In the Tax Notes article, “IRS Opinion Letters Coming Soon for Preapproved Retirement Plans,” principal Elizabeth Dold discussed the significance of the IRS June 1 announcement (Announcement 2020-7, 2020-25 IRB 1) regarding the issuing of opinion letters for preapproved plans.
“This is important information for 401(k), profit sharing, and money purchase plan sponsors that adopt preapproved plans, rather than individually designed plans,” Dold explained. “Many plan sponsors fall within this category and are impacted by these new deadlines.”
Plan sponsors should be mindful of the two-year restatement period, because if they fail to timely adopt the newly approved plan documents, they could trigger plan qualification concerns that would have to be resolved through the IRS’s Employee Plans Compliance Resolution System or risk plan disqualification, said Dold.
Dold added that the July 31, 2022, deadline to apply for a determination letter is also key, because if plan sponsors miss it, they will have to wait until the next six-year cycle to request a letter.
To read the article, click here.