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EGTRRA amendment for SARSEP


Guest Elizabeth Gaskins
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Guest Elizabeth Gaskins

i have a client that just came to me with a SARSEP that was established in 1993. It was established using a local bank's prototype document. They have had no updates, amendments, or restatements since the plan was originally established. We don't deal with SARSEPS that often, and i would like to be able to help my client. Does GUST or EGTRRA apply to them? They now want to make catch-up contributions. Are they still limited to 15% of compensation for deferrals? Any input or suggestions is appreciated-i know this is a loaded question. thanks.

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Since this a prototype the sponsor (bank) has an obligation to either amend the plan to bring it into conformity with the changes in the law or to terminate the plan and notify the employers who are using the plan so that can find another plan to use. Why not call the bank and find out the status of the SARSEP.

mjb

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Guest Elizabeth Gaskins

the bank no longer exists. it was a very small local bank that has been bought out 3-4 times since this document was obtained. that was my first advice to the client and they contacted the current bank which, of course, has no record of their company or the plan. so where do i go from there?

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E: I think you have to be firm with the current bank and advise them that they are the succesor in interest to the sponsor. You really need to the bank that issued the SARSEP and that they have a responsibility to the adopters of the prototype to notify them of the status of the plan. Banks have a way of trying to avoid responsibility until they are confronted with liability. Maybe your client should retain counsel.

mjb

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GUST and EGTRRA does apply to these accounts. Since no IRS amendments were required until now, you only need to be concerned with amendments for EGTRRA and the new RMD rules.

According to the IRS, an IRA must be amended in order to use the provisions of EGTRRA. The amendment procedures are outlined in Rev. Proc 2002-10 – see also Announcement 2002-49 regarding extension of deadline- at theURLs below

http://www.irs.gov/pub/irs-drop/rp-02-10.pdf

http://www.irs.gov/pub/irs-drop/a-02-49.pdf

If you are the current custodian/trustee, then you are responsible for ensuring that the plan is amended.

Life and Death Planning for Retirement Benefits by Natalie B. Choate
https://www.ataxplan.com/life-and-death-planning-for-retirement-benefits/

www.DeniseAppleby.com

 

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