7.1.1. Employee Plans

(1) A plan is qualified if it meets the requirements of IRC 401(a) in form and operation. A qualified plan is entitled to favorable tax treatment. Other plans entitled to favorable tax treatment within EP’s jurisdiction are:

• IRC 403(b) plans

• IRC 457(b) plans

• Simplified Employee Pension plans (SEPs)

• Savings Incentive Match Plans for Employees (SIMPLEs)

(2) To help taxpayers understand the applicable tax laws and ensure that their plans comply, EP issues certain Letter Rulings, Determination Letters, Opinion Letters, Advisory Letters, and Approval Letters.

(3) EP enters into Compliance Statements and Closing Agreements with plan sponsors to resolve failures to comply with the plan qualification requirements, avoiding plan disqualification.

(4) EP provides technical and actuarial support to IRS employees through:

• Employee Plans Knowledge Management (KM)

• Responses to requests for actuarial assistance

(1) This IRM is an overview of the administrative procedures governing EP Rulings and Agreements (R&A). EP R&A is made up of:

• EP Technical

• EP Voluntary Compliance (VC)

• EP Determinations

(2) This IRM covers the following topics:

1. IRM 7.1.1.1, Program Scope and Objectives provides an overview of EP R&A programs.

2. IRM 7.1.1.2, Jurisdiction of EP Technical, Examinations, Determinations and VC, lists specific EP programs; for example, Letter Rulings, Determination Letters (DL), Opinion Letters, and the EP office that rules on them.

3. IRM 7.1.1.3, Assistance to Determinations, VC, and Examinations lists procedures for submitting cases for technical advice, requesting technical assistance, and issuing memoranda providing technical or procedural guidance.

(1) The table below lists delegation orders, their granted authority, the person delegated and the affected IRM section. You can find a complete list of delegation orders governing EP R&A on IRS.gov at Delegation Orders and Policy Statements by Process.

(1) Administrative procedures are generally listed in revenue procedures. Revenue procedures are published in the Internal Revenue Bulletin (IRB), which is published weekly.

(2) General - Rev. Proc. 2024-4, updated annually:

1. Includes the procedures for requesting letter rulings, Determination Letters (DL) and Opinion Letters from EP R&A. It also includes the user fees for these requests.

2. Discusses in detail, the procedural guidance for these programs.

(3) Determination letters

1. Rev. Proc. 2016-37gives the circumstances in which a plan sponsor may submit a DL application to EP and eliminates, as of January 1, 2017, the five-year remedial amendment cycle system for individually-designed plans.

2. Rev. Proc. 2019-20 gives a limited expansion of the DL program to certain statutory hybrid plans and merged plans.

(4) Pre-approved Plans - Rev. Proc. 2015-36, Rev. Proc. 2017-41,Rev. Proc. 2018-21, Rev. Proc. 2018-42, Rev. Proc. 2020-10, Rev. Proc. 2020-40, Rev. Proc. 2021-38, and Rev. Proc. 2023-37 cover the procedures for issuing Opinion and Advisory Letters for defined contribution and defined benefit plans under IRC 401(a), IRC 403(a), and IRC 4975(e)(7). See also Rev. Proc. 2024-4 for updated submission guidelines related to issuing Opinion and Advisory Letters.

(5) Pre-approved 403(b) Plans - Rev. Proc. 2013-22, Rev. Proc. 2014-28, Rev. Proc. 2015-22, Rev. Proc. 2017-18, Rev. Proc. 2019-39, Rev. Proc. 2020-40, Rev. Proc. 2021-37, and Rev. Proc. 2023-37 set forth the procedures for issuing Opinion Letters for 403(b) pre-approved plans.

(6) EPCRS - A coordinated system of correction programs, which is referred to as the Employee Plans Compliance Resolution System (EPCRS), is described in Rev. Proc. 2021-30. Additional guidance regarding Section 305 of the SECURE 2.0 Act of 2022 providing for an expansion of EPCRS is provided in Notice 2023-43.

(7) IRAs - The procedures for obtaining Opinion Letters for prototype trusts, custodial accounts or annuities under IRC 408(a), IRC 408(b), IRC 408 (k), IRC 408(p) or IRC 408A are in Rev. Proc. 87–50, Rev. Proc. 91–44, Rev. Proc. 92–38, Rev. Proc. 97–29, Rev. Proc. 98–59, Rev. Proc. 2002–10, and Rev. Proc. 2010–48, as modified by Appendix A of Rev. Proc. 2024-4.

