Good faith interpretation, but IRS disagrees

[Fielding Mellish]

We submitted a Plan for a Determination Letter. The IRS agent sent us an information request asking for more information and a few plan amendments. Some of the information they're saying is required in the Plan is information that we do not feel is required. In other words, we, in good faith, disagree with the IRS.

I spoke with the IRS agent and he said that there is a Rev. Proc. out there that says that failure to amend because of a good faith interpretation that certain provisions aren't applicable will get you "off the hook" from VCP fees.

I have looked and looked for that Rev. Proc but have found nothing. Has anyone else ever run into this situation?

[Everett Moreland]

RP 2007-44, sec. 5.03(2):

"(2) In addition, the same extension of the remedial amendment period applies to a disqualifying provision described in section 5.01 in the case where the employer (or sponsor or practitioner, if applicable) reasonably and in good faith determines during the period when an interim amendment to reflect a qualification change would otherwise be required under section 5.05 that no amendment is required because the qualification change does not impact provisions of the written plan document. Thus, for example, if a sponsor, practitioner, or employer makes such a determination and the Service in its review of the opinion, advisory, or determination letter application finds that an amendment is required, the plan would still be eligible for the five or six-year remedial amendment cycle to correct the disqualifying provision as described in section 5.01. The Service will make the final determination in all cases as to whether the sponsor’s, practitioner’s or employer’s determination that no interim amendment was required was reasonable and in good faith."

[Fielding Mellish]

RP 2007-44, sec. 5.03(2):

"(2) In addition, the same extension of the remedial amendment period applies to a disqualifying provision described in section 5.01 in the case where the employer (or sponsor or practitioner, if applicable) reasonably and in good faith determines during the period when an interim amendment to reflect a qualification change would otherwise be required under section 5.05 that no amendment is required because the qualification change does not impact provisions of the written plan document. Thus, for example, if a sponsor, practitioner, or employer makes such a determination and the Service in its review of the opinion, advisory, or determination letter application finds that an amendment is required, the plan would still be eligible for the five or six-year remedial amendment cycle to correct the disqualifying provision as described in section 5.01. The Service will make the final determination in all cases as to whether the sponsor’s, practitioner’s or employer’s determination that no interim amendment was required was reasonable and in good faith."

Great, thanks.