SECTION 2. BACKGROUND

.01 The procedures of the Service on the issuance of opinion letters regarding the acceptability of the form of M&P plans are set forth in Rev. Proc. 2000–20, 2000–1 C.B. 553, as modified. This revenue procedure modifies and supersedes Rev. Proc. 2000–20. .02 Rev. Proc. 2005–6, 2005–1 I.R.B. 200, sets forth the general procedures of the Service on the issuance of employee plan determination letters and advisory letters regarding the acceptability of the form of volume submitter plans.

.03 Notice 2001–42, 2001–2 C.B. 70, and Rev. Proc. 2005–6 provide that opin

ion, advisory and determination letters that take into account EGTRRA will not be issued until further notice.

.04 Announcement 2004–33, 2004–18 I.R.B. 862, contains a draft revenue procedure that applies to both the M&P and VS programs, with the rules for issuing opinion letters and advisory letters for pre-approved plans. This revenue procedure finalizes and replaces the draft revenue procedure in Announcement 2004–33.

.05 Announcement 2004–71, 2004–40 I.R.B. 569, contains a draft revenue procedure that describes procedures for implementing a system of six-year remedial amendment cycles for pre-approved plans and five-year staggered remedial amendment cycles for individually designed plans. Under the draft revenue procedure, sponsors and practitioners of pre-approved plans must submit requests for opinion or advisory letters by a specified time period within a six-year cycle in order to continue to rely on their opinion or advisory letters. The draft revenue procedure on remedial amendment cycles is expected to be finalized in the near future.

.06 Announcement 2004–71 also contains a discussion of the annual Cumulative List of Changes in Plan Qualification Requirements (Cumulative List). This Cumulative List identifies statutory changes and other guidance affecting qualification requirements that are considered by the Service in its review of plans for the applicable cycle. The 2004 Cumulative List was published in Notice 2004–84, 2004–52 I.R.B. 1030. This 2004 Cumulative List was issued in conjunction with the opening of the EGTRRA opinion and advisory letter program providing that the Service will accept applications with respect to defined contribution pre-approved plans beginning February 17, 2005, and ending January 31, 2006, as set forth in section 23 of this revenue procedure. The 2004 Cumulative List reflects law changes under EGTRRA with technical corrections made by the Job Creation and Worker Assistance Act of 2002, Pub. L. 107–147 (JCWAA), as well as regulations and guidance published by the Service that are effective after December 31, 2001. However, in order to be qualified, a plan

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ployer to have reliance is clarified to provide that typographical errors and cross-references may be corrected without affecting reliance, provided that these corrections do not change the original intended meaning or impact any qualification requirements, and an employer may adopt model, sample or other required good faith amendments. (sec. 19.03)

(10) The provisions on employer reliance have been expanded to specify that an adopting employer of a VS plan may rely on an advisory letter with respect to the nondiscrimination in amounts requirement under § 401(a)(4) when the adopting employer selects and utilizes certain design-based safe harbors and compensation definitions, under the conditions specified. (sec. 19.02)

(11) The provision on remedial amendment cycles is clarified to specify the circumstances in which the six-year remedial amendment cycle applies to an employer that has adopted a VS or M&P plan and has changed the plan so that it is considered to be an individually designed plan. (sec. 24)

(12) The VS provisions have been clarified to specify that amending the administrative provisions of the trust or custodial documents is allowed. This language is identical to the provisions that apply to nonstandardized M&P plans in section 5.09. (sec. 14) (13) The definition of “National Sponsor” and “VS Practitioner” is revised to include a sponsor or practitioner that has 3000 or more adopting employers or 30 or more adopting employers in 30 or more states. This definition was included in Announcement 2004–33 but was not in the draft revenue procedure attached to that announcement. (sec. 4.09 and 13.04)

(14) The VS submission procedures specify that Form 4461 is being revised to incorporate VS applications. Until the Form is published, the VS submission must include a cover letter requesting approval. (sec. 17.02)

(15) The application procedure is streamlined to provide that VS and M&P applications are now submitted to the same address. This address was formerly used for VS applications but is a change of address for M&P applications. (sec. 20)

(16) The revocation procedures contain a requirement that the content of the notification to each adopting employer must ex

tion or benefit formula in a nonstandardized M&P plan satisfy the uniformity requirements for safe harbor plans under § 1.401(a)(4)–2(b)(2) or § 1.401(a)(4)–3(b)(2) of the Income Tax Regulations. This change will allow adopting employers of nonstandardized defined contribution M&P plans to adopt an allocation formula that is designed to be cross-tested for nondiscrimination on the basis of equivalent benefits under § 1.401(a)(4)–8.

(2) The revenue procedure permits, but does not require, VS plans to include a provision that allows the VS practitioner to amend the plan on behalf of adopting employers. By choosing to include such a provision in the VS plan, the VS practitioner agrees to comply with certain record keeping and notice requirements that apply to sponsors of M&P plans. The Service will evaluate this new feature over time to determine whether to preserve it as a permanent feature of the VS program.

(3) The revenue procedure simplifies and streamlines the two programs. For example, under the procedure, nonstandardized safe harbor plans and paired standardized plans are discontinued as separate categories of M&P plans. This change has been made because recent changes in law and the procedures for employer reliance have diminished the utility of these types of plans.

