Determination letter

[Guest carsca]

I was wondering if anyone has insight into the following:

Company sponsors a DB plan. The plan was frozen July, 2000. The Company is in the process of filing for a GUST determination letter. The Company would like to file with the 1998 Form 5300 forms and not with the proposed forms. The question is must the entire Schedule Q (including demonstrations) be completed?

The instructions to Schedule Q provide that only Parts I and II need to be completed if "the plan does not benefit any highly compensated noncollectively bargained employees. " It seems reasonable to take the position here that this is true and that no further information is necessary.

Is this a position that the IRS will buy?

Thanks in advance!

[Guest qualified plan]

I have the same issue for one of the plans we administer.

In light of the fact that you could use the new forms and not submit coverage info, etc., I think taking the same approach for the old forms is fine.

Any other thoughts on this issue out there?

[Medusa]

According to Announcement 2001-77:

Between July 23, 2001 and December 31, 2001, applicants requesting determination letters on Form 5300 or 5307 may choose to:  

submit the revised Form 5300 or 5307 either including or omitting the revised Schedule Q, once the forms are finalized;  

submit the current Form 5300 or 5307 with the current Schedule Q, following the procedures in Rev. Proc. 2001-6;  

submit the current Form 5300 or 5307 omitting Schedule Q; or  

submit the current Form 5300 or 5307 with the current Schedule Q, completing only Part I of the Schedule Q and those line items relating to the specific coverage and nondiscrimination requirements for which the applicant requests a determination.

In the latter two cases, the applicant must include a cover letter indicating that the determination requested is only on the form of the plan or on both the form of the plan and those issues selected on Schedule Q. If this information is not included in the cover letter, the Service will not contact the applicant but will assume the omission or partial completion of the Schedule Q correctly reflects the scope of the determination requested by the applicant.

[Guest carsca]

Medusa,

Thanks for your reply.

I agree that Announcement 2001-77 (and the rationale supplied by Qualified Plan above) make it justifiable to file the old forms without attaching Schedule Q. The downside of this approach is that the IRS letter will only apply on the form of the plan.

However, my question goes to whether the fact that the Plan is frozen necessarily means that Schedule Q only needs to be completed by answering Parts 1 and 2 of the Schedule. IF my rationale is correct, than I should be able to complete the Schedule Q with minimal information and receive a more comprehensive determination letter. Do you think that this approach works?

[Medusa]

I see where you are going now. I personally have been opting to file sans Sch. Q since a determination letter on anything but form has proven to be of little value in an audit.

As for your question, no one is benefitting as that term is defined under the 410(B) regs, so I think you are safe to complete just the minimal required sections of Part I and II.

Medusa