Rev. Proc. 80-29

Section 1. Purpose

This revenue procedure sets forth the procedures of the Internal Revenue Service pertaining to the issuance of rulings and opinion letters relating to master or prototype pension, annuity, and profit-sharing plans involving sections 401 and 403(a) of the Internal Revenue Code and the status for exemption of related trusts or custodial accounts under section 501(a).

Sec. 2. Background and General Information

.01 The general procedures of the Service relating to the issuance of rulings, determination letters, and opinion letters on employee plans and exempt organization matters are set forth in Rev. Proc. 80-24, page 658, this Bulletin. Rev. Proc. 80-30, page 685, this Bulletin, provides procedures relating to the issuance of determination letters as to the qualification of employee plans or trusts under sections 401(a), 403(a), and 405(a) of the Code and to the exempt status of trusts under section 501(a).

.02 Rev. Proc. 72-7, 1972-1 C.B. 715, as modified by Rev. Proc. 75-51, 1975-2 C.B. 590, contains procedures for the issuance of opinion letters as to the acceptability of the form of master and prototype plans designed to include self-employed individuals. Rev. Proc. 72-8, 1972-1 C.B. 716, as modified by Rev. Proc. 75-52, 1975-2 C.B. 592, contains procedures for the issuance of opinion letters as to the acceptability of the form of master and prototype plans that do not include self-employed individuals.

.03 This revenue procedure contains procedures relating to both those master or prototype plans designed to include owner-employees and those designed to include only individuals who are not owner-employees, thereby consolidating procedures that were previously set forth independently. This revenue procedure also provides for the issuance of an opinion letter relating to a master or prototype plan designed for a partnership that does not include an owner-employee. See section 3.04, below.

Sec. 3. Definitions

.01 A "master plan" is a plan that is made available by a "sponsoring organization" (see section 3.06) 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.

.02 A "prototype plan" is a plan 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.

.03 An "H.R. 10 plan" is a master or prototype plan designed to include self-employed individuals, owner-employees and their employees.

.04 A "corporate-type plan" is a master or prototype plan designed to include only individuals who are not owner-employees. The term includes both a master or prototype plan designed to include only common-law employees and a plan designed for a partnership none of whose partners is an owner-employee.

.05 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 A "sponsoring organization" is a trade or professional organization having characteristics similar to those described in section 1.501(c)(6)-1 of the Income Tax Regulations, a bank (as defined in section 401(d)(1) of the Code), an insurance company, a regulated investment company (as defined in section 851), an investment advisor that has an advisory contract with one or more regulated investment companies, a principal underwriter that has a principal underwriting contract with one or more regulated investment companies, or, in the case of an H.R. 10 plan, a person who, under regulations, may act as a trustee or custodian.

.07 A "variable form" plan is a corporate-type plan that permits an employer to select various options relating to basic provisions such as employee coverage, contributions, benefits, and vesting.

.08 A "standardized form" plan is a corporate-type defined contribution plan (except for a target benefit plan) which meets the following requirements:

1 The provisions governing eligibility and participation are such that an adopting employer will always meet the percentage coverage requirements of section 410(b)(1)(A) of the Code. There are no requirements for participation in the plan other than a period of service not extending past the later of the date an employee reaches age 25 or completes three years of service.

2 Each employee's rights to or derived from all contributions under the plan are fully vested and nonforfeitable at the time the contributions are paid to or under the plan.

3 Contributions under the plan, if any, are allocated on the basis of total compensation.

4 Each participant who completes a year of service shares in any allocation of employer contributions for the year, regardless of the participant's employment status on the last day of the year or any other allocation date specified in the plan.

5 The eligibility requirements and contributions are not more favorable under the plan for officers, shareholders or highly compensated employees than for other employees.

6 The plan is not integrated with old-age, survivors, and disability insurance benefits provided under the Social Security Act.