.03 Additional Changes in this Revenue Procedure

Announcement 2004–33 contained a draft revenue procedure setting forth the rules for both the M&P and VS programs. The Service sought public comment before finalizing these procedures. This final revenue procedure retains the general structure and much of the substance of the draft, including the program changes listed in 3.02 above that were also contained in the draft. However, the Service has made additional changes to the revenue procedure after considering specific recommendations from commentators. In addition to minor revisions and clarifying language, the following changes have been made:

(1) The definition of VS practitioner is expanded. Generally, a VS practitioner must have at least 30 employer-clients reasonably expected to timely adopt a plan that is substantially similar to the VS practitioner’s specimen plan. This revenue

procedure lowers the requirement for a VS practitioner, so that it may have 10 employer/clients reasonably expected to timely adopt a money purchase pension plan (MP Plan), but only if a practitioner has a specimen MP Plan and at least one other type of specimen plan. (sec. 13.04)

(2) The number of trust or custodial account documents that may be submitted by an M&P sponsor or mass submitter with a single plan document is increased from 5 to 10. Additional submissions of trusts or custodial account documents will be permitted for an additional fee. (sec. 4.05)

(3) The category of plans eligible for advisory letters is expanded to include VS plans that provide for non safe-harbor hardship distributions under § 401(k), provided that nondiscriminatory and objective criteria are contained in the plans. (sec. 16.02)

(4) The category of plans eligible for advisory letters is expanded to include defined benefit plans that provide for employee contributions, by eliminating this category from the list of plans not covered by advisory letters. (sec. 16)

(5) The category of plans not eligible for advisory or opinion letters is revised to include plans designed to satisfy the provisions of § 105. (secs. 6.03(20) and 16.02(19)) (6) The instructions to VS practitioners are revised to specify that one specimen plan and application is required for a VS profit-sharing plan, with or without a § 401(k) arrangement. (sec. 17.03)

(7) The submission procedure for modifications of M&P mass submitter plans has been clarified to provide that an M&P mass submitter should submit only the first page of the applicable form along with the applicable fee as part of an initial submission, rather than the entire plan document. (sec. 12.03(2))

(8) The procedures for issuing opinion letters to M&P mass submitters and sponsors, and advisory letters to VS mass submitters and practitioners have been changed to provide that the Service will send an interim email notifying an M&P or VS mass submitter, sponsor or practitioner that review of the applicable plan has been completed, subject to final approval in the form of an opinion or advisory letter. (sections 7.07, 12.01, 17.05, 18.01)

(9) The requirement of word-for-word identical documents in order for an em

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(2) Except as provided in section 5.09 and below, all provisions of the trust or custodial account document must be applicable to all adopting employers of that trust or custodial account, and no options (including blanks to be completed) may be provided in the trust or custodial account document.

(3) With respect to prototype plans, a sponsor or mass submitter may provide up to 10 separate trust or custodial account documents that are intended for use with any single basic plan document. Notwithstanding the above, a sponsor or mass submitter may submit more than 10 separate trust or custodial account documents intended for use with any single basic plan document, along with an additional user fee that applies to submissions above the 10 trust (or custodial account) limit. The amount of the applicable user fee will be specified in future guidance.

(4) As provided in section 5.09, a sponsor or M&P mass submitter may provide a trust or custodial account document, designated for use only by adopters of nonstandardized plans, which provides for blanks to be completed with respect to administrative provisions of the trust or custodial account agreement.

(5) 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 M&P mass submitter as to the acceptability of the form of an M&P plan under § 401(a) or § 403(a), and, in the case of a master plan, the acceptability of the master trust under § 501(a).

.07 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 timely adopt the sponsor’s basic plan document. The deadline for timely adoption will be announced by the Service in future guidance.

plain how the revocation affects reliance. (sec. 22)

(17) The provision on employer amendments is revised to specify that sample, model or other required good faith amendments adopted by certain employers will not cause the plan to be individually designed. (sec. 5.02, sec. 15, sec. 19)

(18) The provision on amendments of M&P mass submitter plans is revised to include references to sample or model amendments. (sec. 12.04)

(19) The revenue procedure is revised throughout so that its provisions are consistent with the draft revenue procedure attached to Announcement 2004–71 on remedial amendment periods.

.04 Provisions Related to EGTRRA

• This revenue procedure announces the opening of the pre-approved defined contribution plan programs as of February 17, 2005, for EGTRRA and other applicable guidance. The 2004 Cumulative List reflects law changes under EGTRRA including technical corrections made by JCWAA as well as regulations and guidance published by the Service that are effective after December 31, 2001, that will be considered by the Service in its review of plans. Section 23 of this revenue procedure provides further details on the scope of this Cumulative List. This Cumulative List will be updated and published annually to identify statutory, regulatory and guidance changes that will be considered by the Service in its review of plans whose remedial amendment cycles are proposed to end on the January 31 of the second calendar year following publication of the list.

.05 Remedial Amendment Period — In Announcement 2004–71, the Service included a draft revenue procedure containing the Service’s procedures for issuing opinion and advisory letters for pre-approved plans under a regular, six-year remedial amendment cycle under § 401(b) of the Internal Revenue Code. The draft also contains procedures for issuing determination letters under a staggered remedial amendment period system that establishes regular, five-year cycles for determination letters for individually designed plans. The Service intends to issue guidance that will supersede and finalize the draft revenue procedure attached to Announcement 2004–71 in the near future.