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Retirement Plans Determination Letter Program

Note - Any federal tax advice contained in this transcript is intended to apply to the specific situation described and should not be considered official guidance independent of the presentation. The tax advice and statements contained herein should not be relied upon for retirement planning purposes without first consulting a tax or retirement planning professional. This transcript has been edited for technical accuracy and may differ slightly from the audio recording of the Retirement Plans Determination Letter Program phone forum. This information is current as of March 31, 2010. Since changes may have occurred, no guarantees are made concerning the technical accuracy after that date.


Welcome to the Retirement Plans Determination Letter Program phone forum.  At this time, all participants are in a listen-only mode.  Later we will conduct a question and answer session.  Instructions will be given at that time.  As a reminder, today’s conference is being recorded.  I would now like to turn the conference over to your host, Mr. John Schmidt.  Please go ahead, sir.

J. Schmidt

Thanks, Peter.  Hello, everyone.  I’m John Schmidt, the staff assistant, Customer Education & Outreach for Employee Plans at the IRS.  Thank you all for dialing into our phone forum on Retirement Plans Determination Letter Program.  Please be advised that the following program, including questions and answers, will be recorded and maintained in accordance with federal record keeping laws.  This recording is a work of the U.S. government and is in the public domain.  A transcript and/or audio recording of this program may be made publicly available on our Web site

Today we’ll be hearing from Andrew Zuckerman, Director Employee Plans, Rulings & Agreements.  He is responsible for all qualified retirement plans, rulings, and guidance in both field and headquarters environments.  We’ll also hear from Vickie Surguy, Manager Employee Plans Determinations.  She is responsible for the national EP determinations program.  At the end of their presentation, there will be a question and answer session.  We will e-mail a certificate of completion to everyone who registered for this session and who attends the full session.  Enrolled agents are entitled to continuing professional education credit for this session.  For tax professions other than enrolled agents, consult your licensing organization to see if it will provide continuing professional education credits for this session. 

Information on Retirement Plans Determination Letter Program can be found on our Web site at  You can also get there by going to the main IRS Web page and clicking on the retirement plans community tab at the top.  Once there, click on more topics, and select determination, opinion, and advisory letters for retirement plans.  You might also want to subscribe to one of our free, electronic newsletters.  The link for newsletters is also in the left-hand navigation bar.  We have two newsletters:  The Retire News for Employers, which is directed at employers sponsoring a retirement plan, and The Employee Plans News, which is directed at professionals who practice in the retirement area.  Check out our Web page and subscribe to our newsletters. 

Without further eloquence, here is Andy Zuckerman.

A. Zuckerman

Good afternoon, for those on the East Coast, and good morning for those on the West Coast.  Thank you.  Welcome, everybody.  Thank you for participating.  This is another media that we use for getting our message out to employers and practitioners that are concerned with retirement plans, and we found it to be rather effective in the past, and hope to continue using it going forward. 

Today’s topic, as you know, deals with the IRS determination letter program, and we hope to be getting you some information that will be useful to you as time goes on.  Topics to be discussed, we want to quickly go over the overview of the determination letter program, what the current status and the future status is.  We’ll talk a little bit about the pre-approved specimen plan, rulings program, and where that stands.  We’re going to talk a little bit about the determination letters for pre-approved plan adopters and what’s happening with that program.  We’ll get into individually designed plan applications, talk some about 403(b) rulings, a program that we intend to be opening in hopefully near future. 

Why don’t we just kind of get into it?  Our current determination letter program, our goals for this year, one of our major goals is to issue our opinion and advisory letters for the defined benefit pre-approved plans by the third quarter.  The third quarter actually starts tomorrow, so we should be getting these letters out today or the next few days.  We have finished the processing of all plans that we had in-house as of last Friday.  And so those of you who have submitted those requests for the lead plans should be getting – should have received their preliminary e-mail and should be receiving their opinion letters in the next couple of weeks, and if you haven’t gotten that preliminary e-mail, let us know, and also if you don’t get the opinion letter, let us know, so we can make sure it’s gotten to the right parties.

We’re currently taking a look at our staggered approach, which we know now is in its fifth cycle, Cycle E.  We want to check out the filing patterns, make effective changes to the program to make it better for you, the employers and the practitioners, as well as making improvements to our processing to make the program just easier and more effective for everyone.  All ideas are very much welcomed.  Currently we have an official advisory committee that is doing a study on – this year’s study will be on the staggered, remedial, amendment period, filing approach, and we’re expecting some very interesting comments and suggestions from that group, so please, if you have any, we’d like to see yours as well.  It’s important to us to give you the best service we can while maintaining the integrity of the determination letter filing process.

One of the big issues we hear about are interim amendments, and we believe that will be covered in the ACT report as well.  And we’re trying to take a look at whether or not we should change our processes regarding interim amendments.  There have been a number of suggestions made from no interim amendments to no interim amendments with notice to employees, so they know what their rights are under the plan, to certain core amendments being made with notice to employees, all the way to lead the status quo, so if anyone has any other suggestions, we’d love to hear them.

Going forward, we’re going to be implementing 403(b) arrangements.  We’re going to have two separate programs.  The first will be opening.  Our goal is to open the pre-approved plan program by tomorrow.  And it doesn’t look like we’re going to meet that goal.  However, we have made significant progress.  We have a draft revenue procedure, which will allow us to open the program that is being circulated for comment, and hopefully we’ll be able to get this revenue procedure out in the next coming months, so we can get this program up and running. 

In the meantime, we have started work on a draft revenue procedure for an individually designed 403(b) program.  We believe that first we should – as with the regular determination programs for … plans, the vast majority of cases that we see and plans that are adopted are through the pre-approved program.  We felt that it would be better if we started out first with a pre-approved program for 403(b) and then moved to the individually designed plan program, and we’re not that far off from getting these things up and running.

