SECTION 11. RULES FOR

DETERMINING FIVE-YEAR REMEDIAL AMENDMENT CYCLE IN CASES OF MERGER OR ACQUISITION, CHANGE IN PLAN SPONSORSHIP, PLAN SPIN-OFF, OR OTHER EVENTS

.01 Except as provided in section 11.02 and 11.03, in the case of a merger or acquisition, a change in plan sponsorship, or a plan spin-off, a plan’s five-year remedial amendment cycle is determined as follows regardless of whether this would shorten or extend the five-year remedial amendment cycle of the plan. The change could result in the need to file a new election pursuant to section 10.08:

(1) If plans with different five-year remedial amendment cycles are merged, the five-year remedial amendment cycle of the merged plan is thereafter determined as provided in section 9 or 10 on the basis of the EIN, controlled group status, affiliated

election may be made that the remedial amendment cycle for each plan (other than a plan described in sections 10.02, 10.03, 10.04 or 10.05(1)) is determined by reference to the last digit of the parent’s EIN. This alternative parent’s EIN election must be made by the parent.

.07 Notwithstanding the above, if (1) separate tax-exempt organizations which are a group of related organizations but are not a controlled group under § 414(b) or (c) or an affiliated service group under § 414(m) are maintaining separate plans, (2) the terms of those plans are substantially the same, and (3) all or substantially all of the discretionary authority concerning the plans’ administration and operation is handled by a centralized organization (such as a national headquarters or a common administrative committee), then an election may be made by such centralized organization that the remedial amendment cycle for all of the plans is determined based on the EIN of the centralized organization (other than a plan described in sections 10.02, 10.03, 10.04 or 10.05(1)). If the group of related organizations also includes related taxable entities to which this section 10.07 would apply if they were tax-exempt, the plans maintained by those taxable entities whose terms are substantially the same are permitted to apply the same election that can be applied for the tax-exempt entities.

.08 The elections described in sections 10.06 and 10.07 must be made ( i.e., signed and dated) by the end of the earliest cycle (determined as of the date of the election) for which a determination letter application would have been required to be submitted (or by the end of Cycle A, in the case of an election to choose Cycle A under section 10.06). For example, if one member is in Cycle B and another member is in Cycle C, the election to choose Cycle A under section 10.06 must be made by the due date for Cycle A.

(1) In the case of an election under section 10.06 that does not involve a parent-subsidiary controlled group, the election must be made jointly by all members sponsoring qualified plans and must list all members of the group sponsoring qualified plans that are eligible for the election ( i.e., plans other than those described in 10.02, 10.03, 10.04, and 10.05(1)), including each member’s EIN, and the election must list all such qualified plans that are

sponsored by each member of the group. If a new member joins the controlled group, that member must make an election no later than one year from the date the new member joins the controlled group in order for other members to maintain the existing election. The members already in the group do not need to make a new election each time a new member joins, or when a member leaves the controlled group. Each time the election is filed with a determination letter application, the group must attach a copy of the original election, a copy of any additional elections executed by new members, and an updated list with current information.

(2) In the case of an election made by a parent in a parent-subsidiary controlled group, the parent must include information described in (1) and may include a designation that the election made by the parent will also apply to qualified plans eligible for the election that are maintained by subsidiaries acquired in the future, and that the election will not apply to plans of subsidiaries that, in the future, are no longer in the controlled group. If the election includes such a provision, the parent does not have to make another election each time it acquires or loses subsidiaries. However, it must maintain a list providing the information under (1) above and attach this list to the election each time the election is filed. This list must be updated to provide current information each time the election is filed with a determination letter application.

(3) In the case of an election made by a centralized organization in a group described in section 10.07, the centralized organization must include all applicable information described in (1) and may include a designation that the election made by the centralized organization will also apply to qualified plans eligible for the election that are maintained by entities added to the group in the future, and that the election will not apply to plans of entities that in the future are no longer in the group described in section 10.07. If the election includes such a provision, the centralized organization does not have to make another election each time it adds or loses members. However, it must maintain a list providing the information under (1) above and attach this list to the election each time the election is filed. The updated list must be maintained by the employer and attached to the elec

July 9, 2007 63 2007–28 I.R.B.

mission period has not expired as of the date of the cycle-changing event. An “applicable” cycle is the five-year cycle that applies to the plan after applying the rules under section 11.02 and this section 11.03.

(1) If a plan’s post-change cycle is an open cycle, and the period remaining in the post-change cycle is less than twelve calendar months, the plan’s post-change cycle is extended for twelve months from the last day of the open cycle submission period. The next five-year cycle will be shortened accordingly. This plan will be reviewed using the same Cumulative List that would be used for an application for an on-cycle plan submitting on the same date as this plan’s submission ( i.e., the applicable Cumulative List is based on the date of the plan’s submission).

(2) If a plan’s post-change cycle is an expired cycle, the plan’s applicable cycle remains the pre-change cycle.

(3) If a plan’s post-change cycle ends later than the plan’s pre-change cycle, and that pre-change cycle is an open cycle, the plan is permitted to treat the pre-change cycle as the applicable cycle.

(4) If a plan’s post-change cycle ends later than the plan’s pre-change cycle, and that pre-change cycle is an expired cycle, the plan is permitted to treat the pre-change cycle as the applicable cycle ( i.e., the plan sponsor does not have to resubmit a determination letter application during the post-change cycle).

(5) If neither the plan’s post-change cycle nor its pre-change cycle is an open cycle, the plan’s applicable cycle is the post-change cycle, regardless of whether this post-change cycle begins before or after the pre-change cycle.