SERVICE ISSUES NEW PROCEDURES ON DETERMINATION LETTER PROGRAM FOR PENSION PLANS.

Rev. Proc. 91-66

SECTION 1. PURPOSE

01 This revenue procedure modifies and supersedes Rev. Proc. 91- 41, 1991-28 I.R.B. 33, to set forth temporary procedures relating to the issuance of determination letters on the qualified status of pension, profit-sharing, and annuity plans under sections 401 and 403(a) of the Internal Revenue Code, as amended by the Tax Reform Act of 1986 (TRA '86), the Omnibus Budget Reconciliation Act of 1986 (OBRA '86), Pub. L. 99-509, the Omnibus Budget Reconciliation Act of 1987 (OBRA '87), Pub. L. 100-203, the Technical and Miscellaneous Revenue Act of 1988 (TAMRA), Pub. L. 100-647, and the Omnibus Budget Reconciliation Act of 1989 (OBRA '89), Pub. L. 101-239, (collectively, "TRA").

02 This modified restatement of Rev. Proc. 91-41 conforms that revenue procedure's requirements and instructions (including its certifications and worksheets) to the final regulations under section 401(a)(4) that were published in the Federal Register on September 19, 1991, in accordance with the Service's previous announcement that determination letters issued under Rev. Proc. 91-41 on or after October 1, 1991, would reflect consideration of those regulations.

03 This revenue procedure also modifies the requirements of Rev. Proc. 91-41 to make more plans eligible for submission under these temporary procedures. Thus, under this revenue procedure, the following additional types of plans are eligible to be submitted:

(1) plans that satisfy design based nondiscrimination safe harbors (and certain other nondiscrimination requirements) in plan years beginning on or after January 1, 1992, whether or not they satisfy such requirements in earlier plan years;

(2) plans that include elective contributions under a qualified cash or deferred arrangement or contributions subject to the requirements of section 401(m);

(3) collectively bargained plans that do not have to meet the coverage and nondiscrimination requirements that apply to noncollectively bargained plans; and

(4) target benefit plans that meet the target benefit safe harbor in the final regulations (regardless of whether the plan is an adoption of a pre-approved (e.g., M&P) plan or an individually designed plan).

04 Finally, this revenue procedure clarifies matters addressed in Rev. Proc. 91-41 by:

(1) providing specific instructions relating to the submission of multiemployer plans and multiple employer plans;

(2) adding clarifying detail to the worksheets that were included in Rev. Proc. 91-41; and

(3) clarifying the scope of reliance on opinion and notification letters issued prior to the effective date of Rev. Proc. 91-41.

SEC. 2. BACKGROUND

01 Rev. Proc. 91-10 contains the general procedures of the Service relating to the issuance of determination letters on the qualification of pension, profit-sharing, stock bonus, and annuity plans. These procedures relate to determinations involving both plans that have not terminated ("ongoing plans") and terminating plans.

02 Since the passage of TRA '86, the Service has published several notices and revenue procedures concerning the extent to which the requirements of TRA will be taken into account in determination letters on the qualified status of plans.

021 Notice 86-13, 1986-1 C.B. 377, provided that, until further notice, determination letter requests would not be reviewed for qualification requirements changed by TRA '86, other than certain retroactive technical corrections.

022 Rev. Proc. 88-42 modified Notice 86-13 to allow plan sponsors to obtain determination letters that reflect consideration of those requirements of TRA '86, OBRA '86, and OBRA '87 that are effective for plan years beginning before January 1, 1989. Rev. Proc. 88-42 did not provide for determination letters that reflect consideration of those qualification requirements first effective in 1989 or later plan years.

023 Rev. Proc. 90-20 modified Rev. Proc. 88-42 to allow determination letters for certain defined contribution plans. It provided that, beginning April 30, 1990, the Service would issue determination letters for certain defined contribution plans that would include consideration of those provisions of TRA that are first effective for plan years beginning after December 31, 1988.

03 On May 14, 1990, the Service published a comprehensive package of proposed regulations providing guidance with respect to the requirements of various sections of the Code, including sections 401(a)(4), 401(a)(17), 401(a)(26), 401(k), 401(l), 401(m), 410(b) and 414(s). These proposed regulations were supplemented by additional regulations proposed on September 14, 1990. On December 3, 1990, the Service delayed the effective date of the regulations under section 401(a)(4) to plan years beginning on or after January 1, 1992.

04 Rev. Proc. 91-41 superseded Rev. Proc. 88-42 and Rev. Proc. 90-20 to allow plan sponsors to obtain determination letters for both defined contribution and defined benefit plans that would include consideration of the provisions of TRA first effective for plan years beginning after December 31, 1988.

05 To qualify for submission under Rev. Proc. 91-41, a plan was required to satisfy certain eligibility criteria, including criteria requiring the plan to satisfy design based safe harbors described in the proposed regulations under section 401(a)(4).

06 Since Rev. Proc. 91-41 was issued, final regulations under sections 401(a)(4), 401(a)(17), 401(k), 401(l), 401(m), 410(b), 414(s), and 415 have been published.

07 In Announcement 91-152, 1991-42 I.R.B. 43, the Service announced that, with respect to determination letters issued on or after October 1, 1991, it would review applications under Rev. Proc. 91-41 (other than those relating to adoptions of pre-approved master or prototype, regional prototype, or volume submitter plans approved before October 1, 1991) for compliance with the final, rather than the proposed, regulations and that Rev. Proc. 91-41 would be amended accordingly.

08 Notice 91-38, 1991-49 I.R.B., extended the relief provided by Alternative II D of Notice 88-131, 1988-2 C.B. 546, through the end of the 1992 plan year or, if applicable, the compliance date for adopters of master or prototype plans under section 13 of Rev. Proc. 89-9, 1989-1 C.B. 780.

09 Rev. Proc. 89-9, as modified by Rev. Proc. 90-21, 1990-1 C.B. 499, sets forth the procedures of the Service pertaining to the issuance of opinion letters for master and prototype (M&P) pension, profit-sharing, and annuity plans under sections 401 and 403(a) of the Code. Rev. Proc. 89-13, as modified by Rev. Proc. 90-21, sets forth the procedures of the Service pertaining to the issuance of notification letters for regional prototype defined contribution aid defined benefit plans. Announcement 89-107, 1989-36 I.R.B. 25, provides information pertaining to the approval of volume submitter specimen pension and profit-sharing plans.

SEC. 3. APPLICABILITY

01 If requested by the applicant in accordance with section 5, an application for determination of the qualified status of an ongoing plan described in subsection 02 will be reviewed by the Service for compliance with TRA, including those requirements that are first effective for plan years beginning on or after January 1, 1989.

02 A plan is described in this subsection if (i) it is an adoption of a pre-approved plan (i.e., an M&P, regional prototype, or volume submitter plan) that has received a favorable opinion, notification, or advisory letter on or after January 4, 1990 or an individually designed plan, and if (ii) each of the following requirements is met by the plan:

(1) the plan is described in one of these categories --

(a) a defined contribution plan (other than a stock bonus or employee stock ownership plan) that meets the following requirements:

1 that portion (if any) of the plan that is neither a target benefit plan nor subject to the exclusive tests in section 1.401(a)(4)-2(d) of the regulations (relating to section 401(k) and section 401(m) plans) satisfies, no later than the first plan year beginning on or after January 1, 1992, the uniformity and safe harbor allocation formula requirements in section 1.401(a)(4)-2(b), without taking into account section 1.401(a)(4)-2(b)(4) (relating to the safe harbor for uniform points plans), and

2 that portion (if any) of the plan that is a target benefit plan satisfies, no later than the first plan year beginning on or after January 1, 1992, each of the safe harbor requirements described in section 1.401(a)(4)-8(b)(3)(i) as well as the additional rules in section 1.401(a)(4)-8(b)(3)(ii) through (vi); or

(b) a defined benefit plan that satisfies, no later than the first plan year beginning on or after January 1, 1992, the uniformity requirements in section 1.401(a)(4)-3(b)(2) of the regulations and one of the safe harbors in section 1.401(a)(4)-3(b)(3), (4), (5), or (7);

(2) the employer is not using the average benefit percentage test under section 410(b)(2) of the Code to demonstrate that the minimum coverage requirements are met by the plan;

(3) the employer is not applying the separate line of business exception under section 410(b)(5) and 414(r) for purposes of determining whether the minimum coverage requirements are met under any plan of the employer;

(4) if the plan provides for disparity in contributions or benefits that favors highly compensated employees, the form of the plan satisfies, no later than the first plan year beginning on or after January 1, 1992, the permitted disparity requirements of section 401(l) and the regulations thereunder;

(5) the plan is not aggregated with any other plan to satisfy the minimum coverage requirements of section 410(b) or the nondiscrimination requirements of section 401(a)(4);

(6) the employer is able to show that the plan satisfies the nondiscrimination requirements of section 401(a)(4) of the Code without using the rules in section 1.401(a)(4)-9(c) or section 1.401(a)(4)-7 of the regulations, regarding restructured plans and imputing permitted disparity, respectively (this does not prevent the plan from providing for disparity in contributions or benefits that satisfies, in form, the requirements of section 401(l); and

(7) the plan is a single plan within the meaning of section 414(1).

