Guidance Issued About IRS Determination Letter Program

The IRS is making changes to the program in anticipation of its elimination.

In anticipation of the elimination, effective January 1, 2017, of the five-year remedial amendment cycle system for individually designed plans under the Internal Revenue Service (IRS) Employee Plans determination letter program, the IRS issued a notice of changes.

The changes described in Notice 2016-03 will be reflected in an update to Revenue Procedure 2007-44, but the agency said employers may rely on the notice until the update is issued. According to the notice, the Department of the Treasury IRS will issue guidance providing that:

  • controlled groups and affiliated service groups that have previously made a Cycle A election are permitted to submit determination letter applications during the Cycle A submission period beginning February 1, 2016, and ending  January 31, 2017;
  • expiration dates on determination letters issued prior to January 4, 2016, are no longer operative; and
  • the period during which certain employers may, on or after January 1, 2016, establish or adopt a defined contribution pre-approved plan and, if permissible, apply for a determination letter, is extended from April 30, 2016, to April 30, 2017. 

The IRS announced in July 2015 its intent to eliminate the staggered five-year determination letter remedial amendment cycles for individually designed retirement plans and limit the scope of the determination letter program to initial plan qualification and qualification upon plan termination.