ASPPA Recommends Changes to Pre-Approved Plan Programs
In a statement from Craig P. Hoffman, general counsel and director of Regulatory Affairs of ASPPA to the Internal Revenue Service (IRS), the groups requested that the Master & Prototype (M&P) and Volume Submitter (VS) components of the pre-approved plan program be combined into a single program and recommended certain modifications to the defined benefit and 403(b) pre-approved plan programs.
The IRS currently maintains a program for the ‘pre-approval’ of plans qualified under sections 401, 403(a) and 403(b) of the Internal Revenue Code. ASPPA requested the modification of substantive and procedural distinctions between certain terms within the pre-approved plans program under sections 401 and 403(a), and ASPPA and NTSAA together requested modifications to the defined benefit and 403(b) pre-approved plan programs.
“To streamline the pre-approved plan procedures for plans qualified under sections 401 and 403(a), ASPPA recommends that the IRS eliminate the procedural and substantive distinctions between the M&P and VS programs by incorporating the best current features of both programs into a single pre-approved plan program,” Hoffman stated. “ASPPA’s experience indicates that most employers adopting and maintaining qualified retirement plans are chiefly concerned with whether the plan is pre-approved by the IRS. The distinctions between M&P and VS are irrelevant to them and create confusion. As a preliminary recommendation, ASPPA suggests eliminating the terms ‘master and prototype plan’ and ‘volume submitter plan’ under the relevant revenue procedures and instead use ‘pre-approved plan’ or a similar term.“In response to changing realities in the plan environment concerning defined benefit plans, ASPPA and NTSAA recommend that cash balance provisions now be included as options within a pre-approved defined benefit plan. Most of the existing cash balance plans are based on provisions that are consistently and repeatedly used, often already using pre-approved defined benefit plan language (with the exception of the limited cash balance-specific provisions).
“In addition, to streamline IRS processes regarding 403(b) plans, ASPPA and NTSAA recommend that the IRS extend the 403(b) plan submission deadline from April 30, 2014, to January 31, 2015, to allow time for new plans to be fully established, as well as enable the IRS and practitioners to analyze and resolve issues with the LRMs that have already been identified and more that may be identified as the drafting process begins.”
Hoffman concluded with, “We believe adoption of these recommendations will result in a reduction in administrative costs for both the IRS and practitioners, all to the benefit of plan participants and plan professionals alike.”
The groups’ letter about pre-approved defined benefit and 403(b) plans is here.
ASPPA’s letter about combining M&P and VS pre-approved plans programs is here.