PLAN SPONSORS NEED NOT NOTIFY IRS OF SLOB RULE APPLICATION UNTIL FURTHER NOTICE.

Notice 90-57

The purpose of this notice is to inform plan sponsors that wish to apply the separate line of business rules under section 414(r) of the Code that notification of the Secretary, as provided by Code section 414(r)-(2)(B), is not required until further guidance is issued.

Section 414(r) of the Code provides rules for determining whether an employer operates separate lines of business for purposes of applying sections 129(d)(8) (relating to dependent care assistance programs), 401(a)(26) (relating to additional participation rules) and 410(b) (relating to minimum coverage). Section 414(r)(2) requires that (A) a line of business have at least 50 employees who are not excluded under section 414(q)(8) of the Code, (B) the employer notify the Secretary that the employer intends to treat the line of business as separate, and (C) the line of business satisfies either the safe harbor rule of section 414(r)(3) or the guidelines prescribed by the Secretary, or the employer receives a determination from the Secretary that, even though the line of business does not satisfy the safe harbor rule or the guidelines, the employer is nonetheless permitted to treat the line of business as separate under section 414(r).

Section 204 of the Public Debt Limit Increase (Public Law 101- 140, enacted November 8, 1989) provides that for plan years beginning before the Secretary of the Treasury or his delegate issues guidelines and begins issuing determinations under section 414(r)(2)(C), an employer is treated as operating separate lines of business if the employer reasonably determines that it meets the applicable requirements of the Code (other than section 414(r)(2)(C)).

Pursuant to this notice, an employer will not currently be required to notify the Secretary that it intends to treat a line of business as separate under section 414(r) until further guidance is issued. Subsequent guidance, however, may require notification by the employer of its application of the separate line of business rules for periods prior to the issuance of such subsequent guidance.

EFFECTIVE DATE

This notice is effective for plan years beginning after December 31, 1988.

DRAFTING INFORMATION

The principal author of this notice is Thomas G. Schendt of the Office of the Assistant Chief Counsel (Employee Benefits and Exempt Organizations). For further information regarding this notice, contact Mr. Schendt on (202) 566-4741 (not a toll-free call).