DETERMINATION LETTER PROGRAM NOW COVERS PLANS MEETING DESIGN-BASED SAFE HARBORS.

Rev. Proc. 91-41

SECTION 1. PURPOSE.

01 This revenue procedure supersedes Rev. Proc. 88-42, 1988-2 C.B. 13, and Rev. Proc. 90-20, 1990-1 C.B. 495, to set forth temporary procedures of the Internal Revenue Service pertaining 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), Pub. L. 99-514, 1986-3 (Vol. 1) C.B. 1, 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. 101-23, (collectively "TRA"), and pertaining to the status of an related trusts or custodial accounts under section 501(a). These temporary special procedures are in addition to the Service's general determination letter procedures under Rev. Proc. 91-10, 1991-5 I.R.B. 6.

02 After passage of TRA '86, the Service did not rule on TRA provisions except for qualification requirements effective before 1989 and certain retroactive corrections. Subsequently, the Service expanded the determination letter program to include a full TRA review of certain types of defined contribution plans. This procedure enables many sponsors of defined benefit and target benefit plans to apply for determination letters that take into account the requirements of TRA that are first effective in 1989 or later plan years, by expanding the TRA program to defined benefit plans and certain target benefit plans that meet the design based safe harbors in the proposed regulations under section 401(a)(4) of the Code. It is anticipated that following publication of final regulations under section 401(a)(4), the TRA determination letter program will be expanded to include all other plans.

03 This revenue procedure also modifies Rev. Proc. 89-9, 1989-1 C.B. 780, and Rev. Proc. 89-13 1989-1 C.B. 801, the Service's procedures relating to master or prototype (M&P) and regional prototype plans, respectivity. These modifications relate to the application of the nondiscrimination rules of section 401(a)(4) of the Code to M&P and regional prototype plans, including standardized and paired plans.

SEC. 2. BACKGROUND AND OVERVIEW

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 these 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.

024 Notice 87-57, 1989-2 C.B. 368, and Rev. Proc. 88-9, 1988-1 C.B. 634, contained special procedures regarding determination letters on plans that will be terminated prior to the delayed amendment date provided in section 1140 of TRA '86. In order to receive a favorable determination letter upon termination, Notice 87- 57 and Rev. Proc. 88-9 require a qualified plan terminating prior to the delayed amendment date of section 1140 to be amended to reflect the law in effect at the time of termination.

03 On May 14, 1990, the Service published a comprehensive package of proposed regulations which provide 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(1), 401(m), 410(b) and 414(s). These proposed regulations were supplemented by additional regulations proposed on September 14, 1990. A public hearing on the proposed regulations was held on September 26-28, 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 The proposed regulations under section 401(a)(4) provide, in part, that a qualified plan must be nondiscriminatory with respect to the amount of either the contributions or the benefits under the plan. The regulations further provide that a plan can meet this requirement on the basis of actual employee data in the operation of the plan or, automatically, on the basis of design based safe harbors incorporated in the form of the plan.

05 The Service is aware that many plan sponsors wish to complete the process of amending their plans for TRA and intend that the designs of their plans will meet the design based safe harbors in the proposed regulations. In consideration of this and the comments made with respect to the proposed regulations, the Service has concluded that it is desirable to expand the scope of the determination letter program at this time to include most defined benefit and target benefit plans that satisfy one of the design based safe harbors. Therefore, this revenue procedure provides that on July 15, 1991, the Service will begin accepting applications for ongoing (i.e., initial or amended, other than terminating) defined benefit and defined contribution plans (other than stock bonus plans and ESOPs) that satisfy, by no later than the 1991 plan year, (or, in the case of plans designed to meet the requirements of section 401(1), the 1989 plan year), the design based safe harbors and that meet certain other requirements described in section 3, below. (Adopters of stock bonus plans and ESOPs will continue to be eligible to receive determination letters that do not consider the provisions of TRA under Notice 86- 13.) Adopters of M&P, regional prototype and volume submitter plans that have received favorable opinion, notification, or advisory letters dated on or after January 4, 1990, may apply for determination letters under this revenue procedure, if they are otherwise eligible. In addition, adopters of ongoing plans that satisfy the conditions of Alternative IID of Notice 88-131, 1985-2 C.B. 546 (as modified by Notice 89-92, 1989-2 C.B. 410, Rev. Proc. 89-65, 1989-2 C.B. 786, and Notice 90-73, 1990-51 I.R.B. 17), may apply for determination letters under this revenue procedure if they are otherwise eligible, without losing the relief afforded by Alternative IID.

