Pre-Approved Plan Program Extended to Include Cash Balance Plans and Employee Stock Ownership Plans (ESOPs)

On June 8, 2015, the Internal Revenue Service (IRS) issued Revenue Procedure 2015-36 (the “Revenue Procedure”), updating existing guidance on pre-approved plan (including master and prototype (M&S) and volume submitter (VS) plans) applications for opinion and advisory letters. It also opens the pre-approved program to cash balance plans and ESOPs. The Revenue Procedure modifies and supersedes Revenue Procedure 2011-49.

The following is a summary of some, but not all, of the changes under the Revenue Procedure:
–Extends the deadline to submit on-cycle applications for opinion and advisory letters for pre-approved defined benefit plans for a plan’s second six-year remedial amendment cycle from June 30, 2015 to October 30, 2015;
–Expands the pre-approved plan program to include cash balance plans and ESOPs (and specifies when opinion letters will not be issued for cash balance plans and ESOPs);
–Reduces the required number of adopting employers necessary to qualify as a VS practitioner from 30 to 15. It also provides that if a plan sponsor requests an advisory letter for more than one basic plan document, it must represent to the IRS that it has at least 30 employer-clients in the aggregate, each of which is expected to adopt at least one of the VS sponsor’s basic plan documents;
–Eliminates the requirement that requests for opinion letters for defined benefit plans containing integrated and nonintegrated features must be submitted as separate filings;
–Allows VS plan submissions to include up to ten separate trust or custodial account documents for approval for each basic plan document without requiring an additional user fee; and
–Modifies the scope of an employer’s reliance on an opinion or advisory letter pursuant to the changes in IRS Announcement 2011-82 (the “Announcement”). The Announcement eliminated certain features of the determination letter program that were considered to be of limited utility to plan sponsors in comparison to the burdens they imposed.

The changes in the Revenue Procedure are effective immediately.

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