The Internal Revenue Service (IRS) has delayed the filing deadline for determination letters for governmental plans to January 31, 2016. This may come as a welcome relief for governmental plan sponsors.
Governmental plans are required to file for IRS determination letters in Cycle C of the IRS’s five-year determination letter program. The initial Cycle C ended on January 31, 2009, but the IRS extended the filing deadline by allowing governmental plans to submit in Cycle E, which ended on January 31, 2011. This extension did not, however, change the requirement that governmental plans file in Cycle C. This meant that although many plans filed only last year, they would have been required to file again at the start of the next Cycle C, beginning February 1, 2013.
Many plans have not yet received rulings on their determination letter applications. In addition, many of the favorable determination letters that have been received “expire” on January 31, 2014. This would require a second filing soon after receipt of an initial determination letter (if there was one).
According to Revenue Procedure 2012-50, a governmental plan sponsor may file in Cycle E (ending January 31, 2106) in lieu of Cycle C. If a plan sponsor elects to file in Cycle E, the expiration date of a determination letter previously received is extended to January 31, 2016.
Contact MCB’s Employee Benefit Plan Audit Practice Leader, Charles Deppe, at 703-218-3600 or email firstname.lastname@example.org with your benefit plan questions or to request a proposal for your next review or audit.