ASPPA Offers IRS Ideas to Simplify Paperwork for Retirement Plan Filings

| June 10, 2011 | 0 Comments

Recommendations Would Save Both IRS and Practitioners Resources

ARLINGTON, VA, (June 10, 2011) – The following is a statement from Craig P. Hoffman, General Counsel and Director of Regulatory Affairs of The American Society of Pension Professionals & Actuaries (ASPPA) from a letter submitted to the U.S. Department of Treasury’s Internal Revenue Service (IRS) suggesting improvements to the pre-approved plan and determination letter program for defined contribution plans.

“The American Society of Pension Professionals and Actuaries (ASPPA) supports the Internal Revenue Service (IRS) in its efforts to improve the pre-approved plan and determination letter programs. These programs are very beneficial to plan sponsors, practitioners and the IRS by allowing faster review and approval of plan documents to ensure qualification with the tax code requirements.

These programs have been very successful. Today, most retirement plan sponsors use pre-approved plans. However, ASPPA believes improvements can be made to generate greater efficiencies.

ASPPA’s recommendations include:

  1. Reduce ‘Protective’ Determination Letter Filings: We recommend the IRS modify its procedures to lessen the need for ‘protective’ determination letter applications, including providing limited audit relief, adopting a plan document registration program, allowing for certification on Form 5500, and providing for certification of adoption of amendments by the pre-approved document sponsor. Changes such as these could significantly reduce the number of determination letter applications.
  2. Modify the Approval of Trust Documents: We suggest that the IRS modify its existing program to allow approval of trust documents separate from the plan document. This would avoid multiple IRS reviews of the same identical trust language just because it is associated with more than one plan document.
  3. Strengthen Reliance on Opinion and Advisory Letters in Bankruptcy: We recommend the IRS clarify and strengthen the wording used in opinion and advisory letters to align with the wording in Revenue Procedures (‘Rev. Proc.’) 2005-16 and 2011-6. Plan sponsors will be less likely to file for determination letters if they are comfortable that the opinion or advisory letter for their plan will be treated as favorable determination under Internal Revenue Code section 7805 in the event a participant files for bankruptcy protection.
    We look forward to partnering with the Service to make changes which will allow for a more cost effective and efficient system to the benefit of plan sponsors, practitioners, and the IRS.”

For more detail on ASPPA’s recommendations to the IRS read our comment letter here.

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About ASPPA: The American Society of Pension Professionals & Actuaries (ASPPA) is a national organization of more than 7,500 retirement plan and benefits professionals that serves as the educator, voice, and advocate for the employer-based retirement system. ASPPA members are administrators, actuaries, advisors, attorneys, accountants, and other financial services professionals who provide consulting and administrative services for qualified retirement plans.


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