IRS Expands Determination Letter Program for Mergers of Qualified Plans Following Corporate Transactions
May 8, 2019
Authored by: Adam Braun and Lisa Van Fleet
The IRS recently reversed course on the availability of the determination letter program for merged qualified retirement plans – thereby providing new alternatives for integrating qualified retirement plan benefits in the context of corporate transactions.
Merged Plan Relief: Rev. Proc. 2019-20, released on May 1, 2019, expands the IRS’ determination letter program for individually designed qualified retirement plans (e.g., defined benefit plans or defined contribution plans) that result from a merger of two or more qualified retirement plans following a corporate merger, acquisition or other similar business transaction (a “Merged Plan”). The newly expanded program will be available beginning September 1, 2019 and continuing on an ongoing basis.
Eligibility: To be eligible for the determination letter program:
- The Merged Plan must be a combination of two or more qualified retirement plans maintained by previously unrelated entities (i.e., entities that are not members of the same controlled group under Section 414 of the Internal Revenue Code);
- The plan merger must occur no later than the last day of the first plan year that begins after the effective date of the corporate merger, acquisition or other similar business transaction (the “Corporate Transaction”); and
- A determination letter application for the Merged Plan must be submitted by the last day of the first plan year that begins after the effective date of the plan merger.
Pre-approved or prototype qualified retirement plans are not explicitly covered by the procedure — additional IRS guidance will be needed to determine the applicability