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Sept. 16 — The IRS is looking for ways to alleviate the stress retirement plan sponsors are experiencing because of the changes coming to the agency’s determination letter program.
The Internal Revenue Service and Treasury Department put out a call for comments on how they can make it easier for sponsors to satisfy qualified plan document requirements, the agencies said in Announcement 2016-32, issued Sept. 16.
The IRS announced last year that it would be making changes to its determination letter program beginning in 2017 to generally only offer letters to plans upon inception and termination. Determination letters are statements from the IRS that a retirement plan complies with the tax code’s qualification requirements on paper.
Sponsors of retirement plans have been almost universally disappointed in the changes because they rely on the letters to feel assured they have a qualified plan.
The IRS asked for comments in several areas, including whether there are circumstances under which plan provisions might not be required. Plan sponsors have expressed concerns over being required to include provisions in their plan documents that either don’t apply to their plans, or don’t yet apply, the IRS said.
Comments were also solicited on conversions to pre-approved plans. The IRS has been pushing conversions to these kinds of plans—which are qualified retirement plans provided by a financial institution or other entity that have been pre-approved by IRS. Sponsors of larger plans have been resistant to this suggestion, saying their individually designed plans wouldn’t be able to fit into the mold of a pre-approved plan document.
The IRS said it expects to issue a revision of the revenue procedure on its Employee Plans Compliance Resolution System “shortly” to “accommodate” the changes to the determination letter program.
Comments on Announcement 2016-32 are due by Dec. 15.
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Announcement 2016-32 is at http://src.bna.com/iE0.
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
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