The Internal Revenue Service (IRS) recently changed its procedures for seeking favorable determination letters for qualified retirement plans. For individually-designed plans, the IRS has created staggered five-year "cycles" for seeking favorable determination letters. For certain plans, the deadline for seeking a favorable determination is January 31, 2007.
The Internal Revenue Service (IRS) recently changed its procedures for seeking favorable determination letters for qualified retirement plans. For individually-designed plans, the IRS has created staggered five-year "cycles" for seeking favorable determination letters. For certain plans, the deadline for seeking a favorable determination is January 31, 2007. Click here for a summary of the new determination letter procedures.
If you sponsor a qualified retirement plan, you are not required to seek a favorable determination letter. However, obtaining a favorable determination letter from the IRS is strongly recommended, for the following reasons: (i) it provides assurance that your qualified plan complies with the requirements of the Internal Revenue Code and is "tax-qualified;" (ii) it provides an opportunity to retroactively correct any document issues that exist without incurring sanctions; and (iii) perhaps most importantly, it permits you to use the IRS' voluntary compliance program to correct significant operational errors involving the plan, without a formal application to the IRS.
Employers' Bottom Line:
If you sponsor an individually-designed qualified retirement plan, Ford & Harrison strongly recommends that you seek a determination letter by the EGTRRA deadline that applies to your company. If you are interested in seeking a letter, please contact Margaret Bernardin, mbernardin@fordharrison.com, (407) 418-4365, or any member of Ford & Harrison's Employee Benefits Practice Group. If you sponsor an M&P plan, Ford & Harrison's employee benefits attorneys can also speak with you to confirm your eligibility for the M&P plan rules (see summary of determination letter procedures), or to discuss whether you should seek a determination letter.