SECTION 5. WHAT IS THE

GENERAL SCOPE OF A DETERMINATION LETTER?

Scope .01 This section delineates, generally, the scope of an employee plan determination letter. It identifies certain qualification requirements, relating to nondiscrimination, that are considered by the Service in its review of a plan only at the election of the applicant. This section also identifies certain qualification requirements that are not considered by the Service in its review of a plan and with respect to which determination letters do not provide reliance. This section applies to all determination letters other than letters issued in response to an application filed on Form 6406, Short Form Application for Determination for Minor Amendment of Employee Benefit Plan; letters relating to the qualified status of group trusts; and letters relating solely to the requirements of § 420, regarding the transfer of assets in a defined benefit plan to a health benefit account described in § 401(h). For additional information pertaining to the scope of reliance on a determination letter, see section 21 of this revenue procedure.

All form and certain non-form .02 In general, employee plans are reviewed by the Service for compliance with the form requirements generally reviewed requirements (that is, those plan provisions that are required as a condition of qualification under § 401(a)). In addition, certain non-form qualification requirements, including, for example, the minimum participation requirements of § 401(a)(26), are considered by the Service in its review of a plan. As described below, certain other nondiscrimination requirements are not considered unless the applicant specifically requests that they be considered. Unless otherwise stated, a plan is reviewed on the basis of the requirements that apply to the plan as of the date the application is received, except for terminating plans. For terminating plans, the requirements are those that apply as of the date of termination.

Nondiscrimination in .03 Unless the applicant elects otherwise, a plan that is not intended to satisfy one of the amount requirement design-based safe harbors described in §§ 1.401(a)(4)-2(b)(2), 1.401(a)(4)-3(b)(3), 1.401(a)(4)-3(b)(4)(i)(C)(1), 1.401(a)(4)-3(b)(4)(i)(C)(2), 1.401(a)(4)-3(b)(5), 1.401(a)(4)-8(b)(3), or 1.401(a)(4)-8(c)(3)(iii)(B) of the Income Tax Regulations (herein referred to as the “design-based safe harbors”) will not be reviewed for (and a determination letter may not be relied on with respect to) the nondiscrimination in amount of contributions or benefits requirement of § 1.401(a)(4)-1(b)(2).

Average benefit test requirement .04 Unless the applicant elects otherwise, a plan that does not satisfy the ratio percentage test of § 410(b)(1) and the regulations thereunder will not be reviewed for (and determination letters may not be relied on with respect to) the average benefit test of § 410(b)(2) and the regulations thereunder.

Nondiscriminatory current .05 Any determination letter that expresses an opinion that the plan satisfies the availability requirement minimum coverage requirements of § 410(b) also will express an opinion that the plan satisfies the nondiscriminatory current availability requirements of § 1.401(a)(4)-4(b) with respect to those benefits, rights, and features that are currently available (within the meaning of § 1.401(a)(4)-4(b)(2)) to all employees in the plan’s coverage group. The plan’s coverage group consists of those employees who are treated as currently benefiting under the plan (within the meaning of § 1.410(b)-3(a)) for purposes of demonstrating that the plan satisfies the minimum coverage requirements of § 410(b). Applications will not be reviewed for (and determination letters may not be relied on with respect to) whether the plan satisfies the requirements of § 1.401(a)(4)-4(b) with respect to any benefit, right, or feature other than the ones described above, except those that are specified by the applicant and for which the applicant has provided information relevant to the determination.

Effective availability .06 In no event will any plan be reviewed to determine (and determination letters may requirement not be relied on with respect to) whether any benefit, right, or feature under the plan satis

January 3, 2000 196 2000–1 I.R.B.

fies the effective availability requirement of § 1.401(a)(4)-4(c).

Other limits on scope of .07 Determination letters may generally be relied on with respect to whether the timing determination letter of a plan amendment (or series of amendments) satisfies the nondiscrimination requirements of § 1.401(a)(4)-5(a) of the regulations, unless the plan amendment is part of a pattern of amendments that significantly discriminates in favor of highly compensated employees. A favorable determination letter does not provide reliance for purposes of § 404 and § 412 with respect to whether an interest rate (or any other actuarial assumption) is reasonable. Furthermore, a favorable determination letter will not constitute a determination with respect to the use of the substantiation guidelines contained in Rev. Proc. 93–42, 1993–2 C.B. 540; e.g., a determination letter will not consider whether data submitted with an application is substantiation quality. Lastly, a favorable determination letter will not constitute a determination with respect to whether any requirements of § 414(r), relating to whether an employer is operating qualified separate lines of business, are satisfied. However, if an employer is relying on § 414(r) to satisfy the minimum coverage or minimum participation requirements, a determination letter will take into account whether the plan satisfies the nondiscriminatory classification test of § 410(b)(5)(B), and, if the requirements of § 410(b) or § 401(a)(26) are to be applied on an employer-wide basis under the special rules for employer-wide plans, a determination letter will take into account whether the requirements of the applicable special rule set forth in § 1.414(r)-1(c)(2)(ii) or § 1.414(r)-1(c)(3)(ii) are met. SECTION 6. WHAT IS THE GENERAL PROCEDURE FOR REQUESTING DETERMINATION LETTERS?