03 Any plan submitted under this procedure must satisfy the following additional requirements no later than the first plan year beginning on or after January 1, 1992:

(1) with the exception of optional forms of benefits, or other rights or features (other than ancillary benefits) that are treated as satisfying the requirements of section 1.401(a)(4)-4 of the regulations under the rule in section 1.401(a)(4)-4(d)(1) ("merger or acquisition benefits"), all benefits, rights and features under the plan with respect to benefits accrued on or after the first day of the first plan year beginning in 1992 must be uniformly available to all employees under the plan on the same terms and conditions (see, however, Notice 91-38);

(2) a defined benefit plan that provides that employee contributions not allocated to a separate account may be made to the plan for a plan year beginning after December 31, 1991 must use the minimum benefit method in section 1.401(a)(4)-6(b)(3) of the regulations to determine the amount of employer derived benefits and employee derived benefits under the plan (see, however Notice 91-38); and

(3) if employer-provided benefits in a defined benefit plan or employer contributions in a defined contribution plan (other than elective contributions under a qualified cash or deferred arrangement and matching contributions) are based on compensation, the plan's definition of compensation for this purpose must be nondiscriminatory within the meaning of section 1.414(s)-1 of the regulations. (If the plan uses an alternative definition of compensation under paragraph (c)(3), (d), or (e) of section 1.414(s)-1 of the regulations to determine contributions or benefits for common law employees and there are also self-employed individuals under the plan, the terms of the plan must determine the amount of the self-employed individuals' compensation for purposes of contributions or benefits in accordance with the rules contained in section 1.414(s)-1(f)(1) of the regulations.)

04 An adoption of a pre-approved plan with a favorable opinion, notification, or advisory letter dated before October 1, 1991 ("a pre-approved proposed regulation plan") will be considered to satisfy the requirements of sections 3.02 and 3.03 even though it does so only when references to the final regulations in those sections are replaced by references to the corresponding provisions of the proposed regulations. Therefore, a favorable determination letter that is issued for such a plan under this revenue procedure may not be relied on with respect to whether the plan satisfies the requirements of the final regulations.

05 In order for an applicant that submitted an application under Rev. Proc. 88-42 or Notice 86-13 prior to July 15, 1991 (the effective date of Rev. Proc. 91-41) to receive a determination letter that considers all the requirements of TRA, the applicant must file an application described in section 5.06, below, in accordance with the procedures outlined in this revenue procedure. The Service will not refund any user fee paid with the earlier application, but the applicant will be entitled to relief from imposition of a user fee on the new application under section 5.09, below, if the earlier application was pending with the Service on July 15, 1991.

06 Plan sponsors who wish to request determination letters under Notice 86-13 (i.e., letters which do not reflect consideration of any of the requirements of TRA) must submit their applications on a form with a revision date earlier than February, 1990.

07 Plans benefiting collectively bargained employees and multiple employer plans will be processed in accordance with the special eligibility rules contained in section 6, below.

08 This revenue procedure does not apply to determination letter requests involving terminating plans. The Service will continue to accept applications for these plans in accordance with Notice 87-57 and Rev. Proc. 88-9.

SEC. 4 SCOPE OF RELIANCE

01 Applications submitted under this revenue procedure will be reviewed for compliance with all requirements of TRA. However, determination letters may not be relied on with respect to whether a plan amendment (or series of amendments) satisfies the nondiscrimination requirements of section 1.401(a)(4)-5(a) of the regulations, except with respect to plan amendments granting past service that are not part of a pattern of amendments that significantly discriminates in favor of highly compensated employees. As a condition of eligibility under this revenue procedure, all benefits, rights and features under a plan must be uniformly available on the same terms and conditions to all participants under the plan, with the exception of benefits, rights and features available solely with respect to benefits accrued before 1992, or benefits, rights and features (other than ancillary benefits) that are treated as satisfying the requirements of section 1.401(a)(4)-4 of the regulations under the rule in section 1.401(a)(4)-4(d)(1) ("merger or acquisition benefits"). Determination letters may not be relied on with respect to whether a benefit, right, or feature satisfies the effective availability requirement of section 1.401(a)(4)-4(c) of the regulations. Under this revenue procedure, plan provisions and amendments granting past service credit that do not satisfy the safe harbor in section 1.401(a)(4)-5 of the proposed regulations will be reviewed to determine that such past service does not have the effect of discriminating significantly in favor of highly compensated employees.

02 In addition, unless specifically requested by the applicant, determination letters may not be relied on with respect to whether benefits, rights or features under a plan that are not uniformly available to all participants as described in section 3.03(l) above satisfy the current availability requirements of the regulations. See section 5.07 below and the certification in Appendix A to this revenue procedure for procedures for requesting such a determination.

03 With respect to plans that are not amended to comply with the final regulations retroactive to the 1989 plan year (or, if a later TRA effective date is applicable, such later year), a determination letter issued under this revenue procedure may not be relied on as to whether the plan has been operated in accordance with a reasonable, good faith interpretation of section 401(a)(4) or whether plan provisions, other than those described in sections 3.02 and 3.03, above, constitute such an interpretation. (This does not alter the reliance that may have been provided to sponsors that received favorable determination letters (or, in the case of adopters of certain standardized form plans, favorable opinion or notification letters) with respect to plans that satisfied the proposed regulations. See, for example, section 17.03 of Rev. Proc. 89-9 and section 15.02 of Rev. Proc. 89-13.) Furthermore, if there has been a failure to operate such a plan in accordance with a reasonable, good faith interpretation of section 401(a)(4) in any plan year beginning before January 1, 1992, the fact that a favorable determination letter is issued for the plan under this procedure will not preclude an adverse effect on the qualification of the plan resulting from such failure either in the year the failure occurred or in any later year.

04 This subsection 4.04 is applicable only to plans for which the Service has issued a favorable determination letter that reflects consideration of the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), the Deficit Reduction Act of 1984 (DEFRA), and the Retirement Equity Act of 1984 (REA).

041 If the employer was entitled to rely on such a letter with respect to whether the plan satisfied the requirements of section 401(a)(4) of the Code as in effect in the last plan year beginning before 1989, the mere fact that the employer has utilized Alternative IID of Notice 88-131 (as modified) in accordance with the requirements therein will not cause the employer to fail to have determination letter reliance with respect to the requirements of section 401(a)(4) in years beginning after 1988.

042 For example, assume that the Service has issued a favorable TEFRA, DEFRA, REA determination letter for a plan that entitles the employer to reliance that the plan satisfies the requirements of section 401(a)(4) as in effect in plan years beginning prior to 1989, that the employer retroactively amends the plan to comply with TRA by adopting a design based safe harbor benefit formula that is made effective for the 1989 plan year, and that the employer receives a favorable determination letter under this revenue procedure.

