IRS Opens Determination Letter Program for Qualified Plans Seeking to Comply with Recent Law Changes

Recently, the IRS issued Rev. Proc. 98-14, opening its determination letter program for qualified plans that seek to comply with most (but not all) of the changes made by the Uruguay Round Agreements Act ("GATT"), the Uniformed Services Employment and Reemployment Rights Act of 1994, the Small Business Job Protection Act of 1996, ("SBJPA"), and Tax Reform Act of 1997 ("TRA '97"). Beginning April 27, 1998, the IRS will consider amendments made to comply with these four statutes when it reviews applications for determinations for qualified pension, profit sharing and stock bonus plans.

As we reported in our August, 1997 Newsletter, the IRS has given sponsors of qualified plans additional time to amend their plans. Rev. Proc. 97-41 provides a remedial amendment period with respect to certain plan amendments for GATT and the SBJPA. The remedial amendment period generally permits plan amendments to be effective retroactively if adopted before the last day of the first plan year beginning on or after January 1, 1999, provided that "operational compliance" occurs prior to the actual amendment date to the extent that any provision of these statutes have effective dates prior to 1999. Determination letters issued with respect to applications for determination filed on or after April 27, 1998 will contain a statement to the effect that the determination takes into account the requirements of GATT, TRA '97 and those requirements of the SBJPA that are effective before the first day of the first plan year beginning on or after January 1, 1999.