Opinion Letters for EGTRRA Still Available
Limited Time Only Rev. 10/10/08, E-mail Alert 2008-13

Did you miss out on a particular type of preapproved defined contribution plan when you submitted for your EGTRRA document? Would you like another chance to submit for an opinion letter or an advisory letter? Do you need a volume submitter document or specific prototype, such as a new comparability plan?

You can obtain an opinion letter for any of our defined contribution prototype plans or an advisory letter for any of our defined contribution volume submitter plans!

For a technical explanation of how this is possible, Revenue Procedure 2008-56 is presented in its entirety below.  By the way, Rich Hochman (among other practitioners) was very adamant about the need for this; so we are very happy to see that the IRS agreed with him.

Revenue Procedure 2008-56 changes the rules regarding the submission of preapproved plans. Prior to this revenue procedure, an opinion letter for a defined contribution preapproved plan (master and prototype and volume submitter) was only able to be requested as part of a mass-submitter submission by January 31, 2006 six-year cycle deadline.

An off-cycle preapproved defined contribution plan submission was permitted by Revenue Procedure 2007-44. This submission had to be made by April 1, 2008. However, opinion or advisory letters issued under this process did not have retroactive reliance for any time prior to the submission. Thus, if an employer adopted a provider’s plan and wanted to restate its plan by using a preapproved plan of a different provider that was submitted under Rev. Proc. 2007-44, then for reliance purposes, the employer must submit the plan for its own determination letter.

Rev. Proc. 2008-56 to the rescue.
This revenue procedure makes off-cycle submission for an opinion letter possible, as long as the plan being submitted is a word-for-word adopter of a mass submitter plan. McKay Hochman is a mass submitter and has an approved EGTRRA document that may be submitted for an opinion letter under the new revenue procedure.  Unlike those who submitted under Revenue Procedure 2007-44, employers will have retroactive reliance when they restate using this new procedure.

Thus, for example, if your firm sponsors an EGTRRA defined contribution prototype plan, then as a mass submitter, McKay Hochman could submit, on your firm’s behalf, an EGTRRA volume submitter plan or prototype new comparability 401(k) plan. We would then obtain for your firm an advisory letter for the volume submitter or an opinion letter for a prototype plan in your firm’s name. Employers could thus have reliance on their EGTRRA restatements without having to submit for individual determination letters. Keep in mind that the deadline for the EGTRRA preapproved defined contribution restatements is April 30, 2010.

Below is Revenue Procedure 2008-56.

Part III
Administrative, Procedural, and Miscellaneous
26 CFR 601.201: Rulings and determination letters
(Also, Part I, §§ 401; 1.401(b)-1.)

Rev. Proc. 2008-56

SECTION 1. PURPOSE
This revenue procedure modifies Rev. Proc. 2007-44 with respect to certain restrictions that apply to the issuance of opinion and advisory letters for new preapproved plans. These restrictions were included in Rev. Proc. 2007-44 primarily to ensure that the use of Service resources to administer the preapproved plan program does not adversely affect the determination letter program. After further evaluation and consideration of comments from preapproved plan sponsors, the Service is relaxing these restrictions. In general, the changes in this revenue procedure apply only to plans that are identical to mass submitter plans. Since the plans affected by the changes have, in effect, already been reviewed and approved, the Service is able to make the changes without reducing resources needed for the determination letter program.

SECTION 2. BACKGROUND
.01 Rev. Proc. 2007-44 provides a system of cyclical remedial amendment periods under § 401(b) of the Internal Revenue Code for amending plans qualified under § 401(a) and obtaining determination letters. Under this system, every preapproved plan (that is, a master and prototype (M&P) or volume submitter (VS) plan) must be submitted to the Service for a new opinion or advisory letter every six years, during the one-year submission period at the beginning of the plan’s six-year cycle. preapproved defined contribution plans have a different six-year cycle than preapproved defined benefit plans. The cycles and submission periods are set forth in section 18 of Rev. Proc. 2007-44.

.02 After the Service issues a new opinion or advisory letter, the preapproved plan’s adopting employers must adopt the newly approved restatement of the plan within the adoption period announced by the Service. An eligible employer that adopts the restated preapproved plan within the adoption period will have adopted the plan within the employer’s six-year remedial amendment cycle. In Announcement 2008-23, 2008-14 I.R.B. 731, the Service announced that the adoption period for preapproved defined contribution plans that have received opinion or advisory letters under the Economic Growth and Tax Relief Reconciliation Act of 2001, Pub. L. 107-16, (“EGTRRA”) will end on April 30, 2010.

