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) to the United States Department of the Treasury’s Internal Revenue Service (IRS) requesting that the Master & Prototype (“M&P”) and Volume Submitter (“VS”) components of the pre-approved plan program be combined into a single program and recommending certain modifications to the defined benefit and 403(b) pre-approved plan programs.
“ASPPA and NTSA appreciate the fact that the IRS actively engages in efforts to streamline the required review processes associated with employee benefit plans, often cooperating with practitioners to better understand and respond to concerns about needed improvements and potential cost savings. The IRS currently maintains a program for the ‘pre-approval’ of plans qualified under sections 401, 403(a) and 403(b) of the Internal Revenue Code. ASPPA requests the modification of substantive and procedural distinctions between certain terms within the pre-approved plans program under sections 401 and 403(a), and ASPPA and NTSA together request modifications to the defined benefit and 403(b) pre-approved plan programs.
To streamline the pre-approved plan procedures for plans qualified under sections 401 and 403(a), ASPPA recommends that the IRS eliminate the procedural and substantive distinctions between the M&P and VS programs by incorporating the best current features of both programs into a single pre-approved plan program. ASPPA’s experience indicates that most employers adopting and maintaining qualified retirement plans are chiefly concerned with whether the plan is pre-approved by the IRS. The distinctions between M&P and VS are irrelevant to them and create confusion. As a preliminary recommendation, ASPPA suggests eliminating the terms “master and prototype plan” and “volume submitter plan” under the relevant revenue procedures and instead use “Pre-Approved Plan” or a similar term.
In response to changing realities in the plan environment concerning defined benefit plans, ASPPA and NTSA recommend that cash balance provisions now be included as options within a pre-approved defined benefit plan. Most of the existing cash balance plans are based on provisions that are consistently and repeatedly used, often already using pre-approved defined benefit plan language (with the exception of the limited cash balance-specific provisions)..
In addition, to streamline IRS processes regarding 403(b) plans, ASPPA and NTSA recommend that the IRS extend the 403(b) plan submission deadline from April 30, 2014 to January 31, 2015 to allow time for new plans to be fully established, as well as enable the IRS and practitioners to analyze and resolve issues with the LRMs that have already been identified and more that may be identified as the drafting process begins.
We believe adoption of these recommendations will result in a reduction in administrative costs for both the IRS and practitioners, all to the benefit of plan participants and plan professionals alike.”
For more detail on ASPPA and NTSA’s recommendations to the IRS read our comment letters:
403(b) pre-approved plan program Master & Prototype and Volume Submitter pre-approved program