Qualification Requirements |
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January 6, 2005 |
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The IRS intends to release an annual list documenting the statutory, regulatory, and guidance changes that must be taken into account when a plan sponsor makes a submission to the IRS for an opinion, advisory, or determination letter. The first such list has been complied for 2004. It will be used to draft the Prototype and Volume Submitter Defined Contribution Plans that we will be drafting and submitting to the IRS in 2005. Theoretically, items not included on this list will not be incorporated into pre-approved DC plans until the plans are submitted again in 2011. The list contains all the changes after December 31, 2001 (generally, since the approval of the GUST document) that are required to be included in the EGTRRA document. The list applies only to defined contribution Prototype and Volume Submitter (pre-approved) plans. Guidance issued after December 14, 2004 that is not listed on the 2004 cumulative list will not be included in the IRS plan language review of pre-approved EGTRRA documents. The final 401(k) regulations and other guidance being issued before year-end are specifically on the 2004 cumulative. A new list will be released next year before the submission of individually designed plans begins in 2006. The Notice is step one in the EGTRRA restatement process and announces February 1, 2005 as the day the IRS will open the 12-month submission period for the EGTRRA restatement of pre-approved defined contribution plans. Employer plans will be amended only after these base plans are approved. The Notice lists 14 code section changes to be incorporated and some miscellaneous Releases. The list includes: |
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| 1. | 72(p) Final Loan Regulations of 12-3-02. | ||||
| 2. | 401(a)(4) Amendments to 1.401(a)(4)-8 relating to new comp plans 6-29-01. | ||||
| 3. | 401(a)(9) Final RMD Regulations of 4-17-02 and 6-15-04. | ||||
| 4. | 401(a)(17) Compensation limit change to $200,000 subject to COLA from EGTRRA. | ||||
| 5. | 401(a)(31) Direct Rollover rule changes: | ||||
| a. | After-tax rollovers in certain situations. | ||||
| b. | Automatic rollover of certain mandatory distributions effective 3-28-05, guidance to be issued soon. | ||||
| c. | 403(b) and 457(b) are added to the definition of eligible retirement plan. | ||||
| d. | Hardships are excluded from definition of eligible rollover definition. | ||||
| 6. | 401(k) | ||||
| a. | Severance from employment is a distributable event for elective deferrals. | ||||
| b. | Safe harbor hardship distribution suspension from making further elective or employee contributions is limited to 6 months. | ||||
| c. | EGTRRA increases in 402(g) and SIMPLE deferral limits. | ||||
| d. | Guidance on deferrals on post-severance compensation to be issued soon. | ||||
| e. | Multiple use test eliminated. | ||||
| f. | Final 401(k) and (m) Regulations expected by end of 2004. | ||||
| 7. | 402A Roth 401(k) plans. | ||||
| 8. | 408(q) Deemed IRAs, Final Regulations 7-22-04. | ||||
| 9. | 411(a) Faster vesting of matching contributions. | ||||
| 10. | 411(a)(11) Rollover contributions may be disregarded from determining involuntary cash-out balance. | ||||
| 11. | 414(v) Catch-up contributions. | ||||
| 12. | 415(c) lesser of 100% of compensation or $40,000 COLA. | ||||
| a. | Deemed 125 compensation . | ||||
| b. | Guidance on post-severance compensation soon. | ||||
| 13. | 416 safe harbor exemption from top - heavy rules. | ||||
| 14. | 4975 plan loans for Subchapter S shareholder-employees. | ||||
| 15. | Miscellaneous | ||||
| a. | Money purchase merger into a profit sharing plan (Rev Rul 2002-42). | ||||
| b. | PEO defined contribution plan guidance (Rev Proc 2002-21 and 2003-86). | ||||
| c. | Charging administrative expenses to former or current employees (Rev. Rul. 2004-10). | ||||
Bill Grossman |
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| For Notice 2004-84: click here. | |||||
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