Compliance April 18, 2017

May 1 Is Deadline for New Adopters of Pre-Approved Plans

DC plan sponsors with individually designed plans can convert to a pre-approved plan now that the IRS determination letter program has ended.
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The Internal Revenue Service (IRS) has extended the deadline from Sunday, April 30, 2017, to Monday, May 1, 2017, for certain employers to adopt a defined contribution (DC) pre-approved plan and apply for a determination letter, if permissible.

Notice 2016-3 previously extended the deadline from April 30, 2016, to April 30, 2017, to help employers who wanted to convert their existing individually designed plan into a current defined contribution pre-approved plan based on the 2010 Cumulative List. Plan sponsors with individually designed plan documents may want to adopt a pre-approved plan since the elimination of the five-year remedial amendment cycles for individually designed plans and other changes as described in section 4 of Rev. Proc. 2016–37.

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Plan sponsors are eligible for this extension if they adopt a plan after January 1, 2016, other than one that is a modification and restatement of a defined contribution pre-approved plan they maintained before January 1, 2016. The extension allows them until May 1, 2017, to:

  • Adopt a current defined contribution pre-approved plan.
  • Apply for a determination letter, if permissible.

If plan sponsors qualify for the extension and to file Form 5307, Application for Determination for Adopters of Modified Volume Submitter Plans (instructions), they should include a statement in the cover letter that their submission package:

  • Restates the plan as a current defined contribution pre-approved plan, and
  • Qualifies for the Notice 2016-3 extension.

Plan sponsors can file for a favorable determination letter until the extended May 1, 2017, deadline.

More information is here.

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