SECTION 4. DEFINITIONS

.01 Master Plan - A “master plan” is a plan (including a plan covering self-employed individuals) that is made available by a sponsor (see section 4.09) for adoption by employers and for which a single funding medium (for example, a trust or custodial account) is established, as part of the plan, for the joint use of all adopting employers. A master plan consists of a basic plan document, an adoption agreement (see sections 4.03 and 4.04), and,

unless included in the basic plan document, a trust or custodial account document (see section 4.05).

.02 Prototype Plan - A “prototype plan” is a plan (including a plan covering self-employed individuals) that is made available by a sponsor for adoption by employers and under which a separate funding medium is established for each adopting employer. A prototype plan consists of a basic plan document, an adoption agreement, and, unless the basic plan document incorporates a trust or custodial account agreement the provisions of which are applicable to all adopting employers, a trust or custodial account document.

.03 Basic Plan Document - A “basic plan document” is the portion of the plan containing all the non-elective provisions applicable to all adopting employers. No options (including blanks to be completed) may be provided in the basic plan document, except as provided in section 16.031 of this revenue procedure regarding flexible plans.

.04 Adoption Agreement - An “adoption agreement” is the portion of the plan containing all the options that may be selected by an adopting employer. (But see section 4.05.)

.05 Trust or Custodial Account Document ( Note: This definition does not apply if the basic plan document includes a trust or custodial account agreement the provisions of which apply to all adopt- ing employers. ) - A “trust or custodial account document” is the portion of an M&P plan that contains the trust agreement or custodial account agreement and includes provisions covering such matters as the powers and duties of trustees, investment authority, and the kinds of investments that may be made. Except as provided in section 5.10 and below, all provisions of the trust or custodial account document must be applicable to all adopting employers and no options (including blanks to be completed) may be provided in the trust or custodial account document. With respect to prototype plans, a sponsor or mass submitter may provide up to five separate trust or custodial account documents that are intended for use with any single basic plan document. Thus, for example, several employers that adopt a sponsor’s standardized M&P plan may have plans with different

trust or custodial account documents. In addition, a sponsor or mass submitter may provide a trust or custodial account document, designated for use only by adopters of nonstandardized plans or nonstandardized safe harbor plans, which provides for blanks to be completed with respect to administrative provisions of the trust or custodial account agreement. Finally, an M&P plan may provide for the use of any other trust or custodial account document that has been approved by the Service for use with the plan as a qualified trust or as a custodial account treated as a qualified trust. Any trust or custodial account document (including one to be used by adopters of standardized plans) may provide for blanks to be completed that merely enable the adopting employer to specify the names of the plan, employer, trustee or custodian, plan administrator and other fiduciaries, the trust year, and the name of any pooled trust in which the plan’s trust will participate.

.06 Opinion Letter - An “opinion letter” is a written statement issued by the Service to a sponsor or mass submitter under this revenue procedure (or, where appropriate in the context, to a sponsoring organization under Rev. Proc. 89–9) as to the acceptability of the form of an M&P plan and any related trust or custodial account under §§ 401(a), 403(a), and 501(a). .07 Notification Letter - A “notification letter” is a written statement issued by the Service to a regional prototype plan sponsor or mass submitter under Rev. Proc. 89–13 as to the acceptability of the form of an M&P plan and any related trust or custodial account under §§ 401(a), 403(a), and 501(a). .08 TRA ‘86 Opinion or Notification Letter - A “TRA ‘86 opinion or notification letter” is a favorable opinion or notification letter issued by the Service on or after January 4, 1990, under Rev. Proc. 89–9 or Rev. Proc. 89–13, which considers the effect of the Tax Reform Act of 1986, Pub. L. 99–514 (TRA ‘86). .09 Sponsor - A “sponsor” is any person that (1) has an established place of business in the United States where it is accessible during every business day and (2) represents to the Service that it has at least 30 employer-clients each of which is reasonably expected to adopt the sponsor’s basic plan document and one or

February 7, 2000 556 2000–6 I.R.B.

more of the adoption agreements associated with that basic plan document within the 12-month period following the issuance of opinion letters under this revenue procedure.