As I said before, if you’re looking at the slides, we’re about to issue the opinion letters and the advisory letters on the pre-approved defined benefit plans, and we’re going to be opening the window for the 5307’s to come in under those plans.  In the meantime, we’re going to begin work on getting ready to open the pre-approved define contribution plan submission window, and it looks like we’re on track to be opening that window on February 1, 2011.  Those are our short-term goals and our long-term goals.  At this point, I’d like to turn this over to Vickie Surguy to talk a little bit more about the determination letter program. 

V. Surguy

Thank you, Andy.  I want to thank you all for your interest in participating in this.  I was overwhelmed by the number of individuals who are listening, so thank you.  We like to be able to get the word out and this is a great forum, I think, to be able to speak and to let you know ways to submit your applications and give you suggestions on how to get your applications through our process a little more quickly than you may not be aware of.  That’s one of the things at the end, the presentation has an order … file, and also some dos and some don’ts that we’re going to cover.  I think those are very interesting.

But I’m going to start with talking about the pre-approved program and then go into the individually designed program.  The pre-approved program, we just this week announcement 2010-20 was released that said the service will soon issue the opinion and advisory letters for the pre-approved defined benefit plans.  Andy just mentioned that we were doing that.  We are in the process of getting those out.  The preliminary e-mails should have been sent.  And now we’re trying to crank out those final opinion and advisory letters. 

Then a plan that receives a favorable letter with respect to … statement for the EGTRRA and the 2006 cumulative list is referred to as an EGTRRA approved plan.  And, as I said, those letters are expected to go out near today.  Employers using these pre-approved documents to restate their plan for EGTRRA in the 2006 cumulative list will be required to adopt the EGTRRA pre-approved plan by April 30, 2012, so they’re going to have two years then to adopt those EGTRRA defined benefit plans, and the service looks up applications for individually determination letters submitted by adopters of these pre-approved plans starting May 1, 2010, so that announcement was just released this week on Monday if you want to look at that.

If you look at slide six, we have a chart here that shows you basically how the pre-approved program works.  The column under DC shows that we are nearing the end then of our first DC cycle.  April 30th is the date that the adopters of the pre-approved plan have their last day to come in if they want a favorable determination letter.  We’re closely approaching that April 30th date. 

Now here in the service, we’re calling that our surge.  We’re expecting around 100,000 applications, and to tell you the truth, we haven’t received nearly that many yet, so we are hoping that those of you that have adopted pre-approved defined contribution plans will be getting those into us shortly so that we don’t have trucks pulling up and backing up to the door of the service center where they’re mailed to and just dumping them all in on the last day.  So we encourage you, as much as possible, to submit early.  I know we’re getting ready to go into April now, so we’re getting a little anxious here waiting for those plans to get into the door here. 

In the meantime, while the DC program has been doing on, and we’re nearing, as I said, the end of our first cycle, we’ve had the DB program going forth.  And, as we said, we’re nearing then the completion of the first cycle in a DB of just issuing the letters that are the opinion or the advisory letters, and I mentioned that announcement then gives the two-year window then for those adopters.  That’s the basic information there that is shown on that slide on page six. 

On seven, just some more specifics about the DC pre-approved plan adopters, announcement 2008-23 announced the opening of the program.  It was opened May 1, 2008.  The remedial amendment period to adopt the approved DC plans and, as I mentioned, April 30, 2010, applications intending to come in within the RAP, or the remedial amendment period, must be on the correct form.  Generally that is Form 5307, which is a short form.  However, a few may have to come in on 5300. 

Form 5307 is for individuals who are verbatim or minor change adopters of volume submitter plans.  Those, if you’ve made the minor modifications to your volume submitter, you can use a 5307.  If you’ve made major modifications to the volume submitter, you may be required to file a 5300 instead of the 5307. 

Prototype adopters can make no changes.  Now that’s a different rule than the volume submitters.  There’s supposed to be no changes to a prototype plan.  If you make changes to a prototype plan, that throws you out of the prototype program, and it throws you onto the individually designed 5300 filer. 

I’m going on to slide nine.  With the volume submitter program, and some of this might be fairly elementary to most of you, but there is a greater leeway in those plans.  As I mentioned, you can make some minor changes and still stay under the 5307. 

The question comes up frequently what the service considers minor and major, and many times, as I’ve been asked that question, it really depends on what the substance of the amendment is, not necessarily the number of amendments.  So if an amendment is made to a plan that is changing something, a benefit formula, changing something that is very much of substance to plan participants, it very well could be then considered major and become individually designed.  If it’s something minor, changing plan sections, just making minor modifications, then normally those will stay on a 5307.  I know that, in the past, someone has said there was a rule that the number of amendments or changes that you made to the plan designed whether it was individually designed or it could stay on the pre-approved program.  We don’t necessary look at the number of amendments.  We look at the substance of them.

5300’s are for, as I said, the major changes and special rulings.  Those require amendments up to a current cumulative list.  If you get thrown into the individually designed program, then that pre-approved plan is going to have to be amended from the list it had to come into under the program from three years ago, four years ago, up to the list that’s current.  And unless the 5300 submission required only, is only due to a special ruling, and that would be a special ruling request like leased employee, affiliated service group, something like that. 

On slide ten, these considerations apply to how the plan must be sent into the service and what standard or review that will be applied.  What we’re talking about there is a 5307 is a short form application, generally either with an adoption agreement or approved, pre-approved volume submitter plan document.  And we’ve reviewed those plans upfront so that the process then on our end for our specialists is much more limited as far as the amount of information that needs to be reviewed.  Actually, those applications should go through to our processing much quicker than a 5300. 

We’ve also had questions regarding what affects changes to pre-approved language have on the amendment cycle.  On slide 11, employers who amend the amendment of a M&P or a volume submitter plan into a type not allowed into the pre-approved program more than one year after the date of the initial pre-approved adoption remains in the six-year cycle for the current cycle.  Then they have to switch to the individually, the five-year cycle after that.

