SECTION 19. EFFECT OF EMPLOYER

AMENDMENTS OR ADOPTION OF INDIVIDUALLY DESIGNED PLAN ON SIX-YEAR REMEDIAL AMENDMENT CYCLE

.01 General Rule An employer that amends any provision of an approved M&P plan including its adoption agreement (other than to change the choice of options, if the plan permits or contemplates such a change) is considered to have adopted an individually designed plan. (See section 5.02 of Rev. Proc. 2005–16.) An employer amending provisions of a VS plan is also

February 1, 2013 through January 31, 2014

February 1, 2013 through October 31, 2013

considered to have adopted an individually designed plan, although such an employer has traditionally had more discretion to make amendments that differ from the specimen document and stay in the VS program. (See section 8 and section 9 of Rev. Proc. 2007–6, 2007–1 I.R.B. 189.)

.02 Eligibility for Six-Year Cycle on Continuing Basis

Except as otherwise provided in section 19.03 and 19.04, an employer who modifies a plan in such a way that the plan, as adopted by the employer, would not be considered an M&P plan or a VS plan, will nevertheless be allowed to remain within the six-year remedial amendment cycle due to the nature of the modifications, as described in section 24.02 of Rev. Proc. 2005–16. Thus, plan amendments (other than those described in sections 19.03 and 19.04 below) that are adopted timely and in good faith with the intent of maintaining the qualified status of the plan by employers sponsoring M&P and VS plans will be disregarded for purposes of determining an employer’s remedial amendment cycle. In this case, the employer will remain

eligible for the six-year remedial amendment cycle. Thus, the plan will continue to be treated as an M&P or VS plan for purposes of this revenue procedure and therefore eligible for the six-year remedial amendment cycle on a continuing basis as provided in section 24.02 of Rev. Proc. 2005–16. .03 Temporary Eligibility for Six-Year Cycle

An employer who adopts an individually designed plan under (1) or (2) below or makes certain amendments to its M&P or VS plan as described under (3) and (4) below is entitled to remain in the six-year remedial amendment cycle only for the current remedial amendment cycle. This temporary eligibility for the six-year cycle applies if:

(1) the employer is an intended adopter (as described in section 17.04) and after timely executing the Form 8905, the employer decides to adopt an individually designed plan whose underlying plan document is not based on a pre-approved plan, or

2007–28 I.R.B. 70 July 9, 2007

cised its authority under section 24.03 of Rev. Proc. 2005–16.

.06 Examples Examples 18 through 22 below illustrate how different types of employer amendments to a pre-approved plan affect an employer’s eligibility for the six-year remedial amendment cycle and which Cumulative List the Service will use to review an employer’s submission. 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 18: Practitioner S maintains a defined contribution VS specimen plan. Practitioner S timely submits an advisory letter application for the initial six-year remedial amendment cycle (that is, EGTRRA remedial amendment period) on or before January 31, 2006. Practitioner S receives an advisory letter dated January 31, 2008. The Service announces that February 1, 2008 until January 31, 2010 is the time period when employers must adopt a restated pre-approved plan and, if necessary, file a determination letter application. Employer T adopts the VS specimen plan, now Plan K, on or before January 31, 2010. Employer T amends Plan K so that it is no longer word-for-word identical to the VS specimen plan. Employer T submits a determination letter application using Form 5307, Application for De- termination for Adopters of Master or Prototype or Volume Submitter Plans, on January 15, 2010. The Service will review the determination letter application based upon the Cumulative List used to review the underlying plan document, the 2004 Cumulative List.

The 2004 Cumulative List is used in this instance because the Service in its review determined that the amendments to the VS specimen plan did not rise to the level that necessitated the treatment of Plan K as an individually designed plan which would require Employer T to file Form 5300, Application for De- termination for Employee Benefit Plan . Accordingly, Employer T’s subsequent remedial amendment cycle will continue to be determined under Part IV of this revenue procedure. Practitioner S would submit an application for an advisory letter within the next six-year remedial amendment cycle, which ends on January 31, 2017, on or before the submission deadline for such cycle of January 31, 2012. Employer T would adopt the restated pre-approved plan and, if necessary, file a determination letter application within the time period announced by the Service.

