SERVICE ISSUES ROADMAP FOR RULINGS ON MASTER OR PROTOTYPE PLANS AND MASS SUBMISSIONS.

Rev. Proc. 89-9

Table of Contents

SECTION 1. PURPOSE

This revenue procedure updates Rev. Proc. 84-23, 1984-1 C.B. 457, to set forth the procedures of the Internal Revenue Service pertaining to the issuance of opinion letters relating to master or prototype (M&P) pension, profit-sharing and annuity plans involving 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, and the Technical and Miscellaneous Revenue Act of 1988 (TAMRA), Pub. L. 100-647, and to the status for exemption of related trusts or custodial accounts under section 501(a) of the Code.

SEC. 2. GENERAL INFORMATION

01 Rev. Proc. 83-36, 1983-1 C.B. 763, as modified by Rev. Proc. 87-40, 1987-2 C.B. 514, sets forth the general procedures of the Service relating to the issuance of rulings, determination letters, opinion letters, and notification letters on Employee Plans and Exempt Organization matters.

02 Rev. Proc. 80-30, 1980-1 C.B. 685, sets forth the general procedures relating to the issuance of determination letters on the qualification of pension, profit-sharing, and stock bonus plans under sections 401(a) and 403(a), and the status for exemption of any related trusts or custodial accounts under section 501(a) of the Code.

03 Rev. Proc. 84-23, as modified by Rev. Proc. 84-83, 1984-2 C.B. 781, sets forth the general procedures relating to the issuance of opinion letters by the National Office as to the acceptability of the form of master and prototype plans.

04 Rev. Proc. 89-4, 1989-3 I.R.B. 18, sets forth the procedures relating to the payment of user fees for requests to the Service for rulings, opinion letters, determination letters, and similar requests.

05 TRA '86 substantially altered the requirements that a plan must meet in order to be qualified under section 401(a) of the Code. Many of the TRA '86 qualification changes are effective for years beginning after December 31, 1986. Other TRA '86 qualification requirements are not effective until years beginning after December 31, 1988. OBRA '86 and OBRA '87 also altered the requirements that a plan must meet in order to be qualified. The qualification requirements under OBRA '86 and OBRA '87 are generally effective for plan years beginning after December 31, 1987. TAMRA contains technical corrections to TRA '86, OBRA '86, and OBRA '87, as well as other changes affecting qualified plans.

06 Section 1140 of TRA '86 provides that a qualified plan must be amended retroactively, not later than the first plan year beginning on or after January 1, 1989, to comply with the requirements of TRA '86. Section 1.401(b)-1 of the Income Tax Regulations extends until the end of the remedial amendment period described therein the time by which plans must be amended to comply with provisions of TRA '86 that are effective before the first day of the first plan year beginning after December 31, 1989, provided certain conditions are satisfied. In general, the remedial amendment period described in section 1.401(b)-1 of the regulations also applies in the case of amendments necessary to conform to the requirements of OBRA '86, OBRA '87, and other changes to the qualification requirements described in section 5.11. The Service has issued substantive guidelines, including those cited later in this revenue procedure, for conforming plans to the TRA '86, OBRA '86, and OBRA '87 requirements.

SEC. 3. DEFINITIONS

01 Master Plan -- A "master plan" is a plan (including a plan covering self-employed individuals) that is made available by a sponsoring organization (see section 3.07) for adoption by employers and for which a single funding medium (for example, a trust or custodial account) is established, as part of the plan, for the joint use of all adopting employers. A master plan consists of two separate documents, a basic plan document and an adoption agreement (see sections 3.03 and 3.04).

02 Prototype Plan -- A "prototype plan" is a plan (including a plan covering self-employed individuals) which is made available by a sponsoring organization for adoption by employers and under which a separate funding medium is established for each adopting employer. A prototype plan consists of two separate documents, a basic plan document and an adoption agreement.

03 Basic Plan Document -- A "basic plan document" is the portion of the plan containing all the non-elective provisions applicable to all adopting employers. No options (including blanks to be completed) may be provided in the basic plan document, except as provided in section 18.031 of this revenue procedure regarding flexible plans.

04 Adoption Agreement -- For purposes of this revenue procedure, with respect to an adopting employer an "adoption agreement" is the portion of the M&P plan containing all the options that may be selected by such adopting employer.

05 Opinion Letter -- An "opinion letter" is a written statement issued by the National Office to a sponsoring organization pursuant to this revenue procedure as to the acceptability of the form of a master or prototype plan and any related trust or custodial account under sections 401, 403(a), and 501(a) of the Code.

06 Favorable TEFRA Opinion Letter -- A "favorable TEFRA opinion letter" is a favorable opinion letter issued by the National Office after July 18, 1985, under Rev. Proc. 84-23, which considers the effect of the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), Pub. L. 97-248, 1982-2 C.B. 462, the Deficit Reduction Act of 1984, Pub. L. 98-369, 1984-3 (Vol. 1) C.B. 1, and the Retirement Equity Act of 1984, Pub. L. 98-397.

07 Sponsoring Organization -- A "sponsoring organization" is a bank (as defined in section 581 of the Code), an insured credit union within the meaning of section 101(6) of the Federal Credit Union Act, a person that has been approved by the Service in accordance with section 1.401-12(n) of the regulations, to act as a nonbank trustee, an insurance company, a regulated investment company (as defined in section 851 of the Code), an investment advisor that has an advisory contract with one or more regulated investment companies, or a principal underwriter that has a principal underwriting contract with one or more regulated investment companies. The term "sponsoring organization" also includes a trade or professional organization having characteristics similar to those described in section 1.501(c)6)-1 of the regulations which markets its plan only to its members in their capacity as adopting employers. (See sections 6.03 and 12 regarding the effect of adoption of a plan sponsored by a trade or professional organization by an employer that is not a bona fide member of such organization.)

08 Standardized Form Plan -- A "standardized form plan" is a mater or prototype plan which meets the following requirements:

1 The provisions governing eligibility and participation are such that the plan by its terms must cover all employees described in section 5.09 (regardless of whether any employer is treated as operating separate lines of business under section 414(r)) except those that may be excluded under sections 410(a)(1) or (b)(3) of the Code. For example, a plan providing full and immediate vesting may exclude employees who do not have at least two years of service. However, the adoption agreement may provide options as to whether some or all of the employees described in sections 410(a)(1) or (b)(3) are to be excluded.

2 The eligibility requirements under the plan are not more favorable for highly compensated employees (as defined in section 414(q) of the Code) than for other employees.

3 The vesting schedule in the plan provides vesting at a rate at least as favorable for every year as would be required by the schedules set forth in section 416(b)(1)(A) or (B) of the Code if the plan were top-heavy for every year after 1983.

4 Except for contributions made under a qualified cash or deferred arrangement, as defined in section 401(k) of the Code and the regulations (including proposed) thereunder, the contributions (including forfeitures) provided under the plan (if a defined contribution plan other than a target benefit plan) or the benefits (if a defined benefit plan or a target benefit plan that complies with Rev. Rul. 76-464, 1976-2 C.B. 115) are a uniform percentage of total compensation within the meaning of section 414(s) of the Code, excluding compensation in excess of the limitation under section 401(a)(17). A plan will not be treated as failing to meet this requirement merely because it involves integration with Social Security benefits or contributions provided (a) the form of the plan meets the permitted disparity limitations of section 401(1), or (b) the plan is a defined benefit plan with a final pay limitation that satisfies the requirements of section 401(a)(5)(D). Also, this section does not preclude a sponsoring organization from submitting a standardized defined benefit or target benefit plan which uses a unit benefit formula based on years of service. (See Section 8 of this revenue procedure for rules governing contributions made under a cash or deferred arrangement.)

09 Paired Plans -- "Paired plans" are either a combination of two or more defined contribution standardized form plans or a combination of one or more defined contribution standardized form plans and one defined benefit standardized form plan (for example, a money purchase pension plan, a profit-sharing plan and a unit benefit or flat benefit pension plan), so designed that if any single plan, or combination of plans, is adopted by an employer, each plan by itself, or the plans together, will meet the anti-discrimination rules set forth in section 401(a)(4) of the Code, the contribution and benefit limitations set forth in section 415 of the Code, and the top-heavy provisions set forth in section 416 of the Code. Paired plans must have the same sponsoring organization. In addition, only one of the paired plans that an employer adopts may provide for disparity in contributions or benefits that is permitted under section 401(1). If one of the paired plans is a defined benefit plan that includes a final pay limitation as described in section 401(a)(5)(D), then the paired defined contribution plan(s) may not provide for disparity in contributions.

10 Replacement Plan -- A "replacement plan" is a plan submitted by a sponsoring organization pursuant to this revenue procedure which restates or amends a prior plan (or plans) of that sponsoring organization for which a favorable TEFRA opinion letter has been issued. Except to the extent permitted under regulations sections 1.401(a)-4 and 1.411(d)-4, a replacement plan must preserve all section 411(d)(6) protected benefits which were provided under the replaced plan(s) (see section 5.03). The replacement plan must be the same type of plan as the plan(s) replaced (e.g., both plans are money purchase pension plans or both plans are profit-sharing plans). Thus, if a basic plan document with two profit-sharing plan adoption agreements is replaced by a basic plan document with one profit- sharing plan adoption agreement and one money purchase pension plan adoption agreement, only the profit-sharing adoption agreement may be considered as a replacement plan for both prior profit-sharing plans. In addition, the prior basic plan document can only be replaced by one amended or restated basic plan document, although each prior adoption agreement may be replaced by more than one amended, restated or additional adoption agreement. Thus, for example, a basic plan document with one profit-sharing adoption agreement could be replaced by one amended or restated basic plan document with one or more profit-sharing adoption agreements, but could not be replaced by two or more basic plan documents each with profit-sharing adoption agreements.

11 National Sponsoring Organization -- A national sponsoring organization is a sponsoring organization which has either (a) 30 or more adopting employers in each of 30 or more states (treating, for this purpose, the District of Columbia as a state) or (b) 3000 or more adopting employers. The determination as to whether there are 3000 or more adopting employers or 30 or more adopting employers in each of 30 or more states may be made on any one date during the 12 month period ending on the date 90 days after the effective date of this revenue procedure. For this purpose, an adopting employer is any employer that has adopted any M&P plan of the sponsoring organization which plan has a favorable TEFRA opinion letter.

SEC. 4. OVERVIEW OF THE REVENUE PROCEDURE

01 Except as described in this section or as required because of changes to plan qualification rules, this revenue procedure generally preserves the structure and requirements of the M&P opinion letter program as set forth in Rev. Proc. 84-23.

02 Reliance -- As under Rev. Proc. 84-23, whether an employer who adopts an M&P plan with a favorable opinion letter receives reliance on the opinion letter (i.e., automatic assurance that any disqualification of the plan on account of the form of the plan will ordinarily be non-retroactive) without the need to obtain a favorable determination letter depends on the form of the M&P plan the employer adopts.