043 In this case, the employer will not fail to be entitled to reliance regarding the requirements of section 401(a)(4) in plan years beginning after 1988 merely because highly compensated employees (other than those described in section 414(q)(1)(A) or (B) of the Code) are entitled to the greater of the benefits accrued in such years (up to and including the first plan year beginning in 1992) under prior plan provisions or the benefits accrued under the plan as amended to comply with TRA or because the section 411(d)(6) protected benefits of other highly compensated employees under the plan exceed their benefits accrued under the plan as amended for TRA; provided, the employer has satisfied all conditions of Alternative IID (as modified) and there has not been a material change in the facts upon which the determination that entitled the employer to reliance regarding the requirements of section 401(a)(4), as in effect before 1989, was based.

SEC. 5. GENERAL INSTRUCTIONS TO SPONSORS

01 The instructions in this section apply in all cases in which an applicant seeks a determination of the qualified status of an ongoing plan described in section 3.02 that considers all the requirements of TRA.

02 The applicant must include with its application a certification (separate from any cover letter submitted with the application) in which the applicant or the applicant's representative certifies that the requirements set forth in section 3.02 and 3.03 are met by the plan or the employer maintaining the plan. In the case of a plan that is not a single employer plan, the applicant or representative must certify that the requirements are met by the plan and each participating employer. A model certification is included in an appendix to this procedure (Appendix A - Certification). Applicants are encouraged to use the format of the model certification in order to facilitate the processing of their applications. Also included with this revenue procedure as Appendix B is a checklist that sponsors and practitioners may use to determine if a plan is eligible to be submitted to the Service under this revenue procedure. Although this checklist is not to be submitted to the Service, applicants are encouraged to use it to ensure that a plan is eligible under this procedure and thereby to avoid delays in the processing of applications.

03 The certification described in the preceding paragraph must also identify the design based safe harbor referred to in section 3.02(1)(a) or (b) above that the plan satisfies and the location of plan provisions that meet the safe harbor. In order to facilitate compliance with this requirement, the certification contains specific references to each design based safe harbor. If the applicant seeks a determination that benefits, rights or features that are not uniformly available to all participants under this plan on the same terms and conditions (i.e., optional forms of benefit available only with respect to benefits accrued before 1992 or merger or acquisition benefits) satisfy current availability or the special rule for merger or acquisition benefits in section 1.401(a)(4)-4(d)(1) of the regulations, this must be indicated on the certification. In the case of a defined benefit plan that includes employee contributions not allocated to a separate account, the certification must identify those plan provisions that satisfy section 1.401(a)(4)-6(b)(3)(ii) of the regulations.

04 If the plan has received a favorable determination letter in the past, the application must include a copy of the latest determination letter, if available. If the letter is not available, an explanation must be included in the certification.

05 The application form that is used to request a determination letter under this revenue procedure must have a revision date of February, 1990, or later ("new form"). The following new forms are required to be filed for applications for determination letters under this revenue procedure regardless of whether the application relates to the initial qualification or amendment of a plan:

 (1) Individually Designed Plan

07 Applications filed under this revenue procedure must also be accompanied by the following demonstrations:

(1) a demonstration that the plan satisfies the requirements of section 401(a)(26) and the regulations thereunder with respect to current and former employees (a demonstration regarding a defined benefit plan's prior benefit structure need not be submitted);

(2) if the plan benefits former employees, a demonstration that the coverage requirements of section 1.410(b)-2(c) are met with respect to such former employees, and

(3) if the plan bases contributions or benefits (other than elective or employee or matching contributions) on compensation and the plan's definition of compensation fails to meet the requirements of both section 1.414(s)-1(c)(2) and 1.414(s)-1(c)(3) of the regulations or includes imputed compensation c-edited for periods of absence from service that fails to satisfy section 1.414(s)-1(e)(3), or, if the plan is a section 401(k) or 401(m) plan that incorporates an actual deferral percentage or actual contribution percentage test using a definition of compensation that fails to meet the requirements of both section 1.414(s)-1(c)(2) and 1.414(s)-1(c)(3), a demonstration that the definition satisfies section 1.414(s)-1(d) of the regulations (in the case of a pre-approved proposed regulation plan, such a demonstration is not required if the plan's definition of compensation would satisfy a safe harbor under the proposed regulations, even though it fails to satisfy a safe harbor under the final regulations);

(4) if the plan provides for past service that fails to meet the requirements of the safe harbor described in section 1.401(a)(4)- 5(a)(5) of the regulations, a demonstration that such grant of past service does not have the effect of discriminating significantly in favor of highly compensated employees; and

(5) if the applicant requests a determination that optional forms of benefits, rights and features that are not uniformly available on the same terms and conditions to all employees under the plan satisfy current availability, a demonstration that each such optional form of benefit, or other right or feature that is not uniformly available meets the current availability requirement of section 1.401(a)(4)-4(b) of the regulations. With respect to benefits, rights or features other than ancillary benefits, in lieu of demonstrating that the requirements of section 1.401(a)(4)-4(b) of the regulations are met, the applicant may provide a demonstration that the requirements of the special rule contained in section 1.401(a)(4)-4(d)(1) (relating to mergers and acquisitions) are met. These requirements must be demonstrated without taking into account the rules in section 1.401(a)(4)-9(c) of the regulations, pertaining to plan restructuring.

08 The demonstrations relating to section 401(a)(26), section 410(b), and compensation should be submitted in a format that corresponds to the appropriate demonstration set forth in Appendix A to this revenue procedure (i.e., Demonstration 1 - Section 401(a)(26) Worksheet, Demonstration 2 - Coverage of Former Employees, or Demonstration 3 - Nondiscriminatory Compensation Worksheet). Applicants are strongly encouraged to use the formats of the worksheets in the appendices in order to facilitate the processing of their applications. Data given with any demonstration may be for the plan year in which the application is filed or for the immediately preceding plan year, provided that coverage data given with the application is for the same plan year. Data given with any compensation demonstration may also be for any 12 consecutive month period ending within the plan year for which coverage data is given.

09 Applications filed under this revenue procedure must include the appropriate user fee determined under Rev. Proc. 90-17, and should include Form 8717, User Fee for Employee Plan Determination Letter Requests. However, a user fee will not be required for an application relating to an ongoing plan that is filed under this revenue procedure if the applicant has previously paid a user fee for a determination letter application involving the same plan and the prior application was still pending with the Service on July 15, 1991. In order to avoid the imposition of an additional user fee on the new application, the applicant must certify that a user fee was previously paid and that this condition has been met by printing "Application Eligible for Waiver of User Fee Under Rev. Proc. 91-*" in bold letters on the top of the first page of the new application form.

10 When a plan (other than an M&P or regional prototype plan) that has been amended is first submitted under this revenue procedure, the application must include a copy of the restated plan. Pages of amendments, in lieu of the restated plan, will not be accepted. A working copy of the plan in a restated form is acceptable. (For this purpose, a "working copy" of a plan means one complete, self-contained document. Thus, a copy of the old plan, with separate amendments that must be integrated into the plan document, will not be acceptable.) The effective dates for required amendments must be clearly identified.

11 Any application relating to an ongoing plan that is filed on an application form with a revision date earlier than February, 1990, will be reviewed in accordance with Notice 86-13. That is, any determination letter resulting from the application may not be relied on with respect to whether the plan satisfies any requirement of TRA. Any application relating to an ongoing plan that is filed on an application form with a revision date of February, 1990, or later, and that fails to include the certification or any demonstration required by this section may be returned as incomplete.

SEC. 6. SPECIAL RULES AND INSTRUCTIONS REGARDING PLANS BENEFITING COLLECTIVELY BARGAINED EMPLOYEES AND MULTIPLE EMPLOYER PLANS

01 Under the rules of sections 401(a)(4) and 410(b) and the regulations thereunder, a plan that benefits solely collectively bargained employees automatically satisfies the coverage and nondiscrimination requirements of these sections. A plan that benefits both collectively bargained employees and noncollectively bargained employees is mandatorily disaggregated into a collectively bargained portion and a noncollectively bargained portion, and the collectively bargained portion automatically satisfies sections 401(a)(4) and 410(b)

02 A plan that benefits employees of more than one employer is treated under sections 401(a)(4) and 410(b) as comprising separate plans each of which is maintained by a separate employer and must satisfy section 401(a)(4) and 410(b) by reference only to such employer's employees.