A sponsor may submit any number of adoption agreements with the basic plan document provided at least 30 employers are reasonably expected to adopt the same basic plan document within the 12-month period following the issuance of opinion letters. After representing to the Service that at least 30 employers are reasonably expected to adopt a basic plan document, the sponsor may submit other basic plan documents and adoption agreements, regardless of the number of employers that are expected to adopt such other plans. The Service reserves the right at any time to request from the sponsor a list of the sponsor’s clients that have adopted or are expected to adopt the sponsor’s M&P plans, including the clients’ business addresses and employer identification numbers.

Notwithstanding the above, any person that has an established place of business in the United States where it is accessible during every business day may sponsor a plan as a word-for-word identical adopter or minor modifier adopter of an M&P plan of a mass submitter, regardless of the number of employers that are expected to adopt such plan.

By submitting an application for an opinion letter for an M&P plan under this revenue procedure (or by having an application filed on its behalf by a mass submitter), a person represents to the Service that it is a sponsor, as defined above, and agrees to comply with the requirements imposed on sponsors by this revenue procedure. Failure to comply with these requirements may result in the loss of eligibility to sponsor M&P plans and the revocation of opinion letters that have been issued to the sponsor.

.10 Mass Submitter - A “mass submitter” is any person that (1) has an established place of business in the United States where it is accessible during every business day and (2) submits applications on behalf of at least 30 unaffiliated sponsors each of which is sponsoring, on a word-for-word identical basis, the same basic plan document and one or more of the adoption agreements associated with that basic plan document. A flexible plan (as defined in section 16.031) which is

adopted by a sponsor will be considered a word-for-word identical plan. A mass submitter may submit an application on its own behalf as one of the 30 unaffiliated sponsors. For purposes of this definition, affiliation is determined under § 414(b) and (c). Additionally, the following will be considered to be affiliated: any law, accounting, consulting firm, etc., with its partners, members, associates, etc. Once the mass submitter has submitted applications on behalf of 30 unaffiliated sponsors with respect to any basic plan document, it will be treated as a mass submitter with respect to all the other basic plan documents and associated adoption agreements for which it requests opinion letters as a mass submitter under section 16.01, regardless of the number of identical adopters of such other plans.

Notwithstanding the above, any person that received a favorable TRA ‘86 opinion letter for a plan as a mass submitter under Rev. Proc. 89–9 will continue to be treated as a mass submitter if it submits applications on behalf of at least 10 sponsors (regardless of affiliation) each of which is sponsoring, on a word-for-word identical basis, the same basic plan document and one or more of the adoption agreements associated with that basic plan document. Once the mass submitter has submitted applications on behalf of 10 sponsors with respect to any basic plan document, it will be treated as a mass submitter with respect to all the other basic plan documents and associated adoption agreements for which it requests opinion letters as a mass submitter under section 16.01, regardless of the number of identical adopters of such other plans.

.11 National Sponsor - A “national sponsor” is a sponsor that has either (a) 30 or more adopting employers in each of 30 or more states (treating, for this purpose, the District of Columbia as a state) or (b) 3000 or more adopting employers. The determination as to whether there are 3000 or more adopting employers or 30 or more adopting employers in each of 30 or more states may be made on any one date during the 12 month period ending on the date that is 60 days after the effective date of this revenue procedure. For this purpose, an adopting employer is any employer that has adopted any plan of the sponsor that has a TRA ‘86 opinion or notification letter.

.12 Standardized Plan - A “standardized plan” is an M&P plan that meets the following requirements:

1 The provisions governing eligibility and participation are such that the plan by its terms must benefit all employees described in section 5.16 (regardless of whether any employer is treated as operating separate lines of business under § 414(r)) except those that may be excluded under § 410(a)(1) or (b)(3). The adoption agreement may provide options as to whether some or all of the employees described in § 410(a)(1) or (b)(3) are to be excluded, provided that the criteria for excluding employees described in § 410(a)(1) applies uniformly to all employees. A standardized plan generally may not deny an accrual or allocation to an employee eligible to participate merely because the employee is not an active employee on the last day of the plan year or has failed to complete a specified number of hours of service during the year. However, the plan may deny an allocation or accrual to an employee who is eligible to participate if the employee terminates service during the plan year with not more than 500 hours of service and is not an active employee on the last day of the plan year.

2 The eligibility requirements under the plan are not more favorable for highly compensated employees (as defined in § 414(q)) than for other employees. 3 Under the plan, allocations, in the case of a defined contribution plan (other than any cash or deferred arrangement part of the plan), or benefits, in the case of a defined benefit plan, are determined on the basis of total compensation. For this purpose, total compensation means a definition of compensation that includes all compensation within the meaning of § 415(c)(3) and excludes all other compensation or that otherwise satisfies § 414(s) under § 1.414(s)–1(c).

