By B. David Joffe, Esq.
Bradley Arant Boult Cummings LLP, Nashville, TN
Last year, the Internal Revenue Service (IRS) announced significant changes to its determination letter program for tax-qualified retirement plans. In Announcement 2015-19, the IRS eliminated the staggered five-year remedial amendment filing cycles for individually designed plans and limited the determination letter program to initial plan qualification, qualification upon plan termination, and certain other limited circumstances. This year, in Notice 2016-3, in anticipation of the revised determination letter program, the IRS has provided guidance in the following areas:
The changes that the IRS has made in the determination letter program may lead plan sponsors whose plans can be restated on a pre-approved plan to consider doing so in order to have greater, continuing reliance regarding the tax-qualified status of the form of their plans. Such sponsors may generally rely on the opinion or advisory letter issued for the pre-approved plan. However, the elimination by the IRS of periodically-updated determination letters for the sponsors of plans that cannot be restated on a pre-approved plan presents a new risk for such sponsors and their plans, many of which may not be terminated for decades or more.
If you have any questions about the Notice, please contact one of the attorneys in the Employee Benefits and Executive Compensation Group at Bradley Arant Boult Cummings LLP.
For more information, in the Tax Management Portfolios, see Ireland, 360 T.M., Qualified Plans — IRS Determination Letter Procedures, and in Tax Practice Series, see ¶5540, Obtaining IRS Approval for Qualified Plans.
© 2016 Bradley Arant Boult Cummings LLP
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