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Right Around the Corner: Expanded IRS Determination Letter Program Opens in September

​Beginning September 1, 2019, the IRS is expanding its retirement plan determination letter program to apply to certain individually designed statutory hybrid and merged plans. Employers sponsoring hybrid plans not previously reviewed by the IRS for required (or other) plan changes, and employers that have or will merge two or more of their plans together in connection with a corporate transaction, should consider taking advantage of this expanded determination letter program.

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A Blueprint for Maintaining an Individually Designed Qualified Plan after the IRS’s Determination Letter Program Cutback

On June 29, 2016, the Internal Revenue Service (IRS) officially sounded the death knell for the five-year remedial amendment cycle with its release of Revenue Procedure 2016-37. Effective January 1, 2017, employers that sponsor an individually designed qualified retirement plan—a group that includes most large retirement plans—may no longer request periodic determination letters. Instead, the IRS will continue to conduct random audits to assess plan compliance with plan document operational requirements.

The IRS will continue to conduct random audits to assess plan compliance with plan document operational requirements. Beginning in 2017, the IRS expects plan sponsors to amend written plan documents in accordance with Revenue Procedure 2016‑37 and without reliance on a determination letter. In the context of an audit, a plan sponsor may rely on a plan’s last favorable determination letter, but only with respect to provisions that have not been amended since the last issued determination letter. Sponsors of individually designed plans must develop new means for assuring they comply with the qualification requirements in the wake of Revenue Procedure 2016-37.

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