Sec. 4. Opinion Letters -- Scope

.01 Opinion letters will be issued only to sponsoring organizations as defined in section 3.06 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 Opinion letters will not be issued under this revenue procedure for prototype plans intended to meet the requirements for individual savings programs under section 408(a) or 408(b) of the Code (see Rev. Proc. 75-6, 1975-1 C.B. 646).

.03 Opinion letters will not be issued for:

1 Collectively-bargained plans (section 413(b) of the Code);

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. 56-267, 1956-1 C.B. 206 or Rev. Rul. 75-530, 1975-2 C.B. 146;

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

7 Individual retirement accounts established by employers and associations of employees intended to meet the requirements of section 408(c) of the Code (see Rev. Proc. 76-32, 1976-2 C.B. 654);

8 Pattern plans (see Rev. Proc. 76-15, 1976-1 C.B. 553);

9 Field prototype plans (see Rev. Proc. 77-23, 1977-2 C.B. 530);

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

11 H.R. 10 plans that do not contain the requirements of section 401(d) of the Code applicable to owner-employees (as defined in section 401(c)(3));

12 Corporate-type plans that involve integration with Social Security benefits except for plans that define annual compensation to be all of each employee's compensation that would be subject to taxation under section 3101(a) of the Code without the dollar limitation of section 3121(a)(1);

13 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).

.04 Master or prototype plans submitted pursuant to this procedure must provide a procedure for amendments so that changes in the Code, regulations, revenue rulings, or other rules or statements published in the Internal Revenue Bulletin may be complied with on a group basis. An employer that amends any provision of an approved master or prototype plan or its adoption agreement (other than to change his 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. 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.

Sec. 5. Opinion Letters and Ruling Letters -- Instructions to Sponsoring Organizations

.01 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. The National Office will also issue a ruling letter to the trustee or custodian as to the exempt status under section 501 of a trust or custodial account where such trust or custodial account forms part of a master plan.

.02 A request for an opinion letter relating to an H.R. 10 plan shall be submitted on Form 3672, Application for Approval of Master or Prototype Defined Contribution Plan for Self-Employed Individuals, on Form 3672-A, Application for Approval of Master or Prototype Defined Benefit Plan for Self-Employed Individuals, as applicable, to the Commissioner of Internal Revenue, Washington, D.C. 20224, Attention: E:EP:T. A sponsoring organization requesting an opinion letter shall also submit a copy of the plan document and trust instrument. If a request relates to a plan which combines a profit-sharing plan and a money purchase plan in a single plan document, a separate Form 3672 should be submitted for each type of plan. A defined contribution plan and a defined benefit H.R. 10 plan may not be combined in a single plan document. A separate plan document should be submitted with either Form 3672 or Form 3672-A, as applicable, for each type of plan. Where a plan provides for more than one funding medium (for example, a trust and a custodial account), a separate document should be submitted for each funding medium. Options (for example, elections specifying the level of contributions) offered to adopting employers may be either included in the plan document or incorporated in a separate document (the "adoption agreement"). Plan documents and trust instruments need not be submitted in duplicate.

.03 A request for an opinion letter relating to a corporate-type plan shall be submitted on Form 4461, Application for Approval of Master or Prototype Defined Contribution Plan, or on Form 4461-A, Application for Approval of Master or Prototype Defined Benefit Plan, as appropriate. The request is to be filed with the Commissioner of Internal Revenue, Washington, D.C. 20224, Attention: E:EP:T. A sponsoring organization requesting an opinion letter shall submit a separate application and plan document for each type of plan submitted (for example, a defined benefit plan, a profit-sharing plan, a target benefit plan, or a money purchase plan). In addition, a sponsoring organization that offers both trusteed and non-trusteed versions of a particular type of plan must incorporate the non-trusteed plan in a separate plan document. Plan documents incorporating more than one type of plan are not acceptable under this procedure. Options (for example, elections to be made by the adopting employer concerning eligibility conditions, vesting rates, and contribution or benefit levels) must be set forth in a separate document (the "adoption agreement"). Options may not be interspersed throughout the plan document. Plan documents need not be submitted in duplicate.