1 An employer who adopts a standardized form defined contribution plan, or paired standardized form defined contribution plans, will not, except under certain circumstances, have to obtain a determination letter because the qualification of such plans does not depend on the particular facts and circumstances of the employer.

2 An employer who adopts a standardized form defined benefit plan, or paired standardized form defined benefit and defined contribution plans may rely on the opinion letter(s) issued to the sponsoring organization with respect to such plan(s) only if the employer's standardized (paired) defined benefit plan satisfies one of the safe-harbors provided in regulations under section 401(a)(26) with respect to its prior benefit structure or is deemed to satisfy section 401(a)(26) under such regulations. However, in connection with the initial adoption or amendment by an employer of a standardized (paired) defined benefit plan, such employer may request a determination letter if the employer wishes to have reliance as to whether its plan satisfies section 401(a)(26) with respect to its prior benefit structure.

3 In all other cases (i.e., the adoption of non- standardized form plans), the employer must obtain a favorable determination letter in order to have reliance.

03 Continued, Interim, and Extended Reliance --

1 This revenue procedure provides that an employer who adopts a master or prototype plan which received a favorable TEFRA opinion letter under Rev. Proc. 84-23 may continue to rely on such a letter provided the sponsoring organization submits to the Service a replacement plan which meets the requirements of this revenue procedure by October 31, 1989, and the employer adopts the approved replacement plan by the later of the last day of the twelfth month beginning after a favorable opinion letter is issued under this procedure, or the end of the remedial amendment period under section 401(b) of the Code and the regulations thereunder. To be entitled to this reliance, certain other conditions must be satisfied, including, for example, the condition that a plan must comply operationally, as of the applicable effective dates, with those requirements of TRA '86 that are effective before 1989. This reliance is not provided in the case of a plan which did not receive a favorable opinion letter under Rev. Proc. 84-23.

2 This revenue procedure also provides a period of extended reliance in the case of any M&P plan (including a new plan) which is submitted in accordance with the requirements of this procedure by October 31, 1989 and is subsequently approved by the Service. An employer who adopts such a plan and is otherwise entitled to reliance under this revenue procedure or under Rev. Proc. 80-30 may rely on the favorable opinion letter issued under this procedure (or on a determination letter, if required) until the earlier of the date established for plan amendment by subsequent legislation or the last day of the last plan year beginning before January 1, 1995.

04 Mass Submitter Program --

1 Under this revenue procedure, the mass submitter program is established as a permanent program to provide expedited review of plans submitted in accordance with the requirements of section 18 of this revenue procedure. Under this revenue procedure, an entity must submit, along with its initial submission of the mass submitter plan, applications for at least 10 sponsoring organizations that will sponsor a plan which is word-for-word identical to the mass submitter's plan, as approved by the Service. Once the mass submitter submits applications for at least 10 identical adopters, it may submit additional applications for sponsoring organizations that will sponsor the mass submitter's plan with minor modifications, as provided in section 18.032.

2 Under this revenue procedure, the Service will issue opinion letters to mass submitters with respect to flexible plans. A "flexible plan" is a mass submitter plan which contains certain optional provisions which an adopting sponsoring organization may choose to include in or delete from the plan it makes available to adopting employers. (See section 18.031(b) for a list of the types of optional provisions which may be included in a flexible plan.) A sponsoring organization's adoption of a plan which differs from the mass submitter's flexible plan only because the sponsoring organization has deleted certain optional provisions will be deemed to be an adoption of a plan that is word-for-word identical to the mass submitter's plan. If the sponsoring organization's plan differs in any other way from the mass submitter's plan, such difference(s) must constitute a minor modification under section 18.032 or the sponsoring organization's plan will not receive expedited review.

3 If a mass submitter wishes to amend its plan, it must notify the Service of its intent to amend the plan. The Service will then send a list to the mass submitter showing all sponsoring organizations that have adopted the mass submitter's plan prior to its amendment. The mass submitter must then identify each of the sponsoring organizations that are adopting the amended plan. Those sponsoring organizations that wish to adopt the amended plan and are identified by the mass submitter will, for purposes of issuing new opinion letters, automatically be deemed to have made such amendments while those not so identified will no longer be considered to have adopted a plan that is identical to or a minor modification of a mass submitter's plan. (But see section 18.031(c) for the procedures relating to the addition of certain optional provisions to a mass submitter's approved flexible plan.)

4 Within 30 days after the effective date of this revenue procedure, the Service will mail to each entity which was approved as a mass submitter under Rev. Proc. 84-23 a list of those sponsoring organizations that have previously adopted plans that are word-for-word identical to the mass submitter's plans along with such plans' file folder numbers. Mass submitters should use these lists, in accordance with the instructions provided with such lists, in applying for opinion letters under this procedure with respect to those sponsoring organizations' plans.

5 In order to reduce the paperwork burdens on mass submitters and sponsoring organizations which use mass submitter plans, the Service has designed a simplified application form, Form 4461-B, to be used to request applications on behalf of sponsoring organizations which are adopting plans that are identical to or minor modifications of mass submitter plans. This form should be used in those circumstances where the aforementioned list may not be used (e.g., in the case of new sponsoring organizations, new plans or minor modifier plans). Form 4461-B will be processed using optical scanning equipment and must therefore be prepared as described in this revenue procedure (see section 18.02).

05 Multiple Plans --

1 A sponsoring organization may utilize one basic plan document with respect to several plans. For example, a sponsoring organization may submit four plans with respect to a given defined benefit basic plan document (an integrated standardized form plan, a non-integrated standardized form plan, a non-integrated non-standardized form plan, and an integrated non-standardized form plan). A sponsoring organization may also use one defined contribution basic plan document for a money purchase plan, a tangent benefit plan, and a profit-sharing plan. One basic plan document may not be used with respect to both defined benefit and defined contribution plans. A separate adoption agreement and completed application form must be submitted with respect to each defined benefit plan and each defined contribution plan. In the case of a simultaneous submission of plans using the same basic plan document, only one copy of the basic plan document need be provided. If the requests are not simultaneous, the sponsoring organization must submit a copy of the basic plan document with each submission and include a cover letter identifying the original submission. The number of such basic plan document must remain the same as in the prior submission.

2 Paired plans (as defined in section 3.09) must be submitted simultaneously. Paired plans are paired by the basic plan documents. Two defined contribution plans that are paired (for example, a profit-sharing plan and a money purchase plan) must share one basic plan document.

3 Under Rev. Proc. 84-23, a sponsor was limited to one set of paired plans. This revenue procedure eliminates the limitation on the number of sets of paired plans which a sponsor may adopt. However, each set may include no more than two basic plan documents as provided above. In addition, this revenue procedure provides that only one of the paired plans which an employer adopts may provide for disparity in contributions or benefits that is permitted under section 401(1).

06 Special Provisions Required in Master and Prototype Plans -

1 Because of the nature of the M&P program, this revenue procedure requires that special provisions be included in every master or prototype plan. Section 5 includes some of these requirements. Thus, for example, M&P plans must contain language permitting the sponsor to amend the plan. Furthermore, provisions must be included to ensure compliance with section 411(a)(10) and (d)(6) of the Code, such as in the event an adopting employer amends the plan by revising the options selected in the adoption agreement. The plan language is required in order that the employer's plan may remain in the M&P program and still satisfy the requirements of sections 411(a)(10) and (d)(6).

2 This revenue procedure requires every master or prototype plan to include in the adoption agreement the address and telephone number of the sponsoring organization or the sponsoring organization's authorized representative. The purpose of this requirement is to ensure that the sponsoring organization is available to answer employer inquiries regarding plan provisions, adoption of the plan, and the effect of an opinion letter. This requirement does not oblige a sponsoring organization to provide legal advice or administrative services to adopting employers.

3 Under this revenue procedure, the Service will not issue an opinion letter with respect to any plan (other than a plan which includes a qualified cash or deferred arrangement (CODA) under section 401(k) of the Code or a master plan (i.e., a plan with a single master trust for all adopting employers) that designates the sponsoring organization as plan administrator) that provides for contributions which are subject to the special non-discrimination requirements of section 401(m).

4 Master and prototype plans may be adopted by an employer that has other plans covering the same employees. Such plans must be aggregated for purposes of section 415 of the Code. Aggregation may also be required under section 416 of the Code. It is impossible for sponsors of M&P plans to include form language that properly aggregates such M&P plan with any other plan of an adopting employer. Therefore, provision is made to enable adopting employers to add additional language to an M&P plan.

07 Special Requirements for Plans That Include a Cash or Deferred Arrangement -- Under Rev. Proc. 84-23, the National Office did not issue opinion letters with respect to plans containing a cash or deferred arrangement (CODA) as described in section 401(k) of the Code. Rev. Proc. 87-18, 1987-1 C.B. 709, modified Rev. Proc. 84-23 to provide for the issuance of opinion letters with respect to plans which are drafted or amended to contain CODAs. This revenue procedure supersedes Rev. Proc. 87-18 and provides that in order to receive a favorable opinion letter, a master or prototype plan which includes a CODA must comply with the special requirements set forth in section 8.

08 Submission Period for Master and Prototype Applications -- Generally, no applications for approval of master or prototype plans may be submitted prior to the expiration of 150 days after the effective date of this revenue procedure. However, mass submitters (as defined in section 18.01) and national sponsoring organizations (as defined in section 3.11) may submit applications at any time after the expiration of 60 days after the effective date of this revenue procedure.

SEC. 5. PROVISIONS REQUIRED IN EVERY MASTER OR PROTOTYPE PLAN

01 Sponsor Amendments -- Master or prototype plans must provide a procedure for sponsor amendment, so that changes in the Code, regulations, revenue rulings, other statements published by the Internal Revenue Service, or corrections of prior approved plans may be applied to all employers who have adopted the plan.

02 Employer Amendments -- An employer that amends any provision of an approved master or prototype plan including its adoption agreement (other than to change the choice of options, if the plan permits or contemplates such a change) or an employer that chooses to discontinue participation in a plan as amended by its sponsoring organization and does not substitute another approved master or prototype plan is considered to have adopted an individually designed plan. However, this rule does not apply in the case of amendments permitted under section 5.04, and certain model amendments published by the Service, which specifically provide that their adoption by an adopter of an M&P plan will not cause such plan to be treated as individually designed. An employer that amends a master or prototype plan because of a waiver of the minimum funding requirement under section 412(d) of the Code will also be considered to have an individually designed plan. The procedures stated in Rev. Proc. 80-30 relating to the issuance of determination letters for individually designed plans, will then apply to the plan as adopted by the employer.

03 Anti-Cutback Provisions -- Master and prototype plans must specifically provide for the protection provided under section 411(a)(10) and (d)(6) of the Code in the event that the employer amends the plan in any manner such as by revising the options selected in the adoption agreement or by adopting a new master or prototype plan. An M&P sponsor may not amend its plan in a manner that could result in the elimination of a benefit protected under section 411(d)(6) with respect to the plan of any adopting employer, unless permitted to do so under regulation sections 1.401(a)-4 and 1.411(d)-4. In addition, a master or prototype plan that does not contain vesting for all years which is at least as favorable to participants as that provided in section 416(b) of the Code, must specifically provide that any vesting which occurs while the plan is top-heavy will not be cut back if the plan ceases to be top-heavy.

