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 .02 In general, employee plans are reviewed by the Service for compliance with the non-form requirements form requirements (that is, those plan provisions that are required as a condition of qualigenerally reviewed fication 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.

2001–1 I.R.B. 203 January 2, 2001

Nondiscrimination in .03 Unless the applicant elects otherwise, a plan that is not intended to satisfy one of amount requirement the 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 miniavailability requirement mum 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 requirement .06 In no event will any plan be reviewed to determine (and determination letters may not be relied on with respect to) whether any benefit, right, or feature under the plan satisfies 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.

Publication 794 .08 Publication 794, Favorable Determination Letter, contains other information regarding the scope of a determination letter. In addition, the specific terms of each letter may further define its scope and the extent to which it may be relied upon.