* See Memorandum to Pension Members No. 20-99 and Pension Operations Advisory Committee No. 29-99, dated April
27, 1999.
1
[11575]
January 28, 2000
TO: PENSION MEMBERS No. 7-00
PENSION OPERATIONS ADVISORY COMMITTEE No. 6-00
RE: IRS TO OPEN MASTER AND PROTOTYPE PROGRAM
______________________________________________________________________________
As we previously reported, the Internal Revenue Service closed temporarily its master and
prototype program, effective May 10, 1999.* The Service has announced in Revenue Procedure 2000-20
that the program will reopen on April 7, 2000, for applications from mass submitters, and on May 8,
2000, for applications from other types of sponsors. A copy of the revenue procedure is attached.
The new master and prototype program combines the master and prototype and regional
prototype plan programs into a unified program for the pre-approval of pension and profit sharing
plans. The program will allow sponsors to obtain opinion letters that take into account all of the
changes in the plan qualification requirements made by the following statutes: the Uruguay Round
Agreements Act (GATT), the Small Business Job Protection Act of 1996 (SBJPA) (including section
414(u) of the Internal Revenue Code and the Uniformed Services Employment and Reemployment
Rights Act of 1994 (USERRA)); the Taxpayer Relief Act of 1997 (TRA '97); and the Internal Revenue
Service Restructuring and Reform Act of 1998 (RRA) (collectively referred to in the revenue procedure
as GUST).
Prototype Sponsor Responsibilities
Under the revenue procedure, a prototype sponsor generally is any person that (1) has an
established place of business in the United States where it is accessible during every business day, and (2)
represents to the Service that it has at least 30 employer-clients each of which is reasonably expected to
adopt the sponsor's basic plan document and at least one associated adoption agreement within the 12-
month period following the issuance of opinion letters under the revenue procedure. After making this
representation with respect to one basic plan document, the sponsor may submit others, regardless of
the number of employers that are expected to adopt such other plans. In addition, any person that has
an established place of business in the United States where it is accessible during every business day may
sponsor a plan as a word-for-word identical adopter or minor modifier of a mass submitter plan,
regardless of the number of employers that are expected to adopt the plan.
The revenue procedure also sets forth specific responsibilities for prototype sponsors. For
example, sponsors will be required to make "reasonable and diligent efforts to ensure that adopting
2employers of the sponsor's M&P plan have actually received and are aware of all plan amendments and
that such employers complete and sign new adoption agreements when necessary." In addition, every
sponsor will be required to maintain, and to provide to the Service upon request, a list of the employers
that have adopted its plan, except for those employers that, to the best of the sponsor's knowledge,
ceased to maintain the plan as a prototype plan more than three years earlier. The revenue procedure
also provides that "[i]f a sponsor reasonably concludes that an employer's M&P plan may no longer be a
qualified plan and the sponsor does not or cannot submit a request to correct the qualification failure"
under the Service's Employee Plans Compliance Resolution System (EPCRS), the sponsor must "notify
the employer that the plan may no longer be qualified, advise the employer that adverse tax
consequences may result from loss of the plan's qualified status, and inform the employer about the
availability of EPCRS."
Mass Submitter Program
The revenue procedure also includes new requirements for mass submitter status. A mass
submitter can be any person that has an established place of business in the United States where it is
accessible during every business day, but must submit applications on behalf of at least 30 unaffiliated
sponsors each of which is sponsoring, on a word-for-word identical basis, the same basic plan document
and one or more of the adoption agreements associated with that basic plan document. For purposes of
this definition, affiliation is determined under sections 414(b) and (c) of the Code. A special grandfather
rule provides that any person that received a favorable TRA '86 opinion letter for a plan as a mass
submitter under Revenue Procedure 89-9 will continue to be treated as a mass submitter if it submits
applications on behalf of at least 10 sponsors (regardless of affiliation) each of which is sponsoring, on a
word-for-word identical basis, the same basic plan document and at least one of the associated adoption
agreements. Once a person is treated as a mass submitter under the general rule or the grandfather rule
with respect to any basic plan document, it will be treated as a mass submitter with respect to all the
other basic plan documents and associated adoption agreements for which it requests opinion letters as a
mass submitter, regardless of the number of identical adopters of such other plans.
Amendments to Existing Plans
The revenue procedure notes that some plans have been operated in a manner that is
inconsistent with the plans' terms but consistent with GUST during the transition period between the
effective dates of GUST and the date plans are amended for GUST. Accordingly, the revenue
procedure requires that prototype adoption agreements contain elective provisions (with or without
default provisions) that will allow adopting employers to conform the terms of their prototype plans to
the manner in which the employers' plans were operated during the transition period. The elective
provisions may be contained in a separate "snap-off" section that can be removed from the adoption
agreement with respect to employers that are not using the plan to retroactively restate a plan for GUST.
Furthermore, the revenue procedure states that the employer must sign the adoption agreement
upon adoption or restatement of the plan. The revenue procedure provides, however, that the signature
requirement may be satisfied by an electronic signature that reliably authenticates and verifies the
adoption of the adoption agreement, or restatement, amendment or modification thereof, by the
employer.
The revenue procedure also extends the remedial amendment period for certain employers that
adopt approved prototype plans until the end of the twelfth month beginning after the date on which
the Service issues a GUST opinion letter for the prototype plan. In order to qualify for this extension,
the employer must either have been a prior adopter of a prototype plan or certify (along with the
3sponsor) that it intends to restate its plan for GUST using a prototype plan, and the sponsor must
submit its application for approval of the prototype plan to the Service by December 31, 2000.
Kathy D. Ireland
Associate Counsel
Attachment
Note: Not all recipients receive the attachment. To obtain a copy of the attachment referred to in this Memo, please call the
ICI Library at (202) 326-8304, and ask for attachment number 11575. ICI Members may retrieve this Memo and its
attachment from ICINet (http://members.ici.org).