IRS Issues Directive

December 1, 1995 Advisory

The Internal Revenue Service has issued a field directive outlining its procedures for processing employee benefit plans that were not timely amended under the Tax Reform Act of 1986. Most plan sponsors had until the end of the 1994 plan year to submit plans to the IRS for approval of their tax-qualified status. For those plans missing the deadline, the IRS will impose sanctions that will differ, depending on how the failure was discovered, the severity of the defects, the number of participants, and the level of good faith demonstrated.