rp-09-36.pdf

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Part III

Administrative, Procedural, and Miscellaneous

26 CFR 601.201: Rulings and determination letters
(Also, Part I, §§ 401; 1.401(b)-1.)

Rev. Proc. 2009-36

SECTION 1. PURPOSE

.01 This revenue procedure modifies Rev. Proc. 2007-44, 2007-2 C.B. 54, to
provide that a remedial amendment cycle with respect to a governmental plan
within the meaning of § 414(d) of the Code (“governmental plan”) will not end
before the expiration of the 91
st
day after the close of the first legislative
session that begins more than 120 days after a determination letter is issued
for the plan (or after the occurrence of certain other events relating to a
determination letter application), provided that the application for the
determination letter was timely submitted to the Service.

.02 This revenue procedure also modifies Rev. Proc. 2007-44 to provide that
the sponsor of an individually designed governmental plan may elect Cycle E
(instead of Cycle C) as the initial (EGTRRA) remedial amendment cycle for
the plan. This change (which was announced in the November 5, 2008,
Special Edition of the EP News http://www.irs.gov/pub/irs-tege/se1108.pdf
is a
one-time modification that does not apply in determining a plan’s remedial
amendment cycle after the initial (EGTRRA) cycle.

SECTION 2. BACKGROUND

.01 Section 401(b) provides a remedial amendment period during which a plan
may be amended retroactively to comply with the qualification requirements of §
401(a). Section 1.401(b)-1 of the Income Tax Regulations describes the
disqualifying provisions that may be amended retroactively and the remedial
amendment period during which retroactive amendments may be adopted. The
regulations also grant the Commissioner the discretion to designate certain plan
provisions as disqualifying provisions.

.02 Section 1.401(b)-1(e)(3) permits the timely adoption of retroactive remedial
amendments that have been determined to be necessary for the issuance of a
favorable determination letter, provided that the application for a determination
letter was filed with the Service before the end of the remedial amendment
period. Section 1.401(b)-1(e)(3) also provides that if an application for a
determination letter on the qualified status of a plan is filed with the Service on or

before the end of a remedial amendment period, the period is extended until the
expiration of the 91
st
day after:

(1) The date on which notice of the final determination with respect to the
application is issued by the Service, the application is withdrawn, or the
application is otherwise disposed of by the Service; or

(2) If a petition is timely filed with the U.S. Tax Court for a declaratory judgment
under § 7476 with respect to the final determination (or the failure of the Service
to make a final determination) in response to such application, the date on which
the decision of the Tax Court in such proceeding becomes final.

.03 Section 1.401(b)-1(f) provides that the Commissioner may extend the
remedial amendment period at the Commissioner’s discretion.

.04 Rev. Proc. 2007-44 provides a system of staggered, cyclical remedial
amendment periods under § 401(b). Under this system, every individually
designed plan has a five-year remedial amendment period or cycle, and every
pre-approved plan (that is, a master and prototype or volume submitter plan) has
a six-year remedial amendment period or cycle. In general, Rev. Proc. 2007-44
extends the remedial amendment period for any disqualifying provision to the
end of a plan’s remedial amendment cycle that includes the date on which the
remedial amendment period with respect to the provision would otherwise end
under § 1.401(b)-1.

.05 In general, the end of a plan’s remedial amendment cycle is the last day by
which the plan may be retroactively amended to correct disqualifying provisions
for which the remedial amendment period under § 1.401(b)-1 would otherwise
end during that cycle. However, if an application for a determination letter is filed
with the Service before the end of a plan’s remedial amendment cycle, the
remedial amendment period, and thus the deadline for retroactively amending
disqualifying provisions, is extended as provided in § 1.401(b)-1(e)(3).

.06 The cycle applicable to an individually designed plan is generally based on
the sponsoring employer’s taxpayer identification number. However, the initial
remedial amendment cycle for individually designed governmental plans (Cycle
C) ended on January 31, 2009, and each subsequent Cycle C ends on each fifth
anniversary thereof. The six-year remedial amendment cycle for pre-approved
plans, including governmental plans that are pre-approved plans, is contained in
section 18 of Rev. Proc. 2007-44.

