rp-12-50.pdf

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Rev. Proc. 2012-50

SECTION 1. PURPOSE

This revenue procedure modifies Rev. Proc. 2007-44, 2007-2 C.B. 54, to provide that
the sponsor of an individually designed governmental plan within the meaning of
§ 414(d) (“governmental plan”) may elect Cycle E (instead of Cycle C) as the second
remedial amendment cycle for the plan by filing a determination letter application for the
plan during the one-year submission period for the second Cycle E (February 1, 2015
through January 31, 2016) instead of the second Cycle C (February 1, 2013 through
January 31, 2014). This modification applies only to the second remedial amendment
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(f) provides that the Commissioner may extend the remedial
amendment period at the Commissioner’s discretion.

.03 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.

.04 The five-year remedial amendment cycle applicable to an individually designed plan
is generally based on the sponsoring employer’s taxpayer identification number.
However, the applicable cycle for all individually designed governmental plans under
Rev. Proc. 2007-44 is Cycle C. The six-year remedial amendment cycle for pre-
approved plans, including governmental plans that are pre-approved, is contained in
section 18 of Rev. Proc. 2007-44.

.05 Rev. Proc. 2009-36, 2009-35 I.R.B. 304, modified Rev. Proc. 2007-44 to provide
that the sponsor of an individually designed governmental plan could elect Cycle E
(instead of Cycle C) as the initial remedial amendment cycle for the plan by submitting a

determination letter application for the plan during the initial Cycle E submission period
(instead of the initial Cycle C submission period).

.06 Pursuant to Rev. Proc. 2007-44, the second Cycle C submission period begins
February 1, 2013, and ends January 31, 2014. The second Cycle E submission period
begins February 1, 2015, and ends January 31, 2016.

SECTION 3. OPTION TO ELECT CYCLE E AS INDIVIDUALLY DESIGNED
GOVERMENTAL PLAN’S SECOND REMEDIAL AMENDMENT CYCLE

.01 The Service recognizes that sponsors of governmental plans face unique issues in
the process of securing approval for amendments from the governing body with
authority to consider plan amendments during legislative sessions. In order to have
greater flexibility to deal with these issues, the sponsor of an individually designed
governmental plan may elect Cycle E (instead of Cycle C) as the plan’s second
remedial amendment cycle. The election is made by filing a determination letter
application for the plan during the one-year submission period for the second Cycle E
(February 1, 2015 through January 31, 2016). No election form or notice to the Service
is required.

.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 second 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 second Cycle E submission
period ending on January 31, 2016, the determination letter that is issued will expire at
the end of the third Cycle C submission period (January 31, 2019).

.04. A determination letter issued to a sponsor of an individually designed
governmental plan for the initial remedial amendment cycle ordinarily expires at the end
of the second Cycle C (January 31, 2014), regardless of whether the sponsor elected
Cycle E as the plan’s initial cycle in accordance with Rev. Proc. 2009-36. This
expiration date is hereby extended to the end of the second Cycle E (January 31, 2016)
if the sponsor elects Cycle E as the plan’s second remedial amendment cycle in
accordance with this revenue procedure.

SECTION 4. EFFECT ON OTHER DOCUMENTS

2

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Rev. Proc. 2007-44 is modified.

SECTION 5. EFFECTIVE DATE

This revenue procedure is effective on February 1, 2013.

DRAFTING INFORMATION

The principal author of this revenue procedure is Angelique Carrington 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 Ms. Carrington at
RetirementPlanQuestions@irs.gov
.