06 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 proposed regulations. 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 1991, or benefits, rights and features (other than ancillary benefits) that are available on the same terms and conditions to a group of employees under a plan before and after their employer engages in an asset or stock acquisition, merger or other similar transaction involving the change of control of a trade or business ("merger of acquisition benefits"). Determination letters may not be relied on with respect to whether a benefit, right, or feature satisfies the effective availability requirement of Q&A-2(a)(3) of section 1.401(a)-4 of the regulations. Under this revenue procedure, A plan provision or plan amendment granting past service credit that does 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.

07 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 2.06 above satisfy the current availability requirements of the regulations. See section 4.07 below and the certification in Appendix A to this revenue procedure for procedures for requesting such a determination.

08 In view of the expanded TRA determination letter program now available, Rev. Proc. 88-42 is superseded in its entirety, effective July 15, 1991. However, because ongoing plans are not required to be amended for TRA before the end of the 1992 plan year, all plans will continue to be eligible to receive determination letters under the provisions of Notice 86-13. That is, a plan that is ineligible or an employer who chooses not to receive a TRA determination letter under this revenue procedure may still request a non-TRA determination letter in accordance with Notice 86-13. Nevertheless, the Service encourages sponsors of such plans to consider delaying the submission of applications until they can be reviewed for compliance with all requirements of TRA. See Notice 90-73, 1990-51 I.R.B. 17.

09 Also in view of the expansion of the determination letter program under this revenue procedure, Rev. Proc. 90-20 is superseded, effective July 15, 1991. Applications filed before July 15, 1991 will continue to be processed in accordance with the procedures in effect prior to July 15, 1991. Any application filed under this revenue procedure prior to July 15, 1991 will be returned to the applicant.

10 The Service intends to extend its determination letter program to plans ineligible under this procedure after issuance of final regulations under section 401(a)(4). The Service anticipates that under this program the scope of reliance heretofore available with respect to the requirements of section 401(a)(4) will be expanded by allowing sponsors of plans that do not meet the design based safe harbors to demonstrate that their plans are nondiscriminatory.

11 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 and 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.

12 Section 6 of this revenue procedure modifies certain provisions of Rev. Proc. 89-9 and Rev. Proc. 89-13. These modifications provide that standardized plans must satisfy the nondiscrimination requirements of section 401(a)(4) on the basis of design based safe harbors (including section 401(1)) and that a favorable opinion or notification letter issued for a standardized plan 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 proposed regulations. (e.g., whether the amendment gives rise to a pattern of discrimination) or whether the plan satisfies the effective availability requirement of Q&A-2(a)(3) of section 1.401(a)-4 of the regulations with respect to any benefit, right, or feature.

13 Section 6 also modifies the requirements of Rev. Proc. 89-9 and Rev. Proc. 89-13 that apply to paired plans. The nondiscrimination design based safe harbors require that defined contribution plans provide a uniform allocation formula and that defined benefit plans provide a uniform benefit formula. Paired plans could fail this requirement if participants in a paired plan receive different top-heavy minimum contributions or benefits, depending on whether they are covered by the other paired plan(s). In order to ensure that paired plans will continue to satisfy the uniformity requirement of the design based safe harbors, the modifications in section 6 require paired plans to adopt one of two options. The first option requires each paired plan to provide the minimum contribution or benefit without regard to whether a participant is covered by the other paired plan(s). The second option requires that coverage under each of the paired plans be identical, but does not require duplicate minimums. Although one of these options must be included in all paired plans currently, the option need not be effective prior to the first day of the first plan year beginning after December 31, 1991.

14 For procedures pertaining to determination letters that do not cover the qualification requirements of TRA, other than certain retroactive technical corrections, see Notice 86-10, 1986-1 C.B. 377.

15 For procedures pertaining to the issuance of opinion letters relating to master or prototype pension, profit-sharing and annuity plans, see Revenue Procedure 89-9, 1989-1 C.B. 780, as modified by Rev. Proc. 90-21, 1990-1 C.B. 499, and section 6 of this revenue procedure.

