Mike Preston

Submit amendment before end of 401(B) period. Tell IRS you fail universal availability but want an exception. After they stop laughing, they will say no. You will then be able to amend it out of the plan without violating any rules.

mbozek: I think somebody is confused! First of all, Richard's concerns are about plans which do not enjoy automatic reliance, so the entire discusion of when a plan must submit seems to be a bit of a different subject. It appears that you are drawing a distinction between what you call the end of the remedial amendment period (a time which you don't define but which I imagine you mean the later of 2/28/02 or the end of the plan year that began in 2001) and a date you don't define, which is the later of the 12/31/2002 or the date that is the end of the month following the approval of the mass submitter's *last* document to be approved. I consider the later of the two dates, as applicable for a plan, to be the date that defines a plan's extended remedial amendment period. A plan is entitled to an extended remedial amendment period if its pre-GUST document is an approved mass-submitter plan (prototype or volume sumitter) OR if it executes a certification by the end of its unextended remedial amendment period (your first date). With that said, I would change the wording slightly for number 1 so that it reads: I agree with 2 if you substitute "mass submitter" for M & P. I disagree with 3. A plan sponsor enjoys the extended remedial amendment period of the mass submitter plan it adopted pre-GUST wihtout any action on its part. In the case you mention, the employer must adopt the plan of the alternate mass submitter before the extended remedial amendment period applicable to the pre-GUST mass submitter. WIth respect to 4, again, the employer enjoys the extended remedial amendment period associated with its pre-GUST document without any further action on its part. Hence, if an employer adopts any plan before its extended remedial amendment period such as an individually designed plan, it is a timely amendment. That is, if an employer is currently using a plan of Mass Submitter A and Mass Submitter A's extended remedial amendment period ends on June 30, 2003, then the employer has until June 30, 2003 to adopt its GUST amendments and there is no restriction as to whether the employer must use Mass Submitter A's document. It can use Mass Submitter B's document or adopt an individually designed plan. So, you don't need to use the certification procedure to get the advantage of the certification, as long as the plan in place has its own mass submitter status with the IRS. The certification can be used to extend the date, however. For example, if the plan sponsor is on a document with Mass Submitter A and the extended remedial amendment period for the employer would have been February 28, 2003 in the absence of a certification executed on or before 2/28/2002, if that empolyer adopted a certification with Mass Submitter B on or before 2/28/2002 then that plan sponsor would enjoy the extended reliance period associated with Mass Submitter B, which could be later, such as June 30, 2003. With respect to number 5, any plan which is a word-for-word adoption of a Mass Submitter plan automatically gets reliance upon execution. In the case of a non-volume sumbitter plan there is no such thing as anything other than word-for-word adoptions. In the volume submitter arena, it is up to the mass submitter itself to issue a letter to the plan sponsor indicating whether or not the adoption is a word-for-word adoption. If it is, then the employer has reliance. If it isn't, then no automatic reliance is granted. Finally, was this comment in response to anything in particular, as I admit that I don't understand it in the context of this discussion:

Does this relieve your concerns? From Announcement 2001-77: "E. Change to Conditions for Extended Remedial Amendment Period The GUST remedial amendment period generally ends on the last day of the first plan year beginning on or after January 1, 2001. However, certain plans may be eligible for an extended remedial amendment period under the provisions of section 19 of Rev. Proc. 2000-20. Section 19.04 of Rev. Proc. 2000-20 requires plans eligible for the extension to request a determination letter by the end of the extended period if a determination letter is required for reliance. Thus, current procedures would require adopting employers of nonstandardized M&P plans and volume submitter plans to request determination letters within the extended period. An employer eligible for reliance without a determination letter, as described in this section, is not required to request a determination letter to be entitled to the extension of the remedial amendment period under section 19 of Rev. Proc. 2000-20, provided that the employer adopts the GUST-approved M&P or specimen plan within the extended remedial amendment period. " Then again, this may only verify the fact that a plan adopted that is not entitled to reliance must be submitted.

I'm not sure why you are bothered by the language you cite. If the adoption is not "pre-certified" (which is interpreted by me to mean a mass-submitter plan, such as a prototype or a word-for-word adoption of a volume submitter plan) then I would expect the IRS to require submission. That is definitely the way it worked for TRA. What is it about this that bothers you?

Try this: http://benefitslink.com/boards/index.php?showtopic=12907

Tom, my reading of "no way OUT of excluding it from a4" was exactly opposite of what you meant! Now it is clear, so thanks for the clarification. Andy, isn't this the same issue that comes up every once in a while? I know I wrote a long message about this a while back. Do you still have it? This issue is the one that has been addressed by the IRS from the podium in recent years, and they started off with the incorrect interpretation and have since modified their position. That is, if you test 410(B) separately, you have two ABT tests. But I don't have time to look up my old message today. Maybe somebody else can?

Man, this is getting confusing. Fred, I agree with Tom that it depends on whether you are testing separately under 410(B). If you are, then your testing group is 20, for all purposes. You do NOT increase from 3% to 5% any of the group of 10 just because you use the ABT on the other 20. Tom..... Huh? SHNEC contributions do triple duty: a4, k and TH, don't they? Huh? Why wouldn't I be able to separate the entire group into two separate groups? One that meets statutory eligibility and one that doesn't?

