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Should GUST Amendment be made now?


Guest Cal

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All things equal, should GUST amendment be made now or later? I have been waiting, hoping to get the last word/extension before amending plans.

What are others doing?

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I always remember the maxim "no good deed goes unpunished". (We tried to do the TEFRA restatements early and then had the pleasure of starting all over when REA came along - not fun in the pre-Laser printer days). At this point in time no document providers have language available that has been approved for post-1998 GUST changes (in fact the IRS has not yet even opened up the program for the Corbels of the world to even submit their master language for approval - supposedly this will open for prototype sponsors by the end of 1999). If you want to get a head start on the restatement process this might be a good time to make sure that all of your files are in order (i.e., amendments signed, DLs located, etc). However, generating documents at this point in time would only invariably mean that you get to do the same work again in the future.

Now having said that, it does seem that in the DB world that there may be some amendments that you may want to consider making sooner than the restatement in year 2000.

1) If you haven't yet amended your IRC 417 rates to use the GATT interest and mortality structure, you might want to get this done soon to have in place for year 2000. It appears that the IRS is taking the approach that if you wait until the restatement in year 2000 that you may need to do double calculations (i.e., both PBGC and GATT min lump sums for payouts) in 2000 and pay the greater of the two.

2) The IRS is taking the position that unless your document incorporates IRC 415(e) solely by reference, that you will need to amend before being able to take advantage of the year 2000 repeal.

Any comments on these last two points would be appreciated - just going from memory from the recent ALI-ABA Pension Law Update.

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mwyatt -

I agree on your first point (ie, to amend for GATT by 12-31-99 to avoid dual calculation in 2000); I am doing this in DB plans.

As to the second point, my understanding is the opposite of yours. My understanding is that, if you have a DB plan that incorporates 415(e) by reference, then you may need to amend by 12-31-99 to avoid an unintended increase in benefits (to do so after 12-31-99 would be a cutback). However, those plans that do not incorporate 415(e) by reference do not need to be amended until the end of the remedial amendment period.

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I guess that my small plan bias is showing here. All of my clients are anxiously awaiting the repeal of IRC 415(e) and are welcoming the springup in accrued benefits. We primarily use Corbel documents in our office and looking at the language I would say that it is not incorporated by reference (given the choices that you need to make wrt dominant plan, etc. in 415(e) I don't know if I've seen any documents that incorporate solely by reference). My focus was on comments by the IRS that I would need to amend these plans early to take advantage of the springup of accrued benefits rather than waiting for the end of the remedial amendment period.

[This message has been edited by mwyatt (edited 11-23-1999).]

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