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Retirement Plan Documents Must Be Restated for EGTRRA

Economic Growth and Tax Relief Reconciliation Act

The IRS will now review restated plan documents either every five or six years, depending on the type of plan document (individually designed, pre-approved prototype, or volume submitter). Pre-approved plan documents (also referred to as prototype and volume submitter) will be required to be restated every six years.

For employers sponsoring individually designed plans who have a 1 or 6 as the last digit of their EIN, plan amendments and IRS submissions are due by January 31, 2007. Plan documents for individually designed retirement plans will be required to be restated every five years and must be submitted to the IRS based on the schedule below:

Staggered Five-Year Reporting for Individually Designed Retirement Plans

Cycle

Last Digit of Employer’s EIN

Special Situations

EGTRRA Filing Cycle

Next Filing Cycle
A 1 or 6   2.1.06 – 1.31.07 2.1.11 – 1.31.12
B 2 or 7 All Multiple Employer Plans 2.1.07 – 1.31.08 2.1.12 – 1.31.13
C 3 or 8 All Governmental Plans 2.1.08 – 1.31.09 2.1.13 – 1.31.14
D 4 or 9 All Multiemployer Plans 2.1.09 – 1.31.10 2.1.14 – 1.31.15
E 5 or 0   2.1.10 – 1.31.11 2.1.15 – 1.31.16

More and more employers that sponsor defined contribution plans (profit-sharing, 401(k), and money-purchase plans) have concluded to utilize pre-approved plans rather than individually designed plans because of their flexibility and cost effectiveness. As noted above, pre-approved document providers are on a six-year reporting cycle and have already submitted their documents to the IRS for review, but the IRS has not yet approved any of them, and individual employers sponsoring plans are not expected to have to adopt amendments before the end of 2007.

SIX-YEAR CYCLE FOR PRE-APPROVED PLANS
(Master and Prototype Plans and Volume Submitter Plans)

Year
Defined Contribution (DC) Plan
Year
Defined Benefit (DB) Plan
One
2005
All pre-approved DC plans must be updated and submitted to the IRS by January 31, 2006.
--
---
Two
2006
IRS processes the applications for DC plans.
--
---
Three
2007
IRS processes the applications for DC plans, and hopefully announces the deadline for employer to restate.
One
2007
 All pre-approved DB plans must be updated based on law in effect at that time and submitted to IRS.
Four
2008
Employers restate DC plans.
(Some limited IRS review may continue early in the year.)
Two
2008
 IRS processes the applications for DB plans.
Five
2009
Employers’ complete restatement of DC plans.
Three
2009
 IRS processes the applications for DB plans and announces the deadline for employers to restate.
Six
2010
---
Four
2010
 Employers restate DB plans.
New Cycle

Year One
2011

IRS announced in Rev. Proc. 2005-66 that the Remedial Amendment Deadline for all DC Pre-approved plans would be January 31, 2011.

All pre-approved DC plans must be updated based on law in effect at that time and submitted to IRS.

Five
2011
 Employers must complete restatement of DB plans by the deadline announced in year five of preceding cycle.

IRS announced in Rev. Proc. 2005-66 that the Remedial Amendment Deadline for all DB Pre-approved plans would be January 31, 2013.

 
Two
2012		 IRS processes the applications for DC plans.
Six
2012
 IRS announced in Rev. Proc. 2005-66 that the Remedial Amendment Deadline for all DB Pre-approved plans would be January 31, 2013.

In addition, good faith interim amendments may be needed based on updated IRS guidance or new laws. The current remedial amendment period (RAP) rule requiring that all pre-approved plans be updated by the end of the 12th month following the receipt of the document sponsor’s opinion letter would be eliminated. A new single date deadline, applicable to all adopting employers, will be announced by the IRS and will replace the old 12th-month rule.

Employers who are not currently using a pre-approved plan but who wish to adopt one before the end of their plan’s RAP may do so by certifying their intent to so adopt such a plan. For example, if an individually designed plan has a RAP ending December 31, 2008, the employer may certify its intent to adopt a pre-approved plan by that date. The effect of the certification is that the employer will have until the end of the pre-approved plan’s RAP to adopt that plan.

Required Action

Employers should have their plans reviewed by their third-party administrator, consultant, or attorney to determine:

  1. The type of plan they have

  2. When, or if, they need to amend their plan

  3. Adopters of individually designed plans may elect to switch to a prototype or a volume submitter plan.  To accomplish this, employers must execute IRS Form 8905, Certification of Intent to Adopt a Pre-Approved Plan, or adopt a pre-approved plan prior to the end of their cycle noted in the above chart.

We'll be pleased to assist you to determine your plan document type and what action, if any, you may be required to pursue to remain compliant with the Economic Growth and Tax Relief Reconciliation Act.  To contact us - Click Here.

Source: www.IRS.gov

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Information is provided for review and consideration only. Please consult legal and tax advisors for practical advice pertaining to your business and personal situations.

This page was last updated on Friday, November 14, 2008 09:49 AM

 
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