03 Based on these principles, the following special rules and instructions apply to plans benefiting collectively bargained employees and multiple employer plans:

(1) A plan that benefits only collectively bargained employees (as defined in section 1.410(b)-6(d)(2) of the regulations) is eligible for submission under this revenue procedure notwithstanding that the plan fails to meet those eligibility criteria set forth in sections 3.02(1) through (6) and 3.03 above. An application for such a plan must include a certification that the plan benefits only collectively bargained employees. Applicants may meet this requirement by including with their application the model certification contained in Appendix A of this revenue procedure, completing the certification through line a. only. The applicant should not respond to the other questions on the certification nor submit the demonstrations otherwise required by section 5.07 above.

(2) A plan that benefits both collectively bargained employees and noncollectively bargained employees is eligible for submission under this revenue procedure notwithstanding that the portion of the plan that benefits collectively bargained employees fails to meet those eligibility criteria set forth in sections 3.02(1) through (6) and 3.03 above, provided the noncollectively bargained portion of the plan is described in sections 3.02 and 3.03 and the identical design based nondiscrimination safe harbor is satisfied with respect to each "separate" plan of each employer. An application for such a plan must include a single certification (as required by section 5.02) for the plan and, for each employer that has noncollectively bargained employees benefiting under the plan, separate demonstrations as required by section 5.07. These demonstrations should be identified by the name of the employer to whom the demonstration relates.

(3) A plan that benefits only noncollectively bargained employees of more than one employer is eligible for submission under this revenue procedure if the plan is described in sections 3.02 and 3.03 and the identical design based nondiscrimination safe harbor is satisfied with respect to each "separate" plan of each employer. The application instructions in the preceding paragraph also apply to a plan described in this paragraph.

SEC. 7. SPECIAL RULES FOR M&P, REGIONAL PROTOTYPE, AND VOLUME SUBMITTER PLANS

01 In general, an employer that adopts a standardized M&P or regional prototype plan need not request a determination letter as to the qualified status of the plan. However, if the employer has, at any time, maintained another plan in addition to the standardized plan or adopts another plan, other than another standardized plan of the same sponsor that is designed to satisfy Code sections 401(a) (4), 415, and 416 when adopted in conjunction with the employer's plan (i.e., a paired plan), then the employer must file an application for a determination letter under this section 7 in order to be entitled to reliance that the plan complies with the requirements of section 415 of the Code. Under certain other circumstances, as described in section 6 of Rev. Proc. 89-9 and section 11 of Rev. Proc. 89-13, as modified by section 6 of Rev. Proc. 91-41, an employer that adopts a standardized M&P or regional prototype plan must file an application for a determination letter in order to be entitled to reliance regarding certain qualification requirements described in those sections.

02 All applications for determination letters submitted by M&P or regional prototype plan adopters must be accompanied by a copy of the adoption agreement. In addition, an application involving a regional prototype plan that uses separate trust or custodial account documents must include copies of these documents.

03 All applications for determination letters submitted by adopters of Service approved volume submitter plans must be accompanied by a copy of the plan and trust instrument and by a written representation, made by the volume submitter, that indicates whether and how the submitted plan or trust instrument differs from the approved specimen plan, and that specifies the location, nature and effect of each difference. The extent to which the plan and trust instrument may differ from the approved specimen plan is governed by the procedures of the appropriate Key District Office.

04 All applications submitted by adopters of M&P, regional prototype, or volume submitter plans must also be accompanied by a copy of the opinion, notification, or advisory letter issued to the plan.

SEC. 8. MODIFICATIONS TO M&P AND REGIONAL PROTOTYPE PLAN REQUIREMENTS AND CLARIFICATION OF SCOPE OF OPINION AND NOTIFICATION LETTERS

01 Section 6 of Rev. Proc. 91-41 made several modifications to sections 3, 5, 6, and 7 of Rev. Proc. 89-9 and sections 4, 6, and 11 of Rev. Proc. 89-13. Although the substance of those modifications is not being changed, it is necessary to restate them to conform to the final regulations. Accordingly, section 6 of Rev. Proc. 91-41 is superseded and section 8.03 through 8.08, below, are substituted.

02 Sections 6.01 and 6.02 of Rev. Proc. 91-41 modified Rev. Proc. 89-9 and Rev. Proc. 89-13 to provide that opinion and notification letters could not be relied on by adopters of standardized M&P and regional prototype plans with respect to whether a plan satisfied certain nondiscrimination requirements in the proposed regulations. (See section 8.03 and 8.04 below). Because the issues described in sections 6.01 and 6.02 of Rev. Proc. 91-41 relate to questions of individual employers' facts and circumstances, neither letters issued before the effective date of Rev. Proc. 91-41 nor those issued after that date may be relied on with respect to those issues.

03 Section 6 of Rev. Proc. 89-9 and section 11 of Rev. Proc. 89- 13 are modified to provide that an employer that has adopted a standardized plan may not rely on an opinion or notification letter with respect to: (a) whether any amendment to the plan (or series of amendments) satisfies the nondiscrimination requirements of section 1.401(a)(4)-5(a) of the regulations, except with respect to plan amendments granting past service that meet the safe harbor described in section 1.401(a)(4)-5(a)(5) and are not part of a pattern of amendments that significantly discriminates in favor of highly compensated employees; or (b) whether the plan satisfies the effective availability requirement of section 1.401(a)(4)-4(c) of the regulations with respect to any benefit, right, or feature. An adopter of a standardized plan may request a determination that past service that fails to meet the safe harbor in the regulations does not have the effect of discriminating significantly in favor of highly compensated employees. Guidance pertaining to the procedures for filing such a request will be provided at a later date.

04 Section 6 of Rev. Proc. 89-9 and section 11 of Rev. Proc. 89- 13 are further modified to provide that an employer that has adopted a standardized plan as an amendment to a plan other than a standardized plan may not rely on an opinion or notification letter with respect to whether a benefit, right, or feature that is prospectively eliminated satisfies the current availability requirements of section 1.401(a)-4 of the regulations. Such an employer may request a determination with respect to whether the prospectively eliminated benefit, right, or feature satisfies the current availability requirements. Guidance pertaining to the procedures for filing such a determination will be provided at a later date.

05 Section 7 of Rev. Proc. 89-9 and section 4.12 of Rev. Proc. 89-13 are amended to provide that, notwithstanding the other requirements of such sections, paired plans must include provisions that will comply with one of the following options by no later than the first day of the first plan year beginning after December 31, 1991:

(1) each of the paired plans will provide the top-heavy minimum contribution or benefit (as applicable) without regard to whether a participant is covered under the other paired plan(s); or

(2) any participant who benefits under any one of the paired plans will automatically benefit under the other paired plan(s).

If the second option is used, the paired plans may designate one of the plans to provide the top-heavy minimum contribution or benefit (as applicable) and no minimum contributions or benefits will be provided under the other paired plan(s). Alternatively, each of the paired plans can provide the top-heavy minimum benefit or contribution (as applicable). Notwithstanding the requirement that all provisions necessary to coordinate paired plans be contained in the basic plan document, paired plans may allow the employer to elect in the adoption agreement which of the foregoing two options will apply to the employer's plans beginning in the 1992 plan year.

06 Section 7 of Rev. Proc. 89-9 is also amended to provide that where the second option in the preceding paragraph is used in paired defined benefit and defined contribution plans and the defined contribution plan is designated to provide the top-heavy minimum contribution (with no minimum benefit to be provided under the defined benefit plan), the minimum contribution is increased to 5% (7 1/2% if the unreduced section 415(e) limit is used).

07 Section 3.08 of Rev. Proc. 89-9 and section 4.11 of Rev. Proc. 89-13 are modified to provide that standardized plans (other than target benefit plans and section 401(k) and 401(m) plans tested exclusively under section 1.401(a)(4)-2(d) of the regulations) must, by their terms, satisfy the uniformity requirements in section 1.401(a)(4)-2(b)(2) or 1.401(a)(4)-3(b)(2) of the regulations and one of the design based safe harbors described in sections 1.401(a)(4)- 2(b)(3) and 1.401(a)(4)-3(b)(3), (4), (5), and (7) of the regulations.