4 Unless the plan is a target benefit plan or a § 401(k) and\or § 401(m) plan, the plan must, by its terms, satisfy one of the design based safe harbors described in § 1.401(a)(4)–2(b)(2) (taking into account § 1.401(a)(4)–2(b)(4)) or § 1.401(a)(4)–3(b)(3), (4), or (5) (taking into account § 1.401(a)(4)–3(b)(6)). (See sections 5.18 and 8.03 for rules regarding § 401(k) and § 401(m) plans and target benefit plans.)

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Notwithstanding this requirement, a standardized plan may give an employer the option to elect to continue to apply the family aggregation rules of § 401(a)(17)(A) and § 414(q)(6) (both as in effect for plan years beginning before January 1, 1997) in plan years beginning after December 31, 1996, to the extent such election conforms to the plan’s operation. Likewise, a standardized plan may give an employer the option to elect to continue to apply the combined plan limit of § 415(e) (as in effect for limitation years beginning before January 1, 2000) in limitation years beginning after December 31, 1999, to the extent such election conforms to the plan’s operation. However, a standardized plan may not give an employer the option to elect to continue to apply the pre-GUST family aggregation rules or the combined plan limit of § 415(e) in years beginning on or after the date the employer adopts its GUST-restated plan. In addition, a plan may not continue to apply the combined plan limit of § 415(e) to the extent such application would cause the plan to fail to satisfy § 401(a) (see Q&A 8 of Notice 99–44, 1999–35 I.R.B. 326). An employer that makes either of these elections will not be able to rely on the opinion letter without a determination letter with respect to the qualification of its plan for the years to which the election applies.

5 All benefits, rights, and features under the plan (other than those, if any, that have been prospectively eliminated) are currently available to all employees benefiting under the plan.

6 Any past service credit under the plan must meet the safe harbor in § 1.401(a)(4)–5(a)(3). A plan will not fail to satisfy the coverage requirement of subsection .121 merely because the plan provides, either as the result of an elective provision or by default in the absence of an election to the contrary, that individuals who become employees, within the meaning of section 5.16, as the result of a “§ 410(b)(6)(C) transaction” will be excluded from eligibility to participate in the plan during the period beginning on the date of the transaction and ending on the last day of the first plan year beginning after the date of the transaction. A “§ 410(b)(6)(C) transaction” is an asset or stock acquisition, merger, or other similar transaction involving a change in the em

ployer of the employees of a trade or business.

.13 Paired Plans - “Paired plans” are either a combination of two or more defined contribution standardized plans or a combination of one or more defined contribution standardized plans and one defined benefit standardized plan (for example, a money purchase pension plan, a profit-sharing plan and a unit benefit or flat benefit pension plan), so designed that if any single plan, or combination of plans, is adopted by an employer, each plan by itself, or the plans together, will meet the nondiscrimination rules set forth in § 401(a)(4), the contribution and benefit limitations set forth in § 415, and the top-heavy provisions set forth in § 416. Paired plans must have the same sponsor. In addition, only one of the paired plans that an employer adopts may provide for disparity in contributions or benefits that is permitted under § 401(l). If one of the paired plans is a defined benefit plan that includes a final pay limitation as described in § 401(a)(5)(D), then the paired defined contribution plan(s) may not provide for disparity in contributions.

.14 Nonstandardized Safe Harbor Plan

• A “nonstandardized safe harbor plan” is an M&P plan that would be a standardized plan except that the plan:

1 is not required, by its terms, to benefit all nonexcludable employees and may, in the case of a defined contribution plan, condition allocations on employment on the last day of the plan year and/or the completion of up to 1000 hours of service during the plan year;

2 may use a § 414(s) definition of compensation for determining contributions or benefits that must be tested for nondiscrimination under § 1.414(s)–1(d); and

3 may provide past service credit that fails to meet the safe harbor in § 1.401(a)(4)–5(a)(3). The opinion letter issued for the plan will state that the plan is a nonstandardized safe harbor plan.

.15 Nonstandardized Plan - A “nonstandardized plan” is an M&P plan that is neither a standardized plan nor a nonstandardized safe harbor plan.

.16 Volume Submitter Plan, Specimen Plan, and Advisory Letter - See section 9 of Rev. Proc. 2000–6.