Expansion of Determination Letter Program

Revenue. Procedure. 2019-20, consistent with the process described in Rev. Proc. 2016-37, 2016-29 I.R.B. 136, provides for a limited expansion of the determination letter program with respect to individually designed plans. Under this limited expansion, the Internal Revenue Service (IRS) will accept determination letter applications for,:

individually
designed statutory hybrid plans during a 12-month period beginning September 1,
2019, and
individually
designed Merged Plans (as defined in section 5.01(2) of the revenue procedure)
on an ongoing basis.

As provided by Rev. Proc.
2016-37, a plan sponsor continues to be permitted to submit a determination
letter application for initial plan qualification and for qualification upon
plan termination. Revenue.
Procedure. 2019-20 also provides for a limited extension of the remedial
amendment period under § 401(b) of the Internal Revenue Code (Code) and Rev.
Proc. 2016-37 under specified circumstances, and for special sanction
structures that apply to certain plan document failures discovered by the IRS
during the review of a plan submitted for a determination letter pursuant to the
revenue procedure.

EXPANSION OF DETERMINATION LETTER PROGRAM

The Treasury Department and the IRS received numerous comments in response to the request for comments. After consideration of the comments, the Treasury Department and the IRS have determined that the determination letter program will be expanded to permit plan sponsors to submit (i) determination letter applications for individually designed statutory hybrid plans, during the 12-month period beginning September 1, 2019, and ending August 31, 2020, and (ii) determination letter applications for certain individually designed Merged Plans on an ongoing basis. The revenue procedure also provides for a limited extension of the remedial amendment period and special sanction structures applicable to plans submitted for a determination letter pursuant to the revenue procedure.

Expansion of Determination Letter Program
for Statutory Hybrid Plans

In general, the IRS will accept a
determination letter application for an individually designed statutory hybrid
plan, as defined in § 1.411(a)(13)-1(d)(5), during the 12-month period
beginning September 1, 2019, and ending August 31, 2020 (statutory hybrid plan
submission period).

The procedures relating to the submission
of determination letter applications for individually designed plans set forth
in Rev. Proc. 2019-4, 2019-1 I.R.B. 146 (and its annual successors), and Rev.
Proc. 2016-37 apply to determination letter applications submitted.

The IRS’s review of individually designed
statutory hybrid plans that are submitted for a determination letter pursuant
to the revenue procedure will be based on the 2017 Required Amendments List
(Notice 2017-72). The review will also take into account all Required
Amendments Lists and Cumulative Lists issued prior to 2016.

Definitions for Guidance Related to Merged Plans

The term “Plan Merger” means a merger or
consolidation, as described in § 1.414(l)-1(b)(2), that combines two or more
plans maintained by previously Unrelated Entities into a single individually
designed plan, and that occurs in connection with a corporate merger,
acquisition, or other similar business transaction among Unrelated Entities
that each maintained its own plan or plans prior to the Plan Merger.

The term “Merged Plan” means a plan that
results from the merger or consolidation of two or more plans into a single
individually designed plan pursuant to a Plan Merger.

The term “Unrelated Entities” means
entities that are not members of the same controlled group under § 414(b), the
same set of trades or businesses under common control under § 414(c), or
members of the same affiliated service group under § 414(m).

The “Date of a Corporate Merger,
Acquisition, or Other Similar Business Transaction” is the effective date of
the transaction as evidenced by a corporate board resolution or written
documentation signed and dated by persons duly authorized to represent the
entities involved.

The “Date of the Plan Merger” is the
effective date of the Plan Merger as evidenced by (a) a corporate board
resolution or written documentation signed and dated by persons duly authorized
to represent the entities involved, or (b) a plan amendment.

Expansion of Determination Letter Program for Merged Plans

In general, beginning September 1, 2019,
the IRS will accept a determination letter application that satisfies the
conditions set forth in section 5.02(2) with respect to a Merged Plan.
Determination letter applications submitted for a Merged Plan will be accepted
on an ongoing basis and are not limited to a specific submission period.

A determination letter application for a
Merged Plan satisfies the conditions of section 5.02(2) if the following
requirements are satisfied:

(a) The Date of
the Plan Merger occurs no later than the last day of the first plan year that
begins after the plan year that includes the Date of a Corporate Merger,
Acquisition, or Other Similar Business Transaction between Unrelated Entities,
and

(b) A determination
letter application for the Merged Plan is submitted within a period beginning
on the Date of the Plan Merger and ending on the last day of the first plan
year of the Merged Plan that begins after the Date of the Plan Merger (Merged
Plan submission period).

The procedures relating to the submission
of determination letter applications for individually designed plans set forth
in Rev. Proc. 2019-4 (and its annual successors) and Rev. Proc. 2016-37 apply
to determination letter applications.

The
IRS’s review of individually designed Merged Plans that are submitted for a
determination letter pursuant to the revenue procedure will be based on the
Required Amendments List that was issued during the second full calendar year
preceding the submission of the determination letter application. The review
will also take into account all previously issued Required Amendments Lists and
Cumulative Lists.

CONTINUED CONSIDERATION OF COMMENTS

The Treasury Department and the IRS will
continue to consider comments received in response to Notice 2018-24 and any
other comments received regarding additional situations in which the submission
of a determination letter application may be appropriate. Also, the Treasury
Department and the IRS will continue to request, on a periodic basis, comments
on additional situations in which the submission of a determination letter
application may be appropriate.