For the first year, they can go on … for their first cycle.  But after that, they do switch to the five-year.  If the changes are made within one year, or it’s a complete rewrite, then it will drop right away to the individually designed cycle.  That is determined on the last digit of the employer identification number, which we’re going to talk about here shortly. 

An employer adoption, which causes such a plan to be treated as individually designed, must file a determination letter application for continued reliance.  An example of that would be where a plan is amended into a Class A allocation formula.  The applications must be filed during the appropriate two-year period within the applicable six-year cycle.  And then, as I said, the next ones will go on then and be filed under the five-year cycle and determined by the last digit of their employer identification number. 

They will be reviewed using the cumulative list the service would have used if the plan had been submitted as an on-cycle plan for the current application, and this will be the 2009 list.  We have to bring it up to the current cumulative list.  Generally, this will require amendments to a volume specimen document.  A prototype can be amended with tact on amendments.  The pre-approved volume submitter documents are generally more like an individually designed plan where a pre-approved master prototype plan is usually a plan document with an adoption agreement, and so that’s why then the tact on amendments are acceptable for those. 

At some point after April 30th, which is fast approaching, we are probably going to close the program to DC adopters.  Possible exceptions will be for new plans.  We haven’t made decisions on that yet.  This will tie into the opening of the DB submission window.  Once the DB submission window is open, we would accept 5307 for only the EGTRRA approved DB adopters. 

Now under the staggered system, the pre-approved defined benefit plan is delayed for a couple of years beyond the defined contribution plans and the DB specimen plans must have been submitted between February 1, 2007 and January 31, 2008, so there was significantly less than the DC submissions.  We had many more DC submissions than we did defined benefit submissions, and we already talked that we ready, as we speak, to issue those letters on those DB plans. 

If you go on to slide 16, now we’re going to go into the other part of the staggered approach, so the staggered determination letter process was bifurcated into individually designed and pre-approved.  Of course, we already talked about the pre-approved, what was divided into a DB and a DC part, which is different than we ever did before.  And then the individually lined program, and I’m not going to cover this in depth because we’re nearing the last cycle, but it was based or it is based on the last digit of the taxpayer identification number or employer identification number for which cycle you would come in for, and we are now in Cycle E.

On slide 17, this just shows the receipts and what we projected before the program started back several years ago now, and actually, our actual receipts, and then percentage of completion.  Now in Cycle D, that number, when this slide was completed, the number wasn’t finalized.  I don’t have the definite number there, but Cycle D, the actual receipt is approximately 9,000 cases.  And as far as completion of those, we are working those, and I cannot give you a percentage of completion today. 

With the other cycles, Cycle A, only the very complex cases that we had to go for technical advice on, which we had to do for certain employer stock ownership plans, are left open in A, and that's the majority of what is still open from Cycle B.  Just the most complicated, complex where we had to have specific guidance from Washington. 

Cycle C is coming along.  I think the percentage is higher than that now, and we are trying to work our way through, even those old ones.  We’ve gotten several pieces of guidance we needed so that we can get out those cases from Cycle A and B so that we can get caught up, hopefully fairly frequently.  That’s our goal we’re trying to get as many of those cases from prior cycles closed as soon as possible.

On with the individually designed programs, we’ve talked about that the first submission was Cycle A, and it was by the last digit of employer identification number.  One difference between the individually designed program and the pre-approved program was that, in the individually designed program, there was no distinction between whether it was a defined contribution or a defined benefit plan.  It was just strictly by the employer identification number and then certain other classes of cases such as governmental plans, multi-employer.  Other ones were singled out for different cycles, and then the employer identification number. 

Cycle D on slide 19, Cycle D plans had a special role in effect with regard to the restated amendments to comply with PPA.  PPA-06 permits a plan sponsor to adopting a plan amendment pursuant to statutory provisions under PPA until the last day of the first plan year beginning on or after 1/1/09 or January 1, 2011 for governmental plans.  PPA deferred conforming some of the text amendments for some plans. 

Cycle D ended January 31, 2010, and most Cycle D plans were subject to review of PPA.  However, because of the difference, Notice 2008-108 allowed plans with plan years ending 2/1/10 or later to defer their PPA restatement provisions until Cycle E, so we had a little bit of difference between PPA, what was required for Cycle D and Cycle E.  So we allowed plans to come in one time only as Cycle E submitters if they met those circumstances, but then they would revert back for the next cycle back to Cycle D.

Individually designed governmental plans, we had recent guidance that extended the governmental plan 401(b) period to Cycle E that allowed additional time to comply with governmental plan regs.  You didn’t need to make an election.  You could stay in Cycle C and receive priority, or you could wait and just come in, in Cycle E.  However, then once you come in, in E, then your next cycle, you would revert back to a Cycle C filer again. 

We’re going to talk about one of our favorite topics, which is interim amendment.  Interim amendments are required to correct disqualifying provisions.  They’re usually executed by the due date of the sponsor’s tax return except for statutory deadline provisions.  And there’s a difference between the interim and discretionary.  Discretionary amendments are your non-mandatory amendments.  Some are for compliance.  Some are for changes that you want to make to the plan because of some other change with plan language.  They’re usually executed by the end of the effective year.  Both can be corrected in final by the restatement at the end of the remedial amendment period. 

On slide 23, we talk about the interim amendment PPA ‘06 amendments are subject to deferral.  Once that issue relates to the non-spouse beneficiary rollover, and we have questions about how to handle these and other interim amendments for purposes of determination letter filings.  The general rule, which is on page 24, is for individually designed plans, copies of all interim and discretionary amendments must be included with your 5300 submission package. 

For DC pre-approved plans, this is deemed satisfied by the sponsor certification as part of the ruling process.  Announcement 2008-23 eliminated the need to file the actual amendment. 

