§1201 Procedures in Connection with the Issuance of Certain Determination Letters by the Secretary of the Treasury Covering Qualifications Under Internal Revenue Code

Summary

Before giving an advance ruling on whether a pension, profit-sharing, stock bonus plan (or its trust) or an annuity or bond purchase plan meets the tax rules for being a “qualified” plan, the Treasury must ask the applicant for any paperwork needed for the tax decision and any extra information that the Labor Department reasonably needs for running its rules. The applicant must also show proof that each “interested party” (an employee or group of employees who could be affected) was told about the application. Anyone who qualifies as an interested party, the Labor Department, and the Pension Benefit Guaranty Corporation (PBGC) can ask to comment within 45 days after the Treasury receives the application. The Labor Department can only ask to comment if the PBGC or at least 10 employees (or 10 percent of the employees, whichever is less) first asks it in writing. If Labor asks for information, the Treasury must give it what Labor requests. Labor then has 30 days after getting a request from PBGC or the employees to tell Treasury, PBGC, and those employees whether it will comment and what parts it will not comment on. If Labor declines to comment on some issues, Treasury must let PBGC and the employees comment on those issues. PBGC, and Labor if a group of employees asks, may join or bring court actions under the tax declaratory-judgment rules. If Treasury issues a favorable determination letter, it must tell Labor and give Labor requested information. Labor must treat that favorable letter as initial proof that the plan meets certain parts of the Labor laws (except it is not initial proof for matters that only involve one specific part). If the application is withdrawn or Treasury rules the plan does not qualify, Treasury must tell Labor. The rules here do not apply to applications received before the date when section 410 of the Internal Revenue Code applies to the plan (or would apply if the plan is later found qualified).