LOS ANGELES--The Internal Revenue Service is expected to update its procedure on the determination letter program to ease concerns of parent-subsidiary controlled groups, Martin L. Pippins, manager, technical guidance and quality assurance in the Employee Plans Division, said Jan. 24.

Speaking at the Los Angeles Benefits Conference, Pippins said the update to Revenue Procedure 2005-66 on the staggered remedial amendment period should be coming out some time in the next few weeks, but that IRS is unlikely to meet its intended issue date of Jan. 31.

Depending on a plan sponsor's employee identification number, the plan is placed into different cycles for requesting determination letters on the plan's qualified status after being amended for changes in the law that occurred during the cycle.

The update would allow parent-subsidiary controlled groups to elect to be treated as Cycle A filers, or whatever cycle the parent corporation would fall into, based on the parent company's employee identification number, Pippins said.

By having parent-subsidary controlled groups elect either the EIN of the parent, or seek determination letters under Cycle A, IRS is able to avoid spreading out the application process through several cycles, which “creates efficiencies” for the agency, Pippins added.

Pippins said it was unusual for him to talk about a revenue procedure before it is issued but that he was doing so because progress on meeting the Jan. 31 deadline for issuing the update had been slowed down by the “volume of the guidance,” and it was clear that such guidance “was needed right away.”

The conference was co-sponsored by the American Society of Pension Professionals & Actuaries, the Tax Exempt/Government Entities Division of IRS, the National Institute of Pension Administrators, and the Western Pension & Benefits Conference.

By David B. Brandolph