16 For procedures pertaining to the issuance of notification letters relating to regional prototype pension, profit-sharing and annuity plans, see Revenue Procedure 89-13, 1989-1 C.B. 801, as modified by Rev. Proc. 90-21, 1990-1 C.B. 499, and section 6 of this revenue procedure.

SEC. 3. APPLICABILITY

01 If requested by the applicant in accordance with section 4, an application for determination of the qualified status of an ongoing plan described in subsection .02 that is filed with the Service on or after July 15, 1991, 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), with the exception of the requirement under section 1.401(a)(4)-5(a) of the proposed regulations that an amendment or series of amendments not discriminate in favor of highly compensated employees and the effective availability requirements of Q&A-2(a)(3) of section 1.401(a)-4 of the regulations, pertaining to optional forms of benefits, other rights, and features under a plan.

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 or the employer(s) maintaining the plan:

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

(a) a defined contribution plan (other than a target benefit, stock bonus, or employee stock ownership plan) that satisfies, no later than the first plan year beginning on or after January 1, 1991, the safe harbor in section 1.401(a)(4)-2(b)(2) of the proposed regulations (that is, the safe harbor for defined contribution plans with a uniform allocation formula); or

(b) a target benefit M&P or regional prototype plan; or

(c) a defined benefit plan that satisfies, no later than the first plan year beginning on or after January 1, 1991, the requirements of the safe harbor for unit credit plans in section 1.401(a)(4)-3(b)(2) of the proposed regulations or the safe harbor for flat benefit plans in section 1.401(a)(4)-3(b)(3) of the proposed regulations;

(2) the employer is using the ratio percentage test under section 410(b) 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, 1989, the permitted disparity requirements of section 401(1), the proposed regulations thereunder, and Notice 89- 70, 1989-1 C.B. 730, without regard to section 1.401(a)(4)-7 of the proposed regulations;

(5) the plan does not need to be 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(d) or section 1.401(a)(4)-7 of the proposed 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(1) and the proposed regulations thereunder); 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, 1991:

(1) with the exception of optional forms of benefits, or other rights or features (other than ancillary benefits) that are available on the same terms and conditions to a group of employees under a plan before and after the employer engages or has engaged in an asset or stock acquisition, merger or other similar transaction involving the change of control of a trade or business, 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 1991 must be uniformly available to all participants under the plan on the same terms and conditions;

(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, 1990 must use the minimum benefit method in section 1.401(a)(4)-6(b)(3) of the proposed regulations to determine the amount of employer derived benefits and employee derived benefits under the plan; and

(3) if benefits in a defined benefit plan or contributions in a defined contribution plan are based on compensation, the plan's definition of compensation for this purpose must be nondiscriminatory within the meaning of section 1.414(s)-1T of the regulations. (If the plan uses an alternative definition of compensation under paragraph (c)(3) or (d) of section 1.414(s)-1T 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)-1T(e) of the regulations.)

04 With respect to plans that are not amended to comply with the proposed 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. Furthermore, if there has been a failure to operate a plan in accordance with a reasonable, good faith interpretation of section 401(a)(4) in any plan year beginning before January 1, 1991, 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.

05 This subsection 3.05 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).

051 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.

052 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.

053 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 1991) 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.

06 Any application filed under this revenue procedure prior to July 15, 1991 will be returned to the applicant. Any other application relating to an ongoing plan that is submitted prior to July 15, 1991, will be reviewed in accordance with the procedures in effect at the time the application was filed. In order for an applicant that submitted an application under Rev. Proc. 88-42 or Notice 86-13 prior to July 15, 1991 to receive a determination letter that considers all the requirements of TRA, the applicant must file an application described in section 4.06, 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 4.09, below, if the earlier application was pending with the Service on July 15, 1991.

07 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.

