SECTION 6. OPINION

LETTERS - SCOPE

.01 General Limits on Opinion Letters - Opinion Letters will be issued only to Providers or 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 7. Opinion Letters do not constitute rulings or determinations as to the exempt status of related trusts or custodial accounts under § 501(a).

.02 Nonapplicability of this Revenue Procedure to IRAs (including traditional IRAs, Roth IRAs, SEPS, and Simple IRAs) and to § 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. (See the Form 5305 series, which provides model IRA documents that have been pre-approved by the IRS and for which an opinion letter is not needed. See also Rev. Proc. 87–50, 1987–2 C.B. 647, as modified by Rev. Proc. 97–29, 1997–1 C.B. 698; Rev. Proc. 98–59, 1998–2 C.B. 727; and Rev. Proc. 2010–48, 2010–50 I.R.B. 828, for administrative procedures for seeking opinion letters for individual retirement arrangements under § 408.) In addition, Opinion Letters will not be issued under this revenue procedure for § 403(b) plans (see Rev. Proc. 2013–22, 2013–18 I.R.B. 985, as modified by Rev. Proc. 2014–28, 2014–16 I.R.B. 944, and clarified by Rev. Proc. 2017–18, 2017–5 I.R.B. 743, and Rev. Proc. 2015–22, 2015–11 I.R.B. 754, for administrative procedures for seeking opinion and advisory letters for § 403(b) arrangements).

.03 Areas Not Covered by Opinion Letters - Opinion Letters will not be issued for:

(1) Multiemployer plans;

(2) Single-employer collectively bargained plans (however, this rule does not preclude an employer from covering employees of the employer that are included in a unit covered by a collective bargaining agreement if it is adopting a Pre-approved Plan for its non-bargaining employees or from adopting a Pre-approved Plan pursuant to such agreement as a singleemployer plan that covers only bargaining 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, including ESOPs that hold stock described in § 409(l)(3);

(6) Consistent with section 6.01, 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) A 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 under which Interest Credits are 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);

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(c) Provisions under which a rate used to determine Interest Credits is based on a subset of plan assets (as described in § 1.411(b)(5)–1(d)(5)(ii)) or the rate of return on certain regulated investment companies (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 participant’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 for funding exclusively through insurance contracts as described in § 412(e)(3); or

(g) Provisions 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) If plan provisions are consistent with treatment of the Cash Balance Formula as a lump sum-based benefit formula under § 1.411(a)(13)–1(d)(3), then 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 may not be a § 401(k) plan or a § 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;

(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 specifically-named defined contribution plan) to an annuity amount, is definitely determinable.

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(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) Governmental defined benefit plans that include “deferred retirement option plan” (DROP) features, or similar provisions in which a participant earns additional benefits for continued employment post-normal retirement age in the form of credits to a separate account (including a cash balance account or other arrangement) under the same plan;

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

(12) Plans under which the ADP test under § 401(k)(3) or the ACP test under § 401(m)(2) are incorporated by reference;

(13) Standardized § 401(k) plans that provide for hardship distributions under circumstances other than those described in the safe harbor standards in the regulations under § 401(k);

(14) Nonstandardized § 401(k) plans that provide for hardship distributions under circumstances not described in the safe harbor standards in the regulations under § 401(k), unless these distributions are subject to nondiscriminatory and objective criteria contained in the plan;

(15) 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);

(16) Plans that include purported fail-safe provisions for § 401(a)(4) or the average benefit test under § 410(b);

(17) 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;

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

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

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

(21) 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 Opinion Letters Will Not Consider Title I Issues - The IRS will not review for and an Opinion Letter will not consider Title I issues, which are administered by the Department of Labor.

.05 The IRS may, in its discretion, decline to issue Opinion Letters for other types of plans or issues not described in this section.

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