.04 The National Office may, at its discretion, require any additional information that it deems necessary.

.05 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.

.06 If the plan document submitted as part of an opinion letter request contains a provision that gives rise to an issue for which contrary authorities exist, failure to disclose and distinguish significant contrary authorities may result in requests for additional information, which will delay action on the request (see section 6.06 of Rev. Proc. 80-24).

Sec. 6. Opinion Letters -- Special Instructions to Sponsoring Organization of Variable Form Corporate-Type Plans

.01 Where a corporate-type defined benefit plan contains one or more nonintegrated benefit formulas, the sponsoring organization must submit a separate adoption agreement containing all of the nonintegrated benefit formulas. Where such a plan contains one or more integrated benefit formulas, the sponsoring organization must submit a separate adoption agreement for each type of integrated formula (for example, excess benefit or offset benefit); each separate adoption agreement should contain all of the plan integrated benefit formulas of a particular type. For example, a corporate-type defined benefit plan with nonintegrated unit benefit and flat-benefit formulas, unit benefit excess formulas, flat-benefit excess formulas, unit benefit offset formulas, and flat-benefit offset formulas must submit at least three separate adoption agreements:

1 An adoption agreement containing all of the nonintegrated benefit formulas (unit benefit and flat-benefit);

2 An adoption agreement containing all of the excess benefit formulas (unit benefit and flat-benefit);

3 An adoption agreement containing all of the offset benefit formulas (unit benefit and flat-benefit).

.02 A copy of the approved master or prototype plan and the Internal Revenue Service opinion letter must be furnished by the the sponsoring organization to each Internal Revenue Service key district office in whose jurisdiction there are employers who adopt the plan. The sponsoring organization must also furnish Key District Offices with a copy of all amendments subsequently approved as to form by the National Office. Key District Offices are listed in Rev. Proc. 80-30.

Sec. 7. Amendments

.01 A sponsoring organization may amend 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. Where a plan has been so amended, the sponsoring organization must submit to the National Office (1) Form 3672 or Form 3672-A, as applicable, for an H.R. 10 plan or (2) Form 4461 or Form 4461-A, as applicable, for a corporate-type plan. The sponsoring organization should also submit a copy of the amendment(s) and a cover letter summarizing the changes to the plan effected by such amendment(s).

.02 No opinion letter will be issued regarding the effect of the following amendments:

1 An amendment solely 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 An amendment solely to conform a plan to the requirements of section 503 of ERISA, relating to claims procedures.

3 An amendment, described in section 8 of this revenue procedure, solely to conform a defined contribution H.R. 10 plan to sections of the Internal Revenue Code added or revised by the Tax Reform Act of 1976, Pub. L. 94-455, 1976-3 C.B. (Vol. 1) 1.

4 An amendment that merely adjusts the maximum limitations under section 415 of the Code to reflect annual cost-of-living increases, other than an amendment that adds an automatic cost-of-living adjustment provision to the plan.

Any amendment noted above will not affect the status of a favorable opinion letter previously issued with respect to a plan. The Service will not accept any requests for opinion letters regarding such amendments.

.03 A completely restated plan must be submitted when a plan is amended for the first time to meet the requirements of ERISA. After that time, no more than four consecutive amendments may be submitted without restating the plan. However, the Service may, at its discretion, require plan restatement at any time that it deems necessary.

Sec. 8. Amendments to Conform Certain Defined Contribution Plans to Sections of the Internal Revenue Code as Added or Revised by the Tax Reform Act of 1976

.01 The Tax Reform Act of 1976 added or revised the following provisions of the Code related to the limitation for contributions to defined contribution plans that include self-employed individuals:

1 Section 404(e)(4) of the Code was revised to limit the availability of the special deduction allowance for contributions of the lesser of $750 or 100% of earned income to those made on behalf of self-employed individuals whose adjusted gross incomes do not exceed $15,000 for the taxable year.

2 Section 415(c)(5) of the Code was added to remove the 25% limitation on contributions for certain participants and permit instead not less than $750 or 100% of earned income, whichever is the smaller amount.

