EGTRRA Restatement for DB plans

[Belgarath]

Is a non-electing church plan - defined benefit - required to restate for EGTRRA by the normal 4-30-2012 deadline? It seems to me that they are, although many "normal" document provisions need not apply.

If they are NOT subject to the restatement deadline, is there a citation? I've been looking through the Rev. Procs., and I don't see where non-electing church plans are exempt from the restatement date. Thanks!

[John Feldt ERPA CPC QPA]

Generally, all qualified plans fall into the 5-year restatement cycle unless they meet the exception of being a pre-approved plan. Some churches actually do elect ERISA coverage under 410(d) and they can adopt a pre-approved plan and fall into to the 6-year restatement schedule. The churches that do not elect ERISA coverage under 410(d) cannot rely on any pre-approval letter from the IRS even if they adopt a pre-approved document - they are in the 5-year restatement cycle.

Assuming they want to have a determination letter, non-electing church plans are subject to the 5-year restatement schedule. This applies to both DB and DC nonelecting church plans.

[Belgarath]

Thank you. It appears that they do not, will not, (and never have) file for a d-letter. So given that they have no reliance to start with, is there any requirement for them to adopt by the EGTRRA restatement deadline? Since they have no reliance, it would seem wise as at the very least this would be a show of "reasonable good faith" attempts at compliance, but not required for anything since they have no reliance already, right? Thanks again!

[John Feldt ERPA CPC QPA]

Is there any requirement for them to adopt by the EGTRRA restatement deadline?

No. Restatements are only required in order to obtain a Determination Letter (or in the case of a pre-approved plan, to secure reliance upon an opinion letter or an advisory letter).

As you've described, the language in this church's plan document and its amendments have no reliance without having ever filed a Form 5300 to apply for a D letter. If the plan were to be submitted at this time, the IRS would want all prior documents and amendments for review.

As I understand it, if you applied for a D letter now and the IRS finds any problems with any recent good-faith amendments (like WRERA) which fall into the current cycle, the IRS will allow the plan to be amended retroactively, within the IRC 401(b) amendment period, in order to conform. This assumes those amendments were executed timely and in good-faith. Okay, what church would have a bad-faith amendment anyway.

However, if the IRS reviewer found problems with some older plan language which was required to be in place by the end of a previous remedial amendment period, it is now too late for that language to be conformed without penalty because that remedial amendment period has expired.

For example, if the plan did not timely adopt the TRA '86 language to comply with the new 415 limitations which were required back in the day shortly after I started working in this field, then the IRS would look at the chart at the end of section 14 of Revenue Procedure 2008-50 and say, "Hmmm, TRA'86, that's $20,000 please. Thank you, and have a nice day." - assuming the plan has 101 - 500 participants. Of course, that sure beats a random audit where they say much larger numbers, and then I'm not sure about the "thank you" and the "nice day" thing.

[Belgarath]

Thank you John! I find this type of discussion very helpful in distilling one or two possible courses of action when there is a screwball situation like this. Your opinions are very much appreciated.