Rev. Proc. 72-8

Section 1. Purpose

This Revenue Procedure sets forth the general procedures of the Internal Revenue Service pertaining to the issuance of rulings, determination letters, and opinion letters relating to master and prototype pension, annuity, and profit-sharing plans (except those covering self-employed individuals) under section 401(a) of the Internal Revenue Code of 1954, and the status for exemption of related trusts or custodial accounts under section 501(a). (A custodial account described in section 401(f) of the Code is treated as a qualified trust for the purposes of the Code.)

Sec. 2. Background and General Information

.01 The general procedures of the Service relating to the issuance of rulings, determination letters, and opinion letters are set forth in Revenue Procedure 72-3, page 698, this Bulletin. Revenue Procedure 72-6, page 710, this Bulletin, provides the procedures relating to the issuance of determination letters as to qualification of employees' plans or trusts under sections 401 and 405(a) of the Code and to the exempt status of trusts under Section 501(a) of the Code.

.02 Revenue Procedure 72-7, page 715, this Bulletin, provides specific procedures for the issuance of opinion letters by the National Office of the Service as to the acceptability of the form of any master or prototype plan designed to include groups of self-employed individuals.

Sec. 3. Scope and Definitions

.01 The procedures established herein are subject to the general provisions referred to in section 2.01 above. These procedures relate only to master plans and prototype plans that do not include self-employed individuals and are sponsored by trade or professional associations, banks, insurance companies, or regulated investment companies. These plans are further identified as "variable form" and "standardized form" plans.

.02 A "master plan" is a form of plan in which the funding organization (trust, custodial account, or insurer) is specified in the sponsor's application, and a "prototype plan" is a form of plan in which the funding organization is specified in the adopting employer's application.

.03 A "variable form" plan is either a master or prototype plan that permits an employer to select various options relating to such basic provisions as employee coverage, contributions, benefits, and vesting. These options must be set forth in the body of the plan or in a separate document. Such plan, however, is not complete until all provisions necessary for qualification under section 401(a) of the Code are appropriately included.

.04 A "standardized form" plan is either a master or prototype plan that meets the requirements of section 4 below.

Sec. 4. Standardized Form Plan Requirements

A standardized form plan must be complete in all respects (except for choices permissible under subparagraphs (a) and (d) below) and contain among other things provisions as to the following requirements:

(a) Coverage.--The percentage coverage requirements set forth in section 401(a)(3)(A) of the Code must be satisfied. Provisions may be made, however, for an adopting employer to designate such eligibility requirements as are permitted under that section.

(b) Nonforfeitable Rights.--Each employee's rights to or derived from the contributions under the plan must be nonforfeitable at the time the contributions are paid to or under the plan, except to the extent that the limitations set forth in section 1.401-4(c) of the Income Tax Regulations, regarding early termination of a plan, may be applicable.

(c) Bank Trustee.--In the case of a trusteed plan, the trustee must be a bank.

(d) Definite Contribution Formula.--In the case of a profit-sharing plan, there must be a definite formula for determining the employer contributions to be made. Provision may be made, however, for an adopting employer to specify his rate of contribution.

Sec. 5. Rulings, Determination Letters, and Opinion Letters

.01 A favorable determination letter as to the qualification of a pension or profit-sharing plan and the exempt status of any related trust or custodial account, is not required as a condition for obtaining the tax benefits pertaining thereto. However, section 4.05 of Revenue Procedure 72-3, page 698, this Bulletin, authorizes District Directors of Internal Revenue to issue determination letters as to the qualification of plans and the exempt status of related trusts or custodial accounts.

.02 In addition, the National Office upon request from a sponsoring organization will furnish a written opinion as to the acceptability of the form of a master or prototype plan and any related trust or custodial account, under sections 401(a) and 501(a) of the Code. Each opinion letter will bear an identifying plan serial number. However, opinion letters will not be issued under this procedure as to (1) plans of a parent company and its subsidiaries, (2) pooled fund arrangements contemplated by Revenue Ruling 56-267, C.B. 1956-1, 206, (3) industry-wide or area-wide union-negotiated plans, (4) plans that include self-employed individuals, (5) stock bonus plans, and (6) bond purchase plans.

.03 A ruling as to the exempt status of a trust or custodial account under section 501(a) of the Code will be issued to the trustee or custodian by the National Office where such trust or custodial account forms part of a plan described in section 3 above and the trustee or custodian is specified on Form 4461, Sponsor Application--Approval of Master or Prototype Plan. Where not so specified, a determination letter as to the exempt status of a trust or custodial account will be issued by the District Director for the district in which is located the principal place of business of an employer who adopts such trust or custodial account after he furnishes the name of the trustee or custodian.

.04 Since a determination as to the qualification of a particular employer's plan can be made only with regard to facts peculiar to such employer, a letter expressing the opinion of the Service as to the acceptability of the form of a master or prototype plan will not constitute a ruling or determination as to the qualification of a plan as adopted by any individual employer nor as to the exempt status of a related trust or custodial account.

