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Deadlines Approaching for Qualified Prototype and Volume Submitter Plans

Deadline to Adopt Updated Plan Documents

Prototype and volume submitter document providers were recently required to update their plan documents to comply with certain tax legislation.  Employer adopters of prototype and volume submitter defined contribution plans have until April 30, 2010 to adopt the provider's updated plan document.  If your company has not yet adopted an updated prototype or volume submitter document, you should contact the provider immediately to begin the process in order to ensure that your company's plan remains qualified.
 

Reliance on Prototype or Volume Submitter Provider's IRS Letter

One of the advantages of adopting a prototype or volume submitter plan document is that in many cases, the adopting employer can rely on the provider's IRS opinion letter as to the plan's qualified status instead of obtaining its own IRS determination letter.

In general, an employer that adopts any prototype or volume submitter plan document can rely on the prototype provider's IRS opinion letter regarding the plan language, if the employer has chosen only those design options that are available under the plan.

An employer that adopts a standardized prototype document generally can also rely on the prototype provider’s IRS opinion letter regarding the plan operation, if the employer follows the terms of the plan. There are, however, circumstances in which an employer that adopts a standardized prototype document cannot rely on the provider’s letter with respect to certain operational requirements. For example, if the employer maintains or maintained another qualified plan covering some of the same participants, it cannot rely on the provider’s letter with respect to meeting the limitations on annual additions or the top heavy requirements. 

An employer that adopts a nonstandardized prototype document or a volume submitter document may also be able to rely on the provider’s letter with respect to certain operational requirements, depending upon the design choices the employer makes for its plan. For example, it will have operational compliance with respect to coverage testing, if the plan covers 100% of all nonexcludable employees (on a controlled group basis), and with respect to certain nondiscrimination requirements, if it adopts a safe harbor allocation formula and a nondiscriminatory definition of compensation. 

DEADLINE TO APPLY FOR AN IRS DETERMINATION LETTER

An employer that wishes to apply for its own IRS determination letter with respect to its prototype or volume submitter plan has until April 30, 2010 to apply. In order to apply for a determination letter, an employer should contact legal counsel. 
In some cases, the prototype or volume submitter provider can also assist in the preparation of a determination letter application.
© 1998-2020 Wiggin and Dana LLPNational Law Review, Volume , Number 62
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About this Author

Karen Clute Tax attorney New Haven Wiggin and Dana
Partner

Karen is committed to helping clients navigate ever-changing tax and fiduciary rules. As a member of the firm's Private Client Services Department, Labor and Employment Department, and Philanthropy Practice Group, Karen has a wide-ranging practice grounded in a deep understanding of the intersections of personal-, community-, and employment-related tax, fiduciary, and financial concerns.

She advises individual clients about a broad range of estate planning issues, with an emphasis on estate and income tax planning. She works with executors and trustees on fiduciary matters and...

203-498-4349
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