SECTION 25. PAPERWORK — Internal Revenue Bulletin 1997-1

REDUCTION ACT

(1) The plan was the subject of a favorable determination letter and the request for that letter contained no misstatement or omission of material facts;

(2) The facts subsequently developed are not materially different from the facts on which the determination letter was based;

(3) There has been no change in the applicable law; and

(4) The employer that established the plan acted in good faith in reliance on the determination letter.

However, all such plans must be amended to comply with the published revenue ruling for subsequent years. The conforming amendment to an individually designed plan must be adopted before the end of the first plan year that begins after the revenue ruling, revenue procedure, or administrative pronouncement is published in the Internal Revenue Bulletin and must be effective, for all purposes, not later than the first day of the first plan year beginning after the revenue ruling is published. For the rule as to the conforming amendment to an M&P plan and a regional prototype plan, see section 14 of Rev. Proc. 89–9 and Rev. Proc. 89–13, as modified by Rev. Proc. 90–21, sections 8.03–8.08 of Rev. Proc. 91–66, and Rev. Proc. 92–41.

.05 While a favorable determination letter may serve as a basis for determining deductions for employer contributions thereunder, it is not to be taken as an indication that contributions are necessarily deductible as made. This latter determination can be made only upon an examination of the employer’s tax return, in accordance with the limitations, and subject to the conditions of, § 404.

Rev. Proc. 96–6, with the exception of section 23.01, is superseded.

This revenue procedure is effective February 1, 1997.

The collections of information contained in this revenue procedure have been reviewed and approved by the Office of Management and Budget in accordance with the Paperwork Reduction Act (44 U.S.C. 3507) under control number 1545–1520.

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid control number.

The collections of information in this revenue procedure are in sections 6.16, 6.18, 7.04, 9.07(4), 10.05, 14, 16, 17, 20.02, and 22.04. This information is required to determine plan qualification. This information will be used to determine whether a plan is entitled to favorable tax treatment. The collections of information are mandatory. The likely respondents are business or other for-profit institutions.

The estimated total annual reporting and/or recordkeeping burden is 163,086 hours.

The estimated annual burden per respondent/recordkeeper varies from 1 hour to 40 hours, depending on individual circumstances, with an estimated average of 2.02 hours. The estimated number of respondents and/or recordkeepers is 80,763.

The estimated annual frequency of responses (used for reporting requirements only) is once every three years.

Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.

DRAFTING INFORMATION The principal author of this revenue procedure is James Flannery of the Employee Plans Division. For further information regarding this revenue procedure, contact the Employee Plans Division’s telephone assistance service between the hours of 1:30 and 4:00 p.m. Eastern time, Monday through Thursday, on (202) 622–6074 (not a toll-free call). Mr. Flannery can be contacted by calling (202) 622–6214 (also not a toll-free call).

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EXHIBIT: SAMPLE NOTICES TO INTERESTED PARTIES

The Exhibit set forth below, may be used to satisfy the requirements of section 19 of this revenue procedure. Exhibit: Sample Notice to Interested Parties

Notice To: ______________________________ [describe class or classes of interested parties]

An application is to be made to the Internal Revenue Service for an advance determination on the qualification of the following employee pension benefit plan:

(name of plan)

(plan number)

(name and address of applicant)

(applicant EIN)

(name and address of plan administrator)

The application will be filed on with the Key District Director, Internal Revenue Service at for an advance determination as to whether the plan meets the qualification requirements of § 401 or 403(a) of the Internal Revenue Code of 1986, with respect to the plan’s [initial qualification, amendment, termination, or partial termination].
The employees eligible to participate under the plan are:
The Internal Revenue Service [has/has not] previously issued a determination letter with respect to the qualification of this plan.

RIGHTS OF INTERESTED PARTIES

You have the right to submit to the Key District Director, at the above address, either individually or jointly with other interested parties, your comments as to whether this plan meets the qualification requirements of the Internal Revenue Code.

You may instead, individually or jointly with other interested parties, request the Department of Labor to submit, on your behalf, comments to the Key District Director regarding qualification of the plan. If the Department declines to comment on all or some of the matters you raise, you may, individually, or jointly if your request was made to the Department jointly, submit your comments on these matters directly to the Key District Director.

REQUESTS FOR COMMENTS BY THE DEPARTMENT OF LABOR

The Department of Labor may not comment on behalf of interested parties unless requested to do so by the lessor of 10 employees or 10 percent of the employees who qualify as interested parties. The number of persons needed for the Department to comment with respect to this plan is . If you request the Department to comment, your request must be in writing and must specify the matters upon which comments are requested, and must also include:

(1) the information contained in items 2 through 5 of this Notice; and

(2) the number of persons needed for the Department to comment.

