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Deadline Looming in the Distance for 403(b) Plans: What Plan Sponsors Should Be Doing Now

June 5, 2018

Authors

Denise Erwin and Sarah Bhagwandin

Deadline Looming in the Distance for 403(b) Plans: What Plan Sponsors Should Be Doing Now

June 5, 2018

by: Denise Erwin and Sarah Bhagwandin

Last year when the IRS announced that the initial remedial amendment period for 403(b) plans will end March 31, 2020, the natural reaction to this very important (but rather remote) deadline was to immediately put it on the to-do list, somewhere near the bottom, where it has been languishing ever since.  If this describes your reaction, you are certainly not alone.

We think it is a good time to move this to the front burner and take some action.  As you may recall, 403(b) plan sponsors were required to adopt a written plan document for existing 403(b) plans on or before December 31, 2009.  At the time, there were no pre-approved 403(b) plans and no determination letter program was available for 403(b) plan sponsors to gain assurance that the document satisfied the requirements of section 403(b) and applicable regulations.  In order to provide a

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Kübler-Ross and IRS Announcement 2016-32

September 23, 2016

Authors

Chris Rylands

Kübler-Ross and IRS Announcement 2016-32

September 23, 2016

by: Chris Rylands

griefWhen the IRS announced that it would virtually eliminate the determination letter program for individually designed retirement plans, many practitioners moved through the classic Kübler-Ross five stages of grief (see the picture at the right).  Some have yet to finish.  In Announcement 2016-32, the IRS requested comments on how these plans can maintain compliance going forward since determination letters are no longer available.

As a general rule, the IRS used to deny plans the ability to incorporate tax code provisions by reference (rather than reciting them wholesale in the plan), except for a very short list available here.  The IRS is asking if there are additional provisions that would also be appropriate to incorporate by reference.  This would avoid the need to reproduce these provisions wholesale and run the risk of

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Update on the Apparent Demise of the Determination Letter Program

August 12, 2016

Authors

Julie Wagner and Jonathan Hull

Update on the Apparent Demise of the Determination Letter Program

August 12, 2016

by: Julie Wagner and Jonathan Hull

IRSAs we previously reported, the IRS had said last year that determination letter program for retirement plans would largely be going away. Rev. Proc. 2016-37 includes information with respect to the future of the determination letter program.  As highlighted in a recent IRS webcast, a noteworthy development is that “subject to IRS resources” that post-initial determination letters may be available after 2017 in specified circumstances:

(1) significant law changes,

(2) new plan designs, and

(3) Plan types that can’t convert to a pre-approved format.

Number 3 means complex plans that do not fit on a pre-approved document may, ‘subject to IRS resources’ as published annually, be able to be submitted for a ruling under the determination letter program.  Therefore, complex individually designed plans may still have hope that the IRS will

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Risk-Shifting and the Demise of the Determination Letter Program

July 29, 2015

Authors

benefitsbclp

Risk-Shifting and the Demise of the Determination Letter Program

July 29, 2015

by: benefitsbclp

Risk ShiftingLast week, at the Western Benefits Conference, IRS Commissioner of the Tax Exempt and Government Entities Division, Sunita B. Lough, addressed the conference minutes after the IRS released Ann. 2015-19, 2015-32 IRB.  This is the announcement reforming the determination letter process primarily for individually designed plans.

Commissioner Lough explained the rationale for elimination of the determination letter process for individually designed plans other than on plan adoption and termination.  She stated that the average time a reviewer takes to determine that a plan is compliant is three hours.  This limited time results from the significant number of applications and the shortage of qualified IRS personnel due to budget limitations.  Based on a three hour review, the IRS has been issuing, in her view, an opinion letter that would take a law firm

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2013 Year-End Qualified Retirement Plan Checklist

October 17, 2013

Authors

benefitsbclp

2013 Year-End Qualified Retirement Plan Checklist

October 17, 2013

by: benefitsbclp

It’s time to ensure year-end qualified plan deadlines are satisfied. Below is a checklist designed to help employers with this process, including information regarding the U.S. Supreme Court’s recent decision in U.S. v. Windsor regarding the Defense of Marriage Act (“DOMA”) and the impact of this decision on qualified retirement plans.  This checklist addresses both year-end deadlines and January 2014 deadlines which sponsors of qualified retirement plans may wish to begin preparing for now.

A.        DEADLINES APPLICABLE TO QUALIFIED RETIREMENT PLANS

  • Cycle C Sponsors.  Individually designed plans are on five-year cycles for renewing their determination letters with the IRS.  For most Cycle C sponsors (i.e., those sponsors with an employer identification number ending in either 3 or 8), the five-year cycle will end on January 31, 2014.  Generally, governmental plans are assigned to Cycle C.  However, governmental plan sponsors may elect Cycle E (i.e., February 1, 2015 to January
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Determination Letters and Proposed Amendments – Don’t Wait!

February 29, 2012

Authors

benefitsbclp

Determination Letters and Proposed Amendments – Don’t Wait!

February 29, 2012

by: benefitsbclp

If you submitted your retirement plan for a determination letter review, hopefully you got your determination letter back in quick order and it was perfect. However, everyone makes mistakes, even (sometimes) the IRS. It pays to double-check to make sure that all amendments you submitted are referenced in the favorable determination letter to the extent they were not covered by a prior determination letter. If all amendments since the last determination letter are not referenced in the current determination letter, you could have a potential issue down the road in an IRS audit or during the next determination letter application submission. The good news is that the IRS has a program for reviewing and correcting determination letter errors. The program requires you submit a request in writing detailing the corrections you believe are required.

But what if, during the course of your determination letter review, the IRS required you to

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If It Isn’t Written Down, It Didn’t Happen

November 8, 2011

Authors

benefitsbclp

If It Isn’t Written Down, It Didn’t Happen

November 8, 2011

by: benefitsbclp

 

We’ve all heard the old adage, advising us to record our thoughts and actions, lest they become lost to obscurity. In EP Quality Assurance Bulletin 2012-1, released November 2, the IRS reminds us of the importance of documentation with regard to the qualified plans in our lives. The Bulletin, entitled “Verification of Prior Plan Documents in the Absence of a Determination Letter,” provides IRS determination letter specialists with updated guidance on verification that retirement plans have been timely amended for prior legislation.

If you are filing your plan during the second remedial amendment cycle and you already have a d-letter covering the first cycle, you need to include all good-faith and interim amendments adopted after your first cycle submission.  In addition, you should include any discretionary amendments adopted since the issue date of the d-letter. However, if you are filing for a plan that does not

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