Bethesda, Md

The IRS has advanced its cyclical determination letter program in Announcement 2008-23 by stating that it expects to begin issuing opinion and advisory letters for pre-approved defined contribution plans on March 31, 2008. Accordingly, employers relying on these pre-approved plans must adopt such plans by April 30, 2010. The Announcement also notes that the IRS will open the program to applications from employers adopting pre-approved defined contribution plans beginning on May 1, 2008.

Whether an adopting employer must file such an application depends upon whether it may rely on the pre-approved plan's favorable opinion or advisory letter pursuant to §19 of Rev. Proc. 2005-16. If such reliance is applicable, then the employer need not file a determination letter application. If reliance is not available, the employer generally files an application on Form 5307, Application for Determination for Adopters of Master or Prototype or Volume Submitter Plans. Form 5307 applications filed on or after May 1, 2008, generally will be reviewed by the IRS based on the 2004 Cumulative List of Changes in Plan Qualification Requirements, which was also used in the review of the underlying pre-approved plans.

Certain circumstances, including employer amendments to the pre-approved plan, may require that the adopting employer file the more detailed Form 5300, Application for Determination for Employee Benefit Plan, rather than Form 5307. Generally, the IRS reviews such a submission based on the Cumulative List in effect when the application is filed. Thus, for May 1, 2008, applications, the 2007 Cumulative List generally will serve as the basis for the IRS's review of the plan.

Announcement 2008-23 revises this latter rule for adopting employers that use the more detailed Form 5300 only because the plan is a multiple employer volume submitter plan or because the employer is requesting a determination regarding a partial termination, affiliated service group status or leased employees. Such applications will be reviewed on the basis of the 2004 Cumulative List rather than the Cumulative List in effect when the application was filed.

In addition, under the Announcement, an employer that files Form 5307 generally need not include a copy of the plan's signed and dated timely good faith EGTRRA amendments that were adopted prior to the adoption of the EGTRRA-restated plan or any interim amendments, regardless of when adopted. The application must include these amendments, however, if the plan is a volume submitter plan that does not authorize the practitioner to amend the plan on behalf of the adopting employer.

The Announcement also notes that the IRS is revising Form 5307 to allow for its optical scanning. Applications on the current version of the form will be accepted through September 30, 2008.

For more information, in the Tax Management Portfolios, see Ireland, 360 T.M., Qualified Plans -- IRS Determination Letter Procedures, and in Tax Practice Series, see ¶5540, Obtaining IRS Approval for Qualified Plans.