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. 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) through (c) 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 1991 or merger or acquisition benefits) satisfy current availability or the special rule for merger or acquisition benefits in section 1.401(a)(4)-4(c) of the proposed 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 proposed 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) with respect to current and former employees (a demonstration regarding a defined beneficiary 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 on compensation and the plan's definition of compensation fails to meet the requirements of both section 1.414(s)-1T(c)(2) and 1.414(s)-1T(c)(3) of the regulations, a demonstration that the definition satisfies section 1.414(s)-1T(d) of the 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(b)(2) of the proposed 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 participants 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 proposed 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 proposed regulations are met, the applicant may provide a demonstration that the requirements of the special rule contained in section 1.401(a)(4)-4(c) are met. These requirements must be demonstrated without taking into account the rules in section 1.401(a)-4, Q&A-2(b)(4) of the regulations or section 1.401(a)(4)- 9(d) of the proposed 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. 91-41" 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. 5. 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 5 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 this revenue procedure, 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. 6. MODIFICATIONS TO M&P AND REGIONAL PROTOTYPE PLAN REQUIREMENTS

01 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 proposed regulations; (b) whether the plan satisfies the effective availability requirement of Q&A-2(a)(3) of section 1.401(a)-4 of the regulations with respect to any benefit, right, or feature; or (c) whether any provision or amendment granting past service credit does not have the effect of discriminating significantly in favor of highly compensated employees, except to the extent such provision or amendment satisfies the safe harbor in section 1.401(a)(4)-5 of the proposed regulations and is not part of a pattern of amendments that discriminates in favor of highly compensated employees. See section 1.401(a)(4)-5 of the proposed regulations. Such an employer may request a determination that past service 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.

02 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 Q&A-2(a)(2)(ii) 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.

03 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.

04 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).

05 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) must, by their terms, satisfy one of the design based safe harbors described in sections 1.401(a)(4)-2(b)(2) and 1.401(a)(4)-3(b)(2) and (3) of the proposed regulations.

06 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)(2) and 1.401(a)(4)- 3(b)(2) and (3) of the proposed regulations; (b) every target benefit plan must, by its terms, satisfy the safe harbor described in section 1.401(a)(4)-8(b)(4) of the proposed regulations (except that only the individual level premium funding method may be used to determine contributions); 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 proposed regulations.

SEC. 7. EFFECT ON OTHER DOCUMENTS

01 Notice 86-13, as modified by Rev. Proc. 88-42, is further modified.

02 Rev. Proc. 89-42, as superseded in part by Rev. Proc. 90-20, is superseded, effective with respect to applications filed on or after July 15, 1991.

03 Rev. Proc. 90-20 is superseded with respect to applications filed on or after July 15, 1991.

04 Rev. Proc. 89-9 and Rev. Proc. 89-13, as modified by Rev. Proc. 90-21, are further modified as provided in section 6 of this revenue procedure.

05 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 4 that such plan be reviewed under this revenue procedure.

SEC. 8. EFFECTIVE DATE

This revenue procedure is effective on July 15, 1991.

DRAFTING INFORMATION

The principal author of this revenue procedure is Joyce Kahn 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) 566-6783/6754. (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 4 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. 91-41. 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

CERTIFICATION AND DEMONSTRATIONS UNDER REV. PROC. 91-41

Plan Name: ____________________

YES/NO 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. 91-41? See section 4.02 and the checklist in Appendix B attached to this revenue procedure.

(Note: A "no" answer to this question means that the plan is ineligible to be submitted under Rev. Proc. 91-41.)

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 4.07(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 a defined benefit plan that is providing additional benefit accruals to former employees (e.g., 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 section 4.07(3).

3. Is the plan a defined benefit plan that includes employee contributions not allocated to a separate account for plan years beginning after 1990?

Yes ___ No ___

If "yes," enter locations of provisions intended to satisfy section 1.401(a)(4)-6(b)(3)(ii) of the proposed regulations:

See sections 3.03(2) and 4.03.

4. Does the plan's definition of compensation for the purpose of computing benefits or allocations FAIL TO SATISFY both section 1.414(s)-1T(c)(2) and section 1.414(s)-1T(c)(3) of the 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)-1T(d) of the regulations. See section 4.07(2).

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(b)(2) of the proposed 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 4.07(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 participants 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(c) of the regulations. (This demonstration must be labeled as "Demonstration 5".) See Section 4.07(5).

