GUST deadline for prototype plans

[k man]

does anyone know whether there is a chance that the service will extend the deadline for prototype plans to beyond 12/31/02.

[Blinky the 3-eyed Fish]

There is a chance that a blob-like creature will invade our world and make us his slaves, so why not this? In other words, there is a chance anything can happen. I am flapping my arms right now in hopes that I will fly away to a more peaceful existence.

[Mike Preston]

It is my understanding that they are giving it serious consideration.

[k man]

any word on the possible extention. i spoke to one of the managers of the prototype program in cincy and he said they really are considering extending the deadline.

[Mike Preston]

No word, yet, as far as I know.

[Guest jsample]

I strongly feel that the 12/31 deadline should be extended for the sole reason that if a TPA sponsors a DC prototype and DB prototype they already have an extension beyond 12/31/2002.

The playing field is not level for DC only sponsors. We are rushing to meet the deadline while some DB / DC sponsors already know that they have until sometime in 2003 to complete their documents (granted they have to restate both DB and DC documents but the DC should have the same deadline as DC only shops).

If no extension is given we will have to take the mutual fund sponsor approach and send blank adoption agreements to clients and tell them to fill the documents out themselves.

Hopefully the IRS will address this question at the ASPA conference in October and discuss it there.

[k man]

John, my company fits into that group- both DB and DC. Thus, our deadline is actually 4/31/03. i can't tell you how happy i am about this.

[Guest jsample]

A funny story.. Our firm actually called our vendor and asked if we could sponsor their DB prototype, just so we could get the extended deadline (how desperate was that). Unfortunately it is not as easy as that.

The IRS extended the individually designed deadline from 12/31/2001 until 2/28/2002, maybe they will do something similar with the DC plans. I emailed the IRS retirement plans website but I haven't heard anything.

[k man]

it would be too late for that since you did not make the application in time. a few months will help. i have another 150-200 to do.

[Guest Michael519]

I may be in some trouble here, and I'd appreciate any advice. I have about 15-20 plans that were not prototype. They were IDP's.

According to Corbel, we can't submit through a volume submitter program since the deadline to be certified for that was February 02.

Since there is no certification, what is my recourse at this point. I was under the impression that as long as we filed the plans using the volume submitter program by 12/31/02, we would be alright. I was wrong.

I'll need to do something, even if it's just sending in all the plans by 12/31/02. They will be late.

Any other thoughts or suggestions?

Thanks.

Michael

[k man]

Michael, that is accurate that they needed to sign the certification. i am researching the issue for some of my clients. if the cases in question were on another sponsor's prototype, the employer would automatically qualify for that sponsor's extension.

You might not be in trouble on all of those IDP's. If the plan was an off calendar year plan, the deadline to amend may not have passed. Thus, you can still get a certification. However, all calendar year IDP's had to be done by 2/28/02.

[KJohnson]

Are they individually designed or were they volume submitter plans (that can look like an individually designed document).

If they are individually designed, and they have anything other than a 10/31 or 11/30 year, you are stuck with the VCP correction method for a non-amender. (There was a "special" program for non-amenders but I believe it expired on September 3).

If they were volume submitter and if the practitioner who drafted the volume submitter plan got its GUST Plan into the IRS by 12/31/00 then you have until the later of 12/31/02 or one year from when the practioner got his or her advisory letter (even if you don't have the certification).

[Guest Michael519]

They are all individually designed plans with 12/31 plan year endings. It seems like we even missed the 9/3 date, so unless there will be some additional remedial period, I'm stuck.

I still need to get the plans up to date, so I will still go ahead and finish that. All the adoption agreements were signed in the appropriate time. I just don't know what's going to happen without getting the determination letters.

What a nightmare I've created. I just completely missed the language on the certification period for the voluntary plans.

[Mike Preston]

Michael, I'm confused. Your last post includes the phrase: "All the adoption agreements were signed in the appropriate time. " What does that mean, exactly? Because immediately preceding that statement, you also state: "I still need to get the plans up to date, so I will still go ahead and finish that. "

Those two statements appear to be mutually exclusive.

But, if I have guessed correctly, you may not have a problem.

So, my guess is that the meaning of your statements is that:

1) You had your clients adopt updated, GUST II, adoption agreements, before 2/28/2002.

2) You have not yet submitted those plans, as you thought the deadline for submission was 12/31/2002.

Do I have that right?

If so, then all you have is a situation where the plans have not filed for a determination letter. It is voluntary to file for a determination letter. Yes, it is generally perceived as good practice to do so, especially for individually designed plans. But by no means is it mandatory.

If I have guessed correctly, you can certainly submit for a current letter of determination by filing at any time. If the filing is beyond the end of the GUST RAP the IRS will only review for compliance within the current year.

But, if the language of your plan is "good", that shouldn't matter at all.

I hope this helps.

mike

[Guest Michael519]

Mike-

I feel a little better, I think. All of the plans adopted the model amendments for GUST (and any prior amendments) before December 31, 2001. The last full restated document each plan had was for TRA.

I used the Corbel service for TRA, but not as a volume submitter.

All the plans have been administered in accordance with the applicable rules.

None have physically signed the new restated documents that I recently ordered through Corbel (Sungard).

I was under the impression that you didn't have to file for a determination letter in the past, but the legal rep from Corbel said that if you file for an individually designed plan determination letter after December 31, 2001, there were late filing penalties ($1,000 for plans under 100 participants), but that was "out the window" after September 3rd, 2002. Since none of the plans were prototypes nor did we get certified through Corbel for volume submission, I was "out of luck". So I was confused whether the rules had changed that you were required to file for a determination letter.

If I understand you correctly, as long as I get the new plans documents in along with the appropriate amendments and adoption agreements, and the language is "good" (I assume it will be using the Corbel service), then I should be okay. And technically, it really doesn't matter whether they are submitted by 12/31/02 or by , as an example, June 2003, since the determination letter would only apply for the year it was submitted.

In the event of an audit, as long as we had all the proper amendments and the plan was "clean", we would be okay.

I hope that's the case. I would feel a whole lot better! Thank you very much!

Michael

[Mike Preston]

Well, you might have a case, but then again, you probably don't.

Unfortunately, your most recent description is not consistent with the statement that: "All the adoption agreements were signed in the appropriate time."

Hence, I guessed wrong.

You now state that the previously executed amendments were only "snap-on" type amendments. It is highly unlikely that those snap-on amendments met the full requirements of GUST.

If they did, then you would still have an argument, though, so maybe it is worth looking into a bit.

[Gilmore]

I'm not sure if this helps, but we submitted a few plan terminations in 2001, before we got our GUST docs, using GUST amendments we received from the IRS and they all received favorable termination letters.

It could be that they were more lenient because the plans were terminating and the GUST docs were not available at the time.