04 Adopting Employer Modification to Satisfy Sections 415 and 416 -- Master or prototype plans must provide that the plan provisions may be amended by overriding plan language completed by the employer in the adoption agreement where such language is necessary to satisfy section 415 or 416 of the Code because of the required aggregation of multiple plans under these sections. In the event of such an amendment the adopting employer must obtain a determination letter in order to continue reliance on the plan's qualified status. Generally, a space should be provided in the adoption agreement with instructions for the employer to add such language as necessary to satisfy sections 415 and 416. In addition, a space must be provided in the adoption agreement for the employer to specify the interest rate and mortality tables used for purposes of establishing the present value of accrued benefits in order to compute the top heavy ratio under section 416. Such a space must be included in both defined contribution plans and defined benefit plans.

05 Defined Contribution Section 415 Aggregation -- Plan language must be incorporated that aggregates all defined contribution master and prototype plans to satisfy section 415(c) and (f) of the Code. Sample language provided in the Employee Plans Technical & Actuarial Division's Listing of Required Modifications may be obtained by writing to the Internal Revenue Service, Employee Plans Technical & Actuarial Division, Washington, D.C. 20224, Attention E:EP:Q.

06 Top-heavy Requirements -- Except to the extent described in section 7.03, relating to paired plans, each plan must either provide that all the additional requirements applicable to top-heavy plans (described in section 416 of the Code) apply at all times or provide that such requirements apply automatically if the plan is top-heavy regardless of how the adoption agreement is completed. In any case where the latter option is chosen, all the requirements for determining whether the plan is top-heavy must be included in the plan. (See Questions T-35 and T-36 of regulation section 1.416-1.)

07 Additional Top-Heavy Minimums to Satisfy Section 415(e) -- Each plan must provide automatically or by optional provisions the additional minimums described in section 416(h)(2)(A) of the Code.

08 Provisions Required in Adoption Agreements -- In order to avoid unnecessary confusion as to the scope of an opinion letter, sponsoring organizations must include in the adoption agreement of all master or prototype plans (other than standardized form and paired plans), in close proximity to the signature blank, a statement that adopting employers may not rely on an opinion letter issued by the National Office with respect to the qualification of that plan and should apply to the appropriate key district for a determination letter in order to obtain reliance. Standardized form and paired plans must also include a similar statement in the adoption agreement that the adopting employer may not rely on the opinion letter issued by the National Office and should apply for a determination letter if the employer maintains or later adopts another plan in addition to the standardized form plan or paired plans. In the case of a standardized defined benefit plan, this statement must also advise the adopting employer that the opinion letter may be relied on with respect to whether the plan meets the minimum participation requirements of section 401(a)(26) of the Code only if the plan satisfies one of the safe-harbors provided in regulations under section 401(a)(26) with respect to its prior benefit structure or is deemed to satisfy section 401(a)(26) under such regulations. However, in connection with the initial adoption or amendment by an employer of a standardized (paired) defined benefit plan, such employer may request a determination letter if the employer wishes to have reliance as to whether its plan satisfies section 401(a)(26) with respect to its prior benefit structure. For this purpose, a plan that is properly replaced by the adoption of a standardized form plan is not considered another plan. The adoption agreement must state that it is to be used with one and only one specific basic plan document. In addition, the adoption agreement must contain a cautionary statement to the effect that the failure to properly fill out the adoption agreement may result in disqualification of the plan. The adoption agreement must also contain a statement which provides that the sponsoring organization will inform the adopting employer of any amendments made to the plan or of the discontinuance or abandonment of the plan.

09 Definition of Employee / Sections 414(b), (c), (m), (n) and (o) -- Each master or prototype plan must include a definition of employee as any employee of the employer maintaining the plan or any other employer aggregated under section 414(b), (c), (m) or (o) of the Code and the regulations thereunder. The definition of employee shall also include any individual deemed under section 414(n) (or under regulations under section 414(o)) to be an employee of any employer described in the previous sentence.

10 Definition of Service / Sections 414(b), (c), (m), (n), and (o) -- Each master or prototype plan must specifically credit all service with any employer aggregated under section 414(b), (c), (m) or (o) of the Code and the regulations thereunder as service with the employer maintaining the plan. In addition, in the case of an individual deemed under section 414(n) (or under regulations under section 414(o)) to be the employee of any employer described in the previous sentence, service with such employer must be credited to such individual.

11 Other requirements -- In addition to the requirements listed in section 10.07 and any other substantive requirements, master or prototype plans must comply with the requirements of all revenue rulings, notices, legislation, and regulations including:

1 Final regulations under the Retirement Equity Act of 1984 (REA);

2 Final regulations under sections 401(a)(4) and 411(d)(6) of the Code on limitations on availability of benefits;

3 If the plan includes a cash or deferred arrangement, final regulations under section 401(k) of the Code;

4 If the plan is an integrated defined benefit plan, Rev. Rul. 86-74, 1986-1 C.B. 205 (modifications to guidelines for social security integration under Rev. Rul. 71-446) with respect to plan years beginning after the relevant effective date specified in section 6 of the revenue ruling and before January 1, 1989.

12 Sponsoring Organization Telephone Numbers -- Master or prototype plan adoption agreements must include the sponsoring organization's address and telephone number (or a space for the address and telephone number of the sponsoring organization's authorized representative) for inquiries by adopting employers regarding the adoption of the pan, the sponsoring organization's intended meaning of any plan provisions, or the effect of the opinion letter.

SEC. 6. STANDARDIZED FORM PLANS

01 Reliance -- An employer adopting a standardized form plan or paired plans may rely on its opinion letter, except as provided in subsections 02, 03, and 04, below, if the provisions of section 15.011 of Rev. Proc. 80-30, as modified by section 19.03 of this revenue procedure, are satisfied.

02 Non-Reliance by Employer Maintaining More than One Plan -- Except in the case of a combination of paired plans, an employer may not rely on opinion letters for standardized form plans, without obtaining a determination letter, if the employer maintains at any time, or has maintained at any time, another plan, including a standardized form plan, that was qualified or determined to be qualified covering some of the same participants. For this purpose, a plan that has been properly replaced by the adoption of a standardized form plan is not considered another plan. The plan that has been replaced and the standardized form plan must be of the same type (e.g., both money purchase pension plans) in order for the employer to be able to rely on the standardized form plan without obtaining a determination letter.

03 Reliance by employer Adopting a Standardized Defined Benefit plan -- An employer that has adopted a standardized defined benefit master or prototype plan may rely on an opinion letter only if the plan satisfies one of the safe-harbors provided in regulations under section 401(a)(26) with respect to its prior benefit structure or is deemed to satisfy section 401(a)(26) under such regulations. However, in connection with the initial adoption or amendment by an employer of a standardized (paired) defined benefit plan, such employer may request a determination letter if the employer wishes to have reliance as to whether the plan satisfies section 401(a)(26) with respect to its prior benefit structure.

04 Reliance by Employers Adopting Standardized Plans Sponsored by Trade or Professional Organizations -- A standardized form plan sponsored by a trade or professional organization which is adopted by an employer that is not a bona fide member of such organization will be considered an individually designed plan and the procedures in Rev. Proc. 80-30 regarding the issuance of determination letters for individually designed plans will apply to the employer's plan.

05 Sharing Basic Plan Document By Standardized and Non- Standardized Plans -- A sponsoring organization may establish a basic plan document that applies to both a standardized form plan and a non-standardized form plan. Such plans may differ only by the different adoption agreements. For example, the adoption agreement for the plan that is a non-standardized form plan may have additional coverage options.

SEC. 7. SPECIAL REQUIREMENTS FOR PAIRED PLANS

01 Limits of Section 415(e) Must Be Provided in Defined Benefit Plan Only -- The benefits under a defined benefit plan in a combination of paired plans must be limited by the requirements of section 415(e) of the Code relating to the aggregation of defined benefit and defined contribution plans. Adjustments to satisfy the requirements of section 415(e) may only be provided in the defined benefit plan with respect to benefits thereunder.

02 Section 416(h) Adjustment to Section 415(e) Limits -- Paired plans that include a defined benefit plan must compute the denominators of defined benefit and defined contribution fractions in a manner satisfying section 416(h)(1) of the Code unless the requirements of section 416(h)(2) are satisfied. Paired plans providing the unreduced section 415(e) limits must provide, regardless of how the adoption agreement is completed, the additional top-heavy minimums described in section 416(h)(2)(A) and provide that the unreduced section 415(e) limits will not apply if the plan is super top-heavy as described in question T-33 of section 1.416-1 of the Income Tax Regulations. In testing for super top-heavy, all the requirements of questions T-35 and T-36 of section 1.416-1 of the regulations must be included in the plan.

03 Coordination of Minimum Benefits and Contributions Under Top- Heavy Plans -- Paired plans, subject to the limits of section 415 of the Code, may provide duplication of the minimum benefits and contributions in each of the plans being paired. The paired plans (when they become top-heavy) may, however, provide minimum contributions and benefits that are not duplicative. In that case, only two methods may be used:

1 The defined benefit plan must provide the 2% (3% if the unreduced section 415(e) limit is used) defined benefit minimum for all its participants. The defined contribution plan must provide the defined contribution minimum for participants in the defined contribution plan who are not participants in the paired defined benefit plan, or

2 The defined contribution plan must provide a contribution not less than 5% (7-1/2% if the unreduced section 415(e) limit is used) with respect to any participant who is a participant in a paired defined benefit plan and a contribution not less than 3% (4% if the unreduced section 415(e) limit is used) for any participant who is not a participant in the paired defined benefit plan. The defined benefit plan must provide the 2% minimum (3% if the unreduced section 415(e) limit is used) with respect to any participant who is not in the defined contribution plan or who does not receive the entire defined contribution allocation.

04 Pairing Provisions Must be in the Basic Plan Document -- In the case of paired plans, all provisions necessary to coordinate the plans (other than the reliance statement required under section 5.08 of this revenue procedure) must be set forth in the basic plan document and not in the adoption agreement.

05 Paired Plans Limited to Two Different Basic Plan Documents -- While the sponsoring organization is not limited in the number of sets of paired plans it may adopt, each set must be limited to two different basic plan documents: one for defined benefit plans and one for defined contribution plans. The pairing of defined contribution plans requires only one basic plan document such as a profit-sharing plan and a money purchase plan containing the identical basic plan document and two different adoption agreements. A sponsoring organization may provide a pairing of defined benefit and defined contribution plans in such a manner that with two different basic plan documents and three adoption agreements, an adopting employer may adopt a profit-sharing plan, a money purchase plan, and a defined benefit plan.