Example 19: Employer X has maintained Plan M, a defined contribution pre-approved plan, since 2002. The last digit of Employer X’s EIN is 8. Plan M is timely submitted for the initial six-year remedial amendment cycle (that is, the EGTRRA remedial amendment period) by the sponsor/practitioner on or before January 31, 2006. Generally, Employer X will have until January 31, 2011 (unless otherwise provided by the Service) to adopt the EGTRRA approved

(2) the employer is a prior adopter of a pre-approved plan (as described in section 17.02) and after adopting this preapproved plan the employer replaces that plan with an individually designed plan whose underlying plan document is not based upon a pre-approved plan document, or

(3) the employer amends an approved M&P plan, including its adoption agreement, to incorporate a type of plan not allowed in the M&P program (and that amendment is adopted more than one year after the date the employer initially adopted the M&P plan (see section 6.03 of Rev. Proc. 2005–16)), or

(4) the employer amends an approved VS plan to incorporate a type of plan not allowed in the VS program (and that amendment is adopted more than one year after the date the employer initially adopted the VS plan (see section 16.02 of Rev. Proc. 2005–16));

In order to obtain reliance, such employer must submit a determination letter application during the approximate two-year period within the six-year remedial amendment cycle that the Service announces for employers to adopt plans and submit them for determination letters. The employer’s plan will be reviewed using the applicable Cumulative List based on the date of the application. The subsequent remedial amendment cycle is the first five-year cycle, as determined under section 9 or 10 of this revenue procedure that ends after the closing of the six-year cycle in which the determination letter application was submitted. However, if the end of the first five-year cycle that ends after the closing of the six-year cycle is less than twelve calendar months after the date of the favorable determination letter, then the plan’s current cycle is extended for twelve calendar months and the next five-year cycle will be shortened accordingly.

.04 Ineligibility for Six-Year Cycle Notwithstanding the above, if an employer amends an approved M&P plan including its adoption agreement or an approved VS plan to such an extent that the Service determines in its discretion that the plan falls under section 24.03 of Rev. Proc. 2005–16, then the plan will be considered individually designed for purposes of this revenue procedure (that is, the employer will be subject to the applicable five-year

remedial amendment cycle based on the last digit of their EIN). The same rule applies if the employer adopts an amendment described under section 19.03(3) and (4) above within one year of adopting either the M&P plan or the VS plan.

.05 Determination letter procedures With respect to an M&P or VS plan, an employer that adopts an amendment which causes such a plan to be treated as an individually designed plan under section 19.02 and .03 of this revenue procedure, but for remedial amendment cycle purposes remains eligible for the six-year remedial amendment cycle either on a continuing or temporary basis, must file a determination letter application for reliance. The determination letter application must be filed during the approximate two-year period within the six-year remedial amendment cycle that the Service announces for employers to adopt and submit determination letter applications, (if applicable). Depending on whether a Form 5307 or 5300 is filed, the Service will use the Cumulative List used to review the underlying document, or the Cumulative List based on the date of the determination letter submission in its review. (See examples 18 through 22).

(1) Determination letter filing procedures for VS plans are set forth in section 9 of Rev. Proc. 2007–6. (2) With respect to M&P plans, except as otherwise provided in section 9 of Rev. Proc. 2007–6 describing when a Form 5307 must be used, an employer that adopts amendments and submits a request for a determination letter must file a Form 5300. Procedures for filing the Form 5300 are similar to the procedures set forth in section 9.09 in Rev. Proc. 2007–6, for VS plans, except for the following:

(a) A list of modifications is not required to be included.

(b) Any changes adopted by the employer must be made in the form of an amendment and not incorporated into the underlying M&P plan document.

(3) While it is expected that an M&P sponsor will generally continue to amend on behalf of the adopting employer even if the adopting employer adopts amendments to the plan, the sponsor no longer has the authority to amend on behalf of the employer if the amendment falls into one of the categories listed in section 6.03 of Rev. Proc. 2005–16 or the Service has exer

July 9, 2007 71 2007–28 I.R.B.

version of the pre-approved plan and have such adoption be considered timely under § 401(b) of the Code.

In 2007, Employer X decides Plan M no longer offers the flexibility it desires in providing the retirement benefits to its employees. As a result, Employer X amends and restates Plan M in 2007 into a defined contribution individually designed plan (with the intent of maintaining the qualified status of Plan M). Though Employer X is now sponsoring an individually designed plan, Employer X, a prior adopter as described in section 17.02, is still eligible for the sixyear remedial amendment cycle under section 19.03.

