The IRS issues favorable letters for various types of plans that meet the requirements of the Code. The type of letter a Plan needs to obtain depends on the structure of the Plan. You may have retirement plans that have been individually designed plans which are drafted to meet particular needs of the employer or pre-approved plans. Some examples of pre-approved plans are Master and Prototype (“M&P”) and Volume Submitter (“VS”) plans.
If you have created an individually designed plan, a determination letter may be obtained from the IRS if it meets the requirements of the Code. An M&P plan may obtain an opinion letter and a VS plan may obtain an advisory letter. Employers who adopt M&P and VS plans can rely on a favorable opinion or advisory letter without having to request individual determination letters. At times however, the adopting employer may wish to obtain a determination letter for M&P and VS plans in order to have reliance or if they wish to expand their scope of reliance on the plans.
To apply for a determination letter, the employer who is adopting the plan must apply. The employer must determine the appropriate forms to file. In general, Form 5300, Application for Determination for Employee Benefit Plan, Form 5309, Application for Determination of Employee Stock Ownership Plan, or Form 8905, Certificate of Intent to Adopt a Pre-approved Plan would be submitted. Each of these forms can be found on the IRS website. Procedures for adopting VS and M&P plans require different forms than those noted above. For more information on which forms should be filed, visit the IRS website.
To apply for an opinion or advisory letter, the pre-approved plan sponsor must apply. This “pre-approved plan sponsor” is often the employer’s third party administrator (“TPA”). The TPA creates the plan document so many businesses can adopt it and will therefore have many identical plan document provisions.
For tips on how to expedite the determination, opinion, and advisory letter process, review the IRS website.