SEC. 8. SPECIAL REQUIREMENTS FOR PLANS THAT INCLUDE A CASH OR DEFERRED ARRANGEMENT

01 Required Provisions -- In order to receive a favorable opinion letter, a master or prototype plan which includes a cash or deferred arrangement (CODA) must be a profit-sharing plan or a rural electric cooperative plan, as defined in section 401(k)(7) of the Internal Revenue Code, and must include provisions which comply with the following list:

1 The CODA must include a mechanism whereby an eligible employee may make a cash or deferred election with respect to employer contributions, within the meaning of section 401(k).

2 The minimum number of years of service required for participation in the cash or deferred arrangement cannot exceed 1.

3 Separate accounts must be maintained for each participant's

(a) elective deferrals, as described in section 402(g)(3)(A) of the Code;

(b) qualified nonelective contributions, as described in section 401(m)(4)(C), and qualified matching contributions used to satisfy the test provided in section 401(k)(3);

(c) employee contributions; and

(d) matching contributions, as described in section 401(m)(4)(A) of the Code, that are not used to satisfy the test provided in section 401(k)(3).

4 Elective deferrals, employee contributions, qualified nonelective contributions, and qualified matching contributions must be nonforfeitable at all times.

5 Amounts attributable to elective deferrals (other than excess deferrals or excess contributions), qualified non- elective contributions, and qualified matching contributions used to satisfy the test provided in section 401(k)(3), may not be withdrawn prior to the occurrence of one of the events specified in section 401(k)(2)(B).

6 If the plan provides for hardship distributions, then for plan years beginning after December 31, 1988, amounts attributable to qualified nonelective contributions and qualified matching contributions may not be distributed merely on account of hardship. Also, income allocated to elective deferrals after December 31, 1988 may not be distributed on account of hardship.

7 If the plan provides for hardship distributions of amounts attributable to elective deferrals, then, for the purpose of determining the existence of an immediate and heavy financial need and the amount necessary to meet that need, the plan must adopt the safe-harbor standards set forth in sections 1.401(k)-1(d)(2)(ii)(B) and (iii)(B) of the regulations.

8 The CODA provisions may not be integrated with social security.

9 Elective deferrals under the plan may not exceed $7000 (or such greater amount as subsequently determined in accordance with increases provided under section 415(d)) for any taxable year.

10 A mechanism must be provided by which a participant may notify the plan administrator of an allocation of excess elective deferrals, and upon which notice such excess elective deferrals, and the applicable earnings, will be distributed to the participant by April 15 of the year following the taxable year of deferral.

11 The Actual Deferral Percentage (ADP) test set forth in section 401(k)(3) of the Code must be contained in the plan.

12 Definitions of highly compensated employee and family member, as described in section 414(q) of the Code, and compensation as described in section 414(s), must be contained in the plan.

13 The method or methods by which the plan may correct contributions in excess of those allowed under the ADP test must be described in the plan. The plan must provide that the employer will maintain records to demonstrate compliance with the nondiscrimination requirements of 401(k), including the extent to which qualified nonelective contributions and qualified matching contributions are taken into account.

14 An explanation of the 10% excise tax imposed by section 4979 of the Code upon employers that have not distributed (within 2 1/2 months following the end of the plan year) or recharacterized contributions in excess of the amount allowed by the ADP test must be contained in the plan.

15 A mechanism must be provided to assure the proper ordering of tests as describe in section 401(m)(6)(D) of the Code.

16 Provisions to satisfy the top-heavy requirements as set forth in section 416 must be contained in the plan. For plan years beginning on or after January 1, 1989, plans may not include elective deferrals or matching contributions as employer contributions for the purpose of satisfying the minimum contribution requirements.

17 The plan must provide that if contributions subject to section 401(m) are made pursuant to the plan containing the CODA or any other plan maintained by the same employer, such employer must designate the method of correction to be used and the plan to be corrected if a multiple use of the alternative limitation (within the meaning of section 401(m)(9) of the Code) occurs.

02 Optional Provisions -- Master or prototype plans that include CODA provisions may also include some or all of the following items:

1 Matching employer contributions or employee contributions. If such contributions are made, the plan must contain the Actual Contribution Percentage (ACP) non- discrimination test set forth in section 401(m)(2) of the Code, and must describe the method or methods by which the plan will correct contributions made in excess of the section 401(m)(2) limits. The plan must provide that the employer will maintain records to demonstrate compliance with the nondiscrimination requirements under section 401(m), including the extent to which qualified nonelective contributions and elective contributions are taken into account. The plan must also contain an explanation of the 10% excise tax imposed by section 4979 of the Code upon employers that have not corrected contributions in excess of the amount allowed by the ACP test within 2 1/2 months following the end of the plan year;

2 qualified nonelective contributions (QNECs);

3 recharacterization of elective contributions in excess of the ADP test as voluntary employee contributions subject to section 401(m);

4 employer contributions, including elective deferrals, to be made regardless of profits;

5 use of QNECs to satisfy the ADP test;

6 use of qualified matching contributions to satisfy the test set forth in section 401(k); and

7 distributions on account of participant hardship (but see sections 8.016 and 8.017).

03 Additional Requirements for Standardized Form Plans --

1 A standardized form plan that includes a CODA must, in addition to satisfying the requirements listed in section .02 above, provide a minimum qualified nonelective contribution of 3% of compensation.

2 The requirement that contributions be a uniform percentage of each participant's compensation does not apply to elective deferrals, QNECs or matching contributions (if any) under the CODA. However, all other requirements of sections 3.08 and 6 of this revenue procedure apply to a standardized form plan that contains a CODA.

SEC. 9. OPINION LETTERS -- SCOPE

01 Issuance Only to Appropriate Sponsors -- Opinion letters will be issued only to sponsoring organizations or mass submitters (as provided in section 18.01) and do not constitute rulings or determinations as to either the qualification of the plans as adopted by particular employers, or, in the case of prototype plans, the exempt status of related trusts or custodial accounts.

02 Nonapplicability of the Procedure to IRAs and SEPs -- Opinion letters will not be issued under this revenue procedure for prototype plans intended to meet the requirements for individual savings programs or simplified employee pension programs under section 408 of the Code (see Rev. Proc. 87-50, 1987-2 C.B. 647).

03 Areas Not Covered by Opinion Letters -- Opinion letters will not be issued for:

1 Any plan under which the rules of section 401(a), 410 or 411 were applied by treating the employees of more than one employer as employed by a single employer, and any plan which has been negotiated pursuant to a collective bargaining agreement and submitted to the Service as a plan maintained pursuant to a collective bargaining agreement. For this purpose, the term "one employer" includes all employers aggregated under section 414(b), (c), (m) or (o). This does not preclude a master or prototype plan, by its terms, from covering employees of the employer who are included in a unit covered by a collectively bargained agreement or the adoption of a master or prototype plan pursuant to such agreement as a single employer plan which covers only employees of the employer. However, the Service will not issue an opinion letter with respect to an M&P plan if any provision therein would cause a plan that is not described in section 413(b) of the Code to fail to be qualified. Furthermore, an opinion letter may not be relied on with respect to whether a plan satisfies any requirement that is applicable to a plan described in section 413(b) but inapplicable to other plans;

2 Stock bonus plans;

3 Bond purchase plans;

4 Employee stock ownership plans (see Rev. Proc. 75-48, 1975-2 C.B. 583);

5 Pooled fund arrangements contemplated by Rev. Rul. 81-100, 1981-1 C.B. 326;

6 Annuity contracts under section 403(b) of the Code;

7 Uniform plans (see Rev. Proc. 84-86, 1984-2 C.B. 787);

8 Defined contribution plans (except for target benefit plans) under which the test for prohibited discrimination under section 401(a)(4) of the Code is made by reference to benefits rather than contributions;

9 Plans that involve integration with Social Security benefits or contributions other than plans that, in form, meet the permitted disparity limitations of section 401(l) or that satisfy the requirements of section 401(a)(5)(D).

10 Plans described in section 414(k) of the Code (relating to a defined benefit plan which provides a benefit derived from employer contributions which is based partly on the balance of the separate account of a participant);

11 Defined contribution plans (other than any CODA portion of such a plan) that allocate contributions or forfeitures to the account of any participant in any manner other than on the basis of total compensation within the meaning of section 414(s);

12 Target benefit and defined benefit plans that provide benefits on the basis of compensation where compensation is not defined as total compensation within the meaning of section 414(s);

13 Governmental plans described in section 414(d) of the Code;

14 Church plans described in section 414(e) of the Code that have not made the election provided by section 410(d);

15 Plans, other than master plane (i.e., plans with a single master trust for all adopting employers) that designate the M&P sponsoring organization as plan administrator and plans which include a qualified CODA under section 401(k) of the Code, which permit contributions which are subject to the special nondiscrimination requirements of section 401(m). However, this does not prohibit mandatory employee contributions in a defined benefit plan. In the case of a plan which includes a qualified CODA, such plan may provide for after-tax employee contributions and matching contributions in addition to elective deferrals.

16 Plans which contain or may contain a multi-tiered benefit structure (other than an integrated benefit formula). Thus, a plan may not provide different benefit formulas for different employees, such as two percent of compensation for salaried employees and one percent for hourly employees.

17 Any plan under which the section 415 limitations are incorporated by reference.

18 Any plan under which the ADP test under section 401(k)(3) or the ACP test under section 401(m)(2) is incorporated by reference. However, a plan which prohibits contributions subject to the requirements of section 401(m) pursuant to subsection .0315, but which allowed such contributions in a plan year to which section 401(m) applies, may incorporate the section 401(m)(2) test by reference for such prior year's contributions.

04 Nontransferability of Opinion Letters -- An opinion letter issued to a sponsoring organization is not transferable to any other entity. For this purpose, a change of employer identification number is deemed to be a change of entity.

SECTION 10. OPINION LETTERS -- INSTRUCTIONS TO SPONSORING ORGANIZATIONS

01 National Office Issues Opinion Letters -- The National Office will, upon the request of a sponsoring organization, issue an opinion letter as to the acceptability under section 401 of the Code of the form of a master or prototype plan and any related trust or custodial account.

02 Forms and Address for Requesting Opinion Letters -- A request for an opinion letter relating to a master or prototype plan must be submitted on the current version of Form 4461, Application for Approval of Master or Prototype Defined Contribution Plan, Form 4461- A, Application for Approval of Master or Prototype Defined Benefit Plan, or Form 4461-B, Application for Approval of Master or Prototype Plan Mass Submitter Adopting Sponsor, as appropriate. All information on the first page of the application must be typed and no photocopies of the first page will be accepted. The request is to be sent to the Internal Revenue Service, Assistant Commissioner (Employee Plans and Exempt Organizations), Attention: E:EP:Q, P.O. Box 14073, Ben Franklin Station, Washington, D.C. 20044. The Service reserves the right to review applications in any order which will expedite the processing of such opinion letter applications. To expedite the review of substantially identical plans which are not described in section 18, relating to mass submitter plans, the Service encourages plan drafters and sponsoring organizations to include in each opinion letter application where it is appropriate a covering letter setting forth the following information:

1 The name and file folder number (if available) of the plan which, for review purposes, the plan drafter designates as the "lead plan" (including the name and EIN of the sponsoring organization);

2 A list of all plans written by the plan drafter which are substantially identical to the lead plan (including the information described in paragraph 1);

3 A description of each place where the plan for which the application is being submitted is not word-for-word identical to the language of the lead plan, including an explanation of the purpose and effect of each such difference;

4 A certification, made under penalty of perjury by the plan drafter, that the information described in paragraph 3 is true and complete. If the sponsoring organization or plan drafter is aware that a lead plan or any substantially identical plan has been assigned for review to a specific tax law specialist, the covering letter should also indicate the name of the tax law specialist. To the extent feasible, lead plans and substantially identical plans should be submitted together. The Service will regard the information and certification described in paragraphs 3 and 4 above as a material representation for purposes of issuing an opinion letter.

