IRS EXTENDS RELIANCE PERIOD TO INDIVIDUALLY DESIGNED DEFINED CONTRIBUTION PLANS.

Rev. Proc. 93-9

Section 1. PURPOSE

01 This revenue procedure makes available an extended reliance period to sponsors of certain individually designed defined contribution plans (including volume submitter defined contribution plans) that are, or that have been, submitted for a determination letter under TRA (i.e., the Tax Reform Act of 1986, Pub. L. 99-514 and later laws amending the Internal Revenue Code (Code)) on or before December 31, 1993.

02 This revenue procedure also extends the period of extended reliance available to master and prototype (M&P) and regional prototype plans.

Section 2. BACKGROUND

01 Rev. Proc. 89-9, 1989-1 C.B. 780, sets forth the procedures of the Internal Revenue Service (Service) pertaining to the issuance of opinion letters for sponsoring organizations (and sponsors) of M&P pension, profit-sharing, and annuity plans under sections 401 and 403(a) of the Code. Rev. Proc. 89-13, 1989-1 C.B. 801, sets forth the procedures of the Service pertaining to the issuance of notification letters for regional prototype defined contribution and defined benefit plans.

01.1 Rev. Proc. 89-9, section 17.03, and Rev. Proc. 89-13, section 15.02, provide a period of extended reliance for certain M&P and regional prototype plans, respectively, that are submitted in accordance with the requirements set forth in those sections. Under those procedures, a sponsoring organization (or sponsor) that submits an M&P or regional prototype plan described in those sections and that receives a favorable opinion or notification letter is not required to amend its plan for subsequent regulations or Service releases issued after the date of the application, before the earlier of: (a) December 31, 1994, or (b) the date the plan is otherwise required to be amended by legislation that becomes effective after the issuance of the favorable opinion or notification letter.

01.2 Rev. Proc. 89-9, section 17.03, and Rev. Proc. 89-13, section 15.02, also provide that an employer that adopts an M&P or regional prototype plan described in those sections for which an opinion or notification letter is issued under Rev. Proc. 89-9 or 89- 13, respectively, is entitled to rely on such opinion or notification letter (or on a determination letter, if required) until the earlier of: (a) the last day of the last plan year beginning before January 1, 1995, or the date established for plan amendment by subsequent legislation.

02 Rev. Proc. 90-20, 1990-1 C.B. 495, provided that, beginning April 30, 1990, the Service would issue determination letters on the qualified status of certain defined contribution plans that would include consideration of those provisions of TRA that are first effective for plan years beginning on or after January 1, 1989. Rev. Proc. 90-20 was superseded by Rev. Proc. 91-41, 1991-2 C.B. 697, which allowed plan sponsors to obtain determination letters for certain safe harbor defined contribution and defined benefit plans that would reflect consideration of the proposed regulations issued May 14, 1990, under section 401(a)(4) and certain related nondiscrimination provisions.

03 Rev. Proc. 91-66, 1991-2 C.B. 870, as modified by Rev. Proc. 92-60, 1992-30 I.R.B. 15, modified and superseded Rev. Proc. 91-41, to conform the procedures of that revenue procedure to the final nondiscrimination regulations issued September 19, 1991. To receive a determination letter under Rev. Proc. 91-66 (as modified) that takes into account the requirements of TRA (including those requirements that became effective in 1989), a plan generally must satisfy, no later than the 1992 plan year, one of the design-based safe harbors described in the final nondiscrimination regulations.

04 Rev. Proc. 92-60 supplements the procedures of Rev. Proc. 91- 66 and enables a plan that does not benefit any highly compensated employees to receive a determination letter that takes into account all TRA issues (including those requirements that became effective in 1989).

05 On August 10, 1992, the Service published a notice of proposed rulemaking that generally extends the effective date of the final nondiscrimination regulations to the first day of the first plan year beginning on or after January 1, 1994 (or January 1, 1996, for plans of tax-exempt or governmental organizations). In addition, Notice 92-36, 1992-35 I.R.B. 12, generally extends the remedial amendment period for TRA requirements to the last day of the first plan year beginning on or after January 1, 1994 (or January 1, 1996, for plans of tax-exempt or governmental organizations).

06 In coordination with the extension of the effective date and the remedial amendment period, revisions to the nondiscrimination regulations were announced in Notice 92-31, 1992-29 I.R.B. 6, and Notice 92-37, 1992-36 I.R.B. 16. A notice of proposed rulemaking that implements these revisions is forthcoming. Because the revisions to be included in the notice of proposed rulemaking will more significantly affect defined benefit plans, the extended reliance described in section 3 below his applicable solely to defined contribution plans. The Service intends to provide a similar extended reliance period for defined benefit plans after the revisions to the nondiscrimination regulations are completed.

07 Section 522 of the Unemployment Compensation Amendments of 1992, Pub. L. 102-318, added section 401(a)(31) of the Code, which requires that qualified plans provide a direct rollover option for all eligible rollover distributions made on or after January 1, 1993. Q&A-15 of Regulations section 1.401(a)(31)-1T provides that sponsors need not amend a plan to comply with section 401(a)(31) of the Code until the end of the remedial amendment period for TRA requirements, as described in section 2.05 of this revenue procedure. A forthcoming revenue procedure will provide simplified procedures (including model plan language) for plans that have received favorable opinion, notification, advisory, or determination letters to comply with section 401(a)(31) of the Code.

