SECTION 2. BACKGROUND

.01 Section 401(b) provides a remedial amendment period during which a plan may be amended retroactively to comply with the qualification requirements of § 401(a). Section 1.401(b)–1 of the Income Tax Regulations describes the disqualifying provisions that may be amended retroactively and the remedial amendment period during which retroactive amendments may be adopted. The regulations also grant the Commissioner the discretion to designate certain plan provisions as disqualifying provisions.

.02 Section 1.401(b)–1(e)(3) permits the timely adoption of retroactive remedial amendments that have been determined to be necessary for the issuance of a favorable determination letter, provided that the application for a determination letter was filed with the Service before the end of the remedial amendment period. Section 1.401(b)–1(e)(3) also provides that if an application for a determination letter on the qualified status of a plan is filed with the Service on or before the end of a remedial amendment period, the period is extended until the expiration of the 91 ^st

day after:

(1) The date on which notice of the final determination with respect to the application is issued by the Service, the application is withdrawn, or the application is otherwise disposed of by the Service; or

(2) If a petition is timely filed with the U.S. Tax Court for a declaratory judgment under § 7476 with respect to the final de

2009–35 I.R.B. 304 August 31, 2009

qualifying provisions, is extended as provided in § 1.401(b)–1(e)(3).

.06 The cycle applicable to an individually designed plan is generally based on the sponsoring employer’s taxpayer identification number. However, the initial remedial amendment cycle for individually designed governmental plans (Cycle C) ended on January 31, 2009, and each subsequent Cycle C ends on each fifth anniversary thereof. The six-year remedial amendment cycle for pre-approved plans, including governmental plans that are preapproved plans, is contained in section 18 of Rev. Proc. 2007–44.

.07 The Service recognizes that the 91-day extension of the remedial amendment period provided by § 1.401(b)–1(e)(3) may not allow enough time for governmental plans to be amended to adopt retroactive remedial amendments that have been determined to be necessary for the issuance of a favorable determination letter. This is because the governing body with authority to amend the plan may be prevented, under the laws and procedures applicable to the governing body’s deliberations, from considering the amendments until some time after the 91-day extension under § 1.401(b)–1(e)(3) has expired.

.08 Rev. Proc. 2009–6, 2009–1 I.R.B. 189, contains the Service’s procedures regarding the issuance of determination letters for plans qualified under § 401(a). Section 19 of Rev. Proc. 2009–6 provides that an application for a determination letter may be withdrawn by the applicant, but that any user fee paid with the application generally will not be returned to the applicant.