SECTION 15. EXAMPLES RELATING

TO REMEDIAL AMENDMENT CYCLES AND PLAN AMENDMENTS

For the following examples, refer to the chart found above in section 12.01 and section 12.02 which is the Extension of the EGTRRA Remedial Amendment Pe

riod and Schedule of Next Five-Year Remedial Amendment Cycle. In the following examples, both the tax year of the employer and the plan year are the calendar years and, except as otherwise provided, the plan has been operated in accordance with the plan terms, including any interim and discretionary amendments.

Example 1: Employer M is a C corporation. The last digit of Employer M’s EIN is 7. Employer M adopts a new plan, Plan X on January 1, 2006. The cycle for Plan X is Cycle B. Since Employer M timely adopted Plan X in good faith with the intent of sponsoring a qualified plan, the initial remedial amendment cycle for Plan X ends January 31, 2008. Any remedial amendments required for Plan X to correct a disqualifying provision as described in § 1.401(b)–1(b)(1) must be adopted by January 31, 2008, unless an application for a determination letter is submitted by that date. To the extent there have been interim or discretionary amendments made, these amendments may be included in a working copy, and such working copy must be submitted in a restated format. A copy of each signed interim or discretionary amendment must be included with the application. The determination letter issued for the plan would apply as of the first day of the 2006 plan year. The subsequent 5-year remedial amendment cycles end on January 31, 2013, January 31, 2018, etc.

Example 2: Same facts as Example 1. On July 1, 2010, Employer M starts to operate the plan in a manner which is inconsistent with the written plan document but an amendment to reflect the plan change when made retroactively effective would not violate § 411(d)(6). This change is unrelated to a change in qualification requirement or published guidance. To conform the plan document with the plan’s operation, Employer M adopts an amendment by December 31, 2010 that reflects the change in operation and such amendment is adopted in good faith with the intent of maintaining the qualified status of Plan X. Employer M submits a determination letter application on or before the end of the second five-year remedial amendment cycle (that is, January 31, 2013). During the review of the determination letter application, the Service finds that the adoption of the amendment caused the plan to fail to satisfy the requirements of the Code as of the date the amendment was first made effective. Once the Service informs Employer M that the amendment is a disqualifying provision as described in § 1.401(b)–1(b)(1), Employer M would be required to adopt an amendment which corrects the disqualifying provision by 91 days after the date of the favorable determination letter. The amendment would be retroactively effective as of July 1, 2010 and Employer M must correct its operation to the extent necessary to reflect the corrective amendment.

Example 3: Same facts as Example 1. The last day of the third five-year remedial amendment cycle for Employer M is January 31, 2018. Since the first day of the third remedial amendment cycle, (February 1, 2013) Employer M has adopted interim plan amendments timely and in good faith with the intent of maintaining the qualified status of Plan X. In 2017, Employer M updates Plan X for the qualification requirements stated in the 2016 Cumulative List

by restating the plan in proposed form. Employer M submits a determination letter application using the restated plan in proposed form on or before January 31, 2018. Employer M receives a favorable determination letter. Employer M must adopt the proposed restated plan by 91 days after the date of the favorable determination letter to be considered timely under § 401(b) of the Code.

Example 4: The remedial amendment cycle for Plan Y is based on the last digit of Employer N’s EIN, which is a 4. Plan Y’s cycle is therefore Cycle D. The initial remedial amendment cycle (that is, EGTRRA remedial amendment period) for Plan Y ends January 31, 2010, and the subsequent 5-year remedial amendment cycle ends January 31, 2015. In November 2008, guidance that would affect the qualification of Plan Y is issued effective for the plan years beginning on or after January 1, 2009. The guidance first appears on the 2009 Cumulative List. Employer N updates Plan Y for the remedial amendment cycle that ends January 31, 2010 for qualification requirements listed on the 2008 Cumulative List. Employer N submits a determination letter application on July 1, 2009. Since the guidance was issued after the October 1 preceding the date the 2008 Cumulative List was issued and was not identified and included on such list, the Service will not consider the guidance in its review until Employer N’s subsequent remedial amendment cycle. To reflect this guidance, Employer N must adopt an interim amendment timely and in good faith (that is, by the tax filing date (including extensions) for 2009). The interim amendment is effective as of the first day of the 2009 plan year and will be reviewed as part of the determination letter application submitted in the subsequent five-year remedial amendment cycle.

Example 5: Same facts as Example 4, except that the guidance was issued in September 2008, effective for the plan years beginning on or after January 1, 2010. Since this guidance was effective in a calendar year following the calendar year in which the submission period began with respect to the applicable Cumulative List, as described in section 4.03 of this revenue procedure, and was not identified and included on such list, the Service will not consider the guidance in its review until Employer N’s subsequent remedial amendment cycle. To reflect this guidance, Employer N must adopt an interim amendment timely and in good faith (that is, by the tax filing date (including extensions) for 2010). The interim amendment is effective as of the first day of the 2010 plan year and will be reviewed as part of the determination letter application submitted in the subsequent five-year remedial amendment cycle.