On slide 25 about interim amendments, submission packages must include copies of the restated document and interim amendments if required for employer signature.  Here’s an example.  A volume submitter practitioner authorized to execute interim amendments on behalf of clients does not have to submit.  If the practitioner does not carry this authority, an interim amendment must be submitted.  In the pre-approved program for EGTRRA, we allow sponsors to amend plans on behalf of their clients.  Most elected to, however some, and I do not know the number, but some of the sponsors did not elect to do that. 

All right.  I am going to turn this program over now to Andy who is going to talk about the 403(b) program. 

A. Zuckerman

Thank you, Vickie.  403(b) is a very interesting area.  These plans have been around for a long, long time.  And there aren’t really that many of them.  We’ve got estimates anywhere between 25,000 and 35,000 of these plans, these programs.  But they’re a very, very important part of the savings mechanisms, the retirement savings mechanisms for certain tax exempt and educational organizations.  So they cover quite a few number of individuals. 

Over the years, Congress would change the law a little bit to get these programs, the 403(b) programs to look a little bit more like retirement plan, although many of the regular retirement plan provisions have applied to.  Back in July of 2007, we issued some final regulations, which is the first time regs were at, since some very old regs back in 1965, and for the first time, these programs required to be in writing and set out all the particular terms that the programs should meet.  When we came out with the regulations, we gave a specific time limit on when plans had to be mended—well, not amended—when they had to be put in writing, when the requirements of the regulations had to be met.  And what wound up happening was many employers were telling us that they were having problems with their vendors who were having difficulty getting certain technical requirements done, certain agreements entered into between the various employers and other vendors. 

We gave an extension on the time for actually getting those amendments done, but to protect the integrity of the regulations, we said that any plan document that was adopted after the deadline that the plan document should have been put in place in the first place would be extended until the end of 2009.  Now that came with a catch, and the catch was that that plan had to be effective back to the beginning of 2009 and any benefits that individuals would have earned, for example, had to have been in place by the beginning of 2009 would have been earned retroactive to the beginning of 2009. 

We had an issue that we don’t really have with the 401 plans, regular 401A plans, which is that the internal revenue code has a period built in specifically allowing these plans, 401 plans to go back and make certain retroactive changes and get certain types of reliance on those changes, on the period during which the amendment has been made, so the plan would not be disqualified.  No such provision exists for the 403(b) program, so we came out with some guidance that says when we come out with our program, our actual revenue procedures, they will include a similar, remedial amendment period, so these plans could be adopted retroactively and would not have any problem in making amendments should these plans have a problem that had to be resolved.  That’s a new, substantive situation, a new substantive provision that we came out with that hopefully will help these plans come into compliance with the new regulations. 

As I said before, we started this program out.  The first step we’re going to take is coming out with a revenue procedure for pre-approved program.  If you look at the top of slide 29, it doesn’t say oops, but it should.  It says there will be no volume submitters.  Since the time that this PowerPoint was put together, we have determined that we will have a volume submitter program in addition to the master and prototype type program for 403(b) plans.  We will have standardized, non-standardized benefit packages, which will make it easier for employers who have very, very simple plans, pre-approved, without anything that could possibly cause the plan to be disqualified … adopt a standardized plan, and they would not have to come in for an individually designed determination letter. 

On slide 30, it shows we really hope that most of the players are going to use on the prototype approval.  It’s important to us that practitioners and employers utilize these documents because it just makes it much easier for the employer and for us to process letters that we might be issuing.  We’re hoping that since, as things currently exist, that most of the 403(b) assets are in insurance annuity contracts and custodial accounts that are invested in stocks, that these entities are the ones that will be providing most of the documentation, and we’re keeping our fingers crossed that the prototype platform will be used.  These are much simpler than regular qualified plans and, as a result, we’re hoping that our program doesn’t get flooded with these plans going forward. 

The next step we’re going to take is to plug in the individually designed program, and we’re developing model language.  We actually came out with sample model language to get feedback from the community, and we have been looking into that model language, trying to update it, and will hopefully be issuing that model language also in the coming months, so if practitioners want to use that language, notwithstanding the fact that the individually designed program is not yet opened, it’ll give them a head start on making sure that they’ve got a good document. 

The next few slides deal in general with why do you want to get a determination letter.  We have a publication that addresses the significance and points out features and actions that you could take that can affect the qualified status of the plan and make your determination letter void, in essence.  It’s a ruling.  It’s a type of ruling that we issue.  And it tells the employer that your plan is satisfying requirements … internal revenue code.  It’s, in a sense, an insurance policy where once we approve a document, should we make a mistake in the IRS in approving it, and there was a problem, there are mechanisms in place where we will require the employer to amend the plan prospectively should they be able to show that, you know, we should have known of the potential mistakes.  This way, employers and employees who participate in the plan will not lose the favorable stack status that’s afforded to those plan documents. 

Again, the slide 34 basically shows that determination letters are not required, but employers want them because it’s an inexpensive form of an insurance policy.  It provides certain protection as well under the bankruptcy laws.  There are some commentators that believe that it can help protect an employer from participant lawsuits in the event there’s a problem with the plan because it helps to show that they took the steps necessary to make sure that the plan was in fact in good condition and qualified and the employer acted properly.  There are any number of reasons why an employer would want a plan determination letter.

Tax advantages are relatively simple, but it’s a change from the general rule.  Normally an individual takes the income amounts when they are entitled to that money, when they vested in those assets, notwithstanding when they’re actually paid out of a plan, and the employer gets the deduction when those individuals vest in the amounts.  Congress has decided that that’s to encourage retirement savings, to encourage employers to put money away, and employees put money away that the amounts going into the plans be tax deferred until paid out, and that the employer would get a current deduction, and the amounts of growth in the plan are not taxable.  It’s really quite an advantage.

I’ve heard it referred to as one of the best tax deductions out there.  A significant portion of employer tax deductions on their business tax returns relate to those for moneys going into qualified retirement plans, and it has created a pool of assets anywhere between $17 trillion and $20 trillion depending on how the market does, which is actually the largest single pool of assets that currently exists in the world.  So the system has worked.  There are over 140 million participants in plans currently, and that doesn’t count the beneficiaries of those participants who are not counted in that number, so considering there are 300 million people in this country, there are a substantial number covered and receiving benefits from these retirement plans. 

