Try this Revenue Procedure on For Size

I had an intriguing discussion with my wife after she returned from a recent shopping trip. It seems there is an absolute lack of logic in women’s clothing sizes. She saw a shirt in exactly the same style and size as one she bought last year. Well, she liked that shirt and decided she’d get another one. However, when she went to try it on, it didn’t come anywhere close to fitting. In fact, the next size didn’t fit either, so she had to go two sizes different.

Since last year’s shirt, in last year’s size, continues to fit her just as well as it did when she bought it, the only conclusion I can arrive at is that women’s clothing sizes are arbitrary and capricious. For the life of me, I can’t figure out how that benefits manufacturers, let alone consumers. Whatever happened to consistency?

IMHO, in this highly competitive world, the huge advantage goes to the company that decides to be consistent and makes things easier for their customers. While I would expect to see a consistent experience in the commercial world, and I’m surprised when I don’t, it is unfortunately expected and not a big shocker when government entities act inconsistently.

For example, the IRS recently released Revenue Procedure 2014-28, which modifies some of the terms of the pre-approved prototype and volume submitter plans for 403(b) service providers. The main modification extends the deadlines for plan filing by one year to April 2015, and also makes it possible for some smaller practitioners to use the program by reducing the number of plans that have to be committed.

Those were certainly two criticisms of the original revenue procedure that set forth the document program in 2013. However, what was not addressed was the inconsistency with the plan qualification program under Section 401(a) of the Internal Revenue Code. The biggest difference? There is no opportunity for individual determination letters for 403(b) plan sponsors that give them assurances that their particular document satisfies all of the rules and requirements. Any plan sponsor who wanted those assurances would be required to file for a much more expensive private letter ruling.

There is no logical reason for the lack of consistency between IRS programs for 403(b) plans and 401(a) plans, other than the IRS position that they do not have the resources. It seems to me that the “service” part of Internal Revenue Service suffers, and a lack of consistency creates confusion and additional complexity for plan sponsors and their providers. Additional resources should be found, as providing service should be as important as garnering revenue.

The IRS/Treasury Department recently announced they are embarking on a reorganization that will affect employee plan support. As the IRS and Treasury restructure, I urge they consider the service needs of the public and ensure that resources are allocated for better consistency and continuity. Meanwhile, we’re stuck with an ill-fitting revenue procedure and have to make the best of it.


In addition to blogging here, I also tweet regularly about topics of interest to Tax Exempt plans. Follow me on Twitter: @1aaronfriedman1.


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