Determination Letter Applications

[Guest jg62098]

I am trying to determine when a Plan needs to be submitted to the IRS for approval. Here is the situation:

The plan sponsor adopted a defined benefit plan prototype that has not yet filed with the IRS for approval. The deadline is Jan. 31, 2008. The plan sponsor is adopting an amendment by the end of 2007 that will turn it into an individually designed plan. As an individually designed plan, it would be a Cycle A plan. My question is - is it appropriate to have the plan sponsor file a determination letter application during the time period set out for adopting the prototype (presumably 02/01/2010 - 01/31/2012) and since the next 5 year for Cycle A plans would end 01/31/2012, the plan would not need to file again until the next RAP for Cycle A (1/31/2017)?

Any guidance is greatly appreciated. Thank you.

[Peanut Butter Man]

If the plan does not have an opinion/advisory letter issued to it by the IRS, then it is an individually designed plan.

If the plan sponsor intends to submit the plan for an opinion/advisory letter, the plan is still considered individidually designed by the IRS until the IRS issues the opinion/advisory letters. For defined benefit plans, this will not happen until 2010. If you adopt a prototype or volume submitter plan before the opinion/advisory letter is issued, the IRS considers the plan individually designed.

If the plan was adopted before January 31, 2007, which was the deadline for restating a Cycle A plan for EGTRRA and submitting it to the IRS for a determination letter, then the plan might be late.

Did you sign Form 8905 to move the plan from the 5-year remedial amendment cycle for individually designed plans to the 6-year cycle for prototypes and volume submitter plans, stating that once the plan is approved by the IRS and the IRS issues the EGTRRA defined benefit opinion/advisory letters, you will re-adopt the plan using the pre-approved plan.

If you are adopting an amendment by the end of 2007 which will make the plan individually designed, then I don't believe that signing Form 8905 before January 31, 2007, will move you to the 6-year cycle for prototypes and volume submitters.

[Guest jg62098]

Peanut Butter Man - thanks for your response.

The IRS previously issued a determination letter for the preapproved DB Plan, however it has not yet issued a determination letter with respect to EGTRRA. The deadline for this submission is 01/31/2008. The plan intended to adopt the pre-approved plan within the two year timeframe that the Service issues as the time period to adopt (presumably beginning in 2010). Although the plan intended to adopt the pre-approved plan, it did not execute a Form 8905 and it subsequently has decided to adopt an amendment that is not permitted under the M&P program.

My initial anaylsis was the same as yours, that the plan would be considered a late filer, however after reading Rev. Proc. 2007-44 I was hoping that there was some way around it. My head is spinning from reading all the guidance and trying to come to a conclusion.

Thanks again,