401(k): IRS Considers Expanding Determination Letter Program in 2019 for Certain Individually Designed Plans


In 2017, the IRS made sweeping changes to its rulings and determination letter program for qualified plans. The most striking change was the elimination of the prior five-year cycle for submitting determination letter applications for individually designed plans, although the process for obtaining opinion letters for preapproved plans was also revamped.

Following the 2017 changes, individually designed plans – including individually designed 401(k) plans — could only be submitted for a determination letter upon their initial adoption, their termination, and upon certain other limited circumstances “as identified in subsequent published guidance.” The guidance initiating the original 2017 changes provided that the IRS would consider each year whether to accept determination letter applications for individually designed plans in specified circumstances other than for initial qualification, and qualification upon plan termination.

IRS Solicits Comments for Specified Circumstances for 2019

Accordingly, on April 5, 2018, the IRS announced that it is soliciting comments from the public to help identify any additional types of plans for which it might be appropriate for plan sponsors to be able to request determination letters during the 2019 calendar year.

Circumstances identified by the IRS that it is willing to take into consideration include:

  • Significant law changes;
  • New approaches to plan design; and
  • The inability of certain types of plans to convert to pre-approved plan documents.

Comments should specify the issues that apply to a particular type of plan that would justify reviewing that particular plan type under the determination letter program. Such issues might include:

  • Specific plan features;
  • Special plan designs applicable to the type of plan; or
  • Unresolved questions of qualification with respect to the type of plan.

The public comment period closes on Monday, June 4, 2018. 

IRS Notice 2018-24 provides additional details, including instructions as to how to make comments.

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