.05 A determination as to the qualification of a plan as it relates to a particular employer will be made by the District Director for the district in which each employer's principal place of business is located, if the employer has adopted a master or prototype plan that has been previously approved as to form. An employer who desires such a determination must file Form 4462, Employer Application--Determination as to Qualification of Pension, Annuity, or Profit-Sharing Plan and Trust, and furnish a copy of the adoption agreement or other evidence of adoption of the plan and such additional information as the District Director may require.

.06 Where master or prototype plans involve integration with Social Security benefits, it is impossible to determine in advance whether in an individual case a particular restrictive definition of the compensation (such as basic compensation) on which contributions or benefits are based would result in discrimination in contributions or benefits in favor of employees who are officers, shareholders, persons whose principal duties consist in supervising the work of other employees, or highly compensated employees. See Revenue Ruling 69-503, C.B. 1969-2, 94. Accordingly, opinion letters relating to master or prototype plans than involve integration with Social Security benefits will not be issued except for those plans where annual compensation, for the purposes of sections 3.01, 5.02, 6.02, 6.03, 13.01, 13.02, and 14.02 of Revenue Ruling 69-4, C.B. 1969-1, 118, is defined to be all of each employee's compensation that would be subject to tax under section 3101(a) of the Code without the dollar limitation of section 3121(a)(1) of the Code.

.07 For the effect of Revenue Rulings on previously-issued determination letters and opinion letters, see section 5 of Revenue Procedure 72-6.

Sec. 6. Request by Sponsoring Organizations and Employers

.01 The National Office will consider the request of a sponsoring organization desiring a written opinion as to the acceptability of the form of a master or prototype plan and any related trust or custodial account. Such request is to be made on Form 4461 and filed with the Commissioner of Internal Revenue, Washington, D.C. 20224, attention T:MS:PT. Copies of all documents, including the plan and trust or custodial agreement, together with specimen insurance contracts, if applicable, are to be submitted with the request. In making its determination, the National Office may require additional information.

.02 Each District Director, in whose jurisdiction there are employers who adopt the form of plan, must be furnished a copy of the previously approved form of plan and related documents by the sponsoring organization. The sponsoring organization must also furnish such District Director a copy of all amendments subsequently approved as to form by the National Office.

.03 The sponsoring organization must furnish copies of opinion letters as to the acceptability of the form of plan, including amendments (See Sec. 7 below), to all adopting employers.

Sec. 7. Amendments

.01 Subsequent to obtaining approval of the form of a master or prototype plan, a sponsoring organization may wish to amend the plan. Whether a sponsoring organization may effect an amendment depends on the plan's administrative provisions.

.02 If the plan provides that each subscribing employer has delegated authority to the sponsor to amend the plan and that each such employer shall be deemed to have consented thereto, the plan may be amended by the sponsor acting on behalf of the subscribers. If the plan does not contain such provision but all subscribing employers consent in a collateral document to permit amendment, the sponsor, acting on their behalf, may amend the plan. However, where a sponsor is unable to secure the consent of each such employer, the plan cannot be amended. In such cases any change can only be effected by the establishment of a new plan and the submission of a new Form 4461 by the sponsor. The new plan must be complete and separate from the old plan, and individual employers may, if they desire, substitute the new plan for the old plan.

.03 Where the plan has been amended pursuant to section 7.02 above, the sponsor is to submit an application, Form 4461, a copy of the amendment, a description of the changes, and a statement indicating the provisions in the original plan authorizing amendments, or a statement that each participating employer's consent has been obtained.

.04 Upon approval of the amendment by the National Office, an opinion letter will be issued to the sponsor containing the serial number of the original plan, followed by a suffix: "A-1" for the first amendment, "A-2" for the second amendment, etc. Employers adopting the form of plan subsequent to the date of the amendment must use the revised serial number.

.05 If a new plan is submitted, together with Form 4461 and copies of all documents evidencing the plan, an opinion letter bearing a new serial number will be issued to the sponsor, and all employers who adopt the new plan are to use the new serial number. Employers who adopted the old plan continue to use the original serial number. However, any employer who wishes to change to the new plan may do so by filing with his District Director a new Form 4462, indicating the change.

.06 An employer who amends his adoption agreement may request a determination letter as to the effect of such amendment by filing Form 4462 with his District Director, together with a copy of the amendment and a summary of the changes. However, in the event an employer desires to amend his adoption agreement under a master or prototype plan, and such amendment is not contemplated or permitted under the plan, then such amendment will in effect substitute an individually designed plan for the master or prototype plan and the amendment procedure described in Revenue Procedure 72-6, page 710, this Bulletin, will be applicable.

Sec. 8. Effect on Other Plans

Determination letters previously issued by District Directors specified in section 4.08, of Revenue Procedure 72-6, page 710, this Bulletin are not affected by these procedures even though the plans covered by the determination letters were designed by organizations described in section 3.01 above. However, such organizations may avail themselves of these procedures with respect to any subsequent action regarding such plans if they otherwise come within the scope of this Revenue Procedure.

Sec. 9. Effect on Other Documents

Revenue Procedure 68-45, C.B. 1968-2, 957 and Revenue Procedure 69-20, C.B. 1969-2, 303 are superseded.

Sec. 10 Effective Date

This Revenue Procedure will be effective on January 3, 1972, the date of its publication in the Internal Revenue Bulletin.