(8) Complete list - Exhibit 7.1.1-1 lists the major EP revenue procedures currently in effect.

(9) In addition to the published guidance listed here and in Exhibit 7.1.1-1, other sections of the Internal Revenue Manual have information and procedures for EP specialists.

(1) Taxpayers must pay user fees for rulings, Opinion Letters, DLs, Compliance Statements and similar requests per The Revenue Act of 1987, P. L. 100–203, Act Section 10511, but some exceptions apply. See Rev. Proc. 2024-4 and IRM 7.11.1.10, User Fee Requirements.

(1) The Director, EP, supervises and is responsible for:

• EP R&A

• EP Examinations

• EP Program Management Office

(2) The Director, EP R&A, supervises and is responsible for:

• EP Determinations

• EP Technical

• EP VC

(3) The Program Manager, VC, supervises and is responsible for the group managers and employees in VC.

(4) The Area Managers (1 & 2), EP Determinations, supervise and are responsible for the group managers and employees in EP Determinations.

(5) The Manager, EP Technical, supervises and is responsible for the group managers and employees in EP Technical.

(6) An EP employee who finds indications of fraud while processing a case discusses the facts with the group manager. If the manager concurs, the EP employee and their manager will contact the EP Fraud Subject Matter Expert (SME) or the TE/GE Fraud Specialist to discuss the first indications of fraud and possible further development. If the EP SME or TE/GE Fraud Specialist agree that there are sufficient indicators to warrant fraud development, they contact the National Fraud Program Fraud Technical Advisor, and together follow the fraud development procedures in IRM 25.1.2, Fraud Handbook, Recognizing and Developing Fraud.

(1) This table lists commonly used acronyms and provides their definitions.

(1) A "Master Plan" is a form of plan defined in Rev. Proc. 2017-41, Section 4.01, with a related form of trust acting as the funding medium for the plans of all adopting employers.

(2) A "pre-approved plan" under IRC 401(a)is a plan that a provider makes available for employers to adopt. The term includes both Standardized and Nonstandardized plans. See Rev. Proc. 2023-37, Section 4.01.

(3) A "pre-approved plan" under IRC 403(b) is a plan that a provider makes available for employers to adopt. The term includes both Standardized and Nonstandardized plans. (Rev. Proc. 2023-37, Section 4.01).

(4) The terms Nonstandardized plan, Standardized plan, mass submitter and provider are defined in Rev. Proc. 2023-37, Section 4.01.

(1) A "letter ruling" is a written statement IRS issued to a taxpayer that interprets and applies the employee benefit plans laws to a specific set of facts.

(2) The IRS can modify or revoke a letter ruling they find to be in error or not in agreement with the IRS’ current views. The retroactive effect of the modification or revocation may be limited under the discretionary authority granted by IRC 7805(b).

(1) A "determination letter" is a written statement the Director, EP R&A, issued on an individual’s or organization’s written inquiry that applies to the particular facts and previously announced principles and precedents.

1. IRS only issues a DL when based on clearly established rules in the statute, a tax treaty, regulations, or based on a conclusion in a revenue ruling, opinion, or court decision representing the IRS position, and that specifically answers the questions presented.

2. IRS doesn’t issue a DL for novel issues or issues excluded from EP Determinations jurisdiction.

(2) The Director, EP R&A, issues DLs on retirement plan’s qualification under IRC 401, IRC 403(a), IRC 409, and IRC 4975(e)(7), and the status for the exemption of any related trusts or custodial accounts under IRC 501(a) (except for adopting employers of a pre-approved plan requesting a determination letter) (IRM 7.1.1.3 (1)).

(3) EP issues DLs for individually-designed plans’:

1. Initial qualification.

2. Termination.

3. Merged Plans, under the conditions set forth in Section 9.05 of Rev. Proc. 2022-40.

4. Certain other circumstances noted in guidance. See Rev. Proc. 2016-37and Rev. Proc. 2024-4, Section 11.

(4) The Remedial Amendments List (RAL), published annually, sets the end of the remedial amendment period for an individually-designed plan with respect to the changes in qualification requirements that appear on the list. The most recent RAL is in Notice 2023-79.

(1) DLs are also issued for individually-designed statutory hybrid plans for a limited period and individually-designed merged plans on an ongoing basis. See Rev. Proc. 2019-20.

