IRS combines and updates prior pre-approved retirement plan rules

 

The IRS recently released a revenue procedure (Rev. Proc. 2023-37) which combines and updates the rules for pre-approved retirement plans. These rules were previously set forth in several separate revenue procedures.

 

Pre-approved plans are plan documents for qualified plans and Section 403(b) plans established and maintained by financial institutions and other service providers (“Providers”). These plans can be offered to clients and customers (“Adopting Employers”) who would like to adopt a plan document that has been pre-approved by the IRS as satisfying the applicable qualification rules. Under the IRS pre-approved plan program, Providers periodically submit their plan documents to the IRS for review, approval and issuance of an “opinion letter,” which confirms that the plan satisfies the applicable requirements in form.  Adopting Employers can then adopt the pre-approved plan documents to maintain their respective tax-favored retirement plans.

 

The rules for pre-approved plans that consolidated in the new revenue procedure, fall into the following three broad categories:

  • The rules regarding remedial amendment periods, the remedial amendment cycle system and plan amendment deadlines, which generally apply to the providers and adopting employers for maintaining pre-approved plans in a compliant manner
  • The procedures for a provider to apply for an opinion letter confirming that the form of the provider’s plan satisfies the applicable requirements
  • The procedures for certain Adopting Employers to apply for individual determination letters regarding the employers’ plans. Many Adopting Employers can rely on the Provider’s opinion letter if certain conditions are satisfied (and cannot or do not have to apply for an individual determination letter).

The new revenue procedure also announces that the submission period for a provider of a defined contribution qualified pre-approved plan to submit an application for a Cycle 4 opinion letter begins on Feb. 1, 2024, and ends on Jan. 31, 2025.

 

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