Section 3. EXTENSION OF RELIANCE PERIOD TO INDIVIDUALLY DESIGNED DEFINED CONTRIBUTION PLANS

01 Individually designed defined contribution plans (including volume submitter plans) that are described in section 3.02 will qualify for the extended reliance period described in section 3.03.

02 An individually designed defined contribution plan (including a volume submitter plan) satisfies the requirements of this section 3.02 if: (a) the plan is eligible for submission under Rev. Proc. 90- 20, Rev. Proc. 91-41, Rev. Proc. 91-66 (as modified), or section 5 of Rev. Proc. 92-60 (i.e., the plan benefits no highly compensated employees); (b) the sponsor requests, or has requested, a determination letter on or before December 31, 1993; and (c) pursuant to that request, the Service issues a favorable determination letter that takes into account all TRA issues (including those requirements that became effective in 1989).

03 Sponsors of defined contribution plans that are described in section 3.02 above will be entitled to extended reliance on their determination letter. Under this extended reliance, sponsors will not be required to amend their plans to reflect regulations or Service releases (e.g., revenue rulings) that are issued after the date of the plan's determination letter. The extended reliance period continues until the earlier of: (a) the last day of the last plan year commencing prior to January 1, 1999, or (b) the date established for plan amendment by any legislation that is effective after the date of the plan's determination letter.

04 Notwithstanding clause (b) in the last sentence of section 3.03, sponsors otherwise eligible for extended reliance who have received a favorable determination letter that does not take into account section 401(a)(31) of the Code may continue to rely on the favorable determination letter, provided the sponsor amends the plan to satisfy section 401(a)(31) of the Code in accordance with a forthcoming revenue procedure. The revenue procedure will provide model plan language and simplified amendment procedures for amending plans to satisfy section 401(a)(31).

05 As described in Rev. Proc. 89-9 section 17.034 and Rev. Proc. 89-13 section 15.02, under limited circumstances, the Service may require a plan to be amended for or to operationally comply with certain qualification requirements prior to the expiration of the extended reliance period. These circumstances generally are limited to cases where it is necessary to correct a fundamental error or omission that is likely to affect participants' rights or tax revenues in a significant number of plans.

06 Plans that are not described in section 3.02 above are not eligible for extended reliance. For example, extended reliance is not available to an individually designed plan that is submitted under section 3 of Rev. Proc. 92-60, for which the employer elects to receive a determination letter that takes into account all TRA issues (including those requirements that became effective in 1989), other than the requirements of sections 401(a)(4), 410(b) and related sections of the Code for which the regulatory date has been extended. Similarly, a defined contribution plan that incorporates an age or service weighted allocation formula is not eligible for extended reliance because it fails to satisfy the requirement in clause (a) of section 3.02 above.

Section 4. MODIFICATIONS TO REV. PROC. 89-9 AND REV. PROC. 89-13

01 Section 17.03 of Rev. Proc. 89-9, and section 15.02 of Rev. Proc. 89-13, are modified to provide that a sponsoring organization (or sponsor) that submitted an M&P or regional prototype plan before April 1, 1991, in accordance with the requirements in those sections and that received a favorable opinion letter or notification letter will not be required to amend its plan for regulations or Service releases (e.g., revenue rulings) that are issued after the date of the favorable opinion letter or notification letter before the earlier of: (a) December 31, 1998, or (b) the date the plan is otherwise require to be amended by legislation that is effective after the date of the plan's opinion letter or notification letter.

02 Section 17.03 of Rev. Proc. 89-9, and section 15.02 of Rev. Proc. 89-13, are further modified to provide that an employer that adopts an M&P or regional prototype plan that is described in those sections and was submitted to the Service before April 1, 1991, and that is otherwise entitled to reliance, may continue to rely on the opinion letter, notification letter, or determination letter, as applicable, until the earlier of: (a) the last day of the last plan year commencing prior to January 1, 1999, or (b) the date established for plan amendment by any legislation that is effective after the date of the plan's opinion letter, notification letter, or determination letter.

03 Notwithstanding clause (b) in the last sentence of section 4.01 and 4.02, a sponsoring organization (or sponsor) of an M&P or regional prototype plan and employers adopting such plans that are otherwise eligible for the extended reliance period described in this section 4, and that have received a favorable letter that does not take into account section 401(a)(31) of the Code may continue to rely on the favorable letter, provided their plans are amended to satisfy section 401(a)(31) of the Code in accordance with a forthcoming revenue procedure. The revenue procedure will provide model plan language and simplified amendment procedures for amending plans to satisfy section 401(a)(31).

04 As described in Rev. Proc. 89-9 section 17.034 and Rev. Proc. 89-13 section 15.02, the Service may require an M&P or regional prototype plan that is otherwise entitled to extended reliance to be amended before the expiration of the extended reliance period, as noted in section 3.05.

Section 5. EFFECT ON OTHER DOCUMENTS

Rev. Proc. 89-9, section 17.03, and Rev. Proc. 89-13, section 15.02, are modified.

Section 6. EFFECTIVE DATE

This revenue procedure is effective as of January 11, 1993.

DRAFTING INFORMATION

The principal author of this revenue procedure is Joyce Kahn of the Employee Plans Technical and Actuarial Division. For further information regarding this revenue procedure, please contact the Employee Plans Technical and Actuarial Division's taxpayer assistance telephone service between the hours of 1:30 p.m. and 4 pm. Eastern Time, Monday through Thursday by calling (202) 622-6074/6075. (These telephone numbers are not toll-free numbers).