Scope .01 This section contains procedures that are generally applicable to all determination letter requests. Additional procedures for specific requests are contained in sections 7 through 16.

Qualified trusteed plans .02 A trust created or organized in the United States and forming part of a pension, profit-sharing, stock bonus or annuity plan of an employer for the exclusive benefit of its employees or their beneficiaries that meets the requirements of § 401 is a qualified trust and is exempt from federal income tax under § 501(a) unless the exemption is denied under § 502, relating to feeder organizations, or § 503, relating to prohibited transactions, if, in the latter case, the plan is one described in § 503(a)(1)(B).

Qualified nontrusteed .03 A nontrusteed annuity plan that meets the applicable requirements of § 401 and other annuity plans additional requirements as provided under § 403(a) and § 404(a)(2), (relating to deductions of employer contributions for the purchase of retirement annuities), qualifies for the special tax treatment under § 404(a)(2), and the other sections of the Code, if the additional provisions of such other sections are also met.

Complete information required .04 An applicant requesting a determination letter must file the material required by this revenue procedure with the Employee Plans Determinations manager (EP Determinations) at the address in section 6.17. The filing of the application, when accompanied by all information and documents required by this revenue procedure, will generally serve to provide the Service with the information required to make the requested determination. However, in making the determination, the Service may require the submission of additional information. Information submitted to the Service in connection with an application for determination may be subject to public inspection to the extent provided by § 6104.

Complete copy of plan and .05 Except in the case of applications involving master and prototype or regional trust instrument required prototype plans filed on Form 5307, or minor amendments described in section 11, a complete copy of the plan and trust instrument is required to be included with the determination letter application. See sections 7.03 and 7.04 for what must be included with applica

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tions involving plan amendments that are not minor amendments.

Section 9 of Rev. .06 Section 9 of Rev. Proc. 2000–4 is generally applicable to requests for determination Proc. 2000–4 applies letters under this revenue procedure.

Separate application for .07 A separate application is required for each single plan within the meaning of § 414(l). each single § 414(l) plan This requirement does not pertain to applications regarding the qualified status of group trusts. Schedule Q .08 Schedule Q (Form 5300) must be filed with all determination letter applications, other than applications that (1) are filed on Form 6406, (2) relate to government plans or to the qualified status of group trusts, or (3) relate solely to the requirements of § 420. The applicant must indicate on Schedule Q whether a determination of any of the requirements referred to in sections 5.03 through 5.05 is requested, and must include with the application form the material and demonstrations called for in the instructions to Schedule Q.

Prior letters .09 If the plan has received a favorable determination letter in the past, the application must include a copy of the latest determination letter, if available. If the letter is not available, an explanation must be included with the application.

User fees .10 The appropriate user fee must be paid according to the procedures of Rev. Proc. 2000–8, page 230, this Bulletin. Form 8717, User Fee for Employee Plan Determination Letter Request, should accompany each determination letter request.

Interested party notification .11 Before filing an application, the applicant requesting a determination letter must and comment satisfy the requirements of § 3001(a) of ERISA, and § 7476(b)(2) of the Code and the regulations thereunder, which provide that an applicant requesting a determination letter on the qualified status of certain retirement plans must notify interested parties of such application. The general rules of the Service with respect to notifying interested parties of requests for determination letters relating to the qualification of plans involving §§ 401 and 403(a) are set out below in sections 17 and 18 of this revenue procedure.

Contrary authority .12 If the application for determination involves an issue where contrary authorities must be distinguished exist, failure to disclose or distinguish such significant contrary authorities may result in requests for additional information, which will delay action on the application.

Employer/employee relationship .13 The Service ordinarily does not make determinations regarding the existence of an employer-employee relationship as part of its determination of the qualification of a plan, but relies on the applicant’s representations or assumptions, stated or implicit, regarding the existence of such a relationship. The Service will, however, make a determination regarding the existence of an employer-employee relationship when so requested by the applicant. In such cases, the application with respect to the qualification of the plan should be filed in accordance with the provisions of this revenue procedure, contain the information and documents in the instructions to the application, and be accompanied by a completed Form SS-8, Determination of Employee Work Status for Purposes of Federal Employment Taxes and Income Tax Withholding, and any information and copies of documents the organization deems appropriate to establish its status. The Service may, in addition, require further information that it considers necessary to determine the employment status of the individuals involved or the qualification of the plan. After the employer-employee relationships have been determined, EP Determinations may issue a determination letter as to the qualification of the plan.

