Industry sources report the IRS plans to stop issuing determination letters for periodic compliance. Under current procedures, companies sponsoring ESOPs and other plans file for determination letters in a five-year cycle. The current cycle 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 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