Governmental plans should be aware that the Internal Revenue Service (IRS) announced in Notice 2016-03 today that the IRS and the Department of the Treasury will issue guidance as it relates to the upcoming elimination of the 5-year remedial amendment cycle system for individually designed plans under the Employee Plans determination letter program. According to the Notice, Revenue Procedure (Rev. Proc.) 2007-44 will be revised to provide that, among other things, expiration dates on determination letters issued before January 4, 2016 will no longer be operative. The Notice further provides that future guidance will clarify the extent to which an employer may rely on a determination letter after a subsequent change in law or plan amendment. Until Rev. Proc. 2007-44 is updated to reflect this change, employers may rely on the information in Notice 2016-03.
As many governmental employers know, Rev. Proc. 2007-44 sets forth the rules and procedures for individually designed qualified plans to apply for determination letters under staggered 5-year remedial amendment cycles. In Announcement 2015-19, the IRS indicated the 5-year remedial amendment cycles will be eliminated effective January 1, 2017. Notice 2016-03 is the first guidance of 2016 that the IRS has released in anticipation of the significant changes to come to the determination letter program in 2017.
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