Federal regulators have come up with a new system for reviewing new model 401(k) and 403(a) retirement plans.[@@]
The Internal Revenue Service has published the rules in a document, Revenue Ruling 2005-16, that explains the schedules life insurers, accounting firms and other organizations should use when submitting “master and prototype” plans and “volume submitter” plans.
Companies that get IRS opinion and advisory letters approving those types of model plans can sell new plans based on the models without necessarily having to go back to the IRS for further review.
The IRS had to change plan review procedures to comply with some sections of the Economic Growth and Tax Relief Reconciliation Act of 2001, according to the explanation of the changes written by Ingrid Grinde, an IRS employee plans specialist.
The IRS began accepting applications for opinion and advisory letters for all kinds of 401 plans, including 401(k) plans, and 403(a) plans affected by the EGTRRA changes Thursday, Grinde writes in the revenue procedure.
The submission period for the new model plans will end Jan. 31, 2006.
The IRS will decide when employers can adopt the model plans after it has reviewed the “pre-approved documents,” Grinde writes.
The IRS will start accepting applications for determination letters for individually designed plans sometime on or after Feb. 1, 2006, and it will accept applications for opinion and advisory letters for pre-approved defined benefit plans starting Feb. 1, 2007, Grinde writes.
The revenue procedure describes many technical changes in requirements for pre-approved plans.
One relatively simple change, for example, will let employers fix minor typos and update cross-references in pre-approved plan documents.
Another change will exclude Section 105 plans from eligibility for IRS advisory or opinion letters, Grinde writes.
The revenue procedure is on the Web at http://www.irs.gov/pub/irs-drop/rp-05-16.pdf
CORRECTION: An earlier version of this story incorrectly described the scope of the new procedure. The procedure applies to 403(a) plans and all kinds of 401 plans, including 401(k) plans.