If a GUST defined contribution prototype or volume submitter plan is terminating in 2009, must the EGTRRA restatement be completed before the plan is terminated? Rev. 02/27/09; E-mail Alert 2009-3

In 2008, there were many questions surrounding the impact of the EGTRRA restatement process in relation to preapproved defined contribution plan termination procedures.  The main question that arose was whether or not a terminating plan needed to restate onto the EGTRRA document, and based on guidance from the IRS (Rev. Proc. 2008-6) we told clients they did not have to amend onto the EGTRRA document when terminating a plan.  Terminating plans were able to rely on the GUST document opinion letter (of course, with all of the additional amendments since GUST) when submitting determination letter upon termination requests.

For 2009, we are recommending that the EGTRRA restatement be completed before the plan is terminated -- based on what we have seen and heard on exam and with termination determination letter submissions.  Many employers are running into difficulty when trying to locate all of the various amendments that need to be attached to their documents. Thus, the safest advice is to amend and restate the plan onto the EGTRRA document prior to terminating the plan.  It is important to remember that the EGTRRA preapproved document also has amendments that need to be made, specifically:

• Section 415 Final Regulations Amendment
• PPA/HEART Amendment

Is the restatement legally required? No, but we strongly recommend it.  It will make the job easier both for those submitting and on later examination for those who did not submit for termination approval.

Note that Defined Benefit plans have not yet been updated for EGTRRA, so terminating plans should use the GUST document when submitting for a determination letter.