SunGard Relius

The IRS issued guidance (Revenue Procedure 2008-56) which changes the rules regarding the submission of pre-approved plans. Ever since the IRS updated the staggered remedial amendment period (RAP) program (Revenue Procedure 2007-44), many plan document providers, including SunGard, had requested that the IRS moderate the rules relating to off-cycle submissions of pre-approved plans. Revenue Procedure 2008-56 was issued in response to these concerns.

Revenue Procedure 2007-44 contains various restrictions on off-cycle submissions of pre-approved plans. An off-cycle pre-approved plan submission is a submission of a prototype or volume submitter plan (by a sponsoring organization or volume submitter practitioner) after the deadline for the submission of such plans (i.e., January 31, 2006 for EGTRRA defined contribution plans and January 31, 2008 for EGTRRA defined benefit plans). The restrictions were:

1. An entity that timely submitted a pre-approved plan could not submit another pre-approved plan off-cycle. For example, if an entity timely submitted an EGTRRA defined contribution prototype, the entity could not (after January 31, 2006) submit a new document, such as an EGTRRA volume submitter defined contribution plan.
   
   
2. A “new” plan (i.e., an EGTRRA plan where the sponsor or practitioner did not have another EGTRRA plan filed prior to the applicable deadline) could be filed off-cycle, but subject to the following two restrictions:
   
   
   1. In order for employers who have adopted the “new” plan to be entitled to the RAP cycle for pre-approved plans (the 6-year cycle), the new plan must have been submitted prior to the adoption period (i.e., prior to April 1, 2008 for defined contribution plans).
      
      
   2. The opinion or advisory letters issued on the “new” plan were not retroactive and could not be relied upon for periods prior to the submission of the “new” plan. This meant that if an employer had adopted one provider’s plan and wanted to restate its plan using the “new” pre-approved plan of a different provider, then the plan must be submitted for a determination letter (even though the employer made no modifications to the plan) because the “new” plan would not give the employer retroactive reliance.

Revenue Procedure 2008-56 modifies some of the above rules.

1. Off-cycle submissions may now be made even if a plan is not a “new” plan, provided the plan being submitted is a word-for-word adopter of a mass submitter plan. A mass submitter is an entity that submits a number of plans on behalf of sponsors and practitioners, such as SunGard.
   
   
2. Plans that are submitted off-cycle (whether they are “new” plans or existing plans now submitted under the preceding paragraph) will have retroactive reliance.

Due to these changes, if your firm had submitted an EGTRRA pre-approved plan, another pre-approved plan generally may be submitted on your firm’s behalf. For example, if your firm sponsors an EGTRRA defined contribution prototype plan, then SunGard could submit, on your firm’s behalf, an EGTRRA volume submitter plan. Your firm would then obtain advisory letters in your firm’s name and employers could use this plan for EGTRRA restatements without a requirement that the plans be submitted for determination letters. Regardless of when you receive your letter, the plan adoption period under the 6-year cycle will end April 30, 2010. All restatements must be adopted and, if desired, submitted to the IRS by that deadline. So, the time to act to have additional options available for your clients is now.

Pre-Approved Plans. SunGard offers complete prototype and more flexible “prototype formatted” volume submitter plan services. For more information on our services, call 800-326-7235, ext. 1100.