Just when you thought you’d figured out all the new regulations set to go into effect for 2012, some government agency changes them up on you. At least with last Friday’s announcement from the IRS, you can breathe easy: its changes won’t take effect until Feb. 1, 2012, or later.
The Service’s Announcement 2011-82 changes the determination letter application process, dropping two features now considered of limited use. Specifically, the two changes are:
- elimination of certain coverage and nondiscrimination demonstrations; and
- restriction filings of Form 5307 to employers that changed their volume submitter (VS) plans.
Concerning the former, the IRS is scrapping the option for a plan sponsor to submit Schedule Q for Form 5300 with its determination letter filing (along with data showing compliance with nondiscrimination mandates), effective Feb. 1, 2012, for non-terminating plans with a five-year remedial amendment cycle; and effective May 1, 2012, for terminating plans or those with a six-year remedial amendment cycle.
Concerning the latter of the two changes, the IRS announced that effective May 1, 2012, it will only accept determination letter applications for Form 5307 from VS plan adopters that modify the terms of the approved specimen plan, but not so that the plan has to be treated as an individually designed plan.
The IRS said that the changes should help improve the Service’s efficiency through reduction of determination letter application processing. Full details of the upcoming changes are described in the IRS press release.