SECTION 7. TRANSITIONAL RELIEF

.01 SIMPLE IRAs. A SIMPLE IRA must be established for an employee prior to the first date a SIMPLE IRA Plan contribution is required to be deposited into the employee’s SIMPLE IRA. An employee or employer who establishes a trust, custodial account or annuity contract as a SIMPLE IRA in 1997 using a document that has not been approved for use as a SIMPLE IRA by the Service is deemed to have used a document that has been approved

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for this use by the Service provided the conditions in (1) through (4) below are satisfied:

(1) The employee or employer used a document provided by a prototype sponsor to establish the ‘‘SIMPLE IRA.’’

(2) On or before December 31, 1997, the prototype sponsor applies to the Service for an opinion letter on the document described in section 7.01(1). The prototype sponsor must apply for the opinion letter using the procedures contained in either section 3 or section 4 of this revenue procedure.

(3) The employee or employer adopts the approved document within 120 days after the later of: (a) the date the Service issues a favorable opinion letter on the document to the prototype sponsor, and (b) if the prototype sponsor seeks approval of the document from one or more state insurance departments not later than 90 days after the Service issues a favorable opinion letter on the document, the date the document is approved by all such state insurance departments. If, as a result of amendments to the document required by a state insurance department, the prototype sponsor applies to the Service for an opinion letter on the amended document within 90 days after it is approved by such state insurance department, the date in (a) in the preceding sentence is the date the Service issues a favorable opinion letter on the amended document.

(4) The employer making contributions to the SIMPLE IRA, the employee on whose behalf contributions are made, and the trustee, custodian or issuer of the SIMPLE IRA comply in operation with § 408(p) for the period beginning on the date the first SIMPLE IRA Plan contribution was deposited into a trust, custodial account or annuity contract established under the original document through the date the employee or employer adopts the approved document.

.02 SIMPLE IRA Plans. An employer must establish a SIMPLE IRA Plan using a document that meets the requirements of § 408(p). An employer who establishes a plan as a SIMPLE IRA Plan in 1997 using a document that has not been approved for use as a SIMPLE IRA Plan by the Service is deemed to have established a SIMPLE IRA Plan using a document that has been approved for this use by the Service provided the conditions in (1) through (4) below are satisfied:

(1) The employer used a document provided by a prototype sponsor to establish the ‘‘SIMPLE IRA Plan.’’

(2) On or before December 31, 1997, the prototype sponsor applies to the Service for an opinion letter on the document described in section 7.02(1). The prototype sponsor must apply for the opinion letter using the procedures contained in section 6 of this revenue procedure.

(3) Within 120 days after the Service issues a favorable opinion letter on the document to the prototype sponsor, the employer adopts the approved document.

(4) The employer making contributions under the SIMPLE IRA Plan, the employees on whose behalf contributions are made, and the trustees, custodians or issuers of the SIMPLE IRAs established for use with the SIMPLE IRA Plan comply in operation with § 408(p) for the period beginning on the date the document was first used by the employer as a SIMPLE IRA Plan and through the date the employer adopts the approved document.