03 Replacement of plans -- If the plan is intended to be a replacement plan, as defined in section 3.10 of this revenue procedure, the sponsoring organization must identify the replaced plan(s) by the file folder number(s). After October 31, 1989, the Service will issue a list of all replacement plans which have been submitted on or before such date (see section 13.042). A sponsoring organization will then have 60 days from the date such list is published to identify any replacement plan which was properly submitted but which does not appear on the list. Failure to identify a proper replacement plan within the 60 day period will preclude the sponsoring organization from later claiming that the TEFRA approved plan was in fact properly replaced.

04 Separate Applications Required for Different Categories of Master or Prototype Plans -- An application for a master or prototype plan shall not contain any combination of profit-sharing, money purchase (other than target benefit), target benefit, non-integrated defined benefit, or integrated defined benefit plan features. However, separate defined contribution plans may have the same basic plan document but the provisions of such basic plan document must be identical for both plans (i.e. no elective or optional features).

05 Sample Language -- A Listing of Required Modifications (LRM) containing sample language to be used in drafting master or prototype plans is available from the Employee Plans Technical & Actuarial Division of the Internal Revenue Service. Such language is not automatically required in master or prototype plans but should be used as a guide in drafting such plans. An LRM may be obtained by writing to the Internal Revenue Service, Employee Plans Technical & Actuarial Division, Washington, D.C. 20224, Attention E:EP:Q. To expedite the review of their plans, sponsoring organizations are encouraged to use LRM language and to identify where such language is being used in their plan documents.

06 Additional Information May Be Requested -- The Service may, at its discretion, require any additional information that it deems necessary. If a letter, requesting changes to plan documents, is sent to the plan's sponsoring organization or authorized representative, the changes must be received no later than 30 days from the date of the letter. If the changes are not received within 30 days, the application may be considered withdrawn. A extension of the 30 day time limit will only be granted for good cause. Any request for an extension is to be made in writing prior to the expiration of the 30 day period and must be approved by the Chief of the Qualifications Branch, Employee Plans Technical & Actuarial Division.

07 Inadequate Submissions -- The Service will return, without further action plans which are not in substantial compliance with the qualification requirements or plans that are so deficient that they cannot be reviewed in a reasonable amount of time. A plan may be considered not to be in substantial compliance if, for example, it omits any of the requirements set forth below, or merely incorporates these requirements by reference to the applicable Code section. The Service will not consider these plans until after they are revised, and they will be treated as new requests as of the date they are resubmitted. No additional user fee will be charged under Rev. Proc. 89-4 if an inadequate submission is amended to be in substantial compliance and is resubmitted to the Service within 30 days following the date the sponsor is notified of such inadequacy. The following are some examples of qualification requirements, the omission of which may cause a plan to be regarded as not being in substantial compliance:

1 Section 401(a)(9) of the Code, as amended by section 1121 of TRA '86, relating to required distributions from qualified plans (see section 1.401(a)(9)-1 and 2 of the proposed regulations);

2 Section 401(a)(11) of the Code, as amended by section 1898 of TRA '86, end section 417 of the Code, as amended by sections 1139 and 1898 of TRA '86, and the regulations thereunder, relating to minimum survivor annuity requirements;

3 Section 415 of the Code, as amended by sections 1106, 1108, 1114, 1852, 1875, and 1898 of TRA '86, relating to contribution and benefit limits for qualified plans (see Notice 87-21, 1987-1 C.B. 458);

4 Section 416 of the Code, as amended by sections 1106, 1118, and 1852 of TRA '86, containing special rules for top- heavy plans;

5 If the plan provides for disparity in contributions or benefits, section 401(1) of the Code, as amended by section 1111 of TRA '86, relating to nondiscriminatory coordination with Social Security benefits (see sections 1.401(1)-1 through 1.401(1)-4 of the proposed regulations);

6 Section 414(m) of the Code, as amended by section 1114 of TRA '86, relating to employees of affiliated service groups;

7 Section 414(n) of the Code, as amended by sections 1146 and 1151 of TRA '86, relating to leased employees;

8 Section 414(o) of the Code, as added by section 1146 of TRA '86, and the regulations thereunder;

9 Sections 401(c) and (d) of the Code, unless the plan precludes participation by self-employed individuals;

10 Section 411(a)(2) of the Code, as amended by section 1113 of TRA '86, and the temporary regulations thereunder, relating to vesting of employer contributions;

11 If the plan contains a cash or deferred arrangement, section 401(k) of the Code, as amended by sections 1116 and 1879(g) of TRA '86, and the regulations thereunder (see section 1.401(k)-1 of the final and proposed regulations);

12 If the plan permits, or permitted in any plan year beginning after 1986, employee or matching contributions (other than mandatory contributions under a defined benefit plan), section 401(m) of the Code, as added by section 1117(a) of TRA '86, relating to the nondiscrimination test for employee and matching contributions (see section 1.401(m)-1 and 2 of the proposed regulations, and also see section 9.0315 of this revenue procedure for rules as to which plans may permit such contributions);

13 Section 410(a) of the Code, as amended by section 1113 of TRA '86 and section 9203 of OBRA '86, relating to minimum participation standards (see section 1.410(a)-4A of the proposed regulations);

14 Sections 411(b)(1)(H) and 411(b)(2) of the Code, as added by section 9202 of OBRA '86, relating to accruals and allocations after a specified age (see section 1.411(b)-2 of the proposed regulations);

15 If the Plan is a contributory defined benefit plan, section 411(c)(2) of the Code, as amended by section 9346(b) of OBRA '87, relating to an employee's accrued benefit derived from employee contributions;

16 Section 401(a)(17) of the Code, as added by section 1106 of TRA '86, relating to the limitation on annual compensation that may be taken into account; and

17 Section 401(a)(26) of the Code, as added by section 1112 of TRA '86, relating to additional participation requirements (see the proposed regulations under section 401(a)(26)).

08 Material Furnished to Adopting Employers -- A sponsoring organization must furnish each adopting employer with a copy of the approved plan, copies of any subsequent amendments, and the most recently issued Internal Revenue Service opinion letter.

09 Nonidentification of Questionable Issues May Cause Delay -- If the plan document submitted as part of an opinion letter request contains a provision that gives rise to an issue for which contrary published authorities exist, failure to disclose and address significant contrary authorities may result in requests for additional information, which will delay action on the request (see section 7.06 of Rev. Proc. 83-36).

10 Material Furnished to Key District Offices -- Each mass submitter and sponsoring organization of a non-mass submitter plan must furnish a copy of the approved master or prototype plan and the Internal Revenue Service opinion letter to each Internal Revenue Service key district office in whose jurisdiction there are employers who adopt the plan. In addition, each mass submitter must submit a list to the appropriate key district office of all sponsoring organizations that have adopted a word-for-word identical plan of the mass submitter and a copy of any plan which contains minor modifications. Each mass submitter and sponsoring organization of a non-mass submitter plan must also furnish key district offices with a copy of all amendments subsequently approved as to form by the National Office. Copies of word-for-word identical plans of mass submitters, as described in section 18.01 of this revenue procedure, need not be submitted to the key district offices.

SEC. 11. AMENDMENTS

01 Opinion Letters for Sponsor Amendments -- A sponsoring organization may amend or restate its previously approved plan (including any related trust or custodial account) and the National Office will entertain a request for a written opinion as to the acceptability, for purposes of sections 401, 403, and 501(a) of the Code, of the form of the plan as amended. If the sponsoring organization is amending its plan, it must, except as provided in section 18.02 and 18.04, submit a Form 4461 or Form 4461-A, as applicable, to the National Office, together with a copy of the amendment(s), a cover letter summarizing the changes to the plan effected by such amendment(s), and a copy of the plan which is being amended. If the sponsoring organization is restating its plan, it must, except as provided in Sections 18.02 and 18.04, submit the restated plan, with the changes highlighted, along with a Form 4461 or 4461-A, as applicable. No more than four consecutive amendments may be submitted without restating the plan. In addition, the Service may, at its discretion, require plan restatement at any time that it deems necessary to adequately review a plan. Opinion letters issued by the Service with respect to the restatement or amendment of plans to comply with TRA '86 will not distinguish between restated or amended plans.

02 No Opinion Letters for Certain Amendments -- A master or prototype plan will not lose its qualified status and, except as provided in section .024 below, no opinion letter will be issued merely because amendments are made which solely cover the following:

1 Amendments to conform a plan to the requirements of section 402(a) of Title I of the Employee Retirement Income Security Act of 1974 (ERISA), Pub. L. 93-406, 1974-3 C.B. 1, relating to named fiduciaries.

2 Amendments to conform a plan to requirements of section 503 of ERISA, relating to claims procedures.

3 Amendments that merely adjust the maximum limitations under section 415, 402(g), and 401(a)(17) to reflect annual cost-of-living increases, other than amendments that add an automatic cost-of-living adjustment provision to the plan.

4 Amendments that merely reflect a change of a sponsoring organization's name. However, a sponsoring organization must notify the service, in writing, of the change in name and must certify that it is still a proper sponsoring organization under this revenue procedure. No opinion letter will be issued and no user fee will be required for a mere change in name. However, if the sponsoring organization wants a new opinion letter, it will have to submit a new Form 4461, 4461-A or 4461-B and pay the appropriate user fee. (Also see section 9.04 regarding changes in employer identification numbers.)

SEC. 12. DETERMINATION LETTER PROCEDURES

Except as provided in section 6, approval by the Service of the form of a master or prototype plan under this revenue procedure does not constitute a determination that an employer who adopts the plan will have a qualified plan. Therefore, such an adopting employer should request a determination letter in accordance with the procedures set forth in Rev. Proc. 80-30. For this purpose, a master or prototype plan sponsored by a trade or professional organization which is adopted by an employer that is not a bona fide member of such organization will be considered an individually designed plan.

SEC. 13. CONTINUED AND INTERIM RELIANCE

01 Continued Reliance for Pre-Effective Date M&P Plan Adopters -- An employer who has adopted a master or prototype plan with a favorable TEFRA opinion letter prior to the effective date of this revenue procedure, and who either was entitled to rely on such opinion letter pursuant to the procedures in effect before such date or receives a favorable determination letter, may continue to rely on such opinion or determination letter for plan years beginning after December 31, 1988 only if the conditions described in section 13.03 are satisfied.

