In this article, Fred Oliphant and Elizabeth Drake discuss the recent changes to the IRS's determination letter program. In 2012, the IRS scaled back its determination letter program for tax-qualified plans, no longer offering any assurances about a plan's operational compliance with the coverage and nondiscrimination rules. This change marked the end of an important feature of the determination letter program that plan sponsors have relied on for many years. This article describes recent changes narrowing the determination letter program, and examines the implications of this change for plan sponsors and their advisors. It also discusses the need for some form of replacement in the form of individual private letter rulings or guidance of general applicability and what the absence of an effective replacement may mean for plan sponsors.
This article also appeared in the Journal of Pension Planning & Compliance, Spring 2013.