Example 6: The remedial amendment cycle for Plan Z is based on the last digit of Employer L’s EIN, which is 0. Plan Z’s cycle is Cycle E. The initial five-year remedial amendment cycle (that is, EGTRRA remedial amendment period) for Plan Z ends January 31, 2011, and the subsequent 5-year remedial amendment cycle ends January 31, 2016. Employer L submits a determination letter application on March 1, 2009. The 2008 Cumulative List will be used to review Employer L’s determination letter submission. Since the initial five-year remedial amendment cycle will expire on January 31, 2011, Employer L must submit a new determination letter application during the last twelve months of the remedial amendment cycle (between February 1, 2010 to January 31,

2007–28 I.R.B. 66 July 9, 2007

2011. to continue to have reliance on a determination letter after that date.

Example 7: Employer Q establishes Plan K on December 18, 2006. Plan K’s cycle is Cycle A. The § 401(b) remedial amendment period with respect to Plan K (determined without regard to section 5.03 of this revenue procedure) ends on September 15, 2007, since Employer Q has received an extension to file its tax return for 2006. Accordingly, under section 5.03, the remedial amendment period is extended to the end of Employer Q’s next remedial amendment cycle, i.e., Cycle A (January 31, 2012). Employer Q submits an application for a determination letter for Plan K on September 4, 2007. Employer Q’s application is given the same priority as an on-cycle filing pursuant to section 14.02(2) for purposes of determining the priority of the Service’s review, and the application will be reviewed based on the 2006 Cumulative List.

Example 8: Same as Example 7, except Employer Q submits an application for a determination letter by January 31, 2007. The 2005 Cumulative List will be used to review Employer Q’s submission and Plan K must contain all of the provisions that any other Cycle A plan would be required to have.

Example 9: Same as Example 7, except that Employer Q decides to wait until the applicable submission period for Cycle A plans, February 1, 2011 through January 31, 2012, to submit an application for a determination letter. The remedial amendment period will extend to the end of that remedial amendment cycle, with respect to the adoption of Plan K and all interim amendments that Employer Q has timely adopted for all applicable periods. The Service will review Employer Q’s application based on the 2010 Cumulative List.

Example 10: Employer R establishes Plan L on December 18, 2006. Plan L’s cycle is Cycle D. The § 401(b) remedial amendment period with respect to Plan L (determined without regard to section 5.03 of this revenue procedure) ends on September 15, 2007, since Employer R has received an extension to file its tax return for 2006. The initial five-year remedial amendment cycle for Plan L ends on January 31, 2010. Employer R submits an application for a determination letter for Plan L on September 4, 2007. Employer R’s application is given the same priority as an on-cycle filing pursuant to section 14.02(2) and the application will be reviewed based on the 2006 Cumulative List. The result would be the same for purposes of the priority of the Service’s review if Plan L’s cycle was Cycle E, with the same facts, (except that the initial remedial amendment cycle for Plan L as a Cycle E plan would end on January 31, 2011). However, if Plan L’s cycle was Cycle C, the plan would not be given the same priority as an on-cycle filing.

Example 11: Employer S adopts Plan M on December 18, 2005, effective January 1, 2005. Plan M’s cycle is Cycle A. Employer S adopts an interim amendment in 2006. Employer S submits the initial application for a determination letter for Plan M on July 1, 2011. The § 401(b) remedial amendment period with respect to the interim amendment adopted for Plan M in 2006 (determined without regard to section 5.03 of this revenue procedure) ends on September 15, 2007, since Employer S has received an exten

sion to file its tax return for 2006. Accordingly, under section 5.03, the remedial amendment period with respect to the interim amendment adopted in 2006 is extended to the end of the next remedial amendment cycle (January 31, 2012). Similarly, there is an extension of the remedial amendment period with respect to amendments timely adopted in subsequent years to the end of the remedial amendment cycle. However, this extension does not apply to the adoption of the plan in 2005 and any amendments made in 2005, since the § 401(b) remedial amendment period for 2005 (September 15, 2006 with extensions) was already extended to January 31, 2007 and expired at that time (the end of the Cycle A remedial amendment cycle). Because Employer S did not submit a determination letter application during the February 1, 2006 through January 31, 2007 Cycle A submission period, Plan M’s initial remedial amendment period (taking into account the extension under section 5.03) ended January 31, 2007. Therefore, Employer S would not be permitted under § 401(b) to adopt any remedial amendments that might be necessary retroactively to 2005.

Example 12: Employer T adopted Plan N in August 2004, effective January 1, 2004. Employer T submits Plan N for a determination letter application in September 2006. The proposed Plan N restatement includes required § 401(k) amendments, effective January 1, 2006. The initial remedial amendment cycle for Plan N is Cycle A, ending on January 31, 2007. Employer T received an extension to file its income tax return for 2006 to September 15, 2007. The Service issued the determination letter in February 2007. Employer T must adopt restated Plan N, including the § 401(k) amendments, no later than 91 days after the date of the issuance of the determination letter, which is earlier than September 15, 2007. If Employer T had submitted a working copy with proposed amendments, these proposed amendments would also need to be adopted no later than 91 days after the date of the issuance of the determination letter.