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Very minor modifications to VS documents


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In the past, it seemed that the IRS was fairly reasonable about allowing MINOR modifications to a VS without requiring a determination letter filing. However, under Revenue Procedure 2011-49, a literal reading of the Revenue Procedure doesn’t provide any wiggle room on this subject. In fact, they specifically removed a provision from prior Revenue Procedures that, reasonably, allowed correction of “obvious and unambiguous” typographical errors and/or cross-references. Now, if you lose reliance over fixing a typo, or a reference to the top-heavy provisions in article “x” – when in fact article “x” is for minimum distributions and article “b” is the top-heavy article, then more substantive modifications seem risky.

Anyone had any conversations with the IRS on this whole issue, or heard anything at conferences, etc.? Whether the IRS truly intends to enforce this I can’t say.

But it looks like you could file minor modifications on a 5307, as per the following.

See following excerpt from Revenue Procedure 2012-6.

Modifications to Revenue Procedure 2011-49

.02 Rev. Proc. 2011-49 is hereby modified as follows with respect to determination letter applications filed on or after May 1, 2012:

1. An adopting employer of an M&P plan (whether standardized or nonstandardized) may not apply for a determination letter for the plan on Form 5307.

2. An adopting employer of a VS plan may not apply for a determination letter for the plan on Form 5307 unless the employer has modified the terms of the approved plan and the modifications are not so extensive as to cause the plan to be treated as an individually designed plan.

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  • 2 months later...

I heard about Revenue Procedure 2012-6 from an opposite perspective - that the IRS no longer PERMITS a user to get a determination letter if the user has not changed anything from the "pre-approved plan".

To work around that constraint, some practitioners find a provision to delete, change, or add (and even with the best of what's available from the document providers, there are some non-tax-oriented provisions that can bear an improvement) so that one can file Form 5307 or Form 5300 to get a determination letter.

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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  • 1 year later...

Don't know if this thread is still live, but here is a further question.

If a PPA restatement is adopted with no modifications on the current cycle (May 2014 through April 2016) can it be submitted if the Plan Sponsor had adopted discretionary amendments following the last restatement cycle (ending April 2010).

I understand that that the PPA restatement itself does not have to be reviewed because it is a volume submitter with no changes, but:

1. what if the Plan Sponsor wants a ruling on amendments that were adopted between that last restatement cycle and the current one?

2. What if the Plan Sponsor started a Plan in the 1980s and only adopts a volume submitter Plan now? What if any assurances can the Plan Sponsor get for initial qualification of the Plan?

3. How can a Plan Sponsor get reliance on discretionary amendments if the Plan Sponsor later adopts a volume submitter plan.

Thanks

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I'll give this one a try.

The Rev Proc cited above (and its updates) says the IRS will not issue determination letters for pre-approved plans where the employer has reliance on the opinion letter. I don't see anything that changes that if they adopted discretionary amendments to the prior document since the prior restatement.

1. Rev. Proc. 2007-44 Section 5.03 gives an extended remedial amendment period for discretionary and interim amendments adopted since the prior restatement cycle. If there are any issues with the amendments, they should be corrected when the VS restatement is done. I think that eliminates the need for a determination letter on those amendments.

2. If you are saying the plan has been using an individually designed plan since the 1980s and has never submitted for a determination letter I would suggest they hire a good ERISA attorney. If you are saying they missed a required restatement, a VCP non-amender filing is the solution.

3. See 1.

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