Now I’m going to turn it back to Vickie because she’s going to be talking about reminders, things to do with filing, dos and don’ts and, in some cases, issues that we, common issues that we typically see.  Vickie?

V. Surguy

All right.  Thank you.  I’m going to tag on a little bit of what Andy just said.  When I talk to our employees all the time, I tell them how important our work is because I do think what we do for the service and what you all do is very, very important to plan participants and to our economy and to benefit people’s retirement.  I think this is a very important part of the Internal Revenue Service that we all have a part in and that we take this very seriously and want to do the best possible job that we can to insure that participants’ rights and their retirements are protected.  That’s my editorial comment. 

Now what I want to cover now, I’m calling the nitty-gritty of the termination letter process.  It’s probably, really, you know, it’s very important for all of you.  One thing, these things help your applications go through our process much quicker.  We have a new computer system that has been designed, and applications are scanned once they’re received.  They’re received over in the Cincinnati service center.  It’s called a campus.  They’re received there, and they are scanned in and then electronically moved from individual-to-individual through our process. 

For the most part, our specialists review the applications on screen, and applications are ran through what we call business rules, which tell us what cycle the case is sent in for, whether it’s a defined benefit or defined contribution.  Things like, is the application signed.  It’s ran through some general rules.  It’s graded for complexity because the more complex the case, the more specialized the agent has to be that works it.  So there are many things that our new system does, but because of that new system, and with our wonderful world of technology these days also requires more specifics in the way you fill out your application and different things that you do with it so that it goes through our process easier. 

We’re just going to talk now first about just general.  Individually designed plans must be restated when they’re submitted.  A working copy or proposed restatement is acceptable.  The 5307 submissions will only be accepted for EGTRRA approved adopters.  We stopped the … approved or … 5307 several, I guess, a year or more ago, a couple years ago.  That was announcement 2007-90.

We did eliminate the requirement of redlining.  At one point, we had redlining in our revenue procedure, redline your changes from your … document.  We did eliminate that requirement.  However, if you would do that, that would make the review go smoother for our specialists because if it’s redlined, your changes from the … plan, it immediately shows us where to go, where the differences are.  So we did eliminate that as a requirement though, so it’s just up to you whether you want to do it or not because, for some practitioners taking over other plans, and putting them into their format and their document, it was too much of a burden, so that’s why we eliminated that as a requirement.  But, optionally, if you could do it, it’s wonderful.

Include copies of your interim amendments with your individually designed submission, but you do not have to do that, and don’t, for your pre-approved 5307 submissions, include copies of discretionary amendments, if any, for both 5307’s or for a 5300 submission.

On page 38 or slide 38, we talk about other document issues.  Submitting a restated plan in proposed form is permitted provided that copies of the timely executed interim and discretionary amendments and the prior plan document to which these amendments apply are also submitted with the application.  A plan that is submitted in proposed form and only proposed amendments in the case of a plan submitted as a working copy, which is okay, but it must be adopted no later than 91 days after the date of our determination letter in order for you to maintain reliance.  We’ve had plans come in, practitioner calls.  We failed to sign everything within 91 days.  If you did that, you’re going to have to go in for a VC because there’s nothing we can do about that.  Everything has to be signed within 91 days of the date of a letter. 

We return applications incomplete, and here are some on slide 39, some of the reasons why we return applications incomplete.  The individually design plan 5300, the plan document with them, aren’t restated for the applicable cumulative list.  Even a working copy must be restated.  And the next one is a biggie: insufficient user fees.  You need to be careful.  Make sure the user fees are the correct amount.  It delays the processing of the application is the only thing I can say.  We have to stop it.  We have to get the current fee … process that.  It just takes longer.  Interim amendments are missing on individually designed plans.  Prototype plans using Form 5300 must also restate for the applicable cumulative list, except noted in announcement 2008-23, and I mentioned that before. 

Other issues on slide 40, demos are requested but not submitted.  Related pertinent documents are missing like the initial plan document, corporate board meeting minutes, board of directors resolutions for terminating plans, mergers, related documents.  Related plans, mention them in your cover letter, along with the employer identification number.  Some have the same plans in multiple files, and if they get messed up in our scanner, it’s difficult for us to get those pages back together again and in the right order with the right plan document. 

Terminating plans aren’t being amended for PPA and other currently applicable guidance such as….  Those are the most common errors that we’re seeing.  I really encourage you to look through that list and kind of use a checklist to make sure that you have all of those things together prior to submitting the application.

Other items of interest, and then I’m going to go over the dos and don’ts.  All EP determination application forms are in the process of being updated.  That is partly because of our new system and, as I mentioned, applications are scanned, and there’s some optical character recognition done in our process to eliminate transcription and transcription error.  But for optical character recognition, applications have to be clear.  The blocks have to be filled out, readable in the little block that it’s supposed to be in, or it will not be picked up correctly and be rejected.  They won’t be sent back to you because they’re rejected, but it will delay the processing because somebody is going to then have to hand transcribe that information in. 

The Form 5307 is available on the Web, the new one.  We are developing a new form for group trust or pooled trust ruling.  The Form is 5316.  It is not available yet.  Currently there is no form for group trust.  They require a cover letter, so that will make those – be able to be processed easier through our electronic system with a form.  And I already mentioned that there’s a block format, and there’s also bar codes that are associated with cases. 

And I do want to also insure that you know that when you are requested to send us back any information regarding your application, a specialist will send you something called an Application Identification Sheet, and AIS.  Each one of those is for each individual case, so it has a barcode that identifies that case.  If you send that sheet with another case, the information that you send in will get associated with the wrong case.  Each barcode is specifically identifying per each case, and that particular plan number.  I hear a comment sometimes that amendments or additional information are not being associated with cases, and many times we have found out that even though it says it plain on that application identification sheet that’s an individual one for each particular case, that it’s being sent in with other cases or a group of information is being sent in together with just one of those sheets for multiple cases, so please insure that you send in an individual one with each application or each request for additional information that you send in. 

