SERVICE PROVIDES SPECIAL PROCEDURES RELATING TO ISSUANCE OF DETERMINATION LETTERS ON PLAN QUALIFICATION.

Rev. Proc. 88-9

SECTION 1. PURPOSE

This revenue procedure sets forth special procedures of the Internal Revenue Service pertaining to the issuance of determination letters on the qualification of pension, profit-sharing and stock bonus plans that will be terminated prior to the delayed amendment date provided in section 1140 of the Tax Reform Act of 1986 (TRA '86), Pub. L. 99-514.

SEC. 2. BACKGROUND AND GENERAL INFORMATION

01 Rev. Proc. 80-30, 1980-1 C.B. 685, sets forth the general procedures of the Service relating to the issuance of determination letters on the qualification of pension, profit-sharing, and stock bonus plans, including determination letters involving the termination of such plans.

02 Section 1140 of TRA '86 provides that qualified plans need not be amended for any provision in subtitle A or C of Title XI until the first plan year beginning after December 31, 1988, so long as such amendment applies retroactively to the period during which the provision is in effect. For plans maintained pursuant to collective bargaining agreements ratified before March 1, 1986, section 1140 provides that such plans must be amended by the first plan year beginning after the earlier of: (1) the later of January 1, 1989, or the date on which the last collective bargaining agreement terminates (without regard to extensions made after February 28, 1986); or (2) January 1, 1991.

03 Notice 86-13, 1986-2 C.B. 377, provides that, until further notice, determination letter requests concerning qualification pension, profit-sharing and stock bonus plans will not be reviewed for qualification requirements changed by TRA '86 other than certain retroactive technical corrections.

04 Notice 87-57, 1987-35 I.R.B. 10, modifies Notice 86-13. Notice 87-57 states that the Service will review requests for determination letters on the basis of the law currently in effect with respect to plans being terminated prior to the delayed amendment date provided in section 1140 of TRA '86. Plan terminating prior to that date must be amended to reflect provisions in TRA '86 that are effective as of the date of termination, the temporary REA regulations, as well as the Technical Corrections to the Tax Reform Act of 1984, Pub. L. 98-369, 1984-3 C.B. 1, and to the Retirement Equity Act of 1984 (REA), Pub. L. 98-397, 1984-2 C.B. 433.

05 Notice 87-20, 1987-6 I.R.B. 17, provides guidance in complying with section 1139 of TRA '86. In general, the interest rates used to determine present values and amounts of certain plan benefits paid from a defined benefit plan in plan years beginning after 1984 must not exceed the "section 1139" rates. However, there are exceptions for distributions that meet the requirements of temporary regulations under REA or that were corrected for underpayment before August 10, 1987.

06 Notice 87-21, 1987-6 I.R.B. 20, describes new limitations on plan contributions and benefits under section 415 of the Code as enacted by TRA '86. These new limitations generally apply for limitation years beginning after 1986. However, transitional rules and an exception for plans maintained pursuant collective bargaining agreements are provided in section 1106(i) of TRA '86.

SEC. 3 REQUIRED AMENDMENTS FOR TERMINATING PLANS

01 In order to receive a favorable determination letter, qualified plans terminating prior to the delayed amendment date provided in section 1140 of TRA '86 must be amended to reflect the law in effect at the time of termination. These requirements include certain provisions of TRA '86, the Technical Corrections in Title XVIII of TRA '86 and the Temporary Income Tax Regulations under REA.

02 In Notice 87-2, 1987-2 I.R.B. 17, the Service published model amendments I-IV that may be used by individually designed plan to comply with TRA '86. In Notice 87-33, 1987-18 I.R.B. 7, two model amendments were published for sponsors of master and prototype plans. These amendments may be adopted to satisfy requirements of this Revenue Procedure with regard to the provisions of TRA '86, other than the Technical Corrections in Title XVIII, that are effective for plan years beginning before January 1, 1989. If the sponsor of a master or prototype plan has not adopted the appropriate model amendment as described in Notice 87-33 by the date of plan termination, the adopting employer may adopt the appropriate model amendment for individually designed plans.

03 The simplified model amendment for section 415 of the Internal Revenue Code provided in Notice 87-21, 1987-6 I.R.B. 20, may not be used to satisfy the section 415 requirements for a terminating plan. The model amendments provided in Notice 87-2 or Notice 87-33 will satisfy the section 415 requirements.

04 In addition to the requirements listed in this section, other requirements that become effective with respect to plans terminating after the effective date of this revenue procedure may also require plan amendment. For example, if changes in the qualification requirements made by the Omnibus Budget Reconciliation Act of 1986 (OBRA), Pub. L. 99-509, are effective with respect to a plan, amendments may be required to comply with those changes on or before plan termination.

SEC. 4. FILING INSTRUCTIONS

01 The requirements of Rev. Proc. 80-30, 1980-1 C.B. 685, are to be followed in requesting a determination of a plan's qualified status from the appropriate Key District Director.

02 An application for a determination letter is made on a Form 5310, accompanied by a Form 6088 or statement of actuarial evaluation describing distributions to participants. Copies of plan amendments made since the most recent determination letter was issued must also be submitted.

SEC. 5. SUPPLEMENTAL INFORMATION REQUIRED

Applications for a determination letter on termination of a qualified plan prior to the delayed amendment date of section 1140 of TRA '86 must be accompanied by the following representations, where applicable:

01 In the case of defined benefit plan, a representation that any distribution made after December 31, 1984, complied with section 1139 rates (or the temporary REA regulations if made before 1987), or were corrected to do so by August 10, 1987.

02 A statement as to whether annual additions, benefit accruals, or benefit payments have been made in excess of the applicable section 415 limitations, and which, if any, exception or transitional provision reference in Section 2.06 of this revenue procedure is applicable.

SEC. 6. EFFECT ON OTHER DOCUMENTS

Section 4.09 of Rev. Proc. 80-30 is hereby modified to require the submission of the supplemental information in section 6 above, in connection with applications for determination letters involving plans terminating prior to the date provided in section 1140 of TRA '86.

SEC. 7. EFFECTIVE DATE

The special procedures set forth in this revenue procedure are effective January 25, 1988. Applications submitted more than 30 days after January 25, 1988, must be accompanied by the appropriate supplemental information described in Sec. .01 and Sec. .02.