Uh-oh...Inherited DB plan contains no Rollover language.

[mal]

I was recently asked to represent a plan whose consultant has not made the required GUST filing. I know how to take care of this issue, but when making the required amendments I noticed that it has NO language pertaining to Direct Rollovers. My recollection is that this was required beginning in 1994 or 1995?? Nonetheless the plan did receive a determination letter in 1995 without the rollover language.

I am including EGTRRA language in the restatement and could include an entire section on rollovers. Operationally, I am told that the plan has allowed rollovers in rare instances of small benefit cashouts, etc. Otherwise the form of benefit is a straight life annuity or a QJSA.

How would this best be handled?

[mbozek]

Direct rollovers are only required if the plan provides for a lump sum payment. A qualified plan does not have to provide for a lump sum and can choose to pay only annuity payments. Your shuold review the plan provisions. The IRS could have issued a determinaton letter without requiring the direct rollover provison because the plan did not provide for lump sum payments when it was submitted. Also plan cannot allow cashouts of small benefits unless there is a provison that allows for such payments. You need to review the plan document. Check and see if the employer adopted the direct rollover as a separate amendment and never made it part of the plan. I think the IRS published a model rollover amendment that could be adopted without being sumitted for a determinaton letter.