02 Interim Reliance for Post-Effective Date M&P Plan Adopters -- An employer who adopts a master or prototype plan with a favorable TEFRA opinion letter or a replacement plan (as described in section 3.10) on or after the effective date of this revenue procedure, will have reliance, beginning with the first plan year for which such plan is timely adopted, only if:

1 the conditions described in section 13.03 are satisfied;

2 in the case of a replacement plan, the plan's sponsoring organization submits it to the Service in accordance with the requirements of sections 5 and 10 on or before the earlier of the date of the employer's adoption of the plan or October 31, 1989; and

3 in the case of a master or prototype or replacement plan which amends or restates a plan of the employer, the employer is entitled to rely on a favorable opinion or determination letter issued with respect to the plan that is amended or restated at the time of adoption of such master or prototype or replacement plan.

For this purpose, a master or prototype or replacement plan is timely adopted for a plan year if it is adopted on or before the last day of the remedial amendment period provided by regulations under section 401(b) of the Code that includes such year. However, this does not permit a plan to be made retroactively effective for a taxable year prior to the taxable year of the employer in which the plan was first adopted by the employer.

03 Conditions for Continued or Interim Reliance / Proper Amendment by Sponsoring Organization -- Except as provided in section 13.05, the following conditions must be satisfied in order for the employer to obtain the continued or interim reliance described in this section:

1 The employer must operate its plan in accordance with those requirements of TRA '86, OBRA '86, OBRA '87, and the regulations and revenue ruling described in section 5.11 that are effective for plan years beginning before 1989 as of the effective dates of such requirements.

2 The sponsoring organization of the TEFRA approved plan described in section 13.01 or 13.02 must submit a replacement plan to the service in accordance with the requirements of sections 5 and 10 on or before October 31, 1989. (However, also see section 13.05.)

3 Unless section 13.05 applies, the employer must adopt the service approved version of such replacement plan and, except as provided in section 6, request a determination letter on or before the later of the last day of the twelfth calendar month beginning after the date the Service issues a favorable opinion letter under this procedure with respect to such replacement plan or the end of any remedial amendment period under section 401(b) of the Code applicable to the employer's plan. Plan provisions necessary to comply with the requirements of sections 5 and 10 must be made retroactively effective to the extent required by the relevant legislation, regulations, revenue rulings and notices.

04 Lists of Plans to be Published by the Service -- The Service will publish in the Internal Revenue Bulletin

1 After October 31, 1989, a cumulative list of all sponsoring organizations and their related replacement plans which have been submitted in accordance with this revenue procedure on or before such date. If a sponsoring organization believes that a replacement plan has been omitted from the cumulative list, it may, within 60 days of publication of such list, notify the Service by writing to the address in section 10.02, including in its notification the file folder numbers of the replacement plan and the plan(s) it replaces. Thereafter, the Service will publish an addendum to the cumulative list, if necessary. A plan that is not listed on the cumulative list or addendum will in no event be considered a replacement plan for purposes of this revenue procedure.

2 Periodically, a list of sponsoring organizations and their related replacement plans which have been submitted to the service on or before October 31, 1989 and which

(a) receive favorable opinion letters (and the respective date issued),

(b) receive unfavorable opinion letters, or

(c) withdraw their requests for opinion letters.

05 Conditions for Continued or Interim Reliance / No Proper Amendment by Sponsor -- This subsection applies if the sponsoring organization of the TEFRA approved plan described in section 13.01 or 13.02 fails to submit a proper replacement plan by October 31, 1989, or if it subsequently withdraws its application or receives an unfavorable opinion letter. In order to obtain the continued or interim reliance described in this section, an employer whose master or prototype plan is not included in the list described in subsection .041 or whose master or prototype plan is included in one of the lists described in subsection .042(b) or (c) must operate its plan in compliance with those requirements described in sections 5 and 10 that are effective before 1989 as of the relevant effective dates, adopt all required amendments retroactive to their effective dates, and satisfy either of the following conditions:

1 By the last day of the twelfth calendar month beginning after publication of the relevant list, the employer must adopt another master or prototype plan with a favorable TEFRA opinion letter, or a replacement plan, that is included in the lists described in subsection .041. The employer must then satisfy section 13.033 with respect to the Service approved version of this plan. For this purpose, the twelve month period described in section 13.033 will start with the first month beginning after the later of the date of the favorable opinion letter issued under this procedure or the date of publication of the relevant list showing that the employer's original master or prototype plan was not properly amended.

2 By the later of the last day of the twelfth calendar month beginning after publication of the relevant list or the end of any applicable remedial amendment period, the employer must amend its plan to satisfy the requirements of section 5.11 and section 10 (in which case the plan will be treated as individually designed) and request a determination letter.

06 Adoption of Another Master or Prototype Plan -- An employer will not be treated as having failed to satisfy the conditions set forth in section 13.03 merely because, instead of adopting the Service approved version of the replacement plan described therein, it adopts another master or prototype plan with a favorable TEFRA opinion letter or its replacement plan (a "substitute plan"), provided such plan has been submitted to the Service in accordance with the requirements of sections 5 and 10 on or before October 31, 1989. If the employer's initial adoption of the substitute plan precedes the date of issuance of a favorable opinion letter under this procedure with respect to the replacement plan described in section 13.03, then the twelve month period provided therein will begin with the first month after the date of the favorable opinion letter issued under this procedure with respect to the substitute plan. Furthermore, an employer will not be treated as having failed to satisfy section 13.03 merely because, instead of adopting the Service approved version of the replacement plan described therein, it adopts individually designed amendments intended to comply with the requirements of section 5.11 and section 10, provided such amendments are adopted and a determination letter application is filed within the time set forth in section 13.033.

07 Adopters of Plans Without Favorable TEFRA Opinion Letters -- Any employer who adopts a master or prototype plan which has no favorable TEFRA opinion letter (other than a master or prototype plan which amends or replaces a plan with a favorable TEFRA opinion letter), will not receive the reliance provided by this section.

08 Reliance for Plan Years Beginning Before 1989 -- Notwithstanding any other provision of this section, whether an employee may rely on a favorable TEFRA opinion letter for plan years beginning after December 31, 1986 and before January 1, 1989 will be determined in accordance with Notice 87-28, 1987-1 C.B. 72, and, if the sponsoring organization has adopted modal amendments issued by the Service, Notice 87-33, 1987-1 C.B. 480, and, if applicable, Notice 87-34, 1987-1 C.B. 490. (Also see section 1140 of TRA '86.)

09 Examples --

1 Employer X adopted Plan A, a nonstandardized master or prototype profit-sharing plan with a favorable TEFRA opinion letter, in July 1988, and received a favorable determination letter in December 1988. The sponsoring organization of Plan A properly submits a replacement plan to the Service by October 31, 1989. In 1990, before Plan A receives its TRA opinion letter, X amends its plan by adopting Plan B, a standardized profit-sharing plan which replaces a prototype plan with a favorable TEFRA opinion letter and which has also received a favorable TRA opinion letter when it is adopted by X.

(a) X will be entitled to continued reliance under this revenue procedure if it adopts the Service approved version of replacement Plan B not later than the later of the end of the twelfth month beginning after Plan B receives its TRA '86 opinion letter or the end of any section 401(b) remedial amendment period applicable to X's plan provided the other requirements of section 13.03 have been complied with. X is not required to request a determination latter with respect to Plan B unless it has maintained another plan in addition to this profit-sharing plan.

(b) If replacement Plan A receives its favorable TRA '86 opinion letter before X adopts Plan B, X would be required to adopt a replacement plan with a favorable TRA '86 opinion letter by the later of the end of the twelfth month beginning after Plan A receives its favorable TRA '86 opinion letter or the end of the remedial amendment period.

2 Employer Y, a calendar year taxpayer, establishes a new calendar year plan with a January 1, 1990 effective date in December 1990 by adopting a non-standardized prototype plan which replaces a prototype plan with a favorable TEFRA opinion letter and which has been properly submitted to the Service by October 31, 1989. This replacement plan receives a favorable TRA '86 opinion letter on January 1, 1991. Y will have reliance beginning with the 1990 plan year if it adopts the Service approved version of the replacement plan and requests a determination letter by January 31, 1992, or the end of any applicable remedial amendment period, if later, provided the other requirements of section 13.03 are satisfied.

3 Employer Z adopted an individually designed plan which received a favorable determination letter in 1983 but was not amended as required to comply with the Retirement Equity Act of 1984 (REA). Z amends its plan by adopting a standardized plan with a favorable TEFRA opinion latter in 1989. The sponsoring organization of the prototype plan properly submits a replacement plan to the Service by October 31, 1989. Z is not entitled to continued reliance under this section because Z was not entitled to rely on a favorable determination letter with respect to its individually designed plan at the time it was replaced by the prototype plan.

4 Employer X adopted Plan A, a standardized plan with a favorable TEFRA opinion letter, in 1986. The sponsoring organization of Plan A fails to submit a replacement plan to the Service by October 31, 1989. On June 30, 1990, the Service publishes a final cumulative list of all replacement plans that have been submitted to the Service by October 31, 1989. On June 30, 1991, X amends its plan by adopting Plan B, another standardized replacement plan which has been properly submitted to the Service by October 31, 1989. Plan B receives a favorable TRA '86 opinion letter on July 15, 1991. X will be entitled to continued reliance under this section if it adopts the Service approved version of replacement Plan B by July 31, 1992 or the end of any applicable remedial amendment period, if later, and the other requirements of section 13.03 are satisfied.

5 Employer Y establishes a new plan in 1990 by adopting Plan C, a standardized plan which was submitted to the Service for approval under this revenue procedure by October 31, 1989. Plan C does not have a favorable TEFRA opinion letter and does not replace a plan with such a letter. Employer Y is not entitled to continued or interim reliance under this section.

6 Employer Z adopts an individually designed plan in 1986 and requests and receives a favorable determination letter. Employer Z retroactively amends its plan to comply with TRA '86, OBRA '86, and OBRA '87 by adopting a prototype plan which has received a favorable opinion letter under this revenue procedure. Employer Z's adoption of the prototype plan occurs within 12 months after the prototype plan receives its opinion letter under this procedure but after the last date on which the employer could timely adopt individually designed amendments intended to comply with TRA '86, OBRA '86, and OBRA '87. Employer Z is not entitled to continued or interim reliance under this section because it is not entitled to rely on a favorable determination letter with respect to its individually designed plan at the time it is amended through adoption of the prototype plan.

SEC. 14. APPROVED PLANS -- MAINTENANCE OF APPROVED STATUS

01 Revocation of Opinion Letter by the Service -- An opinion letter found to be in error or not in accord with the current views of the Service may be revoked. However, except in rare or unusual circumstances, such revocation letter will not be applied retroactively if the conditions set forth in section 14.05 of Rev. Proc. 83-36 are met. For this purpose, such opinion letters will be given the same effect as rulings. Revocation may be effected by a notice to the sponsoring organization to which the letter was originally issued, or by a regulation, revenue ruling or other statement published in the Internal Revenue Bulletin. The sponsor should then notify each adopting employer of the revocation.