Reminders for completing your new forms, I talked about the optical scanning, so currier ten font, alpha characters, limit the number of characters per whatever the fields are. 

On page 43, I’m going to quickly cover some dos and don’ts.  The only thing that should be stapled in your application is the check to the 8717.  Please do not staple, bind, clip together any other parts of the application.  Anything that you staple, bind, it has to be tore apart.  It could jam up the scanner, and it’ll take additional time to process your case.  So the check needs to be stapled to the 8717, but that’s it.  Use the current version of the applicable forms. 

Include pertinent information in your cover letter, and it gives you an example there on slide 43.  Insure your application is complete.  Insure that your plan documents are signed and dated.  Our system even checks to make sure if the application is signed, and it will be thrown out of processing and slowed down if it’s not signed.  Include copies of your prior determination letter and VCP compliance statement if applicable.  Clearly identify each document using title pages, numbers, or identifying separate sheets. 

Insure that the 2848 is correctly completed and timely signed, or we won’t be able to talk to you.  We have to contact the employer directly, and then that delays your case.  Separate multiple applications with brightly colored paper, so what we mean by that, if you’re sending in ten cases in a box, you’re not to stable and bind them, so to separate them, put in something that’s going to show us, this is case one.  This is plan 002.  This is plan 003, something so that we know that these are separate cases. 

File them on time; early is even better.  Pre-approved plans include the 8905 if applicable, and … if it’s word-for-word.  If not, make sure you list the modifications.  I already said don’t use staples.  Don’t attach sticky notes.  They get stuck in the scanners.  Don’t hole punch.  That can make things clog in the scanners.  Don’t use odd sized paper.  Only colored paper in between your different plan documents.  And don’t include unnecessary documents. 

All right, 48 talks about, and you can look at that at your leisure, what we review.  The big thing there is terminations need to be reviewed or updated for all current law.  And there’s a procedure if we find out that what we do if the pre-approved plan, if there’s a language defect.  It tells you on slide 48 what we do there. 

And slide 49 and 50 and 51 and 52 give you the recommended filing order.  I’m not going to cover that, but my suggestion is you take these slides out, look at them, give them to whatever is putting your submissions together, and have them check the order and the dos and don’ts against your application packages and then the better the order, the better the quality of what we get, the quicker your applications will be processed.

The next slide just shows our Web site, how to get to our Web site, which John already mentioned.  And then in the next slide, also John discussed, and that is subscribe to our newsletters.  I believe we’re ready for the Q&A.

A. Zuckerman

Almost, Vickie.  This is Andy.  Before we get into the Q&A, just a little marketing.  We really do have a very, very, very extensive Web site.  We have a Web site with a lot of extensive information.  It’s really important, we believe, that employers and practitioners go to our Web site periodically because we have a wealth of information on there.  We help draft official guidance like regulations and revenue rulings and revenue procedures, and notices, but we also have a lot of what we call soft guidance: newsletters, articles, frequently asked questions, and there is just a wealth of information there that will help you use your plans properly, timely amend, answer questions that you may have. 

We also have a newsletter that goes out electronically, and I think it also provides a lot of information, so please help yourself, come to our Web site, sign up for the newsletter, and I think you’ll be very happy with the results, so now, John.

J. Schmidt

Thanks, Andy, and thanks for the little extra sales pitch there at the end.  Appreciate it.  We are now at the point in this presentation where we will begin a question and answer session.  Just one more bit of administrative things for me to do: please be advised that the program is still being recorded and a transcript and/or audio recording of this program may be made publicly available at  There are about 15 or so questions that were sent in via e-mail that Vickie and Andy have taken a look at and have some prepared answers for, so I’m going to turn the microphone over to, I guess, Vickie.

V. Surguy


J. Schmidt


V. Surguy

I wanted to let you know that I think we had a wonderful response, not only to the number of you who are dialing in to listen to this, but the number who sent in prepared questions.  I may not get to all of even the pre-sent in questions today.  I’m going to try to cover as many as I can. 

Those that I do not get to, I am planning on contacting you then or having someone from my staff contact you individually to provide you with the answer.  And, any additional questions, as we’ve been giving this presentation, I’ve had questions rolling in.  Of course, I don’t believe that I’m going to get to those, so we will try to get to those, and if you have additional questions after this, I would like for you to go on and e-mail them to me, and I’m going to give you my e-mail address.  It wasn’t included on the PowerPoint.  I can’t promise you I will be the one that answers your question.  More than likely I won’t be, but I have a very qualified staff of about 120 specialists who will be more than able and ready to answer your questions and get back to you.  A few of the questions that were asked in advance involved individual cases, and we’ve already contacted those individuals or we will be, so I won’t be covering those today either. 

A. Zuckerman

I strongly encourage you to e-mail Vickie with any questions you may have.

V. Surguy

Like I said, I will make sure that somebody gets back to you.  And if you have problems, not today, but any other time with a delay in cases, something is going on, and you’re just not sure about, feel free to e-mail me, and I will be glad to look into it and have someone get back to you. 

Question one, and I’m going to try to abbreviate these questions as much as possible, and I had just put these in random order.  But the first one I’m going to read here is could you please clarify what documents should be submitted with form 5307 if the plan has a favorable determination letter, but has since been restated by adopting a prototype plan?  For example, if the plan obtained a favorable determination letter in ’98, restated in 2001 by adopting a prototype subject to an opinion letter, and most recently adopted an EGTRRA prototype restatement in 2010, would the 5307 application include only the most recently adopted EGTRRA restatement, or should it also include all the amendments and restatements adopted since 1996 when the last plan specific determination letter was received?