(2) An "Opinion Letter" is a written statement issued by the Director, EP R&A, as to:

1. A plan under IRC 401, IRC 403(a), or both IRC 401 and IRC 4975(e)(7) qualification in form.

2. The form of a pre-approved plan’s acceptability under IRC 403(b).

3. A prototype trust, custodial account, or annuity satisfaction in form with the requirements for individual retirement arrangements (IRAs) under IRC 408(a) and IRC 408(b), SEPs under IRC 408(k), SIMPLEs under IRC 408(p) and Roth IRAs under IRC 408A.

(3) Opinion Letters under IRC 401 are issued to pre-approved defined benefit and pre-approved defined contribution plans submitted under the procedures of Rev. Proc. 2015-36, Rev. Proc. 2017-41, Rev. Proc. 2018-21, Rev. Proc. 2018-42, Rev. Proc. 2020-10, Rev. Proc. 2020-40, Rev. Proc. 2021-38, and Rev. Proc. 2023-37.

1. The master and prototype (M&P) and volume submitter (VS) programs were combined under IRC 401 into a new Opinion Letter program, which also expands the types of plans eligible for pre-approved status and provides greater flexibility in the design of pre-approved plans (Rev. Proc. 2017-41). Section 6.03 of Rev. Proc. 2017-41, lists the situations in which Opinion Letters will not be issued.

2. Rev. Proc. 2018-21 modifies Rev. Proc. 2015-36 and Rev. Proc. 2017-41 with respect to defined benefit plans containing a cash balance formula.

3. Rev. Proc. 2018-42 extends the deadline for submitting on-cycle applications for Opinion Letters for pre-approved defined contribution plans.

4. Rev. Proc. 2020-10 sets forth the third six-year remedial amendment cycle for pre-approved defined benefit plans.

5. Rev. Proc. 2020-40 provides the general deadline for adopting a discretionary amendment to a pre-approved plan.

6. Rev. Proc. 2021-38 provides the deadline for adopting an interim amendment to a pre-approved plan.

7. Rev. Proc. 2023-37 sets for the rules regarding qualified pre-approved plans and IRC 403(b) pre-approved plans, and combines, conforms, clarifies, and updates rules in prior revenue procedures.

(4) The most recent Cumulative List for:

1. Pre-approved defined contribution plans is Notice 2024-3.

2. Pre-approved defined benefit plans is Notice 2020-14.

(5) Opinion Letters are issued to IRC 403(b) plans.

1. Rev. Proc. 2013-22 lists the procedures for issuing Opinion and Advisory Letters for IRC 403(b) pre-approved plans with respect to the first six-year remedial amendment cycle (ending on June 30, 2020). See Rev. Proc. 2014-28, Rev. Proc. 2015-22, Rev. Proc. 2019-39, and Rev. Proc. 2021-37 modified Rev. Proc. 2013-22.

2. Rev. Proc. 2017-18, as modified by Notice 2020-35, provides that the last day of the initial remedial amendment period for a IRC 403(b) pre-approved plan is June 30, 2020.

3. Rev. Proc. 2019-39 establishes a recurring cycle of remedial amendment periods for IRC 403(b) individually-designed and pre-approved plans for correcting form defects first occurring after the initial remedial amendment period ends.

4. Rev. Proc. 2020-40 provides the general deadline for adopting a discretionary amendment to a IRC 403(b) pre-approved plan.

5. Rev. Proc. 2021-37 modifies and supersedes Rev. Proc. 2013-22 for Opinion Letter applications submitted with respect to a IRC 403(b) pre-approved plan’s second six-year remedial amendment cycle (and subsequent cycles). Rev. Proc. 2021-37 eliminates the distinction between prototype and VS plans.

6. Notice 2022-8 sets forth the 2022 Cumulative List of changes for a IRC 403(b) pre-approved plan.

7. Rev. Proc. 2023-37 sets forth the rules regarding qualified pre-approved plans and IRC 403(b) pre-approved plans, and combines, conforms, clarifies, and updates rules in prior pre-approved plan revenue procedures.

(6) Opinion Letters are issued to traditional and Roth IRAs, SEPs and SIMPLEs per Rev. Proc. 2024-4.

(1) An "Advisory Letter" is a letter issued under the VS program on the form of a pre-approved plan. For more information on the VS program, see:

1. Rev. Proc. 2015-36, as modified by Rev. Proc. 2018-21, for IRC 401(a) plans.

   Note: Rev. Proc. 2017-41 modified the pre-approved plan program by eliminating the distinction between an M&P plan and a VS plan. However, certain provisions of Rev. Proc. 2015-36 on the M&P and VS programs continue to apply to pre-approved plans. (Rev. Proc. 2024-4, Section 1.03(2)(a)).

