Frozen plan to be terminated -- document issues

[chris]

Have a MPPP which was frozen back in 2001. Given the upswing in the market, the trustees are considering terminating the plan as of June 30, 2003. The plan document (vol. submitter) was recently updated for GUST. Due to language changes the document will need to be submitted to the IRS for review. Anyway to combine the GUST review with the termination, ie, wouldn't it be possible to submit the 5310 and include the new document and receive a det. ltr. on both the termination and the new document? Alternatively, any issues with terminating the plan as of June 30, 2003, paying out participants as soon thereafter as possible and then submit the document for review, ie, forego the 5310, but terminate as soon as possible?

[Guest saber]

Normally you would submit the termination and it would get reviewed for GUST as well. If you did not have GUST and/or did not timely adopt within the remedial amendment period then there will be issues.

Terminations within the 2002 plan year and forward need EGTRRA.

2003 plan year and forward also need 401(a)(9) amendments.

As for terminating the plan, distributing the assets and then filing for the DL, what is the point?

DL for terminations is needed when the bank holding the money won't release it without a DL. If you can roll the money over or distribute it without the DL than you don't have to apply for the DL if you don't want to.

The DL though will review your plan for GUST and make sure it is right. But if you messed the GUST language up and as a result the distributions are messed up because they were not done in accord with the plan language, then you have bigger problems to deal with.

[Blinky the 3-eyed Fish]

Due to language changes the document will need to be submitted to the IRS for review.

Anyway to combine the GUST review with the termination, ie, wouldn't it be possible to submit the 5310 and include the new document and receive a det. ltr. on both the termination and the new document? Alternatively, any issues with terminating the plan as of June 30, 2003, paying out participants as soon thereafter as possible and then submit the document for review, ie, forego the 5310, but terminate as soon as possible?

Chris is saying he MUST submit for a determination letter because the restatement does not qualify as a word-for-word document.

Chris, you say that you one time you wish to submit the 5310 and then you later say wish to forego the 5310? Submitting the 5310 will get your plan document reviewed as well as the termination, as far as I understand it, so that surely would be the way to go in this case.

[Guest saber]

No one has to submit for a DL.

They submit to get reliance on the letter that the plan qualifies.

If they were to get audited the DL would protect them on one aspect of the exam.

[Blinky the 3-eyed Fish]

Saber, I am afraid you are incorrect. For a M&P or volume submitter plan to be granted the extension to the remedial amendment period, which is any date after 2001 I believe, the plan document restatement must be a word-for-word version (i.e. no changes to the standard document language) or MUST be submitted to the IRS. Failure to do so in the latter case would mean the plan was not timely restated for GUST.

See Rev Proc. 2002-20, Announcement 2001-77, Rev Proc. 2002-73 to name a few.

[Guest saber]

Rev Proc 2000-20 section 19.04 says:

"04 Period of Extension--If the preceding requirements are satisfied, the remedial amendment period for the employer’s plan will not expire before the end of the twelfth month beginning after the date on which a GUST opinion or advisory letter is issued for the M&P or volume submitter specimen plan referred to in subsection .03 or the opinion or advisory letter application for the plan is withdrawn. Within this period, the employer must amend or restate its plan by adopting the GUST-approved M&P or volume submitter specimen plan (or another GUST-approved M&P or volume submitter specimen plan, or individually designed GUST amendments) and, if required for reliance, request a determination letter."

The rules for granting the extension of RAP are in section 19.03 of the same rev proc.

2002-73 extended the RAP period to sept 30, 2003.

The extension of the RAP comes primarily from the employer having adopted a TRA 86 M&P approved plan or VS plan and that same sponsor put in a timely application for GUST Opinion letter. A plan is timely restated for GUST so long as the above apply. The DL letter only gives you reliance that the plan was reviewed and approved for GUST.

If you have another cite that shows you are required to file in order to have extension of the RAP please let me know because I would like to read that as well.

[Blinky the 3-eyed Fish]

Okay, let's first focus on the last portion of the last sentence of Section 19.04 of Rev. Proc. 2000-20, "...and, if required for reliance, request a determination letter." You have to ask yourself, "What does this mean?". Fortunately, it's spelled out Announcement 2001-77, Section II. Note specifically, Section II.C.5., where it clearly says the document terms cannot be modified if intending to rely on the document opionion or advisory letter.

So, going back, if you do not have a word-for-word document, in other words you have modified the document in some manner, you MUST submit the plan, before 9/30/03 in most cases, to be eligible for the extended RAP.

Also, there is good information starting on page 1.387 of the 2003 ERISA Outline Book for your reference as well.

[Guest saber]

Thanks for your edification Blinky.

While I did have to seek some higher help here I do understand it now.

Thanks for your prodding.

:-)

[Blinky the 3-eyed Fish]

Glad I could help. Believe me I have been the recipient many a time.

[Guest saber]

It's unfortunate this field gets as convoluted as it is.

[billfgrady]

Blinky, you have correctly stated that, for an M&P or volume submitter plan to be granted the extension to the remedial amendment period, the plan document restatement must be a word-for-word version (i.e., no changes to the standard document language) or MUST be submitted to the IRS. However, I think the operative date is 2/28/02. In other words, as long as you adopt (even if not word-for-word)prior to 2/28/02, you get the benefit of the 1/31/04 extended RAP. Correct?