The answer to that is when a 5307 application is filed, and a favorable determination letter has been received previously, all restatements and amendments since the letter should be submitted.  In this specific case, all restatements and amendments since the date of the 1998 favorable level should be submitted.  This would include the restated adopted in 2001, the EGTRRA restatement.  Also for the 2001 restatement, proof must be provided that the document was timely adopted if adopted during the extended period. 

Question number two, given the lengthy wait for determination letters submitted for Cycle A through D, we’re trying to work on that, would it be possible to extend the April 30, 2010 deadline for restating and submitting plans to the IRS for adopters of the DC volume submitters?  The answer to that is the deadline is not going to be extended.  There are no plans to extend the deadline. 

Next question, please advise how to proceed with the filing for a determination letter when you have the following situation.  A timely document amended and restated for GUST using a non-standardized prototype or volume submitter master plan.  All of the required amendments made and/or signed timely, same document never submitted for a favorable determination letter, plan sponsor cannot locate the initial document or any amendments, and amendments and restatements made for the plan prior to GUST.  I’m sure that never happens. 

The answer to that is, if the GUST document was executed on 2/28/02, or one year from the date of the opinion or advisory letter, no further documentation for GUST would be necessary.  So you got approved for GUST.  However, if the employer signed after that date, but prior to September 30, 2003, then it’s necessary to provide documentation, which is outlined in Section 19 of Rev. Proc. 2000-20, which is modified by Rev. Proc. 2003-73 to verify that they are entitled to the extended remedial amendment period.  If the document was executed after both of these dates, then you would have to wait.  You’d have to want to consider a VCP submission per Rev. Proc. 2008-50. 

Question number four; is there any correction procedure for failing to file a  Form 8905?  The employer had executed a certification under 2000-20, EIN ended in one.  The attorney responsible for distributing the 8905 died in ’07.  The plan always operated beginning with GUST as an M&P. 

The answer, the 8905 should be submitted for an adopter of an individually designed plan or a pre-approved plan that’s not entitled to the six-year remedial amendment period or remedial amendment cycle—excuse me—cycle.  In this case, the employer is a prior adopter of a pre-approved plan and is already entitled to the six-year cycle.  Therefore, the 8905 is not required. 

The next question, is it necessary for a taxpayer to submit a 5307 for EGTRRA restatements or can he or she rely on the IRS advisory letters for our pre-approved volume submitter plans?  In accordance with Section 19 of Rev. Proc. 2005-16, the employer has reliance, unless modifications have been made to the pre-approved plan.  Also, the first time that we really publicized that was in Announcement 2001-77 gave reliance to Volume Submitter Plans where there were no modifications.  It’s just restated in 2005-16. 

Question number six, on the 5307 line 3d, if the amendments were made by the prototype provider without need for employer signature, unless the employer opted out of the default provision, then what date should we use for the date signed?  The answer to that is the date that the prototype sponsor executed the amendment would be the date then signed.  If the date is not available, indicate that in the cover letter. 

The next question, I’ve got a few parts on this.  What interim discretionary amendments must be submitted along with the EGTRRA restated plan document?  We utilize the EGTRRA pre… volume submitter plan of a certain name that uses an adoption agreement permitting various elections concerning plan parameters.  Leading up to the plan being restated, utilizing the EGTRRA volume submitter submission, various interim and discretionary amendments were made as follows: the final 416 reg amendment, the labor of the 2009 required minimum distribution amendment, EACA and QACA amendment, PPA and HART Act amendment.  Are any of these amendments required to be submitted with the DL submission of the EGTRRA restated document?  If not, what are the consequences if included anyway?

All discretionary amendments should be included with the submission.  As long as the preapproved sponsor has the ability to adopt on the behalf, the middle interim amendments needs to be submitted.  The dates of all the amendments will be included in the favorable determination letter.  However, the plan only will have reliance on the 2004 cumulative list.  Please note you submit amendments which were not timely executed, there may be consequences.  

Number two on this particular question, part two, “What previous plan documents must be submitted in conjunction with the extra documents of no previous DLs were issued to the plan?”  And it goes on, “If the immediate previous ....plan was a preapproved writing submitter or prototype plan that had reliance on ….86 documents prior to …plan was also pre-approved plan, what is required in the DL submission regarding these past plan documents?  Would a statement certifying this, along with a copy of the ….submitter advisory letter or GUST….letter be sufficient?   Can we avoid having to submit complete copies of the GUST ….submitter plan and/or ….adoption agreement?” 

The answer to that is no.  We have required to verify the last major law change.  The complete sign and data GUST document and applicable opinion letters should be submitted. If the GUST document used an extended remedial amendment period to adopt the GUST plan, verification to how the plan qualifies for the extended remedial amendment should also be submitted.  

Part three of this, if the plan being resubmitted is a preapproved EGTRA ….that utilizes an adoption agreement unless the base volume submitter plan also included in the DL submissions.  Again, no modifications were made to the base plan and the trust by the submitter document as preapproved for EGTRA cannot be eliminated from the DL submission.  The answer is the complete sign and dated documents and applicable opinion letter should be submitted.  

Question number eight, “A volume submitter 401(k) plan must request an on cycle determination letter because a volume submitter plan statement was previously obtained for the plan, no excuse me, a VCP statement was previously obtained for the plan do a non-member issue.  The volume submitter practitioner for this 401(k) plan just told us that it cannot provide written representation regarding work award adoption until after the April 30th filing deadline.  We as plan sponsors cannot prepare and submit this representation because we must submit the entire Form 55307 filing under penalty of perjury.  If we make the 5307 determination letter requesting filing on April 30th, but it does not contain the volume submitter representation, will we still be considered have met the filing deadline assuming that when the filing is returned to us as incomplete, we will then be able to provide the volume submitter representation within a reasonable time?” 

Answer: Go on and submit your application package as complete as possible.  Then we will request it when the case is reviewed by our specialist. 

