SECTION 3. OVERVIEW OF THE

REVENUE PROCEDURE

.01 Single Revenue Procedure - The Service maintains two programs for the “pre-approval” of plans qualified under § 401 and § 403(a) - the M&P program and the VS program. The two programs originated to serve different purposes and each has had its own set of rules. Until now, those rules were contained in different revenue procedures. In recent years, there have been changes that have eliminated several of the distinctions between the two programs. While the Service will continue to maintain the two programs separately, the narrowing of the differences between the programs makes it appropriate to set forth the rules for both programs in a single revenue procedure.

.02 Program Changes - The fundamental distinction between M&P and VS plans is unchanged by this revenue procedure. That is, M&P plans will generally continue to consist of a basic plan document and adoption agreement that may not be amended by adopting employers, except by choosing among permitted options under the adoption agreement, without the loss of M&P status. VS plans will continue to be allowed in either adoption agreement or “individually designed” format and employer amendments will not cause the loss of VS status provided the extent and complexity of the amendments are not inconsistent with the purposes of the VS program. However, the revenue procedure eliminates some of the other differences between the M&P and VS programs. The principal changes are as follows:

(1) The revenue procedure eliminates the requirement that the alloca