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IRS Announcement 2022-6 Pauses Opinion Letter Program for Certain IRAs and SEPs
Practical Law Legal Update w-034-8303 (Approx. 4 pages)
IRS Announcement 2022-6 Pauses Opinion Letter Program for Certain IRAs and SEPs
by Practical Law Employee Benefits & Executive Compensation
| Published on 16 Mar 2022 • USA (National/Federal) |
In Announcement 2022-6, the Internal Revenue Service (IRS) announced that until further notice is provided, it will not accept opinion letters applications for prototype individual retirement accounts (IRAs) (including traditional, Roth and Savings Incentive Match Plan for Employees IRAs (SIMPLE IRAs)), simplified employee pensions (SEPs) (including salary reduction SEPs (SARSEPs)), and SIMPLE IRA plans.
On March 15, 2022, the IRS issued Announcement 2022-6, which provides that until further notice is provided, the IRS will no longer accept applications for opinion letters on:
- Prototype individual retirement accounts (IRAs) (including traditional, Roth, and Savings Incentive Match Plan for Employees IRAs (SIMPLE IRAs)).
- Simplified employee pensions (SEPs) (including salary reduction SEPs (SARSEPs)).
- SIMPLE IRA plans.
The Announcement also provides that, pending future guidance:
- Adopters of prototype IRAs, SEPs, and SIMPLE IRA plans may rely on a previously received favorable opinion letter, and sponsors of prototype IRAs, SEPs, and SIMPLE IRA plans may amend their plan documents to reflect recent legislation without affecting that reliance.
- The IRS will not accept opinion letter applications from prototype IRA, SEP, or SIMPLE IRA plan sponsors, and will return to the applicant any application submitted.
Model Forms
Announcement 2022-6 states that taxpayers may use the following model forms if they want to use a pre-approved document to establish or maintain an IRA, SEP, or SIMPLE IRA plan without using a prototype document:
- Form 5305, Traditional Individual Retirement Trust Account.
- Form 5305-A, Traditional Individual Retirement Custodial Account.
- Form 5305-R, Roth Individual Retirement Trust Account.
- Form 5305-RA, Roth Individual Retirement Custodial Account.
- Form 5305-RB, Roth Individual Retirement Annuity Endorsement.
- Form 5305-S, SIMPLE Individual Retirement Trust Account.
- Form 5305-SA, SIMPLE Individual Retirement Custodial Account.
- Form 5304-SIMPLE, Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) - Not for Use With a Designated Financial Institution.
- Form 5305-SIMPLE, Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) - for Use With a Designated Financial Institution.
- Form 5305-SEP, Simplified Employee Pension - Individual Retirement Accounts Contribution Agreement.
- Form 5305A-SEP, Salary Reduction Simplified Employee Pension - Individual Retirement Accounts Contribution Agreement.
Future Guidance
According to Announcement 2022-6, the opinion letter program for prototype IRAs, SEPs, and SIMPLE IRA plans is suspended temporarily.
Until now, Rev. Proc. 2010-48 provided the procedures for submitting an opinion letter request to the IRS for a prototype IRA, SEP, or SIMPLE IRA plan document. The IRS intends to issue a new revenue procedure to replace Rev. Proc. 2010-48. The new guidance will reflect recent legislation, including the SECURE Act.
The IRS intends to issue revised model forms and Listings of Required Modifications (LRMs) with respect to IRAs, SEPs, and SIMPLE IRA plans. LRMs provide sample language that the IRS finds acceptable for prototype IRAs, SEPs, and SIMPLE IRA plans.
The IRS will announce:
- When applications may be submitted under the new opinion letter program for prototype IRAs, SEPs, and SIMPLE IRA plans.
- When the revised model forms must be used.
Practical Implications
Announcement 2022-6 is effective as of March 14, 2022. Sponsors of prototype IRAs, SEPs, SARSEPs, and SIMPLE IRA plans should be aware that they cannot request opinion letters from the IRS until the IRS indicates otherwise, and instead they may:
- Rely on a previously received favorable opinion letter from the IRS.
- Amend their plan documents to reflect recent legislation.
- Rely on IRS model documents if they want to use a pre-approved document to establish or maintain an IRA, SEP, or SIMPLE IRA plan without using a prototype document.
To learn more about SEPs, SARSEPs, and SIMPLE IRAs, see: