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IRS Intends to Issue Opinion Letters for Pre-Approved Defined Contribution Plans for the Third Six-Year Remedial Amendment Cycle
Practical Law Legal Update w-025-8167 (Approx. 3 pages)
IRS Intends to Issue Opinion Letters for Pre-Approved Defined Contribution Plans for the Third Six-Year Remedial Amendment Cycle
by Practical Law Employee Benefits & Executive Compensation
| Published on 02 Jun 2020 • USA (National/Federal) |
In Announcement 2020-7, the Internal Revenue Service (IRS) announced that it intends to issue opinion letters for pre-approved defined contribution plans submitted for approval during the third six-year remedial amendment cycle. The Announcement also addressed the deadline for employers to adopt a newly approved plan and the opening of the determination letter program for eligible employers to submit applications for individual determination letters.
On June 1, 2020, in Announcement 2020-7, the IRS announced that it intends to issue opinion letters for pre-approved defined contribution plans that were:
- Restated for changes in plan qualification requirements listed in the 2017 Cumulative List (see Legal Update, IRS Revises Opinion Letter Procedures for Pre-Approved Plans in Revenue Procedure 2017-41 and Issues 2017 Cumulative List in Notice 2017-37).
- Filed with the IRS for the third six-year remedial amendment cycle under Rev. Proc. 2016-37 (see Legal Update, IRS Provides Determination Letter Guidance in Revenue Procedure 2016-37).
The IRS expects to issue the opinion letters on June 30, 2020, or in some cases, as soon as possible afterward.
Announcement 2020-7 also provides that:
- An adopting employer whose defined contribution plan is eligible for the six-year remedial amendment cycle that adopts a newly approved plan by July 31, 2022, will be considered to have adopted the plan within the third six-year remedial amendment cycle, ending on January 31, 2023.
- An employer adopting a pre-approved defined contribution plan may apply for an individual determination letter (if eligible) during the period beginning August 1, 2020, and ending July 31, 2022.
For more information on pre-approved plans, see Practice Note, Pre-Approved Plans: Design Choices, Tax-Qualification Rules, and Best Practices.