08 Section 5 of Rev. Proc. 89-9 and section 6.01 of Rev. Proc. 89-13 are modified to provide that (a) every nonstandardized plan (other than target benefit plans) must automatically or by option allow the adopting employer to satisfy one of the design based safe harbors described in sections 1.401(a)(4)-2(b)(3) and 1.401(a)(4)- 3(b)(3), (4), (5), and (7) of the regulations; (b) every target benefit plan must, by its terms, satisfy each of the safe harbor requirements described in section 1.401(a)(4)-8(b)(3)(i) as well as the additional rules in section 1.401(a)(4)-8(b)(3)(ii) through (vi); and (c) defined benefit plans that provide for employee contributions not allocated to separate accounts must provide the minimum benefit described in section 1.401(a)(4)-6(b)(3)(ii) of the regulations.

SEC. 9. EFFECT ON OTHER DOCUMENTS

01 Rev. Proc. 91-41 is superseded with respect to determination letter applications submitted on or after January 15, 1992. In accordance with Announcement 91-152, determination letters issued on or after October 1, 1991 with respect to plans submitted under Rev. Proc. 91-41 (other than those submitted on behalf of adopters of pre- approved proposed regulation plans) will be reviewed for compliance with the requirements of the final regulations under section 401(a)(4), as described in sections 3.02, 3.03, 4, and 8 of this revenue procedure.

02 Notice 86-13, as previously modified by Rev. Proc. 88-42 and Rev. Proc. 91-41, is further modified.

03 The modifications made to Rev. Proc. 89-9 and Rev. Proc. 89- 13 by section 6 of Rev. Proc. 91-41 are superseded by the modifications contained in sections 8.03 through 8.08 of this revenue procedure with respect to opinion and notification letters issued on or after October 1, 1991.

04 Section 5.02 through section 5.04 of Rev. Proc. 91-10 are modified with respect to a determination letter application relating to an ongoing plan that requests in accordance with the procedures in section 5 that such plan be reviewed under this revenue procedure.

SEC. 10. EFFECTIVE DATE

This revenue procedure is effective with respect to determination letter applications filed on or after January 15, 1992.

DRAFTING INFORMATION

The principal author of this revenue procedure is James Flannery of the Employee Plans Technical and Actuarial Division. For further information regarding this revenue procedure, please contact the Employee Plans Technical and Actuarial Division's taxpayer assistance telephone service between the hours of 1:30 p.m. and 4 p.m. Eastern Time, Monday through Thursday by calling (202) 566-6783/6784. (These telephone numbers are not toll-free numbers).

APPENDICES

Appendix A below provides samples of the certification and worksheets for the demonstrations required by section 5 of this procedure. (See summary of appendices below.) Other formats that include all of the information shown in pertinent parts of the appendix may be used, but deviations may result in substantial delays in processing of applications. Section references are to Rev. Proc. 91-66. Appendix B provides a checklist that sponsors and practitioners should use to determine whether a plan is eligible to be submitted under this procedure.

Summary of Appendices

Appendix A

CERTIFICATION AND DEMONSTRATIONS UNDER REV. PROC. 91-66

Plan Name: ________________________________________________

Enter a checkmark on the appropriate line if this plan:

a. benefits collectively bargained employees only. If so, do not complete the rest of this certification. See section 6.03(1). ___________________

b. benefits both collectively bargained employees and noncollectively bargained employees. If so, answer all the questions below but answer questions 3 through 8 only with respect to the noncollectively bargained part of the plan. See section 6.03(2) ___________________

c. benefits the noncollectively bargained employees of more than one employer. ___________________

If so, enter the number of employers here: ________________ and complete only one certification for the "plan". However, you may need to provide separate demonstrations for each employer that has noncollectively bargained employees under the plan. See section 6.03(3)

Enter an "X" in the appropriate column.

1. Does the plan (and, if applicable, each employer maintaining the plan) meet the requirements of section 3.02 and 3.03 of Rev. Proc. 91-66? See section 5.02 and the checklist in Appendix B attached to this revenue procedure. (Note: This question should be answered affirmatively for an adoption of a pre-approved proposed regulation plan that would meet the requirements of section 3.02 and 3.03 when the references to the final regulations therein are replaced by references to the corresponding provisions of the proposed regulations. A "no" answer to this question means that the plan is ineligible to be submitted under Rev. Proc. 91-66.)

Yes _____ No _____

2. Does this plan automatically satisfy the requirements of section 401(a)(26)?

Yes _____ No ____

If "no", attach a demonstration that the plan satisfies the requirements of section 401(a)(26) in the format shown in Demonstration 1 of this Appendix A and labeled as "Demonstration 1". See section 5.07(1)

If "yes", attach Schedule A in lieu of Demonstration 1.

2a. Are you required or do you choose to disaggregate the plan for purposes of section 401(a)(26) under the disaggregation rules of the proposed regulations?

Yes _____ No _____

If "yes", attach a separate Schedule B as part of Demonstration 1.

2b. Is this is a defined benefit plan that is providing additional benefit accruals to former employees of any employer maintaining the plan (e.g., ad hoc cost of living increases)?

Yes _____ No ____

If yes, attach Schedule C as part of Demonstration 1 and also attach a demonstration that the plan meets the ratio percentage minimum coverage test in the format shown in Demonstration 2 of this Appendix A and labeled as "Demonstration 2". See sections 5.07(1) and 5.07(2).

3. Is the plan a defined benefit plan that includes employee contributions not allocated to a separate account for plan years beginning after 1991?

Yes _____ No _____

If "yes," enter locations of provisions intended to satisfy section 1.401(a)(4)-6(b)(3)(ii) of the regulations. See sections 3.03(2) and 5.03.

4. Does the plan either:

(a) include a definition of compensation for the purpose of computing benefits or allocations (other than elective, employee, or matching contributions) that FAILS TO SATISFY the requirements of both section 1.414(s)-1(c)(2) and 1.414(s)-1(c)(3) of the regulations or that includes imputed compensation credited for periods of absence from service that fails to satisfy section 1.414(s)-1(e)(3); or

(b) incorporate an ADP or ACP test that uses a definition of compensation that fails to meet the requirements of both section 1.414(s)-1(c)(2) and 1.414(s)-1(c)(3)?

(Note: Answer "no" if the plan is an adoption of a pre-approved proposed regulation plan with a definition that satisfies the corresponding provisions of the proposed regulations.)

Yes ____ No ____

If "yes", attach a demonstration, in the format shown in Demonstration 3 of this Appendix A, and labeled as "Demonstration 3," that the definition satisfies section 1.414(s)-l(d) of the regulations. See section 5.07(3)

5. Does the plan provide for past service credit that fails to meet the requirements of the safe harbor described in section 1.401(a)(4)-5(a)(5) of the regulations?

Yes ______ No _____

If "yes", attach a demonstration that such grant of past service does not have the effect of discriminating significantly in favor of highly compensated employees. (This demonstration must be labeled as "Demonstration 4".) See section 5.07(4).

6. Is the employer requesting a determination that each optional form of benefit, right and feature under the plan that is not available to all employees under the plan on a uniform basis satisfies the current availability requirement of section 1.401(a)(4)-4 of the regulations?

Yes _____ No _____

If "yes", attach a demonstration that the availability of each optional form of benefit, right or feature under the plan that is not uniformly available meets the requirements of section 1.401(a)(4)- 4(b) of the regulations, or that each such optional form of benefit, right or feature under the plan, other than ancillary benefits, meets the requirements of section 1.401(a)(4)-4(d)(1) of the regulations. (This demonstration must be labeled as "Demonstration 5".) See Section 5.07(5).

