SECTION 14. PROVISIONS

REQUIRED IN EVERY VS PLAN

.01 Anti-Cutback Provisions - VS plans must specifically provide for the protection provided under § 411(a)(10) and (d)(6), to the extent required, in the event that the employer amends the plan in any manner. If a VS plan authorizes the VS practitioner to amend the plan on behalf of employers, the VS practitioner may not amend the plan in a manner that could result in the elimination of a benefit to the extent the benefit is required to be protected under § 411(d)(6) with respect to the plan of any adopting employer, unless permitted to do so under §§ 1.401(a)–4 and 1.411(d)–4. In addition, a VS plan that is not exempt from the top-heavy requirements and that does not contain vesting for all years which is at least as favorable to participants as that provided in § 416(b), must specifically provide that any vesting that occurs while the plan is top-heavy will not be cut back if the plan ceases to be top-heavy.

.02 Definition of Employee / § 414(b), (c), (m), (n) and (o) — Each VS plan must include a definition of employee as any employee of the employer maintaining the plan or any other employer aggregated under § 414(b), (c), (m) or (o) and the regulations thereunder. The definition of employee shall also include any individual deemed under § 414(n) (or under regulations under § 414(o)) to be an employee of any employer described in the previous sentence.

.03 Definition of Service / § 414(b), (c), (m), (n), and (o) - Each VS plan must specifically credit all service with any employer aggregated under § 414(b), (c), (m)

March 7, 2005 686 2005–10 I.R.B.

the I.R.B., and with respect to any adopting employer’s plan the effective date of such amendment shall be the first day of the first plan year beginning within such one-year period. As noted in section 15.02, this does not change the applicable period during the six-year cycle when practitioners must request advisory letters, which will still only occur once every six years. Further, practitioners must make reasonable and diligent efforts to ensure that each employer amends its plan when necessary as noted in section 15.02.

.04 Adopting Employers - The Service will announce when adopting employers must adopt amendments to comply with new guidance issued by the Service. Regardless of when amendments are required to be made, adopting employers must operationally comply as of the applicable effective date of the new guidance.

.05 Option to Permit Practitioner Amendment - A VS practitioner may amend its specimen plan and request a new advisory letter with respect to the amended plan. Ordinarily, the amendments will apply only to the plans of employers who adopt the plan after it has been amended and will not apply to plans of employers who adopted the plan prior to the amendment. However, a VS plan may, but is not required to, include a provision that authorizes the VS practitioner to amend the plan on behalf of employers who have previously adopted the plan, so that changes in the Code, regulations, revenue rulings, other statements published by the Internal Revenue Service (including model, sample or other required good faith amendments that specifically provide that their adoption will not cause such plan to be individually designed), or corrections of prior approved plans may be applied to all employers who have adopted the plan. The provision must state that the practitioner will no longer have the authority to amend the plan on behalf of the adopting employer as of the date the Service requires the employer to file Form 5300 as an individually designed plan as a result of an employer amendment to the plan to incorporate a type of plan not allowable in the VS program ( e.g., the addition of an ESOP) or as a result of amendments described in section 24.03. The provision must also state that if the employer is required to obtain a determination letter in order to have reliance (for example,

or (o) and the regulations thereunder as service with the employer maintaining the plan. In addition, in the case of an individual deemed under § 414(n) (or under regulations under § 414(o)) to be the employee of any employer described in the previous sentence, service with such employer must be credited to such individual.

.04 Adopting Employer Modification of Trust or Custodial Account Document

• An employer will not be considered to have an individually designed plan merely because the employer amends administrative provisions of the trust or custodial account document (such as provisions relating to investments and the duties of trustees), provided the amended provisions are not in conflict with any other provision of the plan and do not cause the plan to fail to qualify under § 401(a). For this purpose, an amendment includes modification of the language of the trust or custodial account document and the addition of overriding language.

.05 Other Required Provisions - Requirements similar to those under sections 5.11 and 5.12 relating to M&P plans apply with respect to VS plans, except as otherwise provided in this revenue procedure.