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CCH® PENSION — 10/19/11

IRS updates procedures for requesting opinion and advisory letters for M&P and VS plans

The IRS has updated the procedures for requesting opinion and advisory letters on the acceptability of the form of master and prototype (M&P) and volume submitter (VS) plans. Rev. Proc. 2005-16 has been modified and superseded. The updated procedures are effective October 31, 2011.

The IRS has made many changes to the procedures, including minor revisions and clarifying language. In addition, the purpose and background sections of the procedures have been updated to summarize the second six-year remedial amendment cycle for pre-approved defined contribution and defined benefit plans. In the purpose section, the IRS notes that it began accepting applications for pre-approved defined contribution plans February 1, 2011. The second six-year remedial amendment cycle for pre-approved defined contribution plans ends January 31, 2017.

As provided in Section 18.02(1) of Rev. Proc. 2007-44), the 12-month applicable on-cycle submission period for non-mass submitter sponsors and practitioners, word-for-word identical adopters, and M&P minor modifier placeholder applications will end on January 31, 2012, and the nine-month applicable on-cycle submission period for sponsors and practitioners maintaining defined contribution mass submitter plans will end on October 31, 2011. The IRS has extended the submission deadline to submit applications for opinion and advisory letters for defined contribution mass submitter plans from October 31, 2011 to January 31, 2012. The 2010 Cumulative List of Changes in Plan Qualification Requirements, Notice 2010-90, is to be used by plan sponsors and practitioners submitting determination, opinion or advisory letter applications for plans during this period.

Changes for all pre-approved plans

The IRS made the following changes that are applicable to all pre-approved plans:

• The procedures are modified to: (a) clarify the types of employer modifications and amendments to a plan that will not cause the plan to fail to be identical to an approved M&P or VS plan; (b) provide that an employer or sponsor may adopt interim or discretionary amendments for which the remedial amendment cycle ends later than the remedial amendment cycle to which the opinion or advisory letter applies; (c) provide that an employer may adopt model or sample amendments that the IRS has indicated will not cause the plan to be treated as an individually designed plan; and (d) delete provisions under Rev. Proc. 2005-16 that provided that the employer could modify or amend the plan to correct typographical errors and/or cross references.
• The procedures are modified to clarify that plans must be amended to comply with statutory and regulatory changes pursuant to Rev. Proc. 2007-44 and to clarify that the amendments do not change the applicable on-cycle submission period for the six-year cycle during which sponsors or practitioners must request opinion or advisory letters. In addition, interim amendments adopted by a pre-approved sponsor or practitioner on behalf of adopting employers must be provided to the adopting employers, and the date of the adoption must be provided with the amendments. The IRS may in its discretion request copies of interim amendments that the sponsor or practitioner has adopted on behalf of all adopting employers.
• The address to which applications for opinion and advisory letters should be submitted is updated.
• The procedures are modified to clarify the circumstances under which an opinion or advisory letter is nontransferable to another entity.
• Rules for submitting word-for-word identical plans and off-cycle filings have been clarified and updated.
• Reasons for which an advisory or opinion letter may be revoked are clarified.
• The procedures are clarified to provide that a M&P mass submitter or a VS mass submitter may be counted as one of the 30 unaffiliated sponsors for purposes of determining whether their sponsorship requirements are met without needing to submit a separate opinion or advisory letter application (Form 4461-B) on behalf of the mass submitter.
• The list of areas not covered by opinion letters for M&P plan and advisory letters for VS plans are expanded to include hybrid plans, plans with Code Sec. 401(h) accounts, and DB/K plans under Code Sec. 414(x).
• The procedures for requesting opinion letters for M&P plans and advisory letters for VS plans are revised to refer to the applicable Form 4461, Form 4461-A, Form 4461-B, and Form 8717, to specify what to include until these forms are revised, and to require that the sponsor's (M&P plans) or the practitioner's and mass submitter's (VS plans) certification regarding interim amendments be submitted as part of the application.

M&P pre-approved plan program changes

Changes to the M&P plan program include the following:

• The effect of employer amendments on pre-approved plan status is clarified.
• Opinion letters for multiple employer plans have been deleted from the list of areas not covered by opinion letters and, thus, will now be issued.
• The description of the six-year remedial amendment cycle and other amendment requirements are updated to conform to the interim amendment requirements (including deleting former section 8.03 regarding a special one-year rule to amend following the issuance of a revenue ruling or other guidance).
• Provisions are added to clarify that a pre-approved M&P plan becomes an individually designed plan if a request for an opinion letter is withdrawn, unless the employer adopts another pre-approved plan.
• Provisions are added to clarify that an M&P mass submitter amending its plan should submit a restated plan during the applicable on-cycle submission period for the next six-year cycle, rather than submitting the amendments between submission periods, and to state that the M&P mass submitter must provide copies of the amendments to sponsors who have adopted the plan.
• The National Sponsor category is deleted.

VS pre-approved plan program changes

The following changes have been made to the VS plan program:

• Language is added to clarify that each adoption agreement counts as one specimen plan for purposes of the 30-employer requirement (or 10, if applicable).
• The provisions required for VS plans with an adoption agreement format are specified.
• A rule is removed under which a VS practitioner's authority to amend on behalf of an adopting employer is conditioned on the plan being covered by a favorable determination letter (if the employer is required to obtain a determination letter in order to have reliance), and other provisions concerning the practitioner's authority to amend on behalf of an adopting employer are clarified.
• The procedures are clarified to provide that the responsibilities of a VS practitioner apply to VS practitioners generally, not just those practitioners authorized to adopt plan amendments on behalf of employers.
• The procedures for requesting advisory letters for VS plans are revised to clarify when separate specimen plans and applications are required for different categories of plans and to specify that a governmental plan (i.e., a plan described in Code Sec. 414(d)) is one of the categories of plans that requires a separate specimen plan.

Source: IRS Rev. Proc. 2011-49.

For more information, visit http://www.wolterskluwerlb.com/rbcs.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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