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Compliance June 10, 2011
ASPPA Offers IRS Ways to Simplify Retirement Plan Filings
The
American Society of Pension Professionals and Actuaries (ASPPA) submitted a
letter to the Internal Revenue Service (IRS) suggesting improvements for submitting pre-approved defined contribution plans.
Reported by PLANADVISER staff
ASPPA acknowledged the success of these plans and noted how most plan sponsors use pre-approved plans. But it said there is still room for improvements.ASPPA’s three recommendations are:
1. Reduce ‘Protective’ Determination Letter Filings: The IRS should modify its procedures to lessen the need for ‘protective’ determination letter applications, including providing limited audit relief, adopting a plan document registration program, allowing for certification on Form 5500, and providing for certification of adoption of amendments by the pre-approved document sponsor. Changes such as these could significantly reduce the number of determination letter applications.
2. Modify the Approval of Trust Documents: The IRS should modify its existing program to allow approval of trust documents separate from the plan document. This would avoid multiple IRS reviews of the same identical trust language just because it is associated with more than one plan document.
3. Strengthen Reliance on Opinion and Advisory Letters in Bankruptcy: The IRS should clarify and strengthen the wording used in opinion and advisory letters to align with the wording in Revenue Procedures (‘Rev. Proc.’) 2005-16 and 2011-6. Plan sponsors will be less likely to file for determination letters if they are comfortable that the opinion or advisory letter for their plan will be treated as favorable determination under Internal Revenue Code section 7805 in the event a participant files for bankruptcy protection.
The complete letter sent to the IRS is available here.