Incomplete applications .14 If an applicant requesting a determination letter does not comply with all the returned required provisions of this revenue procedure, EP Determinations, in its discretion, may return the application and point out to the applicant those provisions which have not been met. The request will also be returned pursuant to Rev. Proc. 2000–8 if the correct user fee is not attached. If such a request is returned to the applicant, the 270–day period described in § 7476(b)(3) will not begin to run until such time as the provisions of this sec

January 3, 2000 198 2000–1 I.R.B.

tion have been satisfied.

Effect of failure to .15 The Service may determine, based on the application form, the extent of review of disclose material fact the plan document. A failure to disclose a material fact or misrepresentation of a material fact on the application may adversely affect the reliance which would otherwise be obtained through issuance by the Service of a favorable determination letter. Similarly, failure to accurately provide any of the information called for on any form required by this revenue procedure may result in no reliance. Data requirements .16 The applicant is responsible for the accuracy of any factual representations and conclusions contained in the application. In some circumstances, applicants may not be able to use precise data in preparing demonstrations or schedules that may be required to be submitted with the application. Therefore, the use of estimated data in these demonstrations and schedules is not prohibited. In addition, the data used may be for a prior plan year, provided the following conditions are satisfied: (1) the data is the most recent data available, (2) there is no misstatement or omission of material fact with respect to such prior year’s data, (3) there has been no material change in the facts (including a change in the benefits provided under the plan and employee demographics) since such prior plan year, (4) the same data is used throughout the application, (5) the data is relevant to the operational effect of the plan provisions that are under review, and (6) the applicant clearly discloses that prior year’s data is being submitted with the application. The use of estimated or prior year’s data is not a misrepresentation of material fact. A determination letter that is based on estimated or prior year’s data, however, may not be relied upon to the extent that such data does not satisfy the substantiation guidelines in Rev. Proc. 93–42. Regardless of whether the data is actual or estimated, or whether it is for the current or a prior year, data that is presented in a determination letter application must reflect any changes in the law that are considered by the Service in its determination of the plan’s qualified status. Thus, data presented in an application for a determination letter that takes into account the qualification changes in GATT, SBJPA, and TRA ‘97, will have to reflect the changes to the qualification requirements made by these laws, including, for example, the change to the definition of highly compensated employee in § 414(q).

Where to file request .17 Requests for determination letters are to be addressed to EP Determinations at the following address:

Internal Revenue Service P.O.Box 192 Covington, KY 41012-0192

Requests shipped by Express Mail or a delivery service should be sent to:

Internal Revenue Service 201 West Rivercenter Blvd. Attn: Extracting Stop 312

Covington, KY 41011

Withdrawal of requests .18 The applicant’s request for a determination letter may be withdrawn by a written request at any time prior to the issuance of a final adverse determination letter. If an appeal to a proposed adverse determination letter is filed, a request for a determination letter may be withdrawn at any time prior to the forwarding of the proposed adverse action to the chief, appeals office. In the case of a withdrawal, the Service will not issue a determination of any type. A failure to issue a determination letter as a result of a withdrawal will not be considered a failure of the Secretary or his delegate to make a determination within the meaning of § 7476. However, the Service may consider the information submitted in connection with the withdrawn request in a subsequent examination. Generally, the user fee will not be refunded if the application is withdrawn.

Right to status conference .19 An applicant for a determination letter has the right to a have a conference with the EP Determinations manager concerning the status of the application if the application has

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been pending at least 270 days. The status conference may be by phone or in person, as mutually agreed upon. During the conference, any issues relevant to the processing of the application may be addressed, but the conference will not involve substantive discussion of technical issues. No tape, stenographic, or other verbatim recording of a status conference may be made by any party. Subsequent status conferences may also be requested if at least 90 days have passed since the last preceding status conference.

How to request status conference .20 A request for a status conference with the EP Determinations manager is to be made in writing and is to be sent to the specialist assigned to review the application or, if the applicant does not know who is reviewing the application, to the EP Determinations manager at the address in section 6.17. If, pursuant to section 15, the application for a determination letter has been submitted to Employee Plans Technical (EP Technical) together with a request for a waiver of minimum funding, the request for a status conference should be sent to the actuary assigned to review the application or to the Actuarial manager, at the address in section 15.03. In this case, the right to a status conference will be with the EP Technical Manager.