As we previously reported, the Internal Revenue Service (the “Service”) scaled back its determination letter program for individually designed retirement plans effective as of January 1, 2017. In the intervening years, the Service received a multitude of comments requesting the reopening of the program.
Now, the Service has decided to offer a limited expansion of the determination letter program as outlined in Revenue Procedure 2019-20 (the “Revenue Procedure”). In particular, the Revenue Procedure provides that the Service will accept determination letter applications for both individually designed statutory hybrid plans and individually designed merged plans.
The Revenue Procedure indicates that plan sponsors may submit determination letter applications for individually designed statutory hybrid plans during the twelve-month period beginning September 1, 2019 and ending August 31, 2020. The Service will review such plans based on the Required Amendments Lists issued in 2017 and prior years.
In addition, the Revenue Procedure permits plan sponsors to submit determination letter applications for certain individually designed merged plans effective as of September 1, 2019.
In this context, a “merged plan” is defined as an individually designed plan that results from the merger or consolidation of two or more plans that were maintained by previously unrelated entities (i.e. entities that are not members of the same controlled group) in connection with a corporate merger, acquisition or other similar transaction.
The Service will review merged plans based on the Required Amendments List that was issued during the second full calendar year preceding the submission of the determination letter application. Applications will be accepted on an ongoing basis if the following two requirements are met.
First, the date on which the plan merger occurs must not be later than the last day of the first plan year that begins after the plan year that includes the effective date of the transaction that resulted in the merger.
Second, the application for the determination letter must be submitted within a period beginning on the date of the plan merger and ending on the last day of the first plan year of the merged plan that begins after the date of the plan merger.
The Revenue Procedure presents a previously unavailable opportunity for certain plan sponsors to seek and receive determination letters for these types of plans. A copy of the Revenue Procedure can be found here.