Agent's Amendment Requests

[Guest hussac]

We have dealt with a number of amendment requests for the individually-designed plans we submitted, but for the most part the requests were reasonable. If not, we have been able to avoid doing the amendments by pointing out that the particular language did not apply to the plan.

Now, however, we have begun receiving amendment requests that make no sense, and the agents insist that the language be put into the plan. For example:

1. An agent insists that the direct rollover language for a defined benefit plan include the new wording to specify that a hardship distribution is not an eligible rollover distribution

2. An agent insists that the plan language dealing with excess annual additions in a money purchase pension plan include in the list of reasons why an excess occurred "reasonable error in determining the amount of elective deferrals (within the meaning of section 402(g)(3))". . .

3. An agent wants language added to a defined benefit plan to specify several things (and methods) regarding "old law" benefits, "pursuant to Rev. Rul. 98-1". The language just does not apply to anything in the plan. How to convince the agent is another matter.

Have you run into this problem and, if so, how did you handle it?

[mbozek]

There are only three ways to handle this problem:

1. argue with the agent and try to get him him/her to understand why the requested provision does not apply- usually this is fruitless because the agent has a checklist which must be filled in and cannot check off n/a because his supervisor must review it.

2. ask to speak to the agent's supervisor which will not make the agent very happy and may not get you anywhere- at the best you have now wasted double the amount of time in 1 above, nothing has changed and two IRS agents are annoyed.

3. give the agent what he/she wants as along as there is no harm to the plan's operation. Make a note of the fact that these provisions were required by the agent in case another agent questions you in the future. This usually works best because it involves the least amount of time and energy. The extra time can be spent having a drink while contemplating how ridiculous this entire process is (if u dare to think about it).

[jpod]

My experiences have often been the same as mbozek's, but not always. Lately, I've found that if you give the agent a specific and truthful reason why a certain change is not necessary, which he/she can write down and show to the reviewer if necessary, they happily accept that explanation and back off.

Clients that pay us to draft individually-designed plans do so either because a prototype is not available or because they don't want all the junk that must be in prototype plans. In the latter case, I feel it is a disservice to the client to just give up without trying to convince the agent to back off. On the practical side, if the client ends up with a bunch of junk in its plan, the client will wonder why it had to pay me $x to draft an individually-designed plan, no matter how much I try to blame it on the IRS.

[mbozek]

I agree except that if the agent wont understand reason the client may not understand why it should pay for the time spent trying to convince the agent of the error of his/her ways if the plan is not affected by superfulious additions. Its a judgment call to be made after consultation with the client.

[jpod]

We are in agreement, although what usually happens is I tell the client that I'll stop trying to convince the agent to back off if I think that will be more expensive than stopping right there and drafting the stupid amendment. Also, I think you can find out in about the first 15 seconds of your telephone conversation with the agent whether or not he/she will listen to reason.

[mbozek]

yup