July 7, 2016
On June 29, 2016, the Internal Revenue Service (IRS) released Rev. Proc. 2016-37, formalizing its previously announced changes to the determination letter program for individually designed plans, effective January 1, 2017.
The IRS had previously announced that it was going to be restructuring the program to eliminate the five-year cycle-based program and, in its place, establish a program that permits plan sponsors to submit determination letter requests only for new plans and terminating plans, and in “other circumstances” (to be determined by the IRS and announced periodically). [See Sibson’s Hot Topics from July 23, 2015 and January 7, 2016]. Those changes are made in this Revenue Procedure.
In addition, the Revenue Procedure provides specific rules for sponsors of individually designed plans with respect to reliance on prior letters and the “remedial amendment period” for making amendments. It also states that that the IRS intends to provide on an annual basis two new lists intended to assist plan sponsors in keeping their plans up to date: a Required Amendment List with, in many cases, model language, and an Operational Compliance List to identify qualification changes that become effective during a year.
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