A revenue ruling reveals compensation tables for use in determining contributions to defined benefit plans as well as the taxable wage based used in permitted disparity contribution formulas for DC plans.
The Internal Revenue Service (IRS) has issued Revenue Ruling 2017-05,
revealing the taxable wage base for permitted disparity formulas used
in defined contribution (DC) plans.
Permitted disparity formulas
allow for larger contributions or benefits with respect to compensation
in excess of the Social Security wage base. For purposes of determining
covered compensation for the 2017 year, the taxable wage base is
$127,200.
In determining an employee’s covered compensation for a
plan year, the taxable wage base for the plan year is the taxable wage
base in effect as of the beginning of the period.
The ruling also
provides tables of covered compensation for determining contributions
to qualified pension, profit-sharing, and stock bonus plans.
The Internal Revenue Service (IRS)
has issued Revenue Procedure 2017-4 explaining how the IRS provides
advice to taxpayers on issues under the jurisdiction of the
Commissioner, Tax Exempt and Government Entities Division, Employee
Plans Rulings and Agreements Office. It also details the types of advice
available to taxpayers, and the manner in which such advice is
requested and provided.
Procedures for requesting determination
letters were modified to reflect the elimination of the five-year
remedial amendment cycles for individually designed plans and other
changes as described in section 4 of Rev. Proc. 2016–37.
To the extent that employers that maintain individually designed plans
may still request a determination letter under the third Cycle A, the
procedures described in sections 6 and 7 of Rev. Proc. 2016–6 continue
to apply.
Rev. Proc. 2016-37 says a plan can request a determination letter only if any of these apply:
It has never received a letter before;
The plan is terminating; or
The
IRS makes a special exception. IRS anticipates making exceptions based
on program capacity to work on additional applications, and the need for
rulings in certain areas. The agency said it will measure need in a
variety of ways including annual input from the Employee Plans (EP)
community.
In Rev. Proc. 2017-4 the IRS says procedures for
requesting determination letters were modified to reflect that
employers may request determination letters on whether covered employees
are leased employees only to the extent the employer is otherwise
eligible to apply for a determination letter under Rev. Proc. 2016–37.
Procedures
for requesting determination letters were modified to reflect that
employers that maintain individually designed plans may no longer
request determination letters on whether a plan sponsor is part of an
affiliated service group.
Procedures for requesting a minimum
funding waiver, as described in section 3 of Rev. Proc. 2004–15, 2004–1
C.B. 490, have been modified to eliminate the alternative of requesting a
determination letter in conjunction with a minimum funding waiver
request. Requests for minimum funding waivers may still be submitted to
the Office of Associate Chief Counsel (Tax Exempt and Government
Entities) as requests for private letter rulings. See section 5.15(2) of
Rev. Proc. 2017–1.
NEXT: More changes
Procedures for requesting determination letters were modified to
reflect that determination letters on partial terminations issued to
individually designed plans will be limited in scope to whether a
partial termination has occurred, unless the employer is otherwise
eligible to apply for a determination letter under Rev. Proc. 2016–37.
The
IRS says a favorable determination letter does not constitute a
determination with respect to the federal tax consequences of a lump sum
risk-transferring program as described in Notice 2015–49, 2015–30 I.R.B. 79.
Procedures
for describing the types of advice provided by Employee Plans Rulings
and Agreements were revised to reflect that revenue rulings, information
letters, and waivers of the minimum funding standard are no longer
issued by Employee Plans Rulings and Agreements, but instead are issued
by the Office of Associate Chief Counsel.
Procedures for
requesting § 7805(b) relief were modified to reflect delegation of
authority to Division Counsel (TEGEDC) to limit retroactive revocation
or modification of a determination letter or letter ruling issued by
Employee Plans Rulings and Agreements.
Procedures for user fees
were modified to reflect the elimination of the five-year remedial
amendment period, as well as changes in the Employee Plans Compliance
Resolution System (EPCRS) as described in Rev. Proc. 2016–51.