In using IRS-preapproved documents, may a user change an interim-amendment provision?

[Peter Gulia]

Today, a client sent me a package of what its recordkeeper labels “your SECURE 2.0 Act Interim Amendment.” The package describes this as “changes from your Cycle 3 qualified retirement plan.”

BenefitsLink neighbors, I’d welcome your help so I learn some contours about a plan sponsor’s uses of documents of this kind.

Am I right in guessing that an interim amendment does not get an IRS imprimatur like the IRS opinion letter that results from an on-cycle review of IRS-preapproved documents?

Am I right in guessing that an interim amendment—even if the documents’ designer built it from the IRS’s Listing of Required Modifications—does not get any IRS assurance?

A user may not rely on the IRS opinion letter that accompanies an IRS-preapproved document unless the user makes no change beyond those expressly allowed within the document or by an IRS Revenue Procedure about preapproved documents.

But what if an interim amendment states a provision on a point nowhere even mentioned in the preceding cycle’s IRS-preapproved documents? Without defeating reliance on the most recent IRS opinion letter, may a user change a provision the IRS never vetted?

I don’t yet know whether anything might call for even considering a change. But here’s why understanding the rules matters. If a change would defeat reliance, I might narrow the scope of my review and spend less of my client’s money and attention. Or if a change would not defeat reliance, I can, before I start work, ask my client how much or how little it wants me to review. And knowing the rules I might have better knowledge to form my advice about whether a change might be worthwhile.

I know many plan sponsors never seek a lawyer’s review of what a recordkeeper or other service provider has presented. But for those of us who are asked, the client and the lawyer together need to define what the lawyer is looking for, and, often more important, what not to consider.

I understand that I alone am responsible for any advice to my client.

[Paul I]

You guess correctly that the IRS does not approve or issue opinion letters for interim amendments.

Generally, a mass submitter submits their plan (Adoption Agreement and Basic Plan Document) for each restatement cycle to the IRS for IRS approval.  Once approved, the mass submitter submits to the IRS a list of plan providers who will use the mass submitter's document.  The IRS then issues an opinion letter for the plan provider (with a Letter Serial Number that is now reported on the 5500 series).  The plan provider can then have their client adopt the plan.

The plan provider is required to give to each employer who adopts the plan:

• A copy of the plan provider's IRS letter.
• A copy of the IRS approved plan documents.
• Copies of any subsequent amendments including the date the amendments are adopted.
• Contact information for the plan provider.

Further, the IRS says an employer who adopts the plan may not rely on this letter when the plan is not identical to the pre-approved plan (that is, the employer made amendments that cause the plan not to be considered identical to the pre-approved plan) [this language is from the IRS opinion letter noted above].

In response to IRS LRMs, mass providers prepare amendments to their documents.  Some amendments are intended to be adopted by all users of the mass provider's clients.  Other amendments may add or subtract choices that a plan provider may choose for its clients, or choices that an employer may choose.  None of these amendments are reviewed and approved by the IRS.

If a plan provider or employer do not adopt these interim amendments, or the language of the interim amendments is modified, then the IRS considers the plan to no longer be a pre-approved plan.  The plan can be submitted to the IRS for approval as an individually designed plan.

 

 

[G8Rs]

The interim amendment is required in order for a plan sponsor (employer) to have continued reliance on an IRS pre-approved plan. The amendment is subject to a good-faith standard. It is not approved by the IRS. There's no reliance on using LRM language, and for many provisions there is no LRM language because that is only available when the IRS is ready to review plans for the next restatement cycle. 

The amendment must include mandatory changes in the law as well as optional changes in the law that the employer has used in operation. It doesn't matter if these conflict or override language in the pre-approved plan. Any imperfections caused by the good-faith amendment can be retroactively corrected with future restatements that include IRS approved language.  

The good-faith standard also applies to changes that are "integrally" related to a change in the laws. What is integral is subjective.

Suppose a plan, as of the end of 2025, did not did not permit Roth contributions. But in order to allow catch-ups, the employer will add Roth deferrals. The interim amendment will include the Roth catch-up requirement. But, should the plan have already been amended to allow Roth deferrals based on the existing pre-approved plan? One could argue that adding Roth deferrals for all participants is integrally related to a change in the law. And for a calendar year plan this may not matter because a discretionary amendment must be adopted by the last day of the year - which is the same deadline applicable to a discretionary plan amendment. 

And here's an unlikely example but it may help with your question. A plan permits Roth deferrals and catch-ups. The employer doesn't want to deal with the new Roth catch-ups requirement. So, catch-ups are eliminated. But, catch-ups are so common that the pre-approved plan used by the employer always provides for catch-ups (i.e., there is no election for the employer to make to not include catch-up contributions). Can the interim amendment modify the pre-approved language to eliminate the catch-up provision? I'd say yes - it's integrally related to a change in the law and therefore the interim amendment can modify the IRS pre-approved language. There is no reliance, but as long as it meets a good-faith standard then the remedial amendment period can be used to fix any defects. If the next pre-approved plan that covers the Roth catch-up requirement does not include a 'no catch-up' option for the employer, then the employer would need to find a different document or modify the plan (and submit a 5307 if reliance is desired).