Determination letter on ESOP

[Belgarath]

I'm a little (a lot?) confused on this. So, say an ESOP plan that was individually designed (weren't they all until relatively recently?) applied for and received a determination letter in 2014 - back when individually designed plans were on a 5-year cycle. That letter said it expired 12/31/2019.

But, didn't Rev. Proc. 2016-37 eliminate the 5-year cycle, and isn't it true that you generally cannot file for a determination letter currently (except for initial qualification, plan termination, etc.)?

So even if the plan sponsor wanted to apply for a determination letter, they can't? Or, is there a special situation for an ESOP that I'm missing?

[EBECatty]

The below is from the same revenue procedure. You did not miss anything; there is no special situation for ESOPs. You cannot file for a DL for an ongoing ESOP but can continue to rely on the existing DL (with the expiration date no longer operative) unless and until changes are made (or required and not made). 

SECTION 13. RELIANCE ON DETERMINATION LETTERS

.01 Rev. Proc. 2016-6 provides that, effective as of January 4, 2016, determination letters issued to individually designed plans will no longer contain an expiration date.

.02 Under this revenue procedure, expiration dates included in determination letters issued prior to January 4, 2016, are no longer operative.

.03 In general, a plan sponsor that maintains a qualified plan for which a favorable determination letter has been issued and that is otherwise entitled to rely on the  determination letter may not continue to rely on the determination letter with respect to a plan provision that is subsequently amended or that is subsequently affected by a change in law. However, a plan sponsor may continue to rely on a determination letter with respect to plan provisions that are not amended or affected by a change in law. Reliance on determination letters is discussed in section 13 of Rev. Proc. 2016-4, 2016-1 I.R.B. 142 (updated annually) and section 21.01 of Rev. Proc. 2016-6, 2016-1 I.R.B. 200 (updated annually). 

[Belgarath]

Muchas Gracias. Always nice to find out I'm not entirely senile.

[Linda Wilkins]

The IRS will begin approving prototype and volume submitter ESOP plans shortly, and many sponsor will want to consider adopting one so that they can have an updated current D letter.  Does anyone know whether these plans will be approved for adoption and which firms will be sponsoring volume submitter ESOPs?  

[Belgarath]

I believe FIS is doing one. I have a question for those folks who work a lot with ESOP's, and/or draft the ESOP documents. Do you think that most existing ESOP's will "fit" into a pre-approved plan document? Probably impossible to answer without seeing the pre-approved document... 

[Linda Wilkins]

I know that the ABA Employee Benefits Committee (ESOP subcommittee) worked extensively with the Treasury on the development of the volume submitter plan document, so I expect it to have a good chance of "fitting" most custom plan designs.  (I think Erin Turley at McDermott Will worked on this.)  I have my fingers crossed.