Lots of questions...little time....but.... Yes, if someone is not an excludable amployee and they benefit, then in your example they must get 5%. Those who at one time satisfied 21/1 and who terminate are not excludable for this purpose. I admit that I don't have a clue what the above is stating. A larger contribution under a4 to pass the ABT? If so, you need to give it to somebody. Anybody. You want to give it to the a4 eligible? Fine. You want to give it to the k-only eligible? That's ok, too. Who do you want to give it to? If you have decided to do a single ABT with not only those who satisfy the 21/1 requirement but also those who do not, then you have a single group. Or am I misunderstanding your concern?

Tom, I strongly disagree. See prior message.

While I agree with PAX that an amendment seems like the course of least resistance, in some respects, I can see how a plan sponsor might interpret the language of the plan, and the previously published methodology that is used by the Commissioner to determine the increases, to call for $180,000 in 2002. Any potential ambiguity in the plan can be resolved by the Plan Sponsor and this is a situation that if called upon in 2005 to review what somebody did in 2002 I would hope that using $180,000 would be ok.

Gee, I don't think I said that. Did I? I said that by adopting the amendment to eliminate PBGC after 12/31/99, you can use the same time frame to determine your GATT rate that you used to determine your PBGC rate f you want to avoid 1 one year period where you must provide for 411d6 protection. Under the regs, I think you can also use a one month or a two month lookback and still avoid 411d6. But if you want to use a 5 month lookback, you will have to provide a one year period where participants get the best of both worlds.

Yes, they have until the deadline associated with their prior provider to adopt ANY plan, yours, theirs or MINE!

What kind of document doesn't reference 401(a)(17)?

One can NOT pay out on the basis of GATT prior to the amendment being adopted and effective.

Change the 401(k)/ps to a pure 401(k). Change the PS to a MP. Now you can put in 401(h) contributions, withiin the appropriate limits, to the MP plan.

I'd go with the former.

See 1.402(B)(1), which states in relevant part: "If, however, the surplus of $50,000 had been accumulated as a result of a change in the benefit provisions or in the eligibility requirements of the plan, the $50,000 could not revert to the employer because such surplus would not be the result of an erroneous actuarial computation. " An amendment which changes the 417(e) rates to the GATT rates is clearly a "change in the benefit provisions".

You are correct in that it precludes amedments that reduce benefit accruals, even if those amendments do not violate 411d6. But the cessation of benefit accruals is not impacted. The modification to GATT, if it causes an increase in the reversion is an amendment prohibited by 401(a)(2). I think it is pretty clear based on the wording of the statute. I know I've heard the IRS say the same thing at conferences. I'm pretty sure something was issued in early 95 that identified this issue. However, you don't really need a ruling to be issued for the IRS to state that they intend, should the occassion arise, to apply a statute as written.

It is a violation of 401(a)(2) to adopt an amendment which increases (or creates) a reversion. The IRS is right.

It is a violation of 401(a)(2) to adopt an amendment which increases a reversion, even if that amendment would otherwise be given protection from violating 411(d)(6). The IRS is right.

As I recall, it is based on reasonable expectation. Since the interest rate would need to be less than 3.5% for it to be less than 10 years, I think you are pretty safe. If you are really concerned about it, you could submit a PLR. Seems like overkill to me, though.

See my message in the link that I cited earlier in this thread. 99-23 and the regs only allow you to eliminate the PBGC rates under certain conditions. IN other conditions you must retain the old basis against the new basis for a 12 month period.

I just don't see any discepancy whatsoever. 99-23 (and subsequent guidance) extended the RAP. Period. Nothing more. The reg is clear that an amendment made at any time through 12/31/99 is afforded complete 411d6 protection with respect to the replacement of the PBGC rate with the GATT rate. It didn't say the end of the RAP. So there is nothing to update in the reg to make it consistent with 99-23. If the amendment wasn't made by 12/31/99 the reg provides alternative 411d6 protection, which is not as complete but certainly not insignificant. The fact that the reg provided guidance with respect to amendments adopted after 12/31/99 tells me that the IRS knew that the RAP wouldn't necessarily end on 12/31/99 when they first published the reg. (4/5/95 in proposed form and 4/7/98 in final form). In the Treasury Decision that published the final regs the IRS states: "Several commentators requested that the regulations be amended to provide unconditional section 411(d)(6) relief for plan amendments adopting the applicable interest rate and applicable mortality table rules of RPA '94 regardless of changes in the time for determining the applicable interest rate. The IRS and Treasury have determined that providing some additional flexibility to employers in determining how to transition between the PBGC interest rate and the applicable interest rate and applicable mortality table, as discussed above, where the transition is combined with a change in the time for determining the interest rate, strikes an appropriate balance between the practical concerns of employers and the rights of participants. "

Somehow I still think the reg is clear and has not been updated. Hence, the only way you get 411(d)(6) protection with respect to a lookback period of more than 2 months is if the amendment was adopted before 12/31/1999. I don't see anything in RP 99-23 that changed this.

What provision are you thinking about?