Notice to Interested Parties

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A Notice to Interested Parties must be sent before a plan submits an application to the IRS regarding its qualified status (i.e, a determination letter).


Recipients of Notice

Generally, the Notice must be sent to all employees who could be affected by the plan's qualification status. The regulations defining interested parties are, however, relatively complex and subject to interpretation. See 26 CFR 1.7476-1.

Initial Qualification of Plan

For a plan's first determination letter, an interested party includes:

  • All present employees of the employer who are eligible to participate in the plan), and
  • All other present employees of the employer whose principal place of employment is the same as the principal place of employment of any person who is eligible to participate.

An employee who is not eligible to participate in a plan shall not be an interested party if:

  • such employee is excluded from consideration for purposes of Code section 410(b)(1) by reason of section 410(b)(2) (B) or (C); (see Minimum Participation Standards for the Code Section 410 rules)
  • such plan meets the eligibility standards of Code section 410(b)(1)(A) (i.e., 70 percent of all nonhighly compensated employees are benefit under the plan);
  • such employee is eligible to participate in any other plan of the employer with respect to which a favorable determination letter is outstanding, or in such a plan of another company within the employer's controlled group.

Qualification After Amendment

If a plan has already received a determination letter, and amendment after that letter affects participation, interested parties include all present employees of the employer who are eligible to participate in the plan.

If an amendment does affect participation, all current employees of the employer (and possibly all employees within the employer's controlled group) are interested parties, with the exceptions noted above for those exempt from initial qualification notices.

Qualification At Termination

In the case of an application for an advance determination with respect to whether a plan termination affects the continuing qualification of a retirement plan, all present employees with accrued benefits under the plan, all former employees with vested benefits under the plan, and all beneficiaries of decreased former employees currently receiving benefits under the plan, shall be interested parties.

Timing

The must be sent at least 10 (but not more than 24) days before the plan's application.

See 26 CFR 1.7476-2.

Content and Model Notice

See Rev Proc 2010-6 for the current model notice.

Delivery Method

The notice may be provided "by any method reasonably calculated to ensure that each interested party is notified of the application for a determination".

If an interested party who is a present employee is in a unit of employees covered by a collective-bargaining agreement between employee representatives and one or more employers, notice must also be given to the collective-bargaining representative of such interested party by any method that satisfies this paragraph.

The regulations state that it may be necessary to use more than one method of delivery in order to ensure timely and adequate notice to all interested parties.

Electronic notice is permissible if it satisfies the requirements of § 1.402(f)-1 Q&A–5 .