The IRS in Revenue Procedure (Rev. Proc.) 2023-37 has issued fresh guidance on qualified pre-approved plans and 403(b) pre-approved plans which combines, conforms, clarifies, and updates rules for those plans set forth in prior revenue procedures. 
Rev. Proc. 2023-37 generally became effective on Nov. 21, 2023, with some exceptions.
Rules for Pre-Approved Plans
The rules Rev. Proc. 2023-37 sets for pre-approved plans fall into three broad categories.
Remedial amendment periods, the remedial amendment cycle system, and plan amendment deadlines. Rev. Proc. 2023-37 sets forth the rules regarding remedial amendment periods, the remedial amendment cycle system, and plan amendment deadlines for qualified pre-approved plans and for 403(b) pre-approved plans.
Those rules had been set forth in Rev. Proc. 2016-37, as modified by Rev. Proc. 2017-41, and Rev. Proc. 2020-40 regarding qualified pre-approved plans, and in Rev. Proc. 2019-39, as modified by Notice 2020-35, Rev. Proc. 2020-40, and Rev. Proc. 2021-37 regarding 403(b) pre-approved plans).
Provider application for an opinion letter. Rev. Proc. 2023-37 sets forth the procedures for a provider to apply for an opinion letter confirming that the form of the provider’s plan satisfies the qualification requirements or 403(b) requirements (procedures that were previously set forth in Rev. Proc. 2017-41, as modified by Rev. Proc. 2018-21 regarding qualified pre-approved plans, and in Rev. Proc. 2021-37 regarding 403(b) preapproved plans.
Adopting employer application for a determination letter. Rev. Proc. 2023-37 sets forth the procedures for an adopting employer of a qualified preapproved plan or a 403(b) pre-approved plan to apply for a determination letter regarding the adopting employer’s plan (procedures that were previously set forth in Rev. Proc. 2016-37 and Rev. Proc. 2017-41 (for an adopting employer of a qualified pre-approved plan), and in Rev. Proc. 2021-37 (for an adopting employer of a 403(b) pre-approved plan)).
The rules regarding the application procedures for a determination letter apply to:
- an application for a determination letter submitted by an adopting employer regarding a Cycle 4 (or later) DC qualified preapproved plan;
- an application for a determination letter submitted by an adopting employer regarding a Cycle 4 (or later) DB qualified pre-approved plan; and
- an application for a determination letter submitted by an adopting employer regarding a Cycle 2 (or later) 403(b) pre-approved plan.
Plan Amendment Deadlines
Under Rev. Proc. 2023-37, generally the deadline for the timely adoption of an amendment for a pre-approved plan is determined in the following ways.
Pre-approved plans that are not governmental plans. For such a plan, a provider (or the adopting employer, if applicable) adopts an interim amendment on time if the plan amendment is adopted by the last day of the second calendar year that begins after the issuance of the required amendments list described in Rev. Proc. 2022-40 in which the change in qualification requirements or 403(b) requirements appears. Regarding a discretionary amendment, an adopting employer adopts the amendment timely if the adopting employer adopts the plan amendment by the end of the plan year in which the plan amendment is operationally put into effect.
Pre-approved plans that are governmental plans. Regarding interim amendments, a provider will have adopted the amendment on time if the plan amendment is adopted by the later of: (1) the last day of the second calendar year that begins after the issuance of the required amendments list in which the change in qualification requirements or 403(b) requirements appears; or (2) to the extent any action is required to be taken by the adopting employer in order to adopt the interim amendment, 90 days after the close of the third regular legislative session of the legislative body with the authority to amend the plan that begins on or after the date the plan amendment becomes effective.
Regarding discretionary amendments, an adopting employer adopts the plan amendment in a timely manner if the adopting employer adopts the plan amendment by the later of: (1) the end of the plan year in which the plan amendment is operationally put into effect; or (2) to the extent any action is required to be taken by the adopting employer in order to adopt the discretionary amendment, 90 days after the close of the second regular legislative session of the legislative body with authority to amend the plan that begins on or after the date the amendment becomes effective.
Changes that Apply to all Pre-Approved Plans
The following changes under Rev. Proc. 2023-37 apply to all pre-approved plans, including 403(b) pre-approved plans.
Eligibility. The eligibility of an employer to adopt a pre-approved plan for a cycle is changed to require that, for a plan that was not in existence in the immediately preceding cycle, the plan must have been submitted for an opinion letter for the cycle before the employer adopts it.
Remedial amendments. The remedial amendment period for disqualifying provisions or form defects is clarified to expire at the same time as the deadline for the adoption of interim amendments.
The end of the remedial amendment period for discretionary amendments made by an adopting employer (not by a provider) is changed.
