IRS Expands Determination Letter Program

Hybrid plans and merged plans can now request a determination letter.

The IRS has issued Revenue Procedure 2019-20 which provides for a limited expansion of the determination letter program with respect to individually designed plans. 

Under this limited expansion, the IRS says it will accept determination letter applications for:

  • individually designed statutory hybrid plans during a 12-month period beginning September 1, 2019, and
  • individually designed merged plans (as defined in section 5.01(2) of the revenue procedure) on an ongoing basis. 

In Revenue Procedure 2016-37, the agency closed the determination letter program except for initial plan qualification and for qualification upon plan termination.  The IRS later issued Revenue Procedure 2019-4 to provide an “other circumstances” category for which determination letters can be requested. Though the category was added, the agency did not specify what “other circumstances” for which it applies.

In April last year, the IRS asked for input about determination letter program exceptions. Among the input it received were comment letters from Groom Law Group, one of which suggested an exception for certain hybrid plans.

Revenue Procedure 2019-20 also provides for a limited extension of the remedial amendment period under Section 401(b) of the Internal Revenue Code (Code) and Revenue Procedure 2016-37 under specified circumstances, and for special sanction structures that apply to certain plan document failures discovered by the IRS during the review of a plan submitted for a determination letter pursuant to the new revenue procedure.