.07 The Service recognizes that the 91-day extension of the remedial
amendment period provided by § 1.401(b)-1(e)(3) may not allow enough time for
governmental plans to be amended to adopt retroactive remedial amendments
that have been determined to be necessary for the issuance of a favorable
determination letter. This is because the governing body with authority to amend

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the plan may be prevented, under the laws and procedures applicable to the
governing body’s deliberations, from considering the amendments until some
time after the 91-day extension under § 1.401(b)-1(e)(3) has expired.

.08 Rev. Proc. 2009-6, 2009-1 I.R.B. 196, contains the Service’s procedures
regarding the issuance of determination letters for plans qualified under § 401(a).
Section 19 of Rev. Proc. 2009-6 provides that an application for a determination
letter may be withdrawn by the applicant, but that any user fee paid with the
application generally will not be returned to the applicant.

SECTION 3. APPLICATION OF § 1.401(b)-1(e)(3) TO GOVERNMENTAL
PLANS

Pursuant to the Commissioner’s authority under § 1.401(b)-1(f), if an application
for a determination letter on the qualified status of a governmental plan is filed
with the Service on or before the end of the plan’s remedial amendment cycle,
the remedial amendment period will be extended until the expiration of the 91
st

day after the last day of the first regular legislative session beginning more than
120 days after the date in (1) or (2) below in which the governing body with
authority to amend the plan can consider a plan amendment under the laws and
procedures applicable to the governing body’s deliberations:

(1) The date on which notice of the final determination with respect to the
application is issued by the Service, the application is withdrawn, or the
application is otherwise disposed of by the Service; or

(2) If a petition is timely filed with the U.S. Tax Court for a declaratory judgment
under § 7476 with respect to the final determination (or the failure of the Service
to make a final determination) in response to such application, the date on which
the decision of the Tax Court in such proceeding becomes final.

SECTION 4. OPTION TO ELECT CYCLE E AS INDIVIDUALLY DESIGNED
GOVERNMENTAL PLAN’S INITIAL REMEDIAL AMENDMENT CYCLE

.01 The sponsor of an individually designed governmental plan may elect Cycle
E (instead of Cycle C) as the plan’s initial (EGTRRA) remedial amendment cycle.
The election is made by filing a determination letter application for the plan during
the one-year submission period for the initial Cycle E (February 1, 2010 through
January 31, 2011). No election form or notice to the Service is required. A
sponsor of an individually designed governmental plan that submitted a
determination letter application for the plan during the submission period for the
initial Cycle C (February 1, 2008 through January 31, 2009) may withdraw the
application. If the application was filed on or before November 7, 2008, the user
fee paid with the application will be returned to the applicant, provided a written
request to withdraw the application was submitted to the Service (postmarked)

3

4
on or before January 31, 2009. Otherwise, as provided in section 19 of Rev.
Proc. 2009-9, the user fee generally will not be returned.

.02 If the sponsor of an individually designed governmental plan elects to file a
determination letter application for the plan during the Cycle E submission period,
all requirements for an individually designed plan submitted for a determination
letter during the Cycle E submission period are applicable to the sponsor’s plan,
including the requirement to amend the plan for all applicable items on the Cycle
E Cumulative List and the requirement to timely adopt any interim amendments
that are required for a governmental plan during Cycle C and Cycle D.

.03 A sponsor’s election of Cycle E, instead of Cycle C, as the initial (EGTRRA)
remedial amendment cycle for an individually designed governmental plan
applies only to that plan and only to that cycle. For any subsequent remedial
amendment cycle, the plan’s cycle will revert to Cycle C. Therefore, if a sponsor
of a governmental plan files a determination letter application for the plan during
the initial Cycle E submission period ending on January 31, 2011, the
determination letter that is issued will expire at the end of the Cycle C that next
follows the initial Cycle C (January 31, 2014).

SECTION 5. EFFECT ON OTHER DOCUMENTS

Rev. Proc. 2007-44 is modified.

SECTION 6. EFFECTIVE DATE

This revenue procedure is effective on August 31, 2009, but plan sponsors may
rely on this revenue procedure with respect to the modification contained in
section 4 as of November 5, 2008.

DRAFTING INFORMATION

The principal author of this revenue procedure is James P. Flannery of the
Employee Plans, Tax Exempt and Government Entities Division. For further
information regarding this revenue procedure, please contact the Employee
Plans taxpayer assistance answering service at 1–877–829–5500 (a toll-free
number) or e-mail Mr. Flannery at RetirementPlanQuestions@irs.gov.