7. Check the applicable section of the regulations intended to be satisfied by the design of the plan. In the case of an adoption of a pre-approved proposed regulation plan, check the section that corresponds to the design based safe harbor in the proposed regulations that the plan satisfies. If the plan includes contributions tested exclusively under section 1.401(a)(4)-2(d) of the regulations, relating to section 401(k) and 401(m) plans, as well as other contributions intended to satisfy a design based safe harbor, check each applicable section:

     _____ 1.401(a)(4)-2(b)(3) (defined contribution plan with

9. If the plan received a favorable determination letter in the past, but a copy of the latest determination letter is not attached, explain the reason here:

_________________________

DEMONSTRATION 1 -- SECTION 401(a)(26) WORKSHEET

Name of Plan: _______________________________________________

(Note: You may be required to file separate section 401(a) (26) worksheets for different portions of the plan in accordance with the directions on Schedule B. If this worksheet relates only to a portion of the plan, identify the portion here (e.g., collectively bargained portion, name of collective bargaining unit, or name of employer): ___________________________________

General Instructions: All applicants that request a determination letter under Rev. Proc. 91-66 are required to demonstrate that their plan satisfies the requirements of section 401(a)(26), except those relating to prior benefit structures, unless the plan benefits collectively bargained employees only. This worksheet should be used to fulfill this requirement.

If you believe the plan satisfies section 401(a)(26) because it meets one of the exceptions in section 1.401(a)(26)-1(b) of the regulations, complete Schedule A in lieu of this worksheet.

If the plan does not meet one of the exceptions and you are required, or you choose, to disaggregate the plan under section 1.401(a)(26)-2(d) of the regulations, complete Schedule B before completing this worksheet.

If the plan does not meet one of the exceptions and the plan is a defined benefit plan that provides additional benefit accruals for former employees during the plan year, you must complete this worksheet and attach Schedule C to the worksheet.)

1. Is this a frozen plan within the meaning of section 1.401(a)(26)-2(b) of the regulations?

Yes _____ No _____

(If "yes", do not complete the remainder of this worksheet.)

2. Enter the date for which data responding to the following questions is given (Note: This date must be reasonably representative of the employer's work force and plan coverage.): ________________

3. Enter the total number of employees of the employer who were employed on the date shown on line 2, including self-employed individuals, common-law employees, and leased employees who are treated as employees (See section 1.410(b)-9 of the regulations.): ________________

3a. Does line 3 include any leased employees treated as employees?

Yes _____ No _____

4. Enter the number of employees identified on line 3 (other than those employees in a category excludable with respect to the plan or portion of the plan being tested) who, on the date shown on line 2 were participants and who were benefiting for the plan year, within the meaning of section 1.401(a)(26)-5 of the regulations, under the plan or separate portion of the plan being tested, if applicable. (See line 6 below regarding categories of employees who may be excludable.): __________________

5. Is line 4 greater than or equal to the lesser of 50 or 40% of line 3?

Yes _____ No _____

(If "yes", do not complete the remainder of this worksheet.)

6. Enter the number of employees identified on line 3 who, on the basis of the plan provisions and relevant facts as of the last day of the plan year, are excludable employees in each of the following categories:

a. Noncovered employees excludable on account of minimum age and service under section 1.401(a)(26)-6(b)(1)(i) of the regulations: __________________

b. Covered employees otherwise excludable under section 1.401(a)(26)-6(b)(1)(ii). (This exclusion applies in testing the part of the plan benefiting those employees not otherwise excludable.): __________________

c. Covered employees who are not otherwise excludable under section 1.401(a)(26)-6(b)(1)(ii). (This exclusion applies in testing the part of the plan benefiting those employees who are otherwise excludable.): ________________

d. Employees covered pursuant to a collective bargaining agreement (CBA) and excludable under section 1.401(a)(6)- 6(b)(4): ___________________

e. Employees NOT covered pursuant to a CBA and excludable under section 1.401(a)(26)-6(b)(5): ___________________

f. Terminating employees excludable under section 1.401(a)(26)-6(b)(7): __________________

g. Other (identify): _______________

h. Total of a. through g. (do not count any employee more than once): ____________________

7. Subtract line 6.h. from line 3: _________________

8. Multiply line 7 by 40%: _________________

9. Enter the lesser of 50 or the number shown on line 8: _________________

10. Is line 4 equal to or greater than line 9?

Yes _____ No _____

(If "no," the plan does not satisfy section 401(a)(26).)

SCHEDULE A -- EXCEPTIONS

Name of Plan:________________________________________________

1. Does the plan meet all of the following requirements for the plan year:

a. the plan is not a frozen plan,

Yes _____ No _____

b. the plan is not top-heavy under section 416,

Yes _____ No _____

c. the plan benefits no highly compensated employee or former employee, and

Yes _____ No _____

d. the plan is not aggregated with any other plan to enable the other plan to satisfy sections 401(a)(4) or 410(b) (other than the average benefit percentage test of section 410(b)(2)(A)(ii))?

Yes _____ No _____

2. Is the plan a defined benefit plan that satisfies all of the following conditions for the plan year:

a. a timely filed actuarial report evidences that the plan does not have sufficient assets to satisfy all liabilities;

Yes _____ No _____

b. no employees accrue additional benefits under the plan for the plan year, other than minimum benefits for non-key employees required by section 416; and, if applicable,

Yes _____ No _____

c. if the determination letter is filed in the 1992 or later plan year, the plan is either subject to Title IV of ERISA or is not top-heavy for such year?

Yes _____ No _____

3. Is this a multiemployer plan that meets any of the following conditions:

a. the plan benefits only employees included in a unit covered by a collective bargaining agreement within the meaning of section 1.401(a)(26)-8 of the regulations, or

Yes _____ No _____

b. the plan benefits 50 or more employees?

Yes _____ No _____

(Note that an employee is not to be considered included in a unit of employees covered by a collective bargaining agreement for a year if for that year more than 2% of the employees covered pursuant to the agreement are professionals.)

4. Explain any other basis on which you believe the plan automatically satisfies section 401(a)(26): __________________

SCHEDULE B - DISAGGREGATION

Name of Plan:________________________________________________

Enter an "X" in the appropriate column.

1. Is this a multiemployer plan?

Yes _____ No _____

2. If you answered "yes" to the preceding question, do you treat the portion of the plan that benefits only employees included in a unit covered by a collective bargaining agreement (CBA) as a separate plan that satisfies section 401(a)(26) for the plan year?

Yes _____ No _____

(Note that an employee is not to be considered included in a unit of employees covered by a collective bargaining agreement for a year if for that year more than 2% of the employees covered pursuant to the agreement are professionals.)

(If "yes," skip to question 5 and answer the remainder of the questions on this schedule solely with respect to that portion of the plan that covers employees not included in a unit covered by a CBA.)

3. Does this plan benefit both employees included in a unit covered by a CB and other employees?

Yes _____ No _____

4. If you answered "yes" to the preceding question, do you:

a. treat the portion of the plan that benefits employees included in a unit covered by a CB as separate from the portion covering employees not included in a unit covered by a CB for purposes of section 401(a)(26)?

Yes _____ No _____

b. treat the portion of a plan that benefits employees included in a unit covered by one CB as a plan that is separate from the portion benefiting employees included in a unit covered by another CB for purposes of section 401(a))26)?

Yes _____ No _____

(If you answered "yes" to either question 4.a. or question 4.b., you must provide separate section 401(a)(26) worksheets for each separate portion of the plan.)

5. Does this plan benefit employees who have failed to satisfy the highest minimum age and/or service conditions permissible under section 410(a)(1)?

Yes _____ No _____

6. If you answered "yes" to the preceding question, do you treat that portion of the plan that benefits employees described in question 5 as separate for purposes of section 401(a)(26)?

Yes _____ No _____

(If "yes," provide separate section 401(a)(26) worksheets for the portion of the plan benefiting employees described in question 5 and the other portion(s) of the plan.)

7. Is this a multiple employer plan or is this a multiemployer plan that benefits employees of more than one employer who are not included in a unit covered by a CB?

Yes _____ No _____

(If "yes," each employer must submit a section 401(a)(26) worksheet for its own employees not included in a unit covered by a CB.)

