IRS Relaxes Restrictions On Issuance Of Opinion And Advisory Letters For New Preapproved Plans.

Part III

This revenue procedure modifies Rev. Proc. 2007-44, 2007-28 I.R.B. 54 with respect to certain restrictions that apply to the issuance of opinion and advisory letters for new pre-approved plans. These restrictions were included in Rev. Proc. 2007-44 primarily to ensure that the use of Service resources to administer the pre-approved plan program does not adversely affect the determination letter program. After further evaluation and consideration of comments from pre-approved plan sponsors, the Service is relaxing these restrictions. In general, the changes in this revenue procedure apply only to plans that are identical to mass submitter plans. Since the plans affected by the changes have, in effect, already been reviewed and approved, the Service is able to make the changes without reducing resources needed for the determination letter program.

SECTION 2. BACKGROUND

.01 Rev. Proc. 2007-44 provides a system of cyclical remedial amendment periods under § 401(b) of the Internal Revenue Code for amending plans qualified under § 401(a) and obtaining determination letters. Under this system, every pre-approved plan (that is, a master and prototype (M&P) or volume submitter (VS) plan) must be submitted to the Service for a new opinion or advisory letter every six years, during the one-year submission period at the beginning of the plan's six-year cycle. Pre-approved defined contribution plans have a different six-year cycle than pre-approved defined benefit plans. The cycles and submission periods are set forth in section 18 of Rev. Proc. 2007-44.

.02 After the Service issues a new opinion or advisory letter, the pre-approved plan's adopting employers must adopt the newly approved restatement of the plan within the adoption period announced by the Service. An eligible employer that adopts the restated pre-approved plan within the adoption period will have adopted the plan within the employer's six-year remedial amendment cycle. In Announcement 2008-23, 2008-14 I.R.B. 731, the Service announced that the adoption period for pre-approved defined contribution plans that have received opinion or advisory letters under the Economic Growth and Tax Relief Reconciliation Act of 2001, Pub. L. 107-16, ("EGTRRA") will end on April 30, 2010.

.03 Certain exceptions to the preceding rules apply to new pre-approved plans. A new pre-approved plan is one that is created after the submission period for the applicable six-year cycle. An application for an opinion or advisory letter for a new pre-approved plan that is submitted outside of the submission period within an applicable six-year cycle is filed "off-cycle." Section 20 of Rev. Proc. 2007-44 provides the following exceptions to the rules described in sections 2.01 and 2.02, above:

.04 Rev. Proc. 2005-16, 2005-1 C.B. 674, which contains the Service's procedures for the issuance of opinion and advisory letters, contains rules applicable to "mass submitter" plans, that is, pre-approved plans that are submitted to the Service on a word-for-word identical basis by a minimum number of sponsoring organizations or practitioners.

SECTION 3. MODIFICATION OF REV. PROC. 2007-44

.01 Rev. Proc. 2007-44 is modified to provide the following:

SECTION 4. EFFECT ON OTHER DOCUMENTS

Rev. Proc. 2007-44 is modified.

SECTION 5. EFFECTIVE DATE

The modification in this revenue procedure will be treated as in effect as of the effective date of Rev. Proc. 2007-44, June 13, 2007.

DRAFTING INFORMATION

The principal author of this revenue procedure is James P. Flannery of the Employee Plans, Tax Exempt and Government Entities Division. For further information regarding this revenue procedure, please contact Mr. Flannery via e-mail at RetirementPlanQuestions@irs.gov.