DC Prototype Adopts Amendment Taking it Out of Proram

[rocknrolls2]

Employer X maintains a prototype defined contribution plan for its employees. In 2011, X amended the plan to provide t hat nonelective employer contributions would be allocated on a weighted age and service formula. Such formula was not one of the permitted choices in the adoption agreement. The prototype sponsor has informed X that the amendment takes it out of preapproved status. According to the IRS Rev. Procs, X may use the preapproved plan cycle to submit its determination letter request for its now individually designed plan. For the next cycle, the employer is on the individually designed 5-year cycle. The IRS recently stopped accepting applications from sponsors for DC preapproved plans and it will announce when it will accept determination letter applications from adopting employers. Is my understanding correct that the employer would make a submission of its now individually designed plan during the period IRS states it is willing to accept determination letter submissions from employer adopting preapproved DC plans?

[ETA Consulting LLC]

Employer X maintains a prototype defined contribution plan for its employees. In 2011, X amended the plan to provide t hat nonelective employer contributions would be allocated on a weighted age and service formula. Such formula was not one of the permitted choices in the adoption agreement. The prototype sponsor has informed X that the amendment takes it out of preapproved status. According to the IRS Rev. Procs, X may use the preapproved plan cycle to submit its determination letter request for its now individually designed plan. For the next cycle, the employer is on the individually designed 5-year cycle. The IRS recently stopped accepting applications from sponsors for DC preapproved plans and it will announce when it will accept determination letter applications from adopting employers. Is my understanding correct that the employer would make a submission of its now individually designed plan during the period IRS states it is willing to accept determination letter submissions from employer adopting preapproved DC plans?

I don't know without research, but wanted to ask this; why not seek a prototype that contains the age-weighted provisions? Is the provision being sought not on 'any' prototype or just the one the plan is currently one?

Good Luck!

[John Feldt ERPA CPC QPA]

Exactly. There are a lot providers that have pre-approved (6-year cycle) documents available with aged-based, age/service-based, or age/service/comp based allocation methods.

I would think the employer could adopt one such document now and stay in the 6-year cycle.