IRS Plans to Drop Determination Letters for Individually Designed Plans

Due to budget constraints, the IRS plans to stop issuing determination letters for periodic compliance. Under current procedures, companies file for letters of determination in a five-year cycle. The process allows companies to receive IRS validation of plan changes. While not having to file will save some costs for companies, it means companies will not have any assurances that changes they make to a plan are acceptable to the IRS on audit. As a result, companies will need to be particularly diligent in making sure any changes they make to their plans are fully compliant with the law, including periodic internal reviews to make sure plan requirements are being followed.