02 Subsequent Required Amendments -- Except as provided in section 17.03, an approved master or prototype plan must be amended by the sponsoring organization and, if necessary, the employer, to retain its approved status if any provisions therein fail to meet the requirements of law, regulations, or other rules and guidelines affecting qualification that become effective subsequent to the issuance of an opinion letter.

03 Amendments Following Revenue Rulings -- If an approved master or prototype plan is required to be amended to retain its approved status as a result of publication by the Service of a revenue ruling, notice or similar statement in the Internal Revenue Bulletin (I.R.B.), then, unless section 17.03 is applicable or unless specifically stated otherwise in this revenue ruling, etc., the time by which the sponsoring organization must amend its master or prototype plan to conform to the requirements of the revenue ruling, etc. and request a new opinion letter shall be the end of the one- year period after its publication in the I.R.B., and with respect to any adopting employer's plan the effective date of such amendment shall be the first day of the first plan year beginning within such one-year period.

SEC. 15. WITHDRAWAL OF REQUESTS

01 Notification and Effect -- A sponsoring organization may withdraw its request for an opinion letter at any time prior to the issuance of such letter by notifying the National Office in writing of such withdrawal. The sponsoring organization must also notify each employer who adopted the plan that the request has been withdrawn. Such an employer will be deemed to have an individually designed plan to which Rev. Proc. 80-30 applies.

02 Service Retains Information -- Even though a request is withdrawn, the National Office will retain all correspondence and documents associated with that request and will not return them to the sponsoring organization. The National Office may furnish its views concerning the qualified status of the plan to District Directors who have or will have audit jurisdiction of the returns of any employers who have adopted the plan.

SEC. 16. ABANDONED PLANS

01 Notification to the Service -- A sponsoring organization should notify the National Office in writing of an approved master or prototype plan that is no longer used by any employer and that the sponsoring organization no longer intends to offer for adoption. Such written notification should be filed with the Commissioner of Internal Revenue, Washington, D.C. 20224, Attention: E:EP:Q: and should refer to the file folder number appearing on the latest opinion letter issued.

02 Notification to Employers -- A sponsoring organization that intends to abandon an approved master or prototype plan that is in use by any adopting employer must inform each adopting employer that the form of the plan has been terminated, that the employer's plan will become an individually designed plan (unless the employer adopts another approved M&P plan), and that any employer with a determination letter may continue to rely on such letter (or if the plan is standardized, may continue to rely as if it had received a determination letter) on the date the form of the plan is terminated but only until a change in law or other change in the qualification requirements. After so informing all adopting employers, the sponsoring organization should notify the National Office in accordance with subsection .01 above.

SEC. 17. SPECIAL PROVISIONS RELATED TO TRA

01 Delayed Submissions -- Effective immediately, no applications for the approval of master and prototype plans (other than those plans submitted pursuant to section 17.02 of this revenue procedure) may be submitted after the effective date of this revenue procedure and prior to the expiration of 150 days thereafter. Any application received more than 10 days after the effective date of this revenue procedure and prior to the expiration of 150 days after the effective date of this revenue procedure will be returned. The National Office will continue to process all master and prototype applications received not later than 10 days after the effective date of this revenue procedure in accordance with the provisions of Rev. Proc. 84- 23, and any opinion letter issued to such a plan will not consider the effect of TRA '86.

02 Early Submission Period for Mass Submitters and National Sponsoring Organizations -- Mass submitters (as defined in section 18.01) and national sponsoring organizations (as defined in section 3.11) may submit applications for approval of master or prototype plans at any time following the expiration of 60 days after the effective date of this revenue procedure and will not be subject to the delayed submission requirement of section 17.01. In the case of a national sponsoring organization, each application submitted during this early submission period must be accompanied by the sponsoring organization's certification, made under penalty of perjury, that it maintains a list of adopting employers which establishes that it is a national sponsoring organization as described in section 3.11. The Service reserves the right to request a copy of such list in order to verify that these requirements have been met.

03 Extended Reliance --

1 A sponsoring organization that submits a master or prototype plan which has been amended in accordance with the requirements specified in sections 5 and 10 of this revenue procedure (and other requirements that are in effect on the date the application is submitted) on or before October 31, 1989, and receives a favorable opinion letter under this revenue procedure, will not be required to amend its plan for subsequent regulations under TRA '86, OBRA '86, OBRA '87, or for revenue rulings, revenue procedures, or other Service releases issued after the date of the application, before the earlier of:

(a) December 31, 1994, or

(b) the date the plan is otherwise required to be amended by subsequent legislation.

2 Solely for purposes of this subsection, a master or prototype plan which is submitted to the Service after October 31, 1989 as a word-for-word identical adoption of a mass submitter plan that has been amended in accordance with the requirements specified in sections 5 and 10 of this revenue procedure (and all other requirements in effect on the date of the mass submitter's application) and that has been submitted to the Service on or before October 31, 1989, will be deemed to have been submitted to the Service on the date of the mass submitter's application.

3 Any employer which adopts a plan described in paragraph 1 or 2 above, and is otherwise entitled to reliance, may continue to rely on the opinion letter, or determination letter, if applicable, until the earlier of:

(a) the last day of the last plan year commencing prior to January 1, 1995, or

(b) the date established for plan amendment by any subsequent legislation.

4 In unusual circumstances, the Service may require M&P plans to be amended for, or operationally comply with, qualification requirements issued by the Service after a request for an opinion letter or determination letter is submitted but prior to the end of this extended reliance period. The Service will require this action only in cases where it is necessary to correct a fundamental error or omission that is likely to affect participants' rights or tax revenues in a significant number of plans. Any rule or regulation remedying an omission or correcting an error will generally be made effective prospectively, for plans which have met the requirements for extended reliance. However, the service reserves the right to make such a rule or regulation applicable to such plan during the entire extended reliance period. Upon termination of an employer's master or prototype plan prior to the end of the extended reliance period, the plan must be amended retroactively to the effective date of any intervening change with respect to which operational compliance was required in order to correct a fundamental error or omission. This extended reliance period will not prevent the Service from requiring a plan to be amended to correct any defect in the plan which was not discovered upon prior review by the Service.

SEC. 18. MASS SUBMITTERS

01 Opinion Letters Issued to Mass Submitters -- Notwithstanding anything to the contrary, opinion letters will be issued to any person, whether or not such person is a sponsoring organization, that submits applications for at least 10 sponsoring organizations which will sponsor the identical master or prototype plan. Any such mass submitter that meets the requirements for a sponsoring organization may submit an application on its own behalf as one of the 10 adopting sponsoring organizations. Each sponsoring organization must sponsor a plan that is word-for-word identical to the mass submitter plan. For purposes of this revenue procedure a flexible plan (as defined in section 18.031) which is adopted by a sponsoring organization will be considered a word-for-word identical plan. After the initial submission (with applications for at least 10 identical adopters), the mass submitter may submit additional applications on behalf of sponsoring organizations that wish to adopt a word-for-word identical plan or a plan which contains minor modifications from the mass submitter plan, as provided in section 18.032. With respect to its plan, the mass submitter must submit a completed Form 4461 or 4461-A, as applicable, to the National Office. The first page of the Form 4461 or 4461-A must be typed and no photocopies of the first page will be accepted. Opinion letters issued to a mass submitter will apply only to the mass submitter and may be made available by the mass submitter to an adopting employer only if the mass submitter is also a sponsoring organization defined in section 3.07. All other sponsoring organizations must obtain an opinion letter.

02 Reduced Procedural Requirements for Sponsoring Organizations Which Use Mass Submitter Plans -- A sponsoring organization of a master or prototype plan of a mass submitter must obtain an opinion letter. For initial qualification, or where the sponsoring organization's plan includes minor modifications, the mass submitter on behalf of the sponsoring organization must submit a completed Form 4461-B to the Service which contains a declaration by the mass submitter under penalty of perjury that the sponsoring organization has adopted a master or prototype plan that is word-for-word identical, within the meaning of this section, to a plan of the mass submitter, or plan that is a minor modification of the mass submitter's plan. Such form must be typed and no photocopies will be accepted. If the mass submitter's plan has been approved by the Service, the sponsoring organization's request for an opinion letter must identify the letter serial number and date of the opinion letter issued to the mass submitter with respect to that plan. If the sponsoring organization has previously received an opinion letter with respect to a plan that is identical to the mass submitter's plan, the procedures described in sections 4.044 and 18.04, as applicable, should be followed. If the sponsoring organization is sponsoring a word-for-word identical plan (including a flexible plan), a copy of the plan need not be submitted. If the mass submitter submits a plan with minor modifications, it must comply with the requirements of section 18.032. Upon receipt of the request for an opinion letter, described above, the Service will, as soon as clerically feasible, issue an opinion letter to the sponsoring organization.

03 Special Definitions --

1 Flexible Plan --

(a) In general -- A "flexible plan" is a plan submitted by a mass submitter which contains optional provisions (as defined in subsection (b) below). Sponsoring organizations that adopt the flexible plan may include or delete any optional provision which is designated as such in the mass submitter's plan, provided the inclusion or deletion of specific optional provisions conforms to the mass submitter's written representation to the Service concerning the choices available to sponsoring organizations and the coordination of optional provisions. A mass submitter must bracket and identify the optional provisions when submitting such plan to the National Office and must also provide the Service a written representation describing the choices available to sponsoring organizations and the coordination of optional provisions. Thus, such a representation must indicate whether a sponsoring organization's plan may contain only one of a certain group of optional provisions, may contain only a specific combination of provisions, or may exclude the provisions entirely. Similarly, if the inclusion (or deletion) of a specific optional provision in a sponsoring organization's plan will automatically result in the inclusion (or deletion) of any other optional provision, this must be set forth in the mass submitter's representation. A flexible plan may contain only optional provisions which meet the requirements of subsection (b) and must be drafted so that the qualification of any sponsoring organization's plan will not be affected by the inclusion or deletion of optional provisions. For example, if a sponsoring organization's defined contribution plan contains an optional provision which allows a portion of a participant's account to be invested in life insurance, then under the terms of the sponsoring organization's plan, the application of the proceeds must meet the requirements of sections 401(a)(11) and 417 of the Code. A flexible plan adopted by a sponsoring organization which differs from the mass submitter plan only because the sponsoring organization has deleted certain optional provisions from its plan in conformance with the mass submitter's representation described above will be treated as a word- for-word identical plan to the mass submitter plan. The Service encourages mass submitters to limit the number of optional provisions described in subparagraph (b)(i) and (ii) below which they provide under a flexible plan to six investment provisions and six administrative provisions.