3 Section 415(c)(7) of the Code was added to remove the 25% limitation for certain level premium payments for annuity contracts under plans benefitting owner-employees.

.02 For plans that already contain a minimum contribution formula, the present language should be revised to incorporate the new Code section 415(c)(5) limit by--

1 deleting the present formula and inserting the following:

"Minimum Contribution Provision--A minimum contribution shall be made on behalf of each eligible self-employed individual whose adjusted gross income (determined without regard to any deduction allowable under section 404(a) of the Code) is not in excess of $15,000 for the taxable year ending with or within the limitation year for which such contribution is made. The amount to be so contributed shall be the lesser of any stated percentage (not to exceed 100%) of the individual's earned income or a stated amount (not to exceed $750). In any taxable year in which an amount is contributed under this provision on behalf of at least one self-employed individual, each eligible common-law employee shall receive at least an equivalent amount determinable under these same limitations in the plan."

2 adding the following sentence to the definition now in the plan for the maximum permissible amount that may be contributed:

"If in any limitation year there is at least one self-employed individual whose adjusted gross income (determined without regard to any deduction allowable under section 404(a) of the Code) does not exceed $15,000 for the taxable year ending with or within such limitation year and a contribution is made on behalf of such self-employed individual under section _______ of the plan, the maximum permissible amount with respect to any other participant shall not be less than the contribution made with respect to such self-employed participant under section ________ of the Plan." (The section number to be inserted is the one assigned for the plan provision in (1) above.)

.03 For plans which do not contain a minimum contribution formula, insertion of the language of section 8.02 1 and 8.02 2 above is one method of incorporating the new Code section 415(c)(5) limit.

.04 In the case of defined contribution plans funded solely by level premium annuity, endowment, or life insurance contracts, the new limit of section 415(c)(7) of the Code may be incorporated by adding the following sentence to the plan provision which sets forth the limitation contained in section 415(c)(1):

"The 25% limitation shall not apply, however, to contributions for the benefit of an owner-employee for any limitation year in which:

(a) the owner-employee is not an active participant at any time during such year in a defined benefit plan maintained by the employer, and

(b) the annual addition with respect to such owner-employee for such year consists solely of contributions to pay level annual premiums on contracts as provided in this plan."

Sec. 9. Approved Plans -- Maintenance of Approved Status

.01 An opinion letter found to be in error or not in accord with the current views of the Service may be revoked. Revocation may be effected by a notice to the sponsoring organization to whom the letter was originally issued, or by a revenue ruling or other rule or statement published in the Internal Revenue Bulletin.

.02 An approved master or prototype plan must be amended 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 An opinion letter will not be adversely affected by the publication of a revenue ruling if an amendment conforming the plan to the requirement of the revenue ruling is made by the sponsoring organization within one year after publication of the revenue ruling in the Internal Revenue Bulletin, to be effective for all adopting employers for their plan years beginning within such one year period.

Sec. 10. Withdrawal of Requests

.01 A sponsoring organization may withdraw its request for an opinion or ruling 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 any 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 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. 11. Abandoned Plans

.01 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:T, and should refer to the file folder number and letter serial number appearing on the latest opinion letter issued.

.02 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 and that the employer may not continue to rely on the plan's opinion letter. After so informing all adopting employers, the sponsoring organization should notify the National Office in accordance with subsection .01 above.

Sec. 12. Effect on Other Documents

Rev. Proc. 72-7, Rev. Proc. 72-8, Rev. Proc. 75-51, and Rev. Proc. 75-52, as modified by Rev. Proc. 76-38, 1976-2 C.B. 661, are hereby superseded.

Sec. 13. Effective Date

This revenue procedure is effective June 30, 1980. Requests for opinion letters submitted prior to the effective date will be processed in accordance with Rev. Proc. 72-7 and Rev. Proc. 75-51 or Rev. Proc. 72-8 and Rev. Proc. 75-52, as applicable.