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Application for a D-Letter triggers complete compliance with 401(a)?


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I was talking with an employee benefits attorney the other day about whether a governmental plan should obtain a favorable determination letter from the IRS that the plan satisfies those portions of the qualified plan rules applicable to governmental plans.

The attorney mentioned that if the governmental plan applies for a determination letter, the plan is now, somehow, subject to some or all of the qualified plan rules from which the plan would otherwise be exempt.

Is this true?

While I have only very limited experience with governmental plans, this seems like an odd rule to me. Nothing in the Form 5300 instructions suggests such a rule.

If, in fact, there is such a rule, does anyone have a citation? The attorney who mentioned it did not?

Thank you very much!

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This seems to be a common misconception, but it is absolutely not true. We have gotten numerous determination letters for governmental plans over the years. In certain instances, an examiner has initially requested that some provision applicable only to private plans be added. However, in each case the examiner dropped the request as soon as we pointed out that the requirement was not applicable to governmental plans. You can click here for a list of the qualification requirements which do and do not apply to governmental plans.

Employee benefits legal resource site

The opinions of my postings are my own and do not necessarily represent my law firm's position, strategies, or opinions. The contents of my postings are offered for informational purposes only and should not be construed as legal advice. A visit to this board or an exchange of information through this board does not create an attorney-client relationship. You should consult directly with an attorney for individual advice regarding your particular situation. I am not your lawyer under any circumstances.

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