2. Rev. Proc. 2013-22 (as modified byRev. Proc. 2014-28, Rev. Proc. 2015-22, Rev. Proc. 2019-39, and Rev. Proc. 2021-37, and clarified by Rev. Proc. 2017-18) for IRC 403(b) plans.

Note: Rev. Proc. 2021-37 eliminated the distinction between prototype and VS plans. However, the provisions of Rev. Proc. 2013-22 continue to apply to opinion and advisory letter applications submitted for the first cycle for IRC 403(b) pre-approved plans.

(1) A "compliance statement" is a binding written agreement between EP R&A and, generally, the plan sponsor. It describes certain failures of the retirement plan to meet the applicable requirements under IRC 401(a), IRC 403(b), IRC 408(k) or IRC 408(p). See Rev. Proc. 2021-30 and IRM 7.2.2, TE/GE Closing Agreements, Employee Plans Compliance Resolution System (EPCRS).

(1) A "closing agreement" is a final agreement between the IRS and a taxpayer on a specific issue or liability per IRC 7121. See IRM 7.2.1, TE/GE Closing Agreements, Closing Agreements Originating in EP Technical, and IRM 7.2.2, TE/GE Closing Agreements, Employee Plans Compliance Resolution System (EPCRS).

(1) EP employees don’t issue oral rulings or determinations, letter rulings or DLs in response to oral requests from taxpayers. Instead, EP employees generally discuss with taxpayers or their authorized representatives EP’s jurisdiction to rule on particular issues and the procedural requirements to submit DL or letter ruling requests.

(2) In EP’s discretion, EP employees may also discuss substantive issues with taxpayers or the taxpayer’s representatives. Taxpayers can’t rely on oral advice as a basis for obtaining retroactive relief under Code section 7805(b). (Rev. Proc. 2024-4, Section 3.06).

(3) Taxpayers may call the centralized customer service unit at (877) 829-5500 (toll-free number) for help with specific questions, basic information about forms, or the status of a pending application. See IRM 21.1.1, Accounts Management and Compliance Services Operations, Accounts Management and Compliance Services Overview, for additional information.

(1) The IRS issues approval letters (assuming the requirements of 26 CFR 1.408-2(e)(2) through 26 CFR 1.408-2(e)(5) are met) for entities to act as a nonbank trustee or custodian (NBT) for:

1. Qualified plans under IRC 401(a).

2. IRAs under IRC 408, Roth IRAs under IRC 408A and Coverdell education savings accounts under IRC 530.

3. Archer medical savings account established under IRC 220.

4. Health savings account established under IRC 223.

5. Custodial accounts described in IRC 403(b)(7).

6. Eligible deferred compensation plans described in IRC 457(b).

(2) Approval to act as an NBT is within the jurisdiction of the Director, EP and EP Technical.

(3) The Director, EP Examinations, investigates approved NBTs for continued compliance, then reports its findings to the Director, EP.

(1) "Technical advice" means EEE’s advice or guidance via a memorandum that:

1. EP Examinations or EP R&A requests, or

2. In response to a technical or procedural question that develops during a determination or examination on the interpretation and proper application of tax law, tax treaties, regulations, revenue rulings, notices or other precedents published by the IRS to a specific set of facts.

(2) For additional guidance on requesting technical advice, see:

1. Rev. Proc. 2024-2.

2. IRM 7.11.12, Employee Plans Determinations Letter Program, Preparing Technical Advice Requests.

3. IRM 4.70.16, TE/GE Technical Assistance, Technical Advice Requests and Requests for 7805(b) Relief.

(1) Technical assistance covers matters of general technical application in EP R&A, EP Examinations or an Appeals Office, where the issues:

1. Aren’t raised in an examination of a taxpayer’s return or a request for a determination letter.

2. Don’t relate to a specific case under consideration by EP R&A, EP Examinations or an Appeals Office.

(2) EP Technical issues technical assistance, when appropriate to the relevant requesting office.

(3) Knowledge Management also offer technical assistance to IRS employees. See IRM 1.4.7, Resource Guide for Managers, TE/GE Knowledge Management (KM) Administration.

(1) Memoranda containing either technical or procedural guidance may be issued to EP Technical, EP Determinations, EP Examinations or VC. The guidance may be provided on matters of policy, new legislation or IRS positions. Where appropriate, the instructions contained in the memoranda are incorporated into the IRMs.