The AICPA announced last week that they have submitted comments on the IRS Announcement 2015-19, which advises that the IRS is modifying the Employee Plans Determination Letter Program and that the current five-year remedial amendment cycles for individually designed retirement plans will be terminated effective January 1, 2017.
Retirement plan sponsors request determination letters under Internal Revenue Code section 401(a) to have assurance that a retirement plan is in compliance with the tax qualification requirements for the plan sponsors and employees. When the proposed changes take effect, limiting the circumstances in which a plan sponsor can apply for a determination letter, it would be more difficult for plan sponsors to know that their plans are compliant and entitled to certain tax benefits.
In their November 23 comment letter, the AICPA responded to the IRS’s requests for comments in four areas, including what changes should be made to the IRS’s planned transition period and what guidance should be issued to assist plan sponsors that wish to convert an individual-designed plan into a pre-approved plan.
The AICPA recommended that the IRS increase the current five-year remedial amendment period to a longer period, such as eight or 10 years. The AICPA also recommended that the U.S. Department of the Treasury and IRS develop a defined process to provide effective model remedial amendments for plan sponsors to adopt. The AICPA highlighted that “stakeholders (e.g., independent CPA firms that audit plans) need the ability to rely on the plan qualification of the document; this guidance for the auditors is crucial to the stability of the ongoing private pension system.”
For the AICPA's full comments, head to their site here.