Interim amendments. The interim amendment rules now state that, if an adopting employer does not correct a failure to timely adopt an interim amendment within two years after the period set forth in Section 7 of Rev. Proc. 2023-37, then the adopting employer’s plan will be treated as an individually designed plan at the end of that two-year period.
The interim amendment deadline is changed to match the individually designed plan remedial amendment period deadline.
Governmental plans. The plan amendment deadline for a governmental plan is changed to provide additional time beyond the deadline for a plan that is not a governmental plan only to the extent any action is required to be taken by the adopting employer in order to adopt the amendment.
Starter 401(k)s. For a starter 401(k) deferral-only plan or a safe harbor deferral-only 403(b), an adopting employer’s reliance is updated to include those sections.
Treatment as an individually designed plan. Rev. Proc. 2023-37 updates and clarifies the circumstances under which a pre-approved plan will be treated as an individually designed plan, and the consequences of such treatment.
Opinion letters. The rules for issuing an opinion letter are clarified to provide that an opinion letter will not be issued for amendments made between submission periods. Instead, a provider must submit a restated plan that incorporates the amendments during the next submission period.
The scope of review for an opinion letter is clarified and updated.
The application procedures for an opinion letter are changed to no longer require attachments required in prior cycles.
Determination letters. The rules for an adopting employer applying for a determination letter are clarified and updated.
Filing address. Rev. Proc. 2023-37 updates the application filing address.
403(b) Pre-Approved Plans
The following significant changes under Rev. Proc. 2023-37 affect only 403(b) pre-approved plans:
- The integral amendment portion of the definition of “form defect” is changed to better match the qualified pre-approved plan rules for a disqualified provision.
- The requirements for a standardized 403(b) pre-approved plan that provides only for elective deferrals are updated to add requirements regarding hardship distributions and IRC Section 415 language.
- The requirements for a standardized 403(b) pre-approved plan that provides for contributions other than elective deferrals are changed; now, the requirements of Section 9.07(3)(b) of Rev. Prov. 2023-37 regarding elective deferrals apply only to contributions other than elective deferrals.
- The rules for when an opinion letter will not be issued regarding a 403(b) pre-approved plan are changed to better match the rules (1) for when an opinion letter will not be issued regarding a qualified pre-approved plan and (2) to provide that an opinion letter will not be issued for:
- a plan designed to satisfy the provisions of IRC Section 105;
- a plan that includes 401(h) accounts; and
- a plan that includes purported fail-safe provisions for IRC Section 401(a)(4) or the average benefit test under IRC Section 410(b).
- The rules for an adopting employer of a 403(b) pre-approved plan that applies for a determination letter are updated to better match the qualified pre-approved plan rules for determination letter applications.
Remedial Amendment Cycles
Under Rev. Proc. 2023-37, every pre-approved plan has a recurring remedial amendment cycle.
Defined contribution qualified pre-approved plans, defined benefit qualified pre-approved plans, and 403(b) pre-approved plans each have different cycles. While the same cycle applies regarding all DC qualified pre-approved plans, separate cycles apply regarding all DB qualified pre-approved plans and all 403(b) pre-approved plans.
Providers may apply for new opinion letters for each cycle. Adopting employers of pre-approved plans, if otherwise eligible, may apply for determination letters once each cycle.
The IRS may revise the schedules for remedial amendment cycles to respond to changing circumstances and the needs of adopting employers, as necessary. Rev. Proc. 2023-37 says that the IRS will announce any such revisions and the timing of the submission period for each cycle, which will be reflected in guidance published in the Internal Revenue Bulletin.
Schedules for remedial amendment cycles are available at https://www.irs.gov/retirement-plans/determination-opinion-and-advisory-letters-6-year-cycle-for-pre-approved-plans-plans.
Publication
Rev. Proc. 2023-37 will appear in Internal Revenue Bulletin 2023-51, which will be published on Dec. 18, 2023.
Effective Date
Rev. Proc. 2023-37 generally became effective on Nov. 21, 2023. However, there are some exceptions.
- The procedures Rev. Proc. 2023-37 sets for applications for opinion letters are effective with respect to a Cycle 3 (or later) 403(b) pre-approved plan.
- The procedures Rev. Proc. 2023-37 sets forth for applications for a determination letter are effective with respect to an application for a determination letter submitted by an adopting employer regarding a Cycle 2 (or later) 403(b) pre-approved plan. The IRS notes that the rules regarding an adopting employer’s application for a determination letter apply for Cycle 2 403(b) pre-approved plans because, although Cycle 2 has begun, Cycle 2 opinion letters have not been issued and the employer adoption window for Cycle 2 (during which an application for a determination letter would generally be submitted) has not begun.
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