In anticipation of the elimination, effective January 1, 2017, of the five-year remedial amendment cycle system for individually designed plans under the Internal Revenue Service (IRS) Employee Plans determination letter program, the IRS issued a notice of changes.
The changes described in Notice 2016-03 will be reflected in an update to Revenue Procedure 2007-44, but the agency said employers may rely on the notice until the update is issued.
According to the notice, the Department of the Treasury IRS will issue guidance providing that:
- controlled groups and affiliated service groups that have previously made a Cycle A election are permitted to submit determination letter applications during the Cycle A submission period beginning February 1, 2016, and ending January 31, 2017;
- expiration dates on determination letters issued prior to January 4, 2016, are no longer operative; and
- the period during which certain employers may, on or after January 1, 2016, establish or adopt a defined contribution pre-approved plan and, if permissible, apply for a determination letter, is extended from April 30, 2016, to April 30, 2017.
The IRS announced in July 2015 its intent to eliminate the staggered five-year determination letter remedial amendment cycles for individually designed retirement plans and limit the scope of the determination letter program to initial plan qualification and qualification upon plan termination.