IRS’ website reflects changes to EP determination process that begin in 2015

The IRS has updated its website for changes to the determination letter program for retirement plans that are effective February 1, 2015, beginning with Cycle E2 applications. The application processing procedures are described in Rev. Proc. 2015-6, section 6.13. These changes will improve the program’s efficiency and consistency, according to the IRS.

Procedural completeness review

The IRS explains that applications must include all required documents and information, and if missing information is not supplied within 30 days, the applications will be closed.

1. Initial review for completeness – To be considered complete, submissions must include all information and documents required by Rev. Proc. 2015-6, including the Form 5300 series application and Procedural Requirements Checklist.

2. Procedural Requirements Checklist is now mandatory – The checklist must be included on the last pages of submission forms (Form 5300, 5307, 5310 or 5316). This is no longer optional.

3. Thirty days to submit missing information – If all required information and documents are not included with an application, the IRS will send a List of Missing Items. The IRS provides 30 days to submit the required items.

4. If there is no response within 30 days – If all the required items are not sent by the deadline, the deficient application will be closed, the IRS will not return any submitted documents from the application, and the paid user fee will be forfeited.

Technical deficiency review

Applications that are procedurally complete will proceed for a technical review. The reviewer may ask for additional information or documents. The IRS will provide a time period for sending any additional items requested. If all of the requested items are not submitted during the time period, the IRS will send notification of an additional set period of time to submit the required items. This is the grace period before an application is closed. If all of the requested items are not submitted by the end of the grace period:

• the deficient application will be closed;
• the IRS will not return any submitted documents from the application; and
• the paid user fee will be forfeited.

What happens after a deficient application is closed?

If a deficient application is closed and either the final response deadline or the postmark date of the submitted response occurs before the end of the plan sponsor’s remedial amendment cycle, a new set period of time will be provided to submit a new on-cycle application, with a new user fee.

However, if a deficient application is closed and both the final request deadline and the postmark date of any part of a response to that final request occur after the end of the plan’s remedial amendment cycle, the remedial amendment cycle will not be extended. When the case is closed, a final disposition letter will be sent stating that any subsequent application re-submission will be treated as off-cycle for that remedial amendment cycle. Off-cycle applications may be submitted. However, as discussed in Rev. Proc. 2007-44, section 14.02, off-cycle applications will not be reviewed until all on-cycle plans have been reviewed and processed, unless the application qualifies for one of the priority review criteria provided within that section.

New plan amendment reference lists

The IRS notes that submitters can check their plans’ interim amendments against the new reference lists. The IRS recommends using the lists to track where particular law changes from the cumulative list applicable to a plan are reflected in the plan document. Each reference list contains the items from the cumulative list that were first added that year. For example, the 2014 reference list contains items that were new on the 2014 Cumulative List.

The IRS encourages submitters to include completed reference lists with determination letter applications, as this will help expedite the review process. However, submission of reference lists is not mandatory in Cycle E. The IRS is considering making the inclusion of reference lists mandatory beginning in the following Cycle A. The IRS provides the below example.

Your individually designed plan’s five-year cycle is Cycle E and your determination letter application is due January 31, 2016. Your plan will be reviewed based on the 2014 Cumulative List. You would complete the five reference lists for the five years of your remedial amendment cycle (i.e., the reference lists for the 2014, 2013, 2012, 2011, and 2010 Cumulative Lists).

Source: IRS website.

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