Posted by Abundant Wealth Planning LLC

(IRS) Publishes Proceedings for Determination Letters, Letter Rulings & Other Guidelines

(IRS) Publishes Proceedings for Determination Letters, Letter Rulings & Other Guidelines

The IRS has updated and revised its revenue procedures governing determination letters, letter ruling, and other guidelines, including guidelines on employee benefit plans. These income procedures replace the 2020 counterparts and are generally effective as of the date of issuance. Here are the summaries for employee benefit plans:


Revenue procedure 2020-1

This procedure explains the forms of the advice offered by the various IRS counsel offices and how taxpayers can seek such advice. For 2021, the procedure permanently integrates the IRS guide, which temporarily authorizes the electronic filing of a request for letter ruling and guidance by email instead of fax. (Most submissions can also be made on paper.) Email submissions should be compressed and encrypted using an authorized method. They should be accompanied by signed reminders acknowledging the risks of sending an email and accepting the terms of use of the chosen encryption method. Other changes include revisions to the user fee schedule (the standard rate for most letter ruling and closing agreement increases by nearly 27% to $38,000) and changes in the signature requirements for electronic and paper submissions.

 

Revenue Procedure 2020-4 

This procedure explains how the IRS provides advice on matters within the purview of the Office of Employee Plans Ruling and Agreements in its government division and tax-exempt entities. The procedure applies to determination letters for different types of employee benefit plans (including 401 (k) plans) and transaction and a letter ruling on a limited range of issues. Significant changes include:

  • Form 5310: Electronic submission of requests for determination letters in Form 5310 (Request for determination for terminating plan) will be available from April 16, 2021, and will be mandatory from August 1, 2021. During the transition period, the user fee's electronic payment is optional if Form 5310 is submitted on paper but is required for electronic filing. E-payment and submissions will be made through the website www.pay.gov. Rules for electronic submissions are provided.

  • Pre-approved plans: Procedures for submitting pre-approved plans for corrective amendment cycles before the third cycle have been deleted. 

  • Merged Plans: Determination letter requests for plans resulting from a planned merger must include the most recent plan determination letter for each predecessor plan. (An explanation is no longer needed when a letter is not available for a previous plan.) Only amendments to a previous plan that were adopted or effective after a submitted determination letter should be included with the request.

  • User Fees: User fees for determination letter requests filed on Form 5300 increased to $ 2,700. The rate for determination requests filed on Form 5307 by users of modified volume submitter plans increased to $1000, and the rate for Form 5310 request cancellation plans increased to $ 3,500.

  • Leased Employees: Requests for a determination as to whether leased employees are considered employees should include a letter requesting a determination and additional information outlined in the procedure.


Comment: These updates do not cover any surprises. But the devil, as always, is in the details, so filers should carefully consider the relevant parts of these updated proceedings when preparing a request for determination letters, letter ruling, or other covered submissions.


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