The IRS has announced significant changes to its qualified plan determination letter program. These changes, which become effective January 1, 2017, impact individually-designed plans.
Favorable determination letters give assurance that the plan document, as drafted, complies with applicable laws. Plan documents that do not comply with the law could result in plan “disqualification,” causing adverse tax treatment for participants’ benefits and disallowance of the sponsor’s prior tax deductions for employer contributions. A determination letter, however, does not provide protection with regard to plan operations.
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