7. Check the applicable section of the regulations intended to be satisfied by the design of the plan:

___ 1.401(a)(4)-2(b)(2) (defined contribution plan with uniform

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: _____________________

(General Instructions: All applicants that request a determination letter under Rev. Proc. 91-41 are required to demonstrate that their plan satisfies the requirements of section 401(a)(26), except those relating to prior benefit structures. This worksheet should be used to fulfill this requirement.

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

If the plan does not automatically satisfy section 401(a)(26) and you are required, or you choose, to disaggregate the plan under section 1.401(a)(26)-2(d) of the proposed regulations, complete Schedule B before completing this worksheet.

If 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 proposed 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 workforce and plan coverage.): _________

3. Enter the total number of employees of the employer: _________

4. Enter the number of employees benefiting, within the meaning of section 1.401(a)(26)-5 of the proposed regulations, under the plan or separate portion of the plan being tested, if applicable: _________

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 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 proposed regulations: _____

b. Covered employees otherwise excludable under section 1.401(a)(26)-6(b)(1)(ii): ____

c. Employees covered pursuant to a collective bargaining agreement (CBA) and excludable under section 1.401(a)(26)-6(b)(4): ___

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

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

f. Other (identify): ____

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

7. Subtract line 6.g. 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:

Yes ___ No ___

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

Yes ___ No ___

b. no employee or former employee who is a highly compensated employee accrues a benefit for the plan year, and

Yes ___ No ___

c. 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?

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)-1(b)(2) of the proposed regulations, or

Yes ___ No ___

b. the plan benefits 50 or more employees and no more than 2% of the benefiting employees of any employer who are not included in a unit covered by a CBA are professionals within the meaning of section 1.401(a)(26)-8(k) of the proposed regulations?

Yes ___ No ___

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

SCHEDULE B -- DISAGGREGATION

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 ___

(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 CBA 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 CBA as separate from the portion covering employees not included in a unit covered by a CBA 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 CBA as a plan that is separate from the portion benefiting employees included in a unit covered by another CBA 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 CBA?

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 CBA.)

SCHEDULE C -- FORMER EMPLOYEES

(Caution: 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.)

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 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 of the employer: ____

4. Enter the number of former employees excludable under section 1.401(a)(26)-6(c) of the proposed 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 benefiting 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

(This worksheet should be filed with an application submitted under Rev. Proc. 91-41, if the application relates to a defined benefit plan that is providing additional benefit accruals (e.g., ad hoc cost-of-living increases) for former employees during the plan year. In the circumstances in which the instructions for Form 5300, Form 5303, or Form 5307 require the applicant to submit more than one coverage demonstration with respect to active employees (e.g., separate coverage demonstrations for the employees of each employer participating in a multiple employer plan), separate demonstrations involving former employees are also to be submitted.)

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

Yes ___ No ___

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

3. Enter the total number of former employees of the employer: ____

4. Has the employer elected to disregard former employees who are not currently benefiting end who became former employees either prior to the calendar year 1984 or prior to the beginning of the tenth year before the plan year being tested?

Yes ___ No ___

If "no", enter "0". If "yes", enter the number of former employees excludable under section 1.410(b)-2(c)(2)(ii)(C) of the proposed regulations:

5. Subtract line 4 from line 3: ____

6. Enter the percentage of nonexcludable nonhighly compensated former employees included in line 5 who are benefiting under the plan: _______

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

7. Divide the percentage on line 6 by the percentage of nonexcludable highly compensated former employees included in line 5 who are benefiting under the plan:

(If the percentage on line 7 is less than 70%, this plan is not eligible to be submitted under Rev. Proc. 91-41.) _____________

DEMONSTRATION 3 -- NONDISCRIMINATORY COMPENSATION WORKSHEET

Name of plan: _________________________________________________

(This worksheet should be completed if benefits or contributions under the plan are based on compensation and the plan's definition of compensation fails to satisfy both section 1.414(s)-1T(c)(2) and section 1.414(s)-1T(c)(3) of the proposed regulations.

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 does not produce distortion 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 distortion.)

1. Cite the section of the plan that gives the definition of compensation on which benefits or contributions are based.

________________

2. 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 1 that ends in such plan year.)

________________

3. 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), or

b. all nonexcludable employees of the employer (other than self- employed individuals)

________________

4. 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 5; if you answered "b," skip to line 11.)

