In its latest Employee Plans newsletter, the Internal Revenue Service said Cycle A contains an exception allowing plan sponsors to file a determination application using a controlled group election. Generally, the last digit of the plan sponsor’s EIN determines the five-year remedial amendment cycle for the plan. However, all plan sponsors who are members of a controlled group or affiliated service group may elect Cycle A as their remedial amendment cycle regardless of the last digit of their EIN.
For a non parent-subsidiary controlled group, the Cycle A election must:
- be made by all members sponsoring qualified plans;
- list the names and EINs of all eligible members;
- contain the original election, copies of any additional elections executed by new members and an updated list with current information on any new determination letter applications; and
- be made by any new member within one year of joining the controlled group in order for other members to maintain the existing election.
For a parent-subsidiary controlled group, the Cycle A election must:
- be made by all members of the controlled or affiliated service group (the parent company may elect for
- all members); and
- include the names and EINs of all eligible members.
The parent may also include a designation in its Cycle A election that the election will also apply to the plans of future acquired subsidiaries eligible to make the election and will not apply to subsidiaries’ plans that, in the future, are no longer in the controlled group.