Question number nine, “If a plan does not specifically state as a safe harbor match will be made on payroll or will be made on an annual basis, but instead leaves the determination to the plan administrator, who in turns discloses to the participants that the safe harbor match is based on total compensation annually, when it instead makes the match on a payroll basis, is the plan not qualified because the plan document does not have a definite provision or provisions in accordance with the safe harbor match regulations or is the plan not qualified because the plan operations are not in accordance with what has been communicated in the safe harbor notice?  Under what circumstances would an opinion letter be revoked and how is the review initiated?” 

Generally the fact that the plan allows for discretion could result in a disqualification issue.  It should be amended to clearly define how the safe harbor match will be handled in operation. And that is notice 2000-3.  Section 22…..2005-16 discusses revocation of an opinion or advisory letter.  If you have more questions about that, you need to contact us and we will put you in contact with someone who can more thoroughly discuss that issue about the revocation of an opinion on an advisory letter. 

Question ten: “Please address the following question:  can an employer file a 5310 for ….plan acquired in an acquisition in which we have ….stated document and the….statement, but the 2001 initial plan document, the pre-GUST cannot be located.  We know that the ….sponsor for the initial 2001 plan document, but those files have been destroyed.  And all of the prior personal and acquired entities were terminated and documents can’t be located.  It’s our understanding that there reviewer should only ….going back to GUST and the determination letter review, is there a difference if a 5310 is to have a 5300?” 

The answer is generally if the GUST restatement was signed by 2/28/02 or within one year of the opinion letter, there should be no issue.  It the plan relied on the initial document to extend the ….amendment period for a GUST document, there may be an issue. It would have to be worked on on a case by case basis. 

Next there are four questions…. I’m actually wanted to cover the first three.  “A preapproved plan with variations from the preapproved document is submitted to the IRS for determination letter and the IRS reviews and concluded that there are too many variations and the plan is therefore individually designed.  What happens and what are the consequences?”  We discussed this a little earlier.  According to Section 24.02 of …..2005…., the plan will stay on the six year cycle as stated in ….2007-44 Section 19, the employer will submit in the two year window, but then will….to amend for cumulative list based on the date of application.  However under …..2005-16, Section 24.03, the service may determine that the plan is individually designed and will not receive the extended….amendment cycle due to the nature and then this will switch it to the five remedial amendment cycle.  

“What if a volume submitted or prototype plan is timely amended, but submitted after 4/30 is it a late filer for the current round?  Is it early filer for the next round?”  We have not made any decisions on that yet. 

“What happens if a company previously adopted a preapproved plan for its GUST restatement, but it did not submit it for determination….to submit the ….preapproved plan as adopted for determination letter, but because so many years have gone by, the underlying GUST preapproved plan is no longer available, should the employer submit what it has, that is the preapproved ….restatement and the preapproved GUST restatement, plus the interim amendments as a Form 5307 submission?”  Yes, they should submit what they have assuming the preapproved GUST restatement is available to be submitted.  The employer should submit….and GUST plans on a Form 5307. 

We have six minutes.  Next question, “A client accidentally sent in their determination letter package to the wrong IRS address and forgot to include their check. That probably never happens either. They received the package back and immediately we sent the package to the correct address, enclosing the appropriate check.  Will the IRS accept this request as they have now passed their original filing date or can the IRS accept the package and overlook the clerical error?”  The answer is if they proved that the original package was sent to the incorrect IRS address and returned, we will accept that original date. However, the campus, which is the processing center over in Kentucky where the applications go will establish it with the most recent date.  There should be included a detailed explanation of what happened, so the specialist can review that when the case is assigned. 

A. Zuckerman

This is Andy.  We will be concerned if it happens from the same practitioner on numerous occasions that this is just a way to extend the filing deadline and start asking questions about that because obviously we have a deadline for a reason.  Sending it to the wrong address, waiting for it to come back might give you another week, but if there’s a lot happening with the same practitioner, we have to question whether or not this was done deliberately or not. 

V. Surguy

Yes, we’ll need the proof and those kinds of things.  One of our ways of processing cases, we try and make more efficient review is to batch cases by practitioner.  So that would be noticed.  Some of the things we’ve noticed in the past that have had the most consequences in plan review have been because we had a group of cases that on its own one may have been fine.  But when we saw many that were together, we saw a trend that was of concern.  So we do group cases by practitioner as much as possible.  

We have four minutes.  “If the plan has been involved in a merger, how much documentation should be provided?  For example, if the merge plan does not have a determination letter, should only the prior document be provided or the prior document and our regulatory amendment?”  The answer: submit the GUST plan, include the applicable advisory or opinion letter and all of the amendments up to the date of the merger.   Second part, if a plan has been involved in a merger and the assets are subsequently spun off to the attachment of the question ….still be completed.  Yes, check 8F and include an explanation of the transaction. 

One note I just thought of back with the dos and don’ts, don’t send the Schedule Q in with an application if you’re not asking for a ruling on demo.  There are times we get applications in where there’s a Schedule Q, but they’re not asking for a ruling. They just included it because they thought we wanted it.  And that kicked it out of our system, making the case take longer to go through our processing than if you did not include the Schedule Q. 

Two minutes.  Is it okay to go on with the next question?

A. Zuckerman

Yes, we have time for one more. 

V. Surguy

“Could you explain how we address a plan that was restated multiple times but not determination letters were requested?  The earlier document could not be located, but we believe that the document did exist.  We now do the legal work on the plan and want to submit it for determination letter.”  Consider a voluntary compliance submission per …..2008-50. 

All right, I think that is going to be my last question that I answer because we are getting close to the time that the session is supposed to be over.  

J. Schmidt

Thank you very much, Vickie and Andy for doing this and, of course, thanks to everybody who called in and participated this afternoon.  Thank you very much. 


Ladies and gentlemen, this does conclude our conference for today.  Thank you for your participation and for using AT&T Teleconference Service.

You may now disconnect.