5. How many highly compensated employees are in the group identified on line 3? ________________

6. Using the plan definition of compensation cited in line 1, what is the compensation for the period shown in line 2 for all the highly compensated employees included in line 5, disregarding compensation of any employee over the limit in section 401(a)(17)? $________________

7. What is the total section 415(c)(3) compensation for the period shown in line 2 for the highly compensated employees identified in line 5? (See note on line 16.) $_______________

8. (OPTIONAL) What is the total of the following for all highly compensated employees identified in line 5: 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)? $________________

9. What is the total compensation of all highly compensated employees identified in line 5? Add lines 7 and 8, but disregard any highly compensated employee's compensation over the limit in section 401(a)(17). $________________

10. Highly compensated employees inclusion percentage. Divide the figure on line 6 by the figure on line 9.

________________

(If you answered "a" on line 4 and entered data on lines 5 through 10, skip to line 13.)

11. 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 8? Yes __ No __

12. 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 3. (To calculate an employee's individual inclusion percentage, divide the employee's plan compensation for the period in line 2 by the employee's total section 415(c)(3) compensation (plus the employee's elective contributions and deferred compensation described in line 8 if you answered "yes" on line 11), in each case disregarding compensation over the section 401(a)(17) limit). ________________%

13. 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 14; if you answered "b", skip to line 20.)

14. How many nonhighly compensated employees are in the group identified on line 3? ________________

15. Using the plan definition of compensation cited in line 1, what is the compensation for the period shown in line 2 for all the nonhighly compensated employees included in line 14? $________________

16. What is the total section 415(c)(3) compensation for the period shown on line 2 for the nonhighly compensated employees identified on line 14? (Note: For purposes of responding to this question and question 7, you must use the identical definition of section 415(c)(3) compensation permissible under regulations section 1.415-2(d).) $________________

17. If there is no entry on line 8, (or, if applicable, if you answered "no" to question 11), skip to question 18. Otherwise enter the total of the following for all the nonhighly compensated employees identified in line 14: 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). $________________

18. What is the total compensation of all nonhighly compensated employees identified in line 14? Add lines 16 and 17. $________________

19. Nonhighly compensated employees inclusion percentage. Divide the figure on line 15 by the figure on line 18. ________________% (If you answered "a" on line 13 and entered data on lines 14 through 19, skip to line 21.)

20. 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 3. (The calculation of nonhighly compensated employees' individual inclusion percentages is identical to the calculation for highly compensated employees described in line 12. 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 12 (plus the employee's elective contributions and deferred compensation described in line 8 if you answered "yes" on line 11.)) ________________%

21. If the percentage on line 10, (or, if applicable, line 12) is more than the percentage on line 19 (or, if applicable, line 20), 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)-1T(d)(2)(iv) of the regulations. Otherwise, enter zero. ________________

22. If you answered "a" on line 4 and/or line 13, 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 does not produce distortion 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 4.02 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 the design of the plan satisfy one of the following safe harbors described in the proposed regulations:

___1.401(a)(4)-2(b)(2) (defined contribution plan with uniform

3. If the plan is a target benefit plan, is it an approved M&P or regional prototype plan? (If not applicable, check "N/A".)

Yes __ No __ N/A __

4. Does the plan satisfy the ratio percentage test of section 410(b) of the Code?

Yes __ No __

5. 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 __

6. 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(1), the proposed regulations thereunder, and Notice 89-70, without regard to section 1.401(a)(4)-7 of the proposed regulations? (If there is no disparity in favor of highly compensated employees, check "N/A".)

Yes __ No __ N/A __

7. 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 __

8. Is the plan a single plan within the meaning of section 414(1)?

Yes __ No __

9. 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 1991 uniformly available on the same terms and conditions to all participants under the plan, (except for benefits, rights or features available on the same terms and conditions to a group of employees under a plan before and after their employer engages in an asset or stock acquisition, merger, or other similar transaction involving the change of control of a trade or business)?

Yes __ No __

10. 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 proposed regulations for purposes of determining the employee derived benefits? (If not applicable, check "N/A".)

Yes __ No __ N/A __

11. 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)-1T of the regulations? (If not applicable, check "N/A".)

Yes __ No __ N/A __