The Service announces that February 1, 2008 until January 31, 2010 is the time period when employers must adopt a restated pre-approved plan and, if necessary, file a determination letter application. On June 1, 2009, Employer X submits a determination letter application using Form 5300, Application for Determination for Employee Benefit Plan, and pays the higher user fee. The Service will review the determination letter application based upon the 2008 Cumulative List (that is, the annual Cumulative List based on the date of the determination letter submission). The subsequent remedial amendment cycle is the first five-year cycle as determined under section 9 or 10 of this revenue procedure that ends after the closing of the six-year cycle in which the determination letter application was submitted; thus, the next five-year remedial amendment cycle ends January 31, 2014. Example 20: Employer Y, whose EIN ends with an 8, maintains Plan N. Plan N is an adoption of an M&P defined benefit plan as of 2002. The M&P plan is timely submitted for the initial six-year remedial amendment cycle (that is, EGTRRA remedial amendment period) by the sponsor on or before January 31, 2008 and the sponsor receives an opinion letter dated January 31, 2010 for the M&P plan. The Service announces February 1, 2010 until January 31, 2012, as the time period for employers to adopt a restated pre-approved plan and, if necessary, file a determination letter application.

On November 19, 2011, Employer Y adopts the restated EGTRRA approved version of an M&P plan which includes an amendment to Plan N that creates a plan described under § 414(k). Although Employer Y adopts this amendment timely and in good faith with the intent of maintaining the qualified status of Plan N, this amendment changes the provisions of the M&P plan to create a type of plan that is not allowed in the M&P program. Since Employer Y has amended the M&P plan to incorporate a type of plan for which the Service will not issue an opinion letter, Plan N is an individually designed plan. Though Employer Y is now sponsoring an individually designed plan, Employer Y is still eligible for the six-year remedial amendment cycle under section 19.03 because Employer Y is a prior adopter as described in section 17.02 and the amendment was adopted more than one year after the date Employer Y adopted Plan N in 2002. Employer Y submits a determination letter application using Form 5300, Application for Determina- tion for Employee Benefit Plan, and pays the higher user fee on December 31, 2011. The Service will review the determination letter application based upon the 2010 Cumulative List (that is, the annual Cumulative List based on the date of the determination letter submission). Employer Y receives a favorable de

termination letter dated March 31, 2013. Employer Y’s subsequent remedial amendment cycle is the first five-year cycle, as determined under section 9 or 10 of this revenue procedure that ends after the closing of the six-year cycle in which the determination letter application was submitted; thus, the next five-year remedial amendment cycle ends January 31, 2014. However, since the end of the first five-year cycle that ends after the closing of the six-year cycle is less than twelve calendar months after the date of the favorable determination letter, the current five-year cycle is extended by twelve calendar months as provided in section 19.03. Thus the end of the five-year cycle is January 31, 2015 and not January 31, 2014. The subsequent remedial amendment cycle is shortened accordingly but the submission period deadline remains January 31, 2019.

Example 21: Employer Z, whose EIN ends with a 2, maintains Plan V. Plan V is a defined contribution plan and is an adoption of a VS plan as of January 1, 2011. The VS specimen plan is timely submitted for the second six-year remedial amendment cycle by the practitioner on or before January 31, 2012. The VS practitioner receives an advisory letter dated January 31, 2014 for the VS specimen plan. Generally, Employer Z will have until January 31, 2016 (unless otherwise provided by the Service) to adopt the approved VS plan and to have such adoption be considered timely under § 401(b) of the Code.

On November 15, 2013, Employer Z adopts an amendment to Plan V that creates an employee stock ownership plan (more than one year after Employer Z adopted Plan V). Although Employer Z adopts this amendment timely and in good faith with the intent of maintaining the qualified status of Plan V, this amendment changes the provisions of the VS plan to create a type of plan that is not allowed in the VS program. Since Employer Z has amended the VS plan to incorporate a type of plan for which the Service will not issue an advisory letter, Employer Z submits a determination letter application for Plan V by November 20, 2013 using Form 5300, Application for De- termination for Employee Benefit Plan, and pays the higher user fee. The Service would use the 2012 Cumulative List in its review of the determination letter submission. Employer Z receives a favorable determination letter dated November 20, 2014. Employer Z’s subsequent remedial amendment cycle is the first five-year cycle, as determined under section 9 or 10 of this revenue procedure that ends after the closing of the six-year cycle in which the determination letter application was submitted; thus, the next five-year remedial amendment cycle ends January 31, 2018.

Example 22: Same as Example 21, except that Employer Z adopts an amendment to Plan V that creates an employee stock ownership plan in 2011, the same year Employer Z adopted Plan V. Since Employer Z amended the VS plan to incorporate a type of plan for which the Service will not issue an advisory letter, within one year of adopting the VS plan, the plan is an individually designed plan that is not eligible for the six-year remedial amendment cycle. Employer Z must submit a determination letter application for Plan V during the applicable submission period for Cycle B, February 1, 2012 through January 31, 2013, using Form 5300, Application for De- termination for Employee Benefit Plan, and pay the higher user fee. The Service would use the 2011 Cu

mulative List in its review of the determination letter submission.