Why should a prototype file for a DL?

[Guest newbie2]

At a recent ABA conference, it was suggested that all prototype plan sponsors should file a 5307 for a determination letter.

What are the reasons for doing this as a prototype? Are there any advantages or disadvantages to filing for a DL as a prototype?

Any insight is appreciated. Thank you.

[Jim Chad]

I know that some people recommend this when added bankruptcy protection is desired. The federal bankruptcy laws specifically protects plans with a determination letter.

I have also known some people to recommend filing if the Adoption agreement was completed by someone with a specialty other than retirement plans, such as investing, accounting, etc.

[Guest newbie2]

I know that some people recommend this when added bankruptcy protection is desired. The federal bankruptcy laws specifically protects plans with a determination letter.

I have also known some people to recommend filing if the Adoption agreement was completed by someone with a specialty other than retirement plans, such as investing, accounting, etc.

Thanks Jim...I had heard that re. bankruptcy protection but doesn't the opinion letter give you this protection as well?

Is there a reason to do it in case the prototype plan later becomes an individually designed plan? If so, what is the advantage of having a DL here?

Thank you again.

[Guest Sieve]

FWIW, if a major amendment event is missed (such as EGTRRA), then the VCP correction requires an FDL to be issued as part of that correction process, and the FDL application for that FDL is complicated if the Plan has never had a prior FDL--the IRS may require that all prior documents be submitted (most certainly back to TRA '86). That can open a can of worms, since you then have to confirm that there are no prior missing amendments (perhaps even UCA & OBRA) or else the CAP penalties may come into play as part of the issuance of an FDL.

[Bird]

It's kinda like this, IMO-

-if you know enough about plans to keep your document updated, then you don't need your own FDL,

-if you don't know enough about plans to keep your document updated, then you need an FDL, but then you probably don't know enough about plans to get one.

[Belgarath]

As a little twist on this - A client has decided he wants a FDL for his IRS approved prototype profit sharing plan. Naturally it has been updated, amended, restated, etc. timely with proper documents.

There's no real "deadline" for this, is there? In other words, he'll be an off-cycle filer, which just means that his FDL application will sit on someone's desk until all on-cycle filers have been processed.

Every time I look at the %##^&** Revenue Procedures and forms for filing, I end up going blind.

[Guest Sieve]

I have no %##^&** idea . . . (or, is it "no %##^&* idea"?) That Rev. Proc. is absolutely impossible to understand . . .!!

[Belgarath]

It certainly is no shining light, beckoning to our huddled masses yearning to be free...