SECTION 2. BACKGROUND

.01 GATT and SBJPA made a number of changes to the plan qualification requirements. Many of these changes are already in effect for most plans while other changes do not take effect until plan years beginning after December 31, 1998 or December 31, 1999. TRA ’97 also made several changes to the qualification requirements. The TRA ’97 changes are generally effective for plan years beginning after December 31, 1997, but certain changes are effective for plan years beginning after the date of enactment of TRA ’97, August 5, 1997.

.02 In Rev. Proc. 97–41, the Service provided a remedial amendment period under § 401(b) with respect to certain amendments for GATT and SBJPA. The remedial amendment period generally permits plan amendments to be made retroactively effective if they are adopted on or before the last day of the first plan year beginning on or after January 1, 1999, and they relate to GATT and SBJPA qualification changes that are effective before the first day of that plan year. (In the case of governmental plans, as defined in § 414(d), the plan amendment deadline is the later of (i) the first day of the first plan year beginning on or after January 1, 2000, or (ii) the last day of the

first plan year beginning on or after the “1999 legislative date” (that is, the 90th day after the opening of the first legislative session beginning on or after January 1, 1999, of the governing body with authority to amend the plan, if that body does not meet continuously).) Those amendments that are required to be made to retain qualified status as a result of GATT and SBJPA qualification changes must be made retroactively effective as of the date on which the qualification change became effective with respect to the plan. Operational compliance prior to actual amendment is required if the qualification change is effective before the first day of the first plan year beginning on or after January 1, 1998 (or January 1, 2000, in the case of a governmental plan). Those amendments that are not required but that amend plan provisions that are integrally related to SBJPA qualification changes may be made retroactively effective as of the first day on which the plan was operated in accordance with the amended plan provision.

.03 Rev. Proc. 98–6, 1998–1 I.R.B. 183, contains the Service’s general procedures for employee plan determination letter requests. Section 3.03 of Rev Proc. 98–6 states that until further notice is given, determination letters, other than those issued for terminating plans, will not include consideration by the Service of any amendments to the qualification requirements made by TRA ’97 or by GATT or SBJPA, except for § 1432 and § 1454 of SBJPA, which amended § 401(a)(26) and § 414(n), respectively.

.04 Section 1431(b)(1) of SBJPA repealed the family aggregation requirements of § 414(q)(6), effective for years beginning after December 31, 1996. Section 1431(b)(2) of SBJPA also repealed the family aggregation requirement that formerly applied under § 401(a)(17)(A), effective for years beginning after December 31, 1996. Prior to its repeal, § 414(q)(6) required the compensation and benefits of certain family members of a highly compensated employee who was a 5-percent owner or among the ten highest paid employees of the employer to be combined with the compensation and benefits of the highly compensated employee. The resulting family unit was treated as one employee for purposes of applying the nondiscrimination require

1998–4 I.R.B 23 January 26, 1998

wise, the vesting provisions of multiemployer plans submitted on or after April 27, 1998 will have to reflect the repeal of § 411(a)(2)(C) by § 1442 of SBJPA, although application of this change may be deferred under the plan to the extent permitted by § 1442(c) of SBJPA.

.03 Except as provided below, favorable letters that are issued with respect to applications for determination or other letters filed on or after April 27, 1998 will contain a statement to the effect that the determination (or opinion) takes into account the requirements of GATT and TRA ’97, as well as those requirements of SBJPA that are effective before the first day of the first plan year beginning on or after January 1, 1999.

.04 The statement described in the preceding paragraph will not be included in determination letters issued with respect to applications filed on Form 6406, Short Form Application for Determination for Minor Amendment of Employee Benefit Plan. The statement described in the preceding paragraph also will not be included in determination letters issued with respect to applications filed by adopters of M&P or regional prototype plans on Form 5307, Application for De- termination for Adopters of Master or Prototype, Regional Prototype, or Volume Submitter Plans, regardless of whether the opinion or notification letter for the plan contains such statement. The statement described in the preceding paragraph will be included in opinion and notification letters issued with respect to applications filed on Form 4461–B, Ap- plication for Approval of Master or Pro- totype Plan, or Regional Prototype Plan/Mass Submitter Adopting Sponsor, only if a letter containing such a statement has been issued with respect to the mass submitter’s plan.