval of each employer's application.

Sec. 3. Determination Letters.

.01 District Directors will no longer make advance determinations regarding plans of employers who adopt a master or prototype plan, or any related prototype trust or custodial account, previously approved as to form. Accordingly, the use of Form 3673 is discontinued.

.02 District Directors will continue to make determinations, upon request, of self-employed individuals who adopt a bond purchase plan. A new application, Form 4578, Application for Approval of Bond Purchase Plan, will be used for this purpose.

.03 District Directors will also continue to issue determination letters, upon request, as to the qualification of individually designed plans under the general procedures of Revenue Procedure 69-4, C.B. 1969-1, 391.

Sec. 4. Status of Plan and Related Trust or Custodial Account.

Where an employer adopts a master or prototype plan and any related prototype trust or custodial account previously approved as to form, and observes the provisions thereof, such plan and trust or custodial account will be deemed to satisfy the requirements of sections 401 and 501(a) of the Code, provided the eligibility requirements and contributions or benefits under the plan for owner-employees are not more favorable than for other employees, including those required to be covered under plans of all businesses controlled by such owner-employees.

Sec. 5. Effect of Other Documents.

Revenue Procedure 69-5 is hereby modified to provide that District Directors will no longer make advance determinations regarding plans of employers who adopt a master or prototype plan, or related prototype trust or custodial account, previously approved as to form.

Sec. 6. Effective Date. This Revenue Procedure is effective November 3, 1969, the date of its publication in the Internal Revenue Bulletin. However, Forms 3673 received on or before this date will be processed under prior procedures.