News Highlights on Extensions of time for certain PPA Restatements, Determination Letter Process changes and user fee changes

Tip of the Day

By Stephanie Reagan

Announcement 2015-19 Highlights

Announcement 2015-19  describes changes to the Employee Plans determination letter program for qualified plans. Effective January 1, 2017, the staggered 5-year determination letter remedial amendment cycles for individually designed plans, as described in Rev. Proc. 2007–44, will be eliminated (except that sponsors of Cycle A plans will be permitted to submit applications during the period beginning February 1, 2016, and ending January 31, 2017). The scope of the determination letter program for individually designed plans will be limited to initial plan qualification, qualification upon plan termination, and certain other limited circumstances. As of July 21, 2015, the Service ceased accepting off-cycle determination letter applications (as defined in section 14 of Rev. Proc. 2007–44), except with respect to new and terminating plans.

Notice 2016-3 Highlights

Extends the deadline for the PPA remedial amendment period to April 30, 2017 with respect to any defined contribution pre-approved plan adopted on or after January 1, 2016, other than a plan that is adopted as a modification and restatement of a defined contribution pre-approved plan that had been maintained by the employer prior to January 1, 2016. Therefore, if an employer is using an individually designed document for a defined contribution plan, the employer will have until April 30, 2017 to restate it to a pre-approved plan and submit it for a determination letter.

Expiration dates included in determination letters issued prior to January 4, 2016, are no longer operative. Future guidance will clarify the extent to which an employer may rely on a determination letter after a subsequent change in law or plan amendment.

Controlled groups and affiliated service groups that maintain more than one plan are permitted to submit determination letter applications during the Cycle A submission period beginning February 1, 2016, and ending January 31, 2017, provided that a prior Cycle A election with respect to the controlled group or affiliated service group had been made by January 31, 2012 (the last day of the previous Cycle A submission period).

Rev. Proc. 2016-6 Highlights

In general, this Procedure provides annual guidance regarding the process of issuing determination letters in accordance with Announcement 2015-19 described above.

 Rev. Proc. 2016-8 Highlights

This Procedure updates IRS User Fees beginning 2016 as follows:

  •  Determination letter Form 5300, $2,500
  • Determination letter Form 5307, $800
  • Determination letter Form 5310, $2,300
  • Waiver of 60-day rollover period, $10,000
  • Multiple employer plan, $4,000

2016 VCP compliance fees based on the number of participants:

  • Fewer than 21, $500
  • 21 – 50, $750
  • 51 – 100, $1,500
  • 101 – 1,000, $5,000
  • 1,001 – 10,000, $10,000
  • More than 10,000, $15,000

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