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February 19, 2009

Determination letter

Your Guide

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Definition

A letter issued by the IRS to a plan sponsor, indicating whether the IRS has determined that a retirement plan is qualified.

  1. Form 5300  is used to apply for a determination letter for an  individually designed plans
  2. Form 5307 is used to apply for a determination for a master/prototype plans and volume submitter plans
  3. Form 6406 is used to apply for a determination for plan amendments

While a determination letter is not usually mandatory, it gives the plan sponsor some degree of assurance that the IRS would not disallow the tax benefits for which a qualified plan is eligible, such as deducting plan contributions and participants deferring income tax on plan contributions and earnings until they are distributed.

A favorable determination letter technically applies on a retroactive basis, and assumes that the information presented in the determination letter is accurate. The plan’s ongoing qualified status is dependent  on how it continues to operate after the effective date of the determination letter.

Referring Cite

Revenue Procedure 2006-6, Revenue Procedure 2005-16

Additional Helpful Information

Applications for individual determination letters should be sent to:

Internal Revenue Service
P.O. Box 192
Covington, KY 41012-0192
The address used for Express Mail or delivery services should be sent to:
Internal Revenue Service
201 West Rivercenter Blvd.
Attn: Extracting, Stop 312
Covington, KY 41011

Volume Submitter Specimen and Master and Prototype Plans are sent to:

Internal Revenue Service
P.O. Box 2508
Room 5106
Cincinnati, OH 45201
Attn: VS Coordinator or Master and Prototype Coordinator, as applicable

The address used for express mail or delivery services for Volume
Submitter Specimen and Master and Prototype Plans
is:

Internal Revenue Service
550 Main Street
Room 5106
Cincinnati, OH 45202
Attn: VS Coordinator or Master and Prototype Coordinator, as applicable

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at http://irapublications.com. Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.

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