A request to the Department to comment should be addressed as follows:

Deputy Assistant Secretary Pension and Welfare Benefits Administration ATTN: 3001 Comment Request U.S. Department of Labor, 200 Constitution Avenue, N.W. Washington, D.C. 20210

COMMENTS TO THE INTERNAL REVENUE SERVICE

Comments submitted by you to the Key District Director must be in writing and received by him by . However, if there are matters that you request the Department of Labor to comment upon on your behalf, and the De

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partment declines, you may submit comments on these matters to the Key District Director to be received by him within 15 days from the time the Department notifies you that it will not comment on a particular matter, or by, whichever is later, but not after . A request to the Department to comment on your behalf must be received by it by if you wish to preserve your right to comment on a matter upon which the Department declines to comment, or by if you wish to waive that right.

ADDITIONAL INFORMATION

Detailed instructions regarding the requirements for notification of interested parties may be found in sections 18 and 19 of Rev. Proc. 97–6. Additional information concerning this application (including, where applicable, an updated copy of the plan and related trust; the application for determination; any additional documents dealing with the application that have submitted to the Service; and copies of section 18 of Rev. Proc. 97–6 are available at during the hours of for inspection and copying. (There is a nominal charge for copying and/or mailing.)

APPENDIX Checklist As part of a § 420 determination letter request described in section 17 of this revenue procedure the following checklist may be completed and attached to the determination letter request:

ITEM CIRCLE SECTION

Does the Plan contain a medical benefits account within the meaning of § 401(h) of the Code? If the medical benefits account is a new provision, items ‘‘a’’ through ‘‘h’’ should be completed.

a. Does the medical benefits account specify the medical benefits that will be available and contain provisions for determining the amount which will be paid?

Yes No

b. Does the medical benefits account specify who will benefit? Yes No

c. Does the medical benefits account indicate that such benefits, when added to any life insurance protection in the Plan, will be subordinate to retirement benefits?

d. Does the medical benefits account maintain separate accounts with respect to contributions to

key employees (as defined in § 416(i)(1) of the Code) to fund such benefits?

e. Does the medical benefits account state that amounts contributed must be reasonable and ascertainable?

f. Does the medical benefits account provide for the impossibility of diversion prior to satisfaction of liabilities (other than item ‘‘7’’ below)?

g. Does the medical benefits account provide for reversion upon satisfaction of all liabilities (other

than item ‘‘7’’ below)?

h. Does the medical benefits account provide that forfeitures must be applied as soon as possible to

reduce employer contributions to fund the medical benefits?

Yes No

Does the Plan limit transfers to ‘‘Excess Assets’’ as defined in § 420(e)(2) of the Code? Yes No
Does the Plan provide that only one transfer may be made in a taxable year (except with regard to transfers relating to prior years pursuant to § 420(b)(4) of the Code)?
Does the Plan provide that the amount transferred shall not exceed the amount reasonably estimated to be paid for qualified current retiree health liabilities?
Does the Plan provide that no transfer will be made in any taxable year beginning after December 31, 2000?
Does the Plan provide that transferred assets and income attributable to such assets shall be used only to pay qualified current retiree health liabilities for the taxable year of transfer?
Does the Plan provide that any amounts transferred (plus income) that are not used to pay qualified current retiree health liabilities shall be transferred back to the defined benefit portion of the Plan?
Does the Plan provide that amounts paid out of a health benefits account will be treated as paid first out of transferred assets and income attributable to those assets?
Does the Plan provide that participants’ accrued benefits become nonforfeitable on a termination basis (i) immediately prior to transfer, or (ii) in the case of a participant who separated within 1 year before the transfer, immediately before such separation?

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Yes No

In the case of transfers described in § 420(b)(4) of the Code relating to 1990, does the Plan provide that benefits will be recomputed and become nonforfeitable for participants who separated from service in such prior year as described in § 420(c)(2)?
Does the Plan provide that transfers will be permitted only if each group health plan or arrangement contains provisions satisfying § 420(c)(3) of the Code?
Does the Plan define ‘‘applicable employer cost’’, ‘‘cost maintenance period’’ and‘‘ benefit maintenance period’’, as needed, consistently with § 420(c)(3) of the Code?

Yes No

Yes No _______

Yes No ______

Does the Plan provide that transferred assets cannot be used for key employees? Yes No ______

26 CFR 601.201: Rulings and determination let- ters.

Rev. Proc. 97–7