Currently, the Internal Revenue Service uses a cycle system to stagger the submission deadlines for employers seeking a favorable determination as to the qualified status of their individually designed retirement plans. Plan cycles are determined by the last digit of the plan sponsor’s employer identification number (EIN).
Employers whose plans are on pre-approved documents (such as prototypes or volume submitter documents) are on a different 6-year cycle. Under the 5-year remedial amendment cycle for individually designed plans, it’s time to submit applications for Cycle E Plans. If an employer’s EIN ends in 5 or 0 and its plan is not on a pre-approved document, it’s likely a Cycle E Plan. The filing deadline for Cycle E Plans is January 31, 2016. The filing deadline is on a Sunday, so the last day to file is actually February 1, 2016. But, employers must take action before the filing deadline. Employers seeking a favorable determination letter must give notice to the employees that they are filing for a determination letter in advance of the filing date. The notice must be provided not less than 10 days prior to the filing date and not more than 24 days in advance of the filing date. In some instances, the employer must also provide the notice to union representatives.
Also, employers should be aware of the changes to the employee plans determination process, as described in Rev. Proc. 2015-06. Most notably, the Procedural Requirements Checklist must be included with the submission. Also, applicants that fail to submit all required documents or fail to submit missing items within 30-days may have their application closed. If an application is closed, the employer might be permitted to submit a new application, which would require payment of additional user fee.
As announced last year, the 5-year remedial amendment cycle system for individually designed plans is set to be eliminated effective January 1, 2017. If you sponsor a Cycle E Plan, don’t miss what may be your last opportunity to obtain a favorable determination letter under the current program.