SECTION 1. PURPOSE

.01 This revenue procedure establishes a system of staggered remedial amendment periods under § 401(b) of the Internal Revenue Code (Code). Under this system, every individually designed plan qualified under § 401(a) will have a regular, five-year remedial amendment cycle. The cycles are staggered and spread over five-year periods. That is, the cycles commence in different years for different plans within a five-year period, so that different plans will have different cycles, but the length of the cycle - five years - is the

riodic fluctuations in workload as a result of legislative changes. These fluctuations make resource planning and allocation difficult and may have an overall negative effect on the administration of the various EP programs. Thus, a goal of the review of the determination letter program has been to identify improvements to the program that will result in a more level determination letter workflow. While this review is still ongoing, the Service has already made a number of significant improvements to the determination letter program. See, for example, Announcement 2001–77, 2001–2 C.B. 83.

Program Changes

This draft revenue procedure would establish a system of staggered five-year remedial amendment cycles for individually designed plans and a system of six-year amendment/approval cycles for pre-approved plans. These systems create fixed, regular cycles for the adoption of remedial plan amendments under § 401(b) and the submission of determination, opinion, and advisory letter applications.

In the case of individually designed plans, the five-year remedial amendment cycles would be staggered. In other words, different plans would have different five-year cycles. In general, a plan’s five-year remedial amendment cycle would be determined with reference to the taxpayer identification number (TIN) of the employer that maintains the plan. Special rules are provided for plans maintained by more than one employer and plans maintained by multiple members of a controlled group or affiliated service group.

In the case of pre-approved plans, defined benefit plans would have a different six-year amendment/approval cycle schedule than defined contribution plans. The sponsor of a pre-approved document would be required to submit the plan for a new opinion or advisory letter according to the schedule set forth in the revenue procedure. An adopting employer that timely adopts the approved plan would be treated as having adopted the plan within the employer’s six-year remedial amendment cycle. The Service will announce the deadline for timely adoption after the pre-approved documents in a cycle have been reviewed. It is expected that employ

ers will have generally two years in which to adopt the pre-approved plans.

EGTRRA

This revenue procedure would provide that on February 1, 2006, the Service will begin to accept applications for determination letters for individually designed plans that take into account the requirements of Economic Growth and Tax Relief Reconciliation Act of 2001, Pub. L. 107–16 (EGTRRA). This draft revenue procedure would also extend a plan’s EGTRRA remedial amendment period as provided in the chart found in section 9.01, which is the Extension of the EGTRRA Remedial Amendment Period/Schedule of Next Five-Year Remedial Amendment Cycle.

Remedial Amendment Period

In the case of an individually designed plan, the end of the remedial amendment period for any disqualifying provision would be extended by this revenue procedure to the end of the five-year cycle in which the remedial amendment period would otherwise end.

In the case of a pre-approved plan, regular six-year amendment/approval cycles would be established. However defined contribution plans and defined benefit plans would have different six-year amendment/approval cycles. The schedule for the six-year amendment/approval cycles is found in section 14.01. Sponsors and practitioners would have until January 31 of the year that marks the end of the plan’s first year of the six-year remedial amendment cycle to submit these plans timely for opinion and advisory letters. Adopting employers would have generally two years in which to timely adopt the pre-approved plans. The Service will announce the actual deadline for timely adoption of pre-approved plans.

Request for Comments

Interested persons are invited to comment on the draft revenue procedure, the issues addressed in this announcement, the staggered remedial amendment cycle, the six-year remedial amendment/approval cycle, or any other aspect of the pre-approved plan programs or the determination letter program.

October 4, 2004 570 2004–40 I.R.B.

sion includes a provision of a new plan, the absence of a provision from a new plan, or an amendment to an existing plan which causes the plan to fail to satisfy the requirements of the Code applicable to the qualification of the plan as of the date the plan or amendment is first made effective. Under § 1.401(b)–1(b)(3), a disqualifying provision includes a plan provision designated, at the Commissioner’s discretion, as a disqualifying provision that either (i) results in the failure of the plan to satisfy the qualification requirements of the Code by reason of a change in those requirements; or (ii) is integral to a qualification requirement of the Code that has been changed. For this purpose, a disqualifying provision includes the absence from a plan of a provision required by or, if applicable, integral to the applicable change in the qualification requirements of the Code, if the plan was in effect on the date the change in those requirements became effective with respect to the plan. Under § 1.401(b)–1(c)(3), the Commissioner may impose limits and provide additional rules regarding the amendments that may be made with respect to disqualifying provisions described in § 1.401(b)–1(b)(3).

.05 For a disqualifying provision of a new plan described in § 1.401(b)–1(b)(1), the remedial amendment period begins on the date the plan is put into effect and, in the case of a plan maintained by one employer, ends on the later of the due date (including extensions) for filing the employer’s tax return for the taxable year in which the plan is put into effect or the last day of the plan year in which the plan is put into effect. A new plan maintained by more than one employer need not be amended until the last day of the tenth month following the last day of the plan year that includes the date the plan is put into effect.

.06 For a disqualifying provision that is an amendment to an existing plan described in § 1.401(b)–1(b)(1), the remedial amendment period begins on the earlier of the date the plan amendment is adopted or put into effect and, in the case of a plan maintained by one employer, ends on the later of the due date for filing the employer’s tax return (including extensions) for the taxable year in which the amendment is adopted or effective (whichever is later) or the last day of the plan year in which the amendment is adopted or effec

same for every plan. The effect of this system is that plan sponsors of individually designed plans generally will need to adopt remedial amendments of disqualifying provisions, and will need to apply for new determination letters, only once every five years.

.02 In addition, under this system, every pre-approved plan (that is, every master and prototype (M&P) and volume submitter plan), will generally have a regular, six-year remedial amendment cycle. As a result, sponsors and adopters of pre-approved plans generally will need to apply for new opinion, advisory, or determination letters only once every six years. Preapproved defined contribution plans will have different six-year cycles than pre-approved defined benefit plans. Thus, the same six-year remedial amendment cycle will apply with respect to all pre-approved defined contribution plans, and a separate six-year remedial amendment cycle will apply with respect to all pre-approved defined benefit plans.

.03 This revenue procedure provides that on February 1, 2006, the Service will begin to accept applications for determination letters for individually designed plans that take into account the requirements of the Economic Growth and Tax Relief Reconciliation Act of 2001, Pub. L. 107–16 (EGTRRA). However, this revenue procedure also extends a plan’s EGTRRA remedial amendment period as provided in the chart found in section 9.01, which is the Extension of the EGTRRA Remedial Amendment Period/Schedule of Next Five-Year Remedial Amendment Cycle. Therefore, plan sponsors may avoid unnecessarily filing two determination letter applications by waiting to file their EGTRRA determination letter applications within the twelve-month period preceding the end of the plan’s EGTRRA remedial amendment period.