SCHEDULE C - FORMER EMPLOYEES

Name of Plan:________________________________________________

(Note: If you are required to file separate section 401(a)(26) worksheets for different portions of the plan in accordance with the directions on Schedule B, and the plan provides additional benefit accruals in the plan year for former employees, then you must also file separate Schedule Cs for those portions of the plan. If this worksheet relates only to a portion of the plan, identify the portion here (e.g., collectively bargained portion, name of collective bargaining unit, or name of employer):

Enter an "X" in the appropriate column.

1. Is this a defined benefit plan that benefits former employees (that is, is it providing additional benefit accruals for former employees during the plan year)?

Yes ____ No ____

(If "no," do not complete the rest of this schedule.)

2. Does the plan benefit at least five former employees and satisfy one of the following conditions:

a. more than 95% of all former employees with vested benefits under the plan benefit for the plan year, or

b. at least 60% of the former employees who benefit under the plan are not highly compensated former employees?

Yes _____ No _____

(If "yes," do not complete the rest of this schedule.)

3. Enter the total number of former employees (within the meaning of section 1.410(b)-9 of the regulations) of the employer as of the date on line 2 of Demonstration 1: __________________

4. Enter the number of former employees included on line 3 who are excludable under section 1.401(a)(26)-6(c) of the regulations: __________________

5. Subtract line 4 from line 3: _________________

6. Multiply line 5 by 40%: ________________

7. Enter the lesser of 50 or the number in line 6: __________________

8. Enter the number of former employees included on line 5 benefiting (within the meaning of section 1.410(b)-3(b) of the regulations) under the plan or separate portion of the plan being tested, if applicable: __________________

9. Is line 8 equal to or greater than line 7?

Yes _____ No _____

(If "no," the plan does not satisfy section 401(a)(26).)

DEMONSTRATION 2 - COVERAGE OF FORMER EMPLOYEES

Name of Plan (and Employer, if not a Single Employer Plan): ____________________________________________

(This worksheet should be filed with an application submitted under Rev. Proc. 91-66, if the application relates to a defined benefit plan that is providing additional benefit accruals during the plan year (e.g., ad hoc cost-of-living increases) for former employees. If section 6.03(2) or (3) of Rev. Proc. 91-66 applies and you are required to submit separate demonstrations for employers maintaining the plan, enter the name of the employer to whom this demonstration relates as well as the name of the plan.)

Enter an "X" in the appropriate column.

1. Is this a defined benefit plan that benefits former employees (as defined in section 1.410(b)-9 of the regulations), other than former employees who were collectively bargained employees within the meaning of section 1.410(b)-6(d)(2) of the regulations (that is, is it providing additional benefit accruals for such former employees during the plan year)?

Yes ____ No ____

(If "no," do not complete the rest of this worksheet.)

2. Is the plan maintained by an employer that, at all times during the plan year, either benefits no highly compensated former employees or has no nonhighly compensated former employees?

Yes _____ No _____

(If "yes," do not complete the rest of this worksheet.)

3. Does the plan benefit at least five former employees and satisfy one of the following tests:

a. at least 60% of the former employees who benefit under the plan are not highly compensated former employees, or

b. more than 95% of all former employees with vested accrued benefits under the plan benefit under the plan for the plan year?

Yes _____ No _____

(If "yes," do not complete the rest of this worksheet.)

4. In testing the plan's coverage of former employees, does the employer elect to exclude former employees who became former employees (a) prior to 1/1/84 or prior to the tenth calendar year before the calendar year in which the plan year being tested begins, and (b) in a calendar year that precedes the earliest calendar year in which any former employee who benefits under the plan in the current year became a former employee?

Yes _____ No _____

5. Identify (by entering the appropriate corresponding letter) the testing option that is being used to demonstrate that the plan satisfies the coverage requirements:

a. the daily or quarterly testing option, or

b. the annual testing option: _________________

6. Enter the date for which data responding to the following questions is given (Note: If you answered "b" on line 5, this must be the last day of the plan year.): ________________

7. If you answered "a" on line 5, enter the total number of former employees of the employer who were former employees as of the date shown in line 6 (after the exclusion on line 4, if applicable). If you answered "b" on line 5, enter the number of former employees who were former employees on any day during the plan year (after the exclusion on line 4, if applicable): ___________________

8. Does the employer elect to treat as excludable former employees who were (or would have been had regulations been in effect) excludable employees under section 1.410(b)-6(b) through (g) in the plan year in which they became former employees?

Yes _____ No _____

9. If you answered "yes" on line 8, enter the number of excludable former employees. Otherwise, enter zero. __________________

10. Subtract line 9 from line 7: _________________

(If zero, do not complete the rest of this worksheet.)

11. Enter the percentage of nonexcludable nonhighly compensated former employees included in line 10 who are benefiting under the plan: __________________

(If equal to or greater than 70%, do not complete the rest of this worksheet.)

12. Divide the percentage on line 11 by the percentage of nonexcludable highly compensated former employees included in line 10 who are benefiting under the plan: __________________

(If the percentage on line 12 is less than 70%, this plan is not eligible to be submitted under Rev. Proc. 91-66.)

DEMONSTRATION 3 - NONDISCRIMINATORY COMPENSATION WORKSHEET

Name of Plan (and Employer, if not a Single Employer Plan): __________________________________________________________

(This worksheet should be completed in either of the following circumstances:

(a) if the plan bases contributions or benefits (other than elective or employee or matching contributions) on compensation and the plan's definition of compensation fails to meet the requirements of both section 1.414(s)-1(c)(2) and 1.414(s)-1(c)(3) of the regulations or includes imputed compensation credited for periods of absence from service that fails to satisfy section 1.414(s)-1(e) (3), or

(b) in the case of a section 401(k) or 401(m) plan, if the definition of compensation in the plan's actual deferral percentage or actual contribution percentage test fails to meet the requirements of both section 1.414(s)-1(c)(2) and 1.414(s)-1(c)(3).

If both (a) and (b) are applicable, you must submit separate worksheets for each definition, unless the definitions are the same and the employees taken into account in line 4 of the worksheet are the same in testing each definition. If section 6.03(2) or (3) of Rev. Proc. 91-66 applies and you are required to submit separate demonstrations for employers maintaining the plan, enter the name of the employer to whom this demonstration relates as well as the name of the plan.

Using this worksheet, an employer may determine the average percentage of total compensation included under the plan's definition of compensation for the group of highly compensated employees and for the group of nonhighly compensated employees under two methods.

The first method calculates individual percentages for each employee in the group and then averages the percentages (the "individual method"). The second method calculates an aggregate inclusion percentage for each group by dividing the aggregate plan compensation of all the employees in the group by the aggregate total compensation of these employees (the "aggregate method").

An employer may choose to use the same or different methods for the two groups. If the employer chooses to use the aggregate method for either or both groups, the employer must also show that the use of this method cannot reasonably be expected to create a significant variance from the result that would be obtained using the individual method as the result of the extra weight given employees with higher compensation in the relevant group. For example, it may be demonstrated that the results produced by using the individual method would not differ significantly from the results produced by using the aggregate method. As another example, it may be demonstrated that there is sufficient dispersion of employees among various compensation levels within the relevant group to preclude a reasonable expectation of significant variance.)

1. Does this plan benefit only highly compensated employees or only nonhighly compensated employees?

Yes _____ No _____

(If you answered "yes," do not complete the rest of this worksheet.)

2. This demonstration relates to compensation that is (check only one):

a. used to determine contributions or benefits under the plan, __________________

b. used in the plan's ADP or ACP test, or _________________

c. used both to determine contributions or benefits and in the plan's ADP or AGP test. ________________

3. Cite the section of the plan that gives the definition of compensation on which benefits or contributions are based (or that is used in the plan's ADP and/or ACP test, if applicable). __________________

3a. Is the definition cited on line 3 a rate of pay definition?

