ERISA Pre-Approved and Customized Benefit Plans: Overhauled IRS Procedures and Determination Letter Process

In 2016 the IRS changed the determination letter process to substantially limit employers with customized benefits plans to receive a determination letter on its ongoing plan. Rev. Prov. 2016-37 became effective January 1, 2017. Employers with customized plans must now annually review the IRS’s Required Amendment List. The Service also indicated to plan sponsors that it intends to periodically issue the Operational Compliance List to assist employers in the maintenance of qualified status and compliance.

The removal of the routine determination letter application process and resulting protection has led some employers with customized plans to consider shifting to pre-approved plans. In fact, the IRS is actually encouraging employers to make that transition. In Revenue Procedure 2017-41, the IRS revised the procedures it uses to review and approve “pre-approved” retirement plans in an effort to streamline the process and liberalize the types of plans that will qualify as pre-approved.

Employers with customized plans need to assess whether it is more beneficial to transition to a pre-approved plan. If not, then they need to follow new steps to ensure they are in compliance with IRS rules --- assurance that is needed now that the IRS determination letter protection is not routinely available. Employers with pre-approved plans still need to be aware of the Service's change in pre-approval protocols, especially if they have at all considered adopting a customized plan.

Listen as our authoritative panel of ERISA attorneys analyzes changes to the IRS determination letter process limiting ability of employers with customized benefits plans to receive a determination letter. The panel will review the newly revised IRS procedures for reviewing and approving “pre-approved” retirement plans, and provide guidance to employers seeking to transition from customize to pre-approved plans.

1. Revenue Procedure 2016-37
   1. New procedures for employer with customized plans
   2. Limited circumstances to obtain a determination letter from the IRS
   3. IRS Operational Compliance List
2. Revenue Procedure 2017-41
   1. New procedures for IRS to review and approve “pre-approved” retirement plans
   2. Expansion of types of plans and plan options that will now qualify as pre-approved
3. Considerations for employers transitioning from customized to pre-approved plans

The panel will review these and other key issues:

• Revenue Procedure 2016-37: Changes to determination letter process
• Revenue Procedure 2017-41: New procedures for IRS review and approval of “pre-approved” retirement plans
• Guidance for employers transitioning from customized to pre-approved plans