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IRS Intends to Issue Opinion and Advisory Letters for Pre-Approved Defined Benefit Plans for the Second Six-Year Remedial Amendment Cycle
Practical Law Legal Update w-013-6211 (Approx. 4 pages)
IRS Intends to Issue Opinion and Advisory Letters for Pre-Approved Defined Benefit Plans for the Second Six-Year Remedial Amendment Cycle
by Practical Law Employee Benefits & Executive Compensation
| Published on 12 Mar 2018 • USA (National/Federal) |
On March 9, 2018, in Announcement 2018-05, the Internal Revenue Service (IRS) announced that it intends to issue opinion and advisory letters for pre-approved defined benefit plans for the second six-year remedial amendment cycle. The Announcement also discusses an extension of the deadline to adopt certain pre-approved defined benefit plans. The IRS announced the opening of the determination letter program for certain pre-approved defined benefit plans.
On March 9, 2018, in Announcement 2018-05, the IRS announced:
- That it intends to issue opinion and advisory letters for pre-approved master and prototype (M&P) and volume submitter (VS) defined benefit plans that were restated for changes in plan qualification requirements listed in Notice 2012-76 and filed with the IRS for the second six-year remedial amendment cycle (see Legal Update, IRS Releases 2012 Cumulative List of Changes in Plan Qualification Requirements). The IRS expects to issue opinion and advisory letters on March 30, 2018, or in some cases, as soon as possible afterward. Revenue Procedure 2016-37 (Rev. Proc. 2016-37) provides that:
- every pre-approved plan has a regular, six-year remedial amendment cycle; and
- M&P sponsors and VS practitioners, as defined in Rev. Proc. 2015-36, may apply for new opinion or advisory letters once every six years.
- An extension of the deadline to adopt certain pre-approved defined benefit plans. The Announcement extends the end of the pre-approved defined benefit plan's remedial amendment cycle with respect to changes included in the 2012 Cumulative List from January 31, 2019 (as provided in Rev. Proc. 2016-37) to April 30, 2020. An employer with a defined benefit plan that is eligible for the six-year remedial amendment cycle under Rev. Proc. 2016-37 that adopts an approved M&P or VS plan by April 30, 2020 will be considered to have adopted the plan within the second six-year remedial amendment cycle. Under Section 14.03 of Rev. Proc. 2016-37, the IRS publishes an announcement providing the date by which adopting employers must adopt newly approved plans. This deadline:
- is announced when the review process for a cycle of pre-approved plans has neared completion; and
- provides adopting employers approximately two years to adopt plans and, if eligible, to apply for an individual determination letter (see Retirement Plan Determination Letters Toolkit).
- The opening of the determination letter program for certain pre-approved defined benefit plans. An adopting employer of an M&P or VS plan may apply for an individual determination letter (if eligible) during the period beginning May 1, 2018, and ending April 30, 2020.
- That it intends to announce in future guidance a delayed beginning date for the third six-year remedial amendment cycle. Under Section 16.01 of Rev. Proc. 2016-37, the third remedial cycle is supposed to begin on February 1, 2019.