A Final (?) Word on Plan Amendments
Rev. 08/28/03, E-mail Alert 2003-16

NEWSFLASH: The IRS issued Rev. Proc. 2003-72 regarding the GUST deadline today. The GUST deadline remains September 30, 2003. However, there is an extension for the submission of the application for a determination letter for certain plans until January 31, 2004. Streamlined compliance procedures have been created for the situations below:

1. Plans amended within the GUST Remedial Amendment Period (RAP).
   A plan satisfies the timely amendment requirements if amended to comply with GUST within the plan's GUST remedial amendment period. This is considered to have occurred if "Bona fide" amendments are adopted by the end of the GUST RAP that are made contingent on the receipt of a favorable determination letter provided such amendments become effective upon receipt of the favorable determination letter without further action by the plan sponsor. "The fact that, in connection with the determination letter process, the employer adopts or submits in proposed form, or the Service requests, such changes or such additional amendments will not mean that the amendments the employer adopts by the end of the GUST RAP did not represent a bona fide effort to comply with the requirements of GUST."
   
   
2. For master, prototype and volume submitter plans that are being submitted to the IRS and have not been restated for GUST by September 30, 2003, the submission may be done up until January 31, 2004. The submission must be accompanied by a check for $250 compliance fee in addition to the submission fee. The application should have the words "Rev. Proc. 2003-72" written on the top of the determination letter application. The filing of a determination letter application by January 31, 2004 for an eligible plan will extend the plan's GUST remedial amendment period through the 91st day following the issuance of the favorable determination letter.
   
   
3. Plans that are not required to submit for a determination letter, but that miss the September 30, 2003 deadline, may also submit a determination letter application with a check for $250 for the compliance fee by January 31, 2004.
   
   For more details regarding 1, 2 and 3 above see section 5 and 6 of Rev. Proc. 2003-72
   
   
4. Extension of time for plan to be amended for 401(a)(9).
   The time by which a defined contribution plan must be amended to comply with the final and temporary regulations under Section 401(a)(9) is extended to the later of the last day of the first plan year beginning on or after January 1, 2003, or the end of the GUST remedial amendment period. This effects pre-approved plans submitting for determination letters by January 31, 2004. The deadline for the adoption of the Section 401(a)(9) amendments would correspond to the deadline for the GUST amendment which would be 91 days after the issuance of the favorable determination letter.
   
   IRS Issues EP Plan News Special Edition To Announce GUST Submission Extension 08-29-03
   

Following is the original article about Final (?) Plan Amendments:

As of the time of the writing of this Article, the deadline to both amend and submit, if applicable, McKay Hochman prototype and volume submitter plans is September 30, 2003. While we assume that most of our clients will have the job done by the deadline, we are beginning to hear from some of them that that might not be the case. If you think there may be a problem completing the process by that date, we stand ready to assist you with your amendments and any submissions. Please call Steve Wagoner at 518-862-7274 to arrange for our assistance.

In addition to the GUST amendments, be sure you have completed the appropriate EGTRRA amendments for each of your clients.

While the September 30th deadline looms ahead of us, and all efforts should be made to meet it, some practitioners have now gone back to the IRS to ask for yet another extension of the deadline. While the IRS may be loath to grant yet another extension at this late date, it may happen. At the end of the TRA’86 amendment period, the IRS allowed for an extension of the submission deadline, though not the actual amendment itself. It is possible that the same thing could happen again. Again, we strongly suggest that every best effort be made to have all your client amendments, and, if appropriate, submissions done by September 30, 2003.

If anything changes on the deadline, we will notify you by means of our e-alerts. Unless the timing fit our deadlines, we would probably use a special alert to notify you.

The IRS is already in discussions with industry practitioners about getting ready for the EGTRRA plan document Remedial Amendment Period (RAP). We expect that we will be submitting documents to the IRS rewritten to incorporate EGTRRA sometime in the second half of next year.

NOTE: The IRS is proposing an entirely new restatement and submission process. The new IRS concept was presented in a new “White Paper” that was released in early May and is available on our website at mhco.com Hot Topic Number 14. One possibility for the next round of restatements, i.e., the EGTRRA restatement, is to maintain the status-quo. A second staggered alternative would require sponsors of prototype and volume submitter plans to actually up date their documents every year. The stagger comes in, because your adopting employers would be able to stay on their documents and only amend every 5 years. Clients would be assigned to the different plan based on their taxpayer identification number, i.e., those with the last number ending in 0 or 1 would restate in year one of the cycle, 2 or 3 the second year of the cycle, etc. At this point, we, at McKay Hochman, are vigorously opposed to the new every-year approach and are in the process of letting the IRS know, just what a burden this would be on all of our clients. Under this concept. five different Defined Contribution Basic Documents and sets of Adoption Agreements would have to be maintained. Implementing law and regulatory changes into five different documents and maintaining each client with the proper document multiplies administrative issues exponentially.

That's not all folks!!!! Stay tuned, we will keep you apprised as this unfolds.

For detailed practitioner-level information on all the major retirement plan news, subscribe to our Prototype Plan News and/or attend one of our eSeminars such as our Current Issues with 401(k) Plans or our Retirement Plan Insights regional class.

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