IRS DRAFT REVENUE PROCEDURE DESCRIBING SIX-YEAR AMENDMENT/ APPROVAL CYCLES FOR PROTOTYPE PLANS

[18053] September 30, 2004 TO: PENSION COMMITTEE No. 46-04 PENSION OPERATIONS ADVISORY COMMITTEE No. 65-04 RE: IRS DRAFT REVENUE PROCEDURE DESCRIBING SIX-YEAR AMENDMENT/ APPROVAL CYCLES FOR PROTOTYPE PLANS The Internal Revenue Service has issued Announcement 2004-71, which requests public comment on a draft revenue procedure that would establish a system of staggered five-year remedial amendment cycles for individually designed qualified retirement plans, and a system of six-year amendment/approval cycles for prototype plans.1 Under the draft revenue procedure, sponsors of defined contribution prototype plans would apply for opinion letters for their plans every six years, according to the following schedule: • Mass submitters would apply for opinion letters from February 1, 2005, through October 31, 2005, and their next applications would be due from February 1, 2011, through October 31, 2011; and • Sponsors would apply for opinion letters from February 1, 2005, through January 31, 2006, and their next applications would be due from February 1, 2011, through January 31, 2012. In connection with these applications, the Service would publish annually a Cumulative List of Changes in Plan Qualification Requirements, with a target date of mid-November of each year. An opinion letter issued for a timely submitted prototype plan would take into account, and could be relied on, with respect to the changes in the qualification requirements and guidance changes included in the Cumulative List published the year before the year the filing of applications is accepted for the cycle. When the Service’s review of a prototype plan cycle neared completion, the Service would establish a uniform date by which all adopting employers would be required to adopt the newly approved plans. The Service expects that such adoptions would be required during a 1 The Announcement is available at http://www.irs.gov/pub/irs-drop/a-04-71.pdf. The Service proposed the six- year amendment/approval cycles earlier this year in Announcement 2004-32. See Memorandum to Pension Committee No. 21-04 and Pension Operations Advisory Committee No. 33-04 [17399], dated April 20, 2004. 2 two-year window. In order for an employer’s plan to be treated as a prototype plan eligible for the six-year amendment/approval cycle: • The employer would be required to adopt an approved (or interim) prototype plan before the end of its five-year remedial amendment period, or • The employer and a prototype sponsor would be required to execute an IRS Form entitled “Certification of Intent to Adopt Pre-approved Plan,” before the end of the employer’s five-year remedial amendment period, and the sponsor would be required to apply for an opinion letter by the application deadline of January 31st of the calendar year following the calendar year opening of the six- year remedial amendment cycle. If these requirements were satisfied, then the remedial amendment period for the employer’s plan would not expire before the end of the time period for adopting a prototype plan. The Service requests comments on the draft revenue procedure, the six-year amendment/ approval cycle, and any other aspect of the prototype plan program by January 3, 2005. If you have suggestions for the Institute’s comment letter, please contact the undersigned by phone at (202) 371-5432, by fax at (202) 326-5841, or by email at kireland@ici.org before Monday, November 15, 2004. Kathy D. Ireland Senior Associate Counsel