.03 Certain exceptions to the preceding rules apply to new preapproved plans. A new preapproved plan is one that is created after the submission period for the applicable six-year cycle. An application for an opinion or advisory letter for a new preapproved plan that is submitted outside of the submission period within an applicable six-year cycle is filed “off-cycle.” Section 20 of Rev. Proc. 2007-44 provides the following exceptions to the rules described in sections 2.01 and 2.02, above:

(1) In order for the adopting employers of a new preapproved plan to be eligible for an applicable six-year cycle, the preapproved plan must be submitted to the Service for an opinion or advisory letter prior to the beginning of the announced adoption period for that cycle.

(2) The opinion or advisory letter with respect to an off-cycle application is not retroactive and may not be relied upon for the period prior to the date of submission of the application.

(3) A sponsor or practitioner that submits an application for an opinion or advisory letter within the submission period for an applicable six-year cycle may not also submit an off-cycle application for an opinion or advisory letter.

In accordance with paragraph (2), some EGTRRA opinion and advisory letters include a caveat stating that the letter is not retroactive and may not be relied upon for the period prior to the date of submission of the application.

.04 Rev. Proc. 2005-16, 2005-1 C.B. 674, which contains the Service’s procedures for the issuance of opinion and advisory letters, contains rules applicable to “mass submitter” plans, that is, preapproved plans that are submitted to the Service on a word-for-word identical basis by a minimum number of sponsoring organizations or practitioners.

SECTION 3. MODIFICATION OF REV. PROC. 2007-44

.01 Rev. Proc. 2007-44 is modified to provide the following:

(1) A sponsor or practitioner is not precluded from submitting an off-cycle application for an opinion or advisory letter on account of having also submitted an on-cycle application, provided the new application is for a plan that is word-for-word identical to a mass submitter plan that has received a favorable EGTRRA opinion or advisory letter, or for which an application for such a letter is pending, and the new application is filed according to the procedures governing mass submitter plans under Rev. Proc. 2005-16.

(2) Adopting employers of a new preapproved plan that is word-for-word identical to a mass submitter plan will not fail to be eligible for an applicable six-year cycle merely because the preapproved plan is submitted to the Service for an opinion or advisory letter after the beginning of the announced adoption period for that cycle. Regardless of when the application is filed or when the opinion or advisory letter is issued, however, the announced adoption period for any applicable six-year cycle will not be extended.

(3) An otherwise eligible adopting employer as described in section 17 of Rev. Proc. 2007-44 may rely on a preapproved plan’s current opinion or advisory letter to retroactively amend its plan under § 401(b) and Rev. Proc. 2007-44 by adopting the preapproved plan within the announced adoption period for the applicable six-year cycle, regardless of whether the opinion or advisory letter application for the plan was filed off-cycle (and regardless of whether the plan is word-for-word identical to a mass submitter plan). Thus, for example, an eligible employer may rely on a preapproved plan’s EGTRRA opinion or advisory letter to retroactively amend its plan for EGTRRA and the other qualification changes listed in Notice 2004–84, 2004–2 C.B. 1030, (“the 2004 Cumulative List”) by adopting the preapproved plan within the adoption period ending on April 30, 2010, even if the application for the opinion or advisory letter for the plan was submitted off-cycle. Any EGTRRA opinion or advisory letters that have been issued with a caveat prohibiting retroactive reliance will be reissued by the Service to remove the caveat.

.02 Until further notice, the Service will continue to accept off-cycle applications for opinion or advisory letters filed by M&P and VS mass submitters for preapproved plans that are word-for-word identical to the mass submitter’s currently approved plan or to a plan of the mass submitter for which an application is currently pending with the Service. The Service will not accept applications for opinion or advisory letters for other plans submitted after the beginning of the adoption period announced by the Service for an applicable six-year cycle because there will not be sufficient time for the Service to review the plans and for employers to then adopt the plans before the end of the adoption period.

SECTION 4. EFFECT ON OTHER DOCUMENTS

Rev. Proc. 2007-44 is modified.

SECTION 5. EFFECTIVE DATE

The modification in this revenue procedure will be treated as in effect as of the effective date of Rev. Proc. 2007-44, June 13, 2007.

DRAFTING INFORMATION
The principal author of this revenue procedure is James P. Flannery of the Employee Plans, Tax Exempt and Government Entities Division. For further information regarding this revenue procedure, please contact Mr. Flannery via email at RetirementPlanQuestions@irs.gov.