AICPA Supports IRS Expansion of Scope of Retirement Plan Determination Letter Program

July 25, 2018

  • Expansion of program for individually designed retirement plans should apply to 2019 and beyond
  • Determination letters provide assurance to plan sponsors and participants that the retirement plan qualifies for tax benefits  

Washington, D.C. (July 25, 2018) – The American Institute of CPAs (AICPA) has submitted recommendations to the Internal Revenue Service (IRS) in response to Notice 2018-24, Request for Comments on Scope of Determination Letter Program for Individually Designed Plans during Calendar Year 2019.

The AICPA letter explained that the purpose of the determination letter program is to provide assurance to plan stakeholders (e.g., plan sponsors, participants, beneficiaries, auditors, counsel, etc.), through the issuance of a favorable determination letter by the IRS, that the written terms of a qualified retirement plan are in compliance with the tax qualification requirements of Internal Revenue Code section 401(a) so that plan sponsors and participants are assured of tax benefits.

Notice 2018-24 specifically asks for comments about the types of plans the IRS and the Department of the Treasury should consider during the 2019 determination letter application process, as a result of significant law changes (as defined in Rev. Proc. 2016-37), new approaches to plan design, and the inability of certain types of plans to convert to pre-approved plan documents.

The AICPA recommended that:

  • The IRS and Treasury Department expand the scope of the determination letter program for individually designed plans (IDPs) during 2019 and beyond.
  • The IRS and Treasury Department accept applications for determination letters for IDPs in the following circumstances:
    • Certain Employee Plan Compliance Resolution System matters and plans with adoption agreements that include significant pre-approved plan document changes;
    • Qualified plans with multiple benefit structures; and
    • Employee Stock Ownership Plans