Yes _____ No _____

4. Enter the period for which the compensation data in this worksheet is given (i.e., the plan year for which coverage data is shown on the application or a 12 consecutive month period specified in the definition cited on line 3 that ends in such plan year.) _________________

5. Identify (by entering the appropriate corresponding letter) the employees for whom data is given on this worksheet:

a. employees benefiting under the plan (other than self- employed individuals),

b. employees treated as benefiting under the section 401(k) or 401(m) plan (other than self-employed individuals), or

c. all employees (other than self-employed individuals) benefiting under all the plans of the employer for which the same alternative definition of compensation is used to determine that the plan satisfies section 401(a)(4) __________________

6. Identify (by entering the appropriate corresponding letter) the method used to calculate compensation inclusion percentages for the group of highly compensated employees:

a. the aggregate method under which the aggregate plan compensation of all employees in the group is divided by the same employees' aggregate total compensation, or

b. the individual method under which individual compensation inclusion percentages are calculated for each employee in the group and then averaged __________________

(If you answered "a," proceed to line 7; if you answered "b," skip to line 13.)

7. How many highly compensated employees are in the group identified on line 5? ___________________

8. Using the plan definition of compensation cited in line 3, what is the compensation for the period shown in line 4 for all the highly compensated employees included in line 7. For this purpose, disregard the plan compensation of any highly compensated employee that exceeds (a) the employee's total compensation as defined in lines 9 through 11 (if the plan imputes compensation), or (b) the limit in section 401(a)(17). $__________________

9. What is the total section 415(c)(3) compensation for the period shown in line 4 for the highly compensated employees identified in line 7? (See note on line 18.) $_________________

10. (OPTIONAL) What is the total of the following for all highly compensated employees identified in line 7: all elective contributions and deferred compensation under Code sections 125, 402(a)(8), 402(h) or 403(b); all compensation deferred under a plan described in section 457(b); and employer pick up contributions described in section 414(h)(2)? $____________________________

11. What is the total compensation of all highly compensated employees identified in line 7? Add lines 9 and 10, but disregard any highly compensated employee's compensation over the limit in section 401(a)(17). $________________

12. Highly compensated employees inclusion percentage. Divide the figure on line 8 by the figure on line 11. _________________%

(If you answered "a" on line 6 and entered data on lines 7 through 12, skip to line 15.)

13. In calculating individual employees' compensation inclusion percentages, do you choose to include in total compensation for each employee the elective contributions and deferred compensation described in line 10?

Yes _____ No _____

14. Highly compensated employees inclusion percentage. Enter the average of the separately calculated compensation inclusion percentages for the highly compensated employees included in the group identified on line 5. (To calculate an employee's individual inclusion percentage, divide the employee's plan compensation for the period in line 4 (excluding compensation in excess of total compensation, if the plan imputes compensation) by the employee's total section 415(c)(3) compensation (plus the employee's elective contributions and deferred compensation described in line 10 if you answered "yes" on line 13), in each case disregarding compensation over the section 401(a)(17) limit). __________________%

15. Identify (by entering the appropriate corresponding letter) the method used to calculate the compensation inclusion percentages for the group of nonhighly compensated employees:

a. the aggregate method

b. the individual method __________________

(If you answered "a", continue with line 16; if you answered "b", skip to line 22.)

16. How many nonhighly compensated employees are in the group identified on line 5? ___________________

17. Using the plan definition of compensation cited in line 3, what is the compensation for the period shown in line 4 for all the nonhighly compensated employees included in line 16? For this purpose, disregard the plan compensation of any nonhighly compensated employee that exceeds the employee's total compensation as defined in lines 18 through 20 (if the plan imputes compensation). $__________________

18. What is the total section 415(c)(3) compensation for the period shown on line 4 for the nonhighly compensated employees identified on line l6? (Note: For purposes of responding to this question and question 9, you must use the identical definition of section 415(c)(3) compensation permissible under regulations section 1.415-2(d).) _______________

19. If there is no entry on line 10, (or, if applicable, if you answered "no" to question 13), skip to question 20. Otherwise enter the total of the following for all the nonhighly compensated employees identified in line 16: all elective contributions and deferred compensation under Code sections 125, 402(a)(8), 402(h) or 403(b); all compensation deferred under a plan described in section 457(b); and employer pick up contributions described in section 414(h)(2). $_________________

20. What is the total compensation of all nonhighly compensated employees identified in line 16? Add lines 18 and 1. $__________________

21. Nonhighly compensated employees inclusion percentage. Divide the figure on line l7 by the figure on line 20. _________________%

(If you answered "a" on line 15 and entered data on lines 16 through 21, skip to line 23.)

22. Nonhighly compensated employees inclusion percentage. Enter the average of the separately calculated compensation inclusion percentages for the nonhighly compensated employees included in the group identified on line 5. (The calculation of nonhighly compensated employees' individual inclusion percentages is identical to the calculation for highly compensated employees described in line 14. You must use as total compensation the identical definition of section 415(c)(3) compensation permissible under regulations section 1.415-2(d) used for line 14 (plus the employee's elective contributions and deferred compensation described in line 10 if you answered "yes" on line 13.)) ______________________________%

23. If the percentage on line 12, (or, if applicable, line 14) is more than the percentage on line 21 (or, if applicable, line 22), enter the difference and provide any facts you consider relevant to whether the difference is de minimis or should be disregarded in accordance with section 1.414(s)-1(d)(3)(v) of the regulations. Otherwise, enter zero. __________________%

24. If you answered "a" on line 6 and/or line 15, provide a demonstration (such as separate breakdowns, by highly compensated and nonhighly compensated group, of the numbers of employees at various compensation levels) to show that the use of the aggregate method could not reasonably be expected to create a significant variance from the result that would be obtained by using the individual method as a result of the extra weight given employees with higher compensation in the relevant group. _______________

APPENDIX B - CHECKLIST

(The applicant or representative may wish to use the following checklist to determine that the certification required by section 5.02 of this revenue procedure can be made. The checklist should not, however, be submitted with the application and certification. A "No" answer to any of the questions on this checklist means the plan is not eligible to be submitted under this revenue procedure.)

1. Is the plan a defined benefit plan or a defined contribution plan (other than a stock bonus or employee stock ownership plan)?

Yes ___ No ___

2. Does that portion of the plan, if any, that is not subject to the exclusive tests for section 401(k) and section 401(m) plans under section 1.401(a)(4)-2(d) of the regulations satisfy one of the following safe harbors described in the regulations:

     _____ 1.401(a)(4)-2(b)(3) (defined contribution plan with

3. Does the plan satisfy the minimum coverage requirements of section 410(b) of the Code without regard to the average benefit percentage test?

Yes ___ No ___

4. Is the determination of whether the minimum coverage requirements are met by the employer's plans made without applying the separate line of business exception of section 410(b)(5) and 414(r)?

Yes ___ No ___

5. Does any disparity in contributions or benefits under the plan that favors highly compensated employees automatically satisfy, by plan design, the permitted disparity requirements of section 401(l) and the regulations thereunder without regard to section 1.401(a) (4)-7 of the regulations? (If there is no disparity in favor of highly compensated employees, check "N/A".)

Yes ___ No ___ N/A ___

6. Are the minimum coverage requirements of section 410(b) and the nondiscrimination requirements of section 401(a)(4) met by the plan without reference to any other plan and without resort to restructuring or imputing permitted disparity?

Yes ___ No ___

7. Is the plan a single plan within the meaning of section 414(l)?

Yes ___ No ___

8. Are all benefits, rights and features provided under the plan with respect to benefits accrued on or after the first day of the first plan year beginning in 1992 uniformly available on the same terms and conditions to all employees under the plan (except for optional forms of benefit, rights or features under the plan, other than ancillary benefits, that meet the requirements of section 1.401(a)(4)-4(d)(1) of the regulations)?

Yes ___ No ___

9. If this is a defined benefit plan that provides for employee contributions not allocated to a separate account, does the plan satisfy the minimum benefit method of section 1.401(a)(4)-6(b)(3) of the regulations for purposes of determining the employee derived benefits? (If not applicable, check "N/A".)

Yes ___ No ___ N/A ___

10. If contributions or benefits are based on compensation, is the plan's definition of compensation for this purpose nondiscriminatory within the meaning of section 1.414(s)-1 of the regulations? (If not applicable, check "N/A".)

Yes ___ No ___ N/A ___