Cash Balance Determination Letter

[jessgaines]

Has anyone been denied a determination letter for an IDP cash balance plan?  I have a client that restated an IDP to a preapproved plan.  The original  IDP had never obtained a DL, so they wanted to get a DL for the original plan.  We sent in the application last May (2019) and just received a letter stating that due to Rev Proc 2019-4, section 12 they are not able to issue a determination.  Has anyone heard this before?  The IRS agent stated that they are notifying a lot of applications of this.  Any input would be appreciated, even if you just let me know it happened to you.

[Mike Preston]

I thought that the IRS previously announced that IDP's can receive an LOD on installation and on termination, but nothing in between.

[jessgaines]

From what I understand, IDP can receive a LOD if they have never applied for one.  From the IRS website:

"You may only submit an application if your individually designed plan is:

• A plan seeking an initial favorable determination letter
• A terminating plan
• A plan that meets certain circumstances to be announced in IRS guidance (no additional circumstances apply for applications in calendar year 2017)"

My real question is, if you restate to a preapproved plan from an IDP that never received a determination letter, can you not apply for a letter on the original plan?  Must you rely on the opinion letter for the preapproved plan?

[QP_Guy]

Help me understand what you're hoping for.  I would think that once you restated, you'd have 'reliance' to use EPCRS.  What other help will the LOD provide that you don't have already?

That said, I'd confirm : 1. the 5300 clearly asked the right question ("may i have a LOD on initial qualification?"); and 2. the IRS's failure to provide a favorable letter won't kick in the referral to Exams that is already in the Rev Proc (Sec. 7, .02) and that the IRS is saber rattling about nowadays.

[LANDO]

Try this...

https://www.irs.gov/pub/irs-drop/rp-19-20.pdf?utm_source=ERISA+Law+Alert+-+5%2F2%2F19&utm_campaign=2%2F21%2F17+Newsletter&utm_medium=email

See the excerpt below from:

https://www.wagnerlawgroup.com/resources/erisa/irs-expands-determination-letter-program-revenue-procedure-2019-20

 

"...Sponsors of individually-designed statutory hybrid plans, such as cash balance plans and pension equity plans, may submit requests for determination letters during the 12-month period beginning September 1, 2019 and ending August 31, 2020. Because the IRS's scope of review during a statutory hybrid plan's most recent remedial amendment cycle did not include provisions related to the final hybrid plan regulations, sponsors of statutory hybrid plans now have the opportunity to request that the IRS review their plans during this one year submission window to verify their plans comply with the hybrid plan rules and to correct plan document failures related to these rules without having to pay a sanction."

[LANDO]

I believe that since you've restated onto a pre-approved document you have to meet one of the exceptions in Rev Proc 2019-4 in order to file a pre-approved document for a determination letter.

https://www.irs.gov/pub/irs-irbs/irb19-01.pdf