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Determination Ltr for Gvt Plan

Guest Luke80

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I have been asked to file for a determination letter for the pension plan of a local government. The problem is that there is no "stand alone" document, rather the government has a compilation of local ordinances that make up the terms of the plan.

My question is this - If the local government will pass an ordinance saying that this plan intends to comply with 401(a) and address all portions of 401(a) that apply to governmental plans, could this compilation of ordinances be submitted to the IRS in lieu of a plan document?

Does anyone have experience with something like this?


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Absolutely yes! It is quite common for a plan document of a local governmental plan to consist of several local statutes--often with state statutes, state and local regulations, policy manuals, and the like thrown in. So long as the documents as a whole meet those of the 401(a) requirements that apply to governmental plans, we have never had troubles getting an IRS determination letter on the plan as a whole.

One thing to watch out for, though, is the extent to which the local statute can easily be amended if required by the IRS. No matter how well drafted a plan may be, it is very common for the IRS to require some trivial amendments as a condition of issuing a favorable determination letter. (Indeed, when two identical plans are sent to two different IRS examiners, it is common for each examiner to request a different set of amendments.) Such amendments must be adopted within 90 days after the issuance of a favorable determination letter. You want to make sure that whatever legislative body is involved will be in session, will have time to make the amendments, and will agree to make the amendments within that 90-day period. The last thing you want is a determination letter that says that the plan must adopt certain amendments as a condition for qualification, and then to have those amendments not adopted, or not adopted in a timely manner.

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The opinions of my postings are my own and do not necessarily represent my law firm's position, strategies, or opinions. The contents of my postings are offered for informational purposes only and should not be construed as legal advice. A visit to this board or an exchange of information through this board does not create an attorney-client relationship. You should consult directly with an attorney for individual advice regarding your particular situation. I am not your lawyer under any circumstances.

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