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possiblity of extension


k man

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Guest Mike Mallon

:D According to a August 11, 2003 email from Alex Brucker, the IRS may be working on a possible RAP extension for GUST. The extension would not affect the adoption deadline; it would still be September 30, 2003. The extension would be to the filing deadline. It may be extended to January 31, 2004.

This is unofficial. I have not seen an official announcement as of 4:45 pm (pacific) on August 13, 2003.

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Paul Shultz at the IRS has made it clear that he supports the extensions referred to in prior posts (1/31/04 and if you miss the deadline for adopting the plan but adopt and file by 1/31 then the sanction is $250). However, as of yesterday (Fri.) there was still a "snag." And, as he pointed out, there's no telling what will happen until it's officially announced. He had hoped it would have been released already, but we'll have to wait and see what happens.

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You only have to file by 9/30/02 if:

1) You did not amend by 2/28/02

2) You are entilted to the extended RAP under your volume submitter or prototype document

3) You deviate from the volume submittter or prototype.

In such an instance you will only be considered a timely GUST amender if you file. While it is true that you don't have to file for a determination letter you do need to be a timely amender.

For plans who have used the extended RAP but who do not go "word for word" with their V.S. or prototype the IRS has determined that filing is a neccessary part of being a timely amender.

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k man,

You are correct. No one ever has to file and if you do, you can file at any time.

HOWEVER, if you have a problem with any language in your plan, you can only amend it prospectively. That means if that language was there during a past period, you have no ability to retroactively amend the plan and clean it up (other than through a correction program and pay the bucks), so you basically have a plan that is subject to disqualification retroactively if you haven't filed for a letter.

That is where the remedial amendment period (RAP) comes in. When you are forced to amend a plan (e.g., a change in the law), each law contains a specific RAP time frame. Within that time frame, you can retroactively amend the plan and keep it qualified as long as the required amendments are due to the law changes that created the current RAP. AND, if you file for a determination letter, your RAP extends until the receipt of the determination letter. That allows the IRS to come back to you and ask for changes and you can still make the language changes and apply them retroactively.

For the amendments required for GUST, that RAP is now running out for volume submitter plans. If they do not file before the RAP period is up, then any bad language cannot be corrected retroactively. They are considering extending the filing deadline under which you can still file for a determination letter and be able to maintain the retroactive application of any required changes in language.

Now there has also been a new change in rules. Since EGTRRA, you can no longer wait until the end of the RAP for EGTRRA (and any new laws going forward) to be able to make the amendments. Now, there must be a good-faith amendment in the year a provision becomes applicable. There is still an EGTRRA RAP (I think it is the end of 2006) that applies to be able to clean up any final language based on guidance that is issued in the meantime.

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Now let's be clear. The EXTENDED RAP ends on September 30, 2003 for 99.9% of the VS and prototype plans. For a plan to be granted the extended RAP, they DO have to submit to the IRS by September 30, 2003 if any modifications are made to the standard document language. If no modifications are made, then no submission is necessary.

"What's in the big salad?"

"Big lettuce, big carrots, tomatoes like volleyballs."

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  • 2 weeks later...

I heard the same, but it might not be quite as generous as mentioned above-- we will have to wait and see. What I heard is that all plans have to be restated by 9/30 but that if you go off volume submitter or prototype you have an extended period to file for a determ letter if you pay $250. Hopefully we will know in an hour or so.

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Actually it is on benefits buzz now. Glancing at it I think it is more in line with Mike Mallon's post and my first follow up.

Adopt by 9/30 and you have until 1/31 to get a determ if you need one.

Adopt after 9/30 but prior to 1/31 and you are o.k. as long as you file for a determ and pay $250.

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I've read Rev. Proc. 2003-72 several times now and I am not certain as to whether the extended RAP deadline of 01/31/04 applies to employers who actually amended and restated, as opposed to those who simply adopted (but did not amend and restate), a volume submitter plan, prior to 2/28/02. I suppose this uncertainty could extend to the 9/30/03 extended RAP deadline as well. In other words, although it is not required to do so, if such an employer decides to submit for a GUST determination letter, was/is there a deadline to do so under this fact pattern?

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The requirement to submit VS plans only extends to those plans that did not adopt GUST documents by 2/28/02 AND modified the standard VS language. Since your plans adopted documents (I am assuming they are GUST approved) by 2/28/02, there is no requirement to submit whatsoever.

"What's in the big salad?"

"Big lettuce, big carrots, tomatoes like volleyballs."

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What about non-standardized prototype plan adopters not planning to file for a letter of determination? If one of these folks misses the 9/30 deadline but signs by the extended filing deadline, would they be eligible for $250 to be deemed as signing by 9/30? Rev Proc 2003-72 doesn't cover this fact set so I'm wondering if anyone has posed the question to the IRS and gotten an answer?

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  • 1 month later...

I would like to restate ljr's question in the hope of getting some additional input.

Is a prototype adopter that would not have filed for a determination letter if they had adopted the plan by 9/30/03 allowed to adopt the prototype plan after 9/30/03, submit the plan for a determination letter, pay the $250 fee under Rev. Proc. 2002-73, and be considered a timely amender?

(I agree with ljr that Rev. Proc. 2002-73 does not address this situation.)

...but then again, What Do I Know?

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Apparently, no one was willing to answer my questions because they didn't want to make me look like an idiot, but I'm used that.

After rereading Rev. Proc. 2003-72, I find that Section 6.03 clearly applies to my situation.

(The nonstandardized issue brought up by ljr is not addressed there.)

I will now quietly retreat with my tail between my legs until my impetuous nature once again overcomes my common sense.

...but then again, What Do I Know?

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