IRS Finalizes New Employee Plan Determination Letter Procedures

The Internal Revenue Service (IRS) recently finalized procedures for a new system of staggered remedial amendment periods and new procedures for retirement plan sponsors seeking IRS approval of amendments to file determination letters to ensure tax code compliance. With Revenue Procedure 2005-66, the IRS has set forth new procedures that include five-year staggered cycles for individually designed employee plans to file determination letters with the IRS and six-year staggered cycles for sponsors of pre-approved plans (master and prototype (M&P) and volume submitter plans) to file opinion, advisory or determination letters, with employers having approximately a two-year window to adopt their updated pre-approved plans. The new procedures also extend the remedial amendment period for compliance with the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) to the end of a plan’s initial applicable cycle for both individually designed and pre-approved plans. Thus, for