SECTION 6. OPINION LETTERS -

SCOPE

.01 General Limits on Opinion Letters

• Opinion letters will be issued only to sponsors or M&P mass submitters. Opinion letters constitute determinations as to the qualification of the plans as adopted by particular employers only under the circumstances, and to the extent, described in section 19. In the case of prototype plans, opinion letters do not constitute rulings or determinations as to the exempt status of related trusts or custodial accounts.

.02 Nonapplicability of this Revenue Procedure to IRAs (including traditional IRAs, Roth IRAs, SEPS, and Simple IRAs) and section 403(b) Plans - Opinion letters will not be issued under this revenue procedure for prototype plans intended to meet the requirements for individual retirement arrangements under § 408 or for § 403(b) plans (see Rev. Proc. 87–50, 1987–2 C.B. 647; Rev. Proc. 97–

29, 1997–1 C.B. 698; Rev. Proc. 98–59, 1998–2 C.B. 727; Rev. Proc. 2010–48, 2010–50 I.R.B. 828; Rev. Proc. 2013–22, 2013–18 I.R.B. 985; Rev. Proc. 2014–28, 2014–16 I.R.B. 944; and Rev. Proc. 2015–22, 2015–11 I.R.B. 754). .03 Areas Not Covered by Opinion Letters - Opinion letters will not be issued for:

(1) Multiemployer plans; (2) Union plans (this does not preclude a M&P plan from covering employees of the employer who are included in a unit covered by a collective bargaining agreement or the adoption of a M&P plan pursuant to such agreement as a singleemployer plan that covers only employees of the employer);

(3) Stock bonus plans other than ESOPs;

(4) ESOPs that are a combination of a stock bonus plan and a money purchase plan;

(5) ESOPs that provide for the holding of preferred employer stock, even if such stock is described in § 409(l)(3);

(6) Pooled fund arrangements contemplated by Rev. Rul. 81–100, 1981–1 C.B. 326 (as modified by Rev. Rul. 2004–67, 2004–2 C.B 28; Rev. Rul. 2011–1, 2011–2 I.R.B. 251; Notice 2012–6, 2012–3 I.R.B. 293; and Rev. Rul. 2014– 24, 2014–37 I.R.B. 529); (7) Statutory hybrid plans with any of the following features:

(a) Any statutory hybrid benefit formula that is not a cash balance formula, such as a formula under which benefits are determined by reference to the current value of an accumulated percentage of the participant’s average compensation (a Pension Equity Plan or “PEP”);

(b) Provisions that allow for hypothetical interest crediting based on rates of return that are subject to participant choice, or any rate that does not meet the requirements of § 1.411(b)(5)–1(d).

(c) Provisions that allow a rate used to determine hypothetical interest to be based on actual return on plan assets or a subset of plan assets (as described in § 1.411(b)(5)–1(d)(5)(ii)) or the rate of return on certain RICs (as described in § 1.411(b)(5)–1(d)(5)(iv)).

(d) A conversion amendment, except for plans providing that, after the effective date of the conversion amendment, a par

ticipant’s accrued benefit is equal to the sum of accruals under the prior formula plus the benefit based on the cash balance formula (“A�B Conversion”);

(e) Provisions that use the 3-percent accrual rule or the fractional accrual rule under § 411(b)(1)(A) or (C) to satisfy the accrued benefit requirements under § 411(b)(1);

(f) Provisions that provide for funding exclusively through insurance contracts as described in § 412(e)(3); and

(g) Provisions that provide for offsets of benefits accrued under another plan (the “offsetting plan”), unless:

(i) The offset is applied on an accumulated basis at the participant’s annuity starting date, rather than offsetting each year’s principal credit by that year’s accruals or contributions under the offsetting plan;

(ii) The cash balance formula is treated as a lump sum-based benefit formula under § 1.411(a)(13)–1(d)(3) only if the offsetting plan is a defined contribution plan and the offset is applied by subtracting the account balance under the defined contribution plan from the hypothetical account balance under the cash balance formula prior to converting the balance to an annuity benefit;

(iii) The offset meets the safe-harbor requirements of § 1.401(a)(4)–8(d) (except that the offset can be computed by subtracting the account balance under the offsetting plan from the hypothetical account balance under the cash balance formula), including the requirement that the offsetting plan cannot be a section 401(k) plan or a section 401(m) plan;

(iv) For the purpose of determining the amount of the offset against any defined benefit formula, the offset reflects the value of any distributions from the offsetting plan made prior to the participant’s annuity starting date under the cash balance plan;

(v) The offset is applied on a uniform basis for all participants;

(vi) The plan provides a minimum accrued benefit to participants (expressed as a lifetime annuity commencing at normal retirement age) of no less than 0.5% of compensation for each year of credited service, which is not reduced by the offset applied to other formulas under the plan;

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(vii) Accrued benefits, considered in conjunction with defined contribution accounts subject to any offset, meet nondiscrimination requirements; and

(viii) The amount of the offset, including any procedures and actuarial assumptions for converting a defined contribution account balance (under a specificallynamed defined contribution plan) to an annuity amount, is definitely determinable.

(8) Plans described in § 414(k) (relating to a defined benefit plan that provides a benefit derived from employer contributions that is based partly on the balance of the separate account of a participant);

(9) Target benefit plans, other than plans that, by their terms, satisfy each of the safe harbor requirements described in § 1.401(a)(4)–8(b)(3)(i), as well as the additional rules in § 1.401(a)(4)– 8(b)(3)(ii) through (vii); (10) Defined benefit plans that provide for employee contributions (other than statutory hybrid plans that accepted employee contributions prior to the first plan year after the effective date of this revenue procedure);

(11) Plans that would not satisfy the qualification requirements except as governmental plans as described in § 414(d);

(12) Church plans described in § 414(e) that have not made the election provided by § 410(d);

(13) Plans under which the § 415 limitations are incorporated by reference;

(14) Plans that incorporate the ADP test under § 401(k)(3) or the ACP test under § 401(m)(2) by reference;

(15) Section 401(k) plans (standardized and nonstandardized) that provide for hardship distributions under circumstances other than those described in the safe harbor standards in the regulations under § 401(k);

(16) Fully-insured § 412(e)(3) plans, other than non-statutory hybrid plans that by their terms satisfy the safe harbor in § 1.401(a)(4)–3(b)(5);

(17) Plans that fail to contain a provision reflecting the requirements of § 414(u) (see Rev. Proc. 96–49, 1996–2 C.B. 369);

(18) Plans that include purported failsafe provisions for § 401(a)(4) or the average benefit test under § 410(b);

(19) Plans that include blanks or fill-in provisions for the employer to complete, unless the provisions have parameters that preclude the employer from completing the provisions in a manner that could violate the qualification requirements;

(20) Plans designed to satisfy the provisions of § 105;

(21) Plans that include § 401(h) accounts;

(22) Eligible combined plans within the meaning of § 414(x)(2); or

(23) Variable annuity plans and plans that provide for accruals that are determined in whole or in part based on the value of or rate of return on identified assets, including plan assets.

.04 The IRS may, in its discretion, decline to issue opinion letters for other types of plans not described in this section.