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Certified Intent to Adopt?


stevena
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PSP Client uses Kemper document. Kemper is not allowing them to adopt GUST restated document because the funds for the plan are not held at Kemper. So, client wants to use Smith Barney Document as funds are held there. Smith Barney has not been issued a DOL opinion letter yet. So, client needs to have a letter of intent to adopt Smith Barney document when the opinion letter IS issued. Who drafts this letter of intent to adopt? (Plan is self trusteed). I understand it has to be signed by the employer as well as the document sponsor. Document sponsor says they have no idea what the intent letter is. Plan year end is 12/31.

thanks a lot

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Are you sure that moving to a document sponsor that doesn't know about the letter of intent to adopt. To me it sounds like the person you are talking to doesn't work with retirement plans to much - perhaps they could spend a little time going up the ladder until they find someone who know about this.

You are correct in that the letter of intent should be signed by both the employer and the document sponsor. Basically what the document should state is:

1) Employer intends to adopt the XYC Company prototype once it has been approved by the IRS and that it is being done to extend the remedial amendment period.

2) The document sponsor should indicate the date that they received the "letter of intent".

There is more to the actual "letter of intent" than I mentioned above (i.e. specific references to tax regulations and revenue procedures), but that is this basics.

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Are you sure that moving to a document sponsor that doesn't know about the letter of intent to adopt. To me it sounds like the person you are talking to doesn't work with retirement plans to much - perhaps they could spend a little time going up the ladder until they find someone who know about this.

You are correct in that the letter of intent should be signed by both the employer and the document sponsor. Basically what the document should state is:

1) Employer intends to adopt the XYC Company prototype once it has been approved by the IRS and that it is being done to extend the remedial amendment period.

2) The document sponsor should indicate the date that they received the "letter of intent".

There is more to the actual "letter of intent" than I mentioned above (i.e. specific references to tax regulations and revenue procedures), but that is the basics.

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Actually, I had trouble with the letter of intent with two document sponsors. I was on the phone for 3 1/2 hours yesterday. I still have both of them telling me that they have no such thing. One of them told me to write it and they would sign it. (WHO would sign it, I said??)

In addition, both are requiring that to adopt the document when it is restated requires adopting the current document...so I have to fill out the current adoption agreement, and then the GUST-restated adoption agreement. I am not confident that this is actually required...it seems nonsensical. But I cannot find anyone who knows anything at the fund groups. Not sure where filling out the current adoption agreement will get me, as I will still not have a letter of intent.

One of the fund groups told me that they used to have a document/legal help desk, but that it was closed last year. I was amazed yesterday as I made literally twenty calls and was transferred from Boston, to New York, then back to Boston- to the same person I originally talked to. The whole thing is so frustrating.

Thanks for the response though.

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I think you have to do one of 2 things: have the "Certification under IRS Revenue Procedure 2000-20" OR adopt an interim prototype document. So if you complete the current Smith Barney document, you are OK and do not need the Certification. This seems the way out of this mess, since Smith Barney cannot help you with the Certification.

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In the Summer, 2001 edition of "Employee Plans News" (a publication of IRS's EP department), they included a sample certification that satisfies the requirements of Rev. Proc. 2000-20.

Anyone that sponsors volume submitter or M&P's MUST know about this procedure. If not, I would find another provider.

The following is copied from the newsletter, which may be found at http://www.irs.ustreas.gov/plain/bus_info/...ep/archive.html and click on the summer, 2001 edition.

"The following sample certification meets the requirements of Rev.Proc.2000-20:

__________(name,address and EIN of employer)certifies that it intends to adopt __________(name of M&P or

volume submitter specimen plan and file folder number,if available),sponsored by __________(name,address

and EIN of M&P or volume submitter practitioner),as approved for GUST by a favorable opinion or

advisory letter.This plan will amend or restate __________(name and plan number of the employer ’s plan

being amended or replaced)and will be adopted within the extended GUST remedial amendment

period under Rev.Proc.2000-20 as modified by Notice 2001-42.

__________(name of M&P or volume submitter practitioner)certifies that an application for a GUST

opinion or advisory letter for the M&P or volume submitter specimen plan identified above

was filed with the IRS by December 31,2000.

____________________________________________________________

Employer ‘s signature Date

____________________________________________________________

Sponsor ’s or practitioner ’s signature Date

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One other thing to note:

You can fill out this certification with any provider of documents. You do not need to actually adopt the same document that is described in this certification. The certification just buys you additional time. So, if you can find another provider that knows what they are doing (e.g., Kemper again) and can fill this out with them, you can still come back and use the Smith Barnery document later.

Even individually-designed plans can make use of this certification. Before the time limit expires for actual adoption (one year after the volume submitter gets its letter), the plan sponsor can revoke the certification and adopt any plan document.

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If anyone has the patience to reply to this post...

Client, as I said, currently uses Kemper document.

Could we possibly rely on the current Kemper document's use (even though Kemper will not allow him to use the restated document because his funds are not at Kemper) to give the client until 12/31/02 to use the GUST approved Smith Barney document? In other words, not have him sign a letter of intent to adopt (which Smith Barney does not have) OR fill out a current Smith Barney adoption agreement (which is unapproved for GUST as of yet).

Does the clients current use of the Kemper prototype mean that he needs to do no further action until 12/31/02...even though Kemper has said he cannot use the document after 1/1/02?

Kemper did file with the IRS by 12/31/00.

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Guest Boilerburm

Sorry, no. The only way that you can have any reliance at all that extends past February 28, 2002 is if you adopt the previously mentioned certification. If you don't adopt that certification, then the remedial amendment period ends for you on February 28.

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I spoke with my prototype sponsor (Datair) the other day and was told that, if your client had previously adopted ANY prototype whose sponsor filed for GUST before 12/31/00, you have an extended remedial amendment period until 12/31/02.

A number of my clients were on the Datair prototypes because we didn't sponsor some types (DB and Target) but for this round, we'll sponsor all types.

Datair told us that our clients, on their prototype, don't need to certify that they'll adopt our regional prototype.

The rules are different for Volume Submitter documents.

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For whatever it's worth, I agree with Chip Brown's comment. Rev. Proc. 2000-20 makes it clear that your client will be entitled to the extended deadline that applies to the Kemper prototype. This is true even though Kemper said you can't continue using the document and even though you aren't going to update using the Kemper plan. So, you don't need the certification.

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  • 4 weeks later...

I'm going to throw my opinion in here, and it doesn't coincide with the opinion of Boilerburm, either. If your client is currently on a pre-GUST specimen plan of a specific document provider (Kemper in this case) and that specific document provider has applied for a GUST opinion letter on or before 12/31/2000 as successor documents, then the adopters of the original documents have until 12/31/02, at the earliest, to adopt any GUST restatement. I don't see how an action by the document provider gets in the way of the IRS extension of the RAP.

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Guest Boilerburm

I now disagree with me. I spoke too soon, and agree with you, Mike. If your pre-GUST document provider made a timely filing, then I agree that you can take advantage of the extended deadline.

Sorry if I misled anyone by posting before thinking it through all the way.

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