IRS PROVIDES MODEL PLAN AMENDMENT FOR WAIVING NOTICE REQUIREMENT.

Rev. Proc. 93-47

SECTION 1. PURPOSE

This revenue procedure provides a model amendment for sponsors of master and prototype (M&P), regional prototype, volume submitter specimen, and individually designed profit-sharing and stock bonus plans that have received favorable opinion, notification, advisory, and determination letters to amend their plans to reflect the modifications made by Notice 93-26, 1993-18 I.R.B. 11, to the 30-day notice requirement under section 1.411(a)-11(c) of the Income Tax Regulations. Notice 93-26 and the model amendment provided by this revenue procedure do not modify the 30-day notice requirement under section 1.417(e)-1 of the regulations.

SEC. 2. BACKGROUND

.01 Section 411(a)(11) of the Internal Revenue Code requires a plan to provide that an accrued benefit with a present value exceeding $3,500 may not be immediately distributed without the consent of the participant. Section 1.411(a)-11(c) of the regulations provides that a distribution election is not valid consent under section 411(a)(11) unless the participant receives notice of certain specified rights no less than 30 days and no more than 90 days before the annuity starting date with respect to the distribution. Section 1.401(a)-20, Q&A-10 of the regulations defines the annuity starting date as the first day of the first period for which an amount is paid as an annuity or any other form. Notice 93- 26 clarifies that, for purposes of satisfying sections 411(a)(11) and 402(f) of the Code, the plan administrator is permitted to treat the date of distribution as the annuity starting date in the case of distributions that are not in the form of an annuity within the meaning of section 72 and that are also not subject to the requirements of section 401(a)(11).

.02 Section 402(f) of the Code as amended by the Unemployment Compensation Amendments of 1992 requires a plan administrator to give a participant notice of the direct rollover provisions of section 401(a)(31) within a reasonable time period prior to an eligible distribution. Under Q&A-12 of section 1.402(c)-2T of the Temporary Income Tax Regulations, the reasonable time period for giving this section 402(f) notice is the same as the time period for giving the notice under section 1.411(a)-11(c) of the regulations.

.03 Notice 93-26, 1993-18 I.R.B. 11, modified the 30-day notice rule for purposes of sections 402(f) and 411(a)(11) of the Code to allow a participant to waive the 30-day minimum period by affirmative election, provided that two requirements are met. First, the participant must be given the opportunity to consider the decision for at least 30 days after the notice is provided. Second, the plan administrator must provide information to the participant clearly indicating that the participant has a right to this period for making the decision, using a method that is reasonably designed to attract the attention of the participant.

.04 Notice 93-26 does not affect the requirements imposed by sections 401(a)(11) and 417 of the Code and the regulations thereunder on distributions to which those sections apply. Section 1.417(e)-1(b)(3) of the regulations provides that, in order to satisfy section 401(a)(11) and section 417, a plan must provide participants with the written explanation of the qualified joint and survivor annuity required under section 417(a)(3) no less than 30 days and no more than 90 days before the annuity starting date. Thus, even if the 30-day notice period required under section 411(a)(11) may be waived in accordance with Notice 93-26, if sections 401(a)(11) and 417 apply to a distribution the notice required by section 1.417(e)-1(b)(3) must be given no less than 30 days before the annuity starting date. Section 401(a)(11) applies to distributions from defined benefit plans and any defined contribution plan subject to the funding standards of section 412 (i.e., any money purchase plan) and certain distributions from profit-sharing and stock bonus plans.

.05 All M&P, regional prototype, volume submitter specimen, and individually designed plans that have favorable opinion, notification, advisory, and determination letters valid as of the date of this revenue procedure should contain language requiring a 30-day minimum period from receipt of the section 411(a)(11) notice.

SEC. 3. MODEL AMENDMENT

.01 Sponsors who wish to amend their profit-sharing and stock bonus plans to permit a participant to waive the 30-day period as allowed by Notice 93-26 with respect to a distribution to which sections 401(a)(11) and 417 of the Code do not apply may adopt on a word-for-word identical basis the language in the appendix to this revenue procedure. This model language is available for use by M&P, regional prototype, volume submitter specimen, and individually designed plans. No application or notice to the Service is required. The Service will not issue new opinion, notification, advisory, or determination letters for plans amended by adding the model language.

.02 M&P and regional prototype plan sponsors using the model language must inform all adopting employers of the change to their plans.

.03 Volume submitter specimen plan sponsors may only offer the amended specimen plan prospectively, as volume submitter specimen plan sponsors do not have the power to adopt amendments on behalf of employers. However, an employer who adopted a volume submitter specimen plan prior to this amendment of the specimen plan may individually adopt the model amendment and will not need to obtain a new determination letter.

.04 Notice of the adoption of the model amendment must be provided by the employer to interested parties as required by section 19 of Rev. Proc. 93-6, 1993-1 I.R.B. 135. For this purpose, an employer who adopts the model as an amendment to an individually designed or volume submitter plan must comply with section 19 of Rev. Proc. 93-6 as if it were amending a master or prototype or regional prototype plan for which no determination letter will be issued.

SEC. 4. EXTENDED RELIANCE

Plans that are amended in accordance with section 3 of this revenue procedure will not lose their otherwise applicable extended reliance period under Rev. Proc. 89-9, 1989-1 C.B. 780, Rev. Proc. 89-13, 1989-1 C.B. 801, Rev. Proc. 93-9, 1993-2 I.R.B. 20, Rev. Proc. 93-39, 1993-31 I.R.B. 7, or any other such procedure. Also, employers entitled to rely on opinion, notification, or determination letters will not lose reliance on such letters merely because of this amendment.

DRAFTING INFORMATION

The principal author of this revenue procedure is Daniel Evans of the Employee Plans Technical and Actuarial Division. For further information regarding this revenue procedure, contact the Employee Plans Technical and Actuarial Division's telephone assistance service between 1:30 and 4:00 p.m., Eastern Time, Monday through Thursday on (202) 622-6074/6075 or Mr. Evans on (202) 622-6214. (These telephone numbers are not toll-free numbers.)

APPENDIX

MODEL LANGUAGE

(Note to sponsor: The following model language may be used to amend profit-sharing and stock bonus plans to permit a participant to waive the 30-day period as allowed by Notice 93-26 with respect to a distribution to which sections 401(a)(11) and 417 of the Code do not apply. This model language should be added to the section of the plan that provides that the notice required by section 1.411(a)-11(c) of the regulations must be provided to a participant no less than 30 days and no more than 90 days before the annuity starting date.)

"If a distribution is one to which sections 401(a)(11) and 417 of the Internal Revenue Code do not apply, such distribution may commence less than 30 days after the notice required under section 1.411(a)- 11(c) of the Income Tax Regulations is given, provided that:

(1) the plan administrator clearly informs the participant that the participant has a right to a period of at least 30 days after receiving the notice to consider the decision of whether or not to elect a distribution (and, if applicable, a particular distribution option), and

(2) the participant, after receiving the notice, affirmatively elects a distribution."