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IRS Expands Determination Letter Program

The IRS has announced the expansion of areas for issuing determination letters for certain retirement plans. 

Revenue Procedure (Rev. Proc.) 2019-20 issued May 1, details two new issues for which retirement plan sponsors may now request determination letters:

  • Statutory Hybrid Plans – plan sponsors may submit determination letter applications for statutory hybrid plans for the 12-month period beginning Sept. 1, 2019, and ending Aug. 31, 2020.
  • Plan Mergers – plan sponsors may submit determination letter applications for certain merged plans on an ongoing basis.

The IRS notes that, as provided in prior guidance, plan sponsors will continue to be able to submit a determination letter application for initial plan qualification and for qualification upon plan termination. 

As provided by Rev. Proc. 2016-37, a plan sponsor continues to be permitted to submit a determination letter application for initial plan qualification and for qualification upon plan termination. Rev. Proc. 2019-20 also provides for a limited extension of the remedial amendment period under Code Section 401(b) and Rev. Proc. 2016-37 under specified circumstances, and for special sanction structures that apply to certain plan document failures discovered by the IRS during the review of a plan submitted for a determination letter pursuant to Rev. Proc. 2019-20.

The announcement comes close on the heels of the April 19, 2019, issuance of Rev. Proc. 2019-19, which expanded the IRS' Self-Correction Program (SCP) for retirement plans to enable plan sponsors to fix certain plan document and operational failures (including plan loan issues) without having to file a Voluntary Correction Program (VCP) submission with the IRS.