Advisory Group Recommends Missing Participant and Determination Letter Program Changes to IRS

The Advisory Committee on Tax-Exempt and Government Entities (ACT) has issued its 2018 Report of Recommendations to the IRS on several issues potentially affecting tax-exempt entities, including tax-qualified retirement plans. Recommendations specific to retirement plans include potential broadening of the IRS determination letter program, and administration of the IRS’s missing participant program.

The IRS in 2015 announced a significant scaling back of its program of issuing determination letters, which affirm plans’ qualified status. For example, beginning in 2017, individually designed plans could only submit for determination letters at the time of plan establishing or termination, with certain exceptions to later be specified by the IRS. Earlier this year the IRS requested comments on types of plans and circumstances that might justify the Service reopening a broadened determination letter program for 2019. This 2018 ACT report offers recommendations on circumstances and parameters for a limited reopening of the determination letter program not only for 2019, but for beyond as well.

The report also makes recommendations concerning missing plan participants. Among these are a recommendation that IRS coordinate missing participant guidance with the Department of Labor and Pension Benefit Guaranty Corporation, that it reopen the IRS’s former letter forwarding program, allow uncashed check amounts to be forfeited (subject to reclaiming), apply plan distribution field directives to distributions other than required minimum distributions, etc.