(b) Optional Provisions -- A flexible plan may contain only optional provisions which comply with the requirements set forth below. The optional provisions may be arranged as separate optional articles or as separate optional provisions within a single article. A flexible plan may also contain optional provisions in the adoption agreement. For example, if a mass submitter flexible plan basic plan document contains an optional provision which would allow for loans under a sponsoring organization's master or prototype plan, the adoption agreement could also include an optional provision which would enable an adopting employer to elect whether loans will be available under the plan it adopts. If the sponsoring organization does not wish to enable adopting employers to make loans available under their plans, both the basic plan document optional provision and the adoption agreement optional provision would be deleted from the sponsoring organization's master or prototype plan. Sponsoring organizations may include or delete optional provisions of mass submitter plans, but once the sponsoring organization has decided to include an optional provision, it must offer that provision to all adopting employers. Any optional provision which the Service determines does not meet the requirements for a proper optional provision will have to be changed to a non- optional provision or deleted from the mass submitter's plan. The following is an exclusive list of the allowable optional provisions which a flexible plan may contain:

(i) Investment Provisions -- A mass submitter may offer a variety of investment provisions in its plan for sponsoring organizations to include or delete from their version of the plan. However, the plan as adopted by the sponsoring organization must provide some method for investing trust assets. Investment provisions are those provisions which describe the plan's methods of investing the trust or custodial funds, including provisions such as the availability of loans and investments in insurance contracts or other funding media, and self-directed investments.

(ii) Administrative Provisions -- A mass submitter may offer a variety of administrative provisions in its plan for sponsoring organizations to include or delete from their version of the plan. However, the plan as adopted by the sponsoring organization must describe how the plan will be administered. Administrative provisions are those provisions which describe the administration of the plan, including the powers, duties, and responsibilities of a plan's custodian, trustee, administrator, employer, and other fiduciaries. Administrative provisions include the allocation of responsibilities among fiduciaries, the resignation or replacement of fiduciaries, claims procedures under the plan, and record-keeping requirements. However, procedural provisions which are required for plan qualification are not administrative provisions under this section. For example, provisions which provide for the notice to participants required by section 417 of the Code and record-keeping required by regulations under sections 401(k) and (m) are not administrative provisions for purposes of this revenue procedure, and may not be optional provisions.

(iii) Cash or Deferred Arrangement -- A mass submitter may include a self-contained cash or deferred arrangement (as defined in section 401(k) of the Code) which meets the requirements of section 8 for sponsors to include or delete.

(c) Addition of Optional Provisions by the Mass Submitter -- A mass submitter may add additional optional provisions to its plan after a favorable opinion letter is issued. Generally, the addition of such optional provisions will not be treated as a plan amendment for purposes of this revenue procedure, Rev. Proc. 80-30, and Rev. Proc. 89-4, and sponsoring organizations and adopting employers will not be required to obtain new opinion and determination letters in order to preserve reliance. (However, the addition of a cash or deferred arrangement or any change to the language of the adoption agreement subsequent to the issuance of an opinion letter will be treated as a plan amendment to the mass submitter's plan and the requirements of subsection .04 will then apply.) The mass submitter must submit such additional optional provisions to the Service, along with a completed Form 4461 or 4461-A, as applicable, and a check or money order payable to the Internal Revenue Service in the amount specified in Rev. Proc. 89-4, as modified by section 19.04 of this revenue procedure. No opinion letter will be issued to the mass submitter or any adopting sponsoring organization with respect to the addition of these optional provisions. Instead, an advisory letter will be issued to the mass submitter notifying it that the addition of such optional provisions will not affect the status of favorable opinion and determination letters issued to sponsoring organizations and adopting employers.

(d) Notification to Employer -- If a mass submitter adds optional provisions, as described in subsection (c) above, all adopting sponsors who wish to include the additional optional provisions must furnish each adopting employer with a copy of the plan which includes such additional provisions in accordance with section 10.08. If a sponsoring organization decides to include or delete an optional provision after it initially adopted the plan, it must also furnish each adopting employer with a copy of the new plan in accordance with section 10.08. However, if such inclusion or deletion results in a change to the language of the adoption agreement, such change will be treated as a plan amendment and the sponsoring organization and its adopting employers may not continue to rely on previously issued opinion or determination letters.

2 Minor Modification -- A "minor modification" is a minor change to an otherwise word-for-word identical plan of the mass submitter which does not require an in-depth technical review. For example, a change from 5 year 100% vesting to 3 year 100% vesting is a minor modification. On the other hand, a plan which is modified to change the method of accrual of benefits would not be considered a minor modification. A minor modification must be submitted by the mass submitter on behalf of the sponsoring organization which will adopt the modified plan. Such submissions will be reviewed on an expedited basis and opinion letters will be issued to the sponsoring organization as soon as possible. However, the Service reserves the right to determine if such changes are actually minor. If it is determined that the changes are extensive or require an in-depth technical review, the plan will not be entitled to expedited review but will be treated as a non-mass submitter plan. (In such event, the Service will notify the mass submitter in writing of its determination. Within 30 days following the date of such communication, either the mass submitter may revise the plan so that the modifications are minor and resubmit the revised plan, or the sponsoring organization may submit an additional user fee in an amount equal to the difference between a non-mass submitter plan application user fee and a minor modifier application user fee. If, after such 30 day period neither action has been taken, the application may be considered withdrawn.) To qualify for the expeditious review, the mass submitter must submit a completed Form 4461-B. Such form must be typed and no photocopies will be accepted. In addition, the mass submitter must submit a copy of the mass submitter's plan with the minor modifications highlighted, as well as a statement indicating the location and effect of each change. The mass submitter must certify under penalty of perjury that the plan of the sponsoring organization except for the delineated changes is word-for-word identical, within the meaning of this section, to the plan for which the mass submitter received a favorable opinion letter. If a mass submitter fails to identify each modification, such failure will be considered a material misrepresentation and an employer may not rely on any opinion or determination letter that may be issued with respect to the plan. If a mass submitter repeatedly fails to identify such modifications, the Service may deny permission to that mass submitter to submit additional minor modifications.

04 Amendments of Mass Submitter Plans -- Any plan submitted by a mass submitter must include language designating the mass submitter as agent for the sponsoring organization for purposes of making plan amendments (see section 14.02). Any sponsoring organization which does not wish to make the amendments made by a mass submitter may switch to another mass submitter or may submit an application for an opinion letter on its own behalf. If the mass submitter makes any change to the plan, other than the addition of optional provisions pursuant to section 18.031(c) or an amendment described in section 11.02, it must comply with the requirements of section 11.01 of this revenue procedure. In addition, prior to submitting an amendment to the National Office, the mass submitter must notify the Service of its intention to amend the plan. Such notification should be submitted, in writing, to the Commissioner of Internal Revenue, Washington, D.C. 20224, Attention: E:EP:Q. The Service will then mail a list to the mass submitter showing all sponsoring organizations which have adopted plans that are identical to the mass submitter's plans, as well as the specific plans adopted by each sponsoring organization. The mass submitter must then submit the amended plan to the National Office for approval, along with a list identifying all adopting sponsoring organizations' plans which will be amended, a user fee form for each such sponsoring organization, and the appropriate user fee required under Rev. Proc. 89-4. All sponsoring organizations which have adopted the mass submitter's plan, are identified on the list submitted to the Service, and for which a user fee has been submitted, will be considered to have made such amendments and will be issued opinion letters. In the case of minor modifier plans, separate Form 4461-B applications must be filed along with copies of the plans as amended, user fee forms, and the user fee required by Rev. Proc. 89-4 for minor modifier applications. Copies of the amended plan must be sent to adopting employers and key district offices in accordance with section 10. Any adopting sponsor which is not included on the list submitted to the Service (or in the case of a minor modifier, for which a Form 4461-B application has not been filed) or which notifies the Service of its desire not to adopt such amendment will no longer participate as a mass submitter plan but must apply for an opinion letter on its own behalf to retain its status as a master or prototype plan.

05 Expeditious Processing Accorded Mass Submitter Plans -- All mass submitter plans, including the adoption of approved mass submitter plans by sponsoring organizations, will be accorded more expeditious processing than master and prototype plans submitted by non-mass submitters, to the extent administratively feasible.

06 Substitution of Mass Submitter Plans for Non-Mass Submitter Plans -- A sponsoring organization which has submitted to the Service a non-mass submitter replacement plan (as defined in section 3.10) may substitute a word-for-word identical plan of a mass submitter which is of the same type as the non-mass submitter plan at any time prior to receiving its favorable TRA '86 opinion letter, and such plan will be considered a replacement plan for purposes of section 13. However, if a sponsoring organization which has submitted a non- mass submitter replacement plan substitutes a minor modifier plan after the Service has begun reviewing the non-mass submitter plan, then the minor modifier will not be considered a replacement plan under section 13. A non-mass submitter that intends to switch to a minor modifier should contact the Inventory Control Unit of the Employee Plans Technical and Actuarial Division (qualifications Branch) by calling (202) 566-4576 (not a toll-free call) to determine whether review of the non-mass submitter plan has begun.

SEC. 19. EFFECT ON OTHER DOCUMENTS

01 Rev. Proc. 84-23 and Rev. Proc. 84-83 are hereby superseded.

02 Rev. Proc. 87-18 is hereby superseded.

03 Section 15.01 of Rev. Proc. 80-30 is modified by renumbering paragraph 4 as 2 after replacing paragraphs 1, 2, and 3 with the following:

1 A standardized form plan or paired plans as defined in sections 3.08 and 3.09 of Rev. Proc. 89-9 provided that:

(a) the sponsoring organization of such plan or plans has a currently valid favorable opinion letter from the National Office,

(b) the employer has followed the terms of the plan(s), and the coverage and contributions or benefits under the plan(s) are not more favorable for highly compensated employees (as defined in Code section 414(q)),

(c) the employer has properly notified all interested parties of the adoption of the plan(s) in accordance with sections 7 and 8, above, and

(d) the employer has not received, within 120 days after the date of adoption of the plan(s), notice from the Service that the plan(s) will not be treated as qualified pursuant to this subsection. (In this regard, see section 4.145, above).

04 Section 6.032 of Rev. Proc. 89-4 is hereby modified by amending the title of subparagraph (b) to read "Opinion and Advisory Letters on Master and Prototype Plans" and adding at the end of such subparagraph the following: Mass submitter's addition of optional provisions following issuance of a favorable opinion letter, per basic document (regardless of the number of adoption agreements) .....................$400

SEC. 20. EFFECTIVE DATE

This revenue procedure is effective February 6, 1989, the date it is published in the Internal Revenue Bulletin.

DRAFTING INFORMATION

The principal author of this revenue procedure is Charles D. Lockwood, of the Employee Plans Technical and Actuarial Division. For further information regarding this revenue procedure, please contact the Employee Plans Technical and Actuarial taxpayer assistance telephone service between the hours of 1:30 p.m. and 4:00 p.m. Eastern Time, Monday through Friday, on (202) 566-6783/6784 (not a toll-free call). Mr. Lockwood's telephone number is (202) 343-0729 (also not a toll-free call).