GUST extension still available if plan already amended for GUST (with a determination letter)? Need to change ADP/ACP testing for 2002

[Jeff Kirtner]

Plan has already been amended for GUST and has received a determination letter. The Plan needs to change the ADP/ACP testing for 2002 (from prior to current).

If the plan had not already been amended, the GUST RAP would have extended through 9/30/03.

Issue: If the amendment is done today, is the amendment timely? i.e., does the GUST RAP end on 9/30/03 even though the plan has already been amended for GUST and a determination on the GUST-amended plan has already been issued? Or does amending the plan for GUST and/or submitting or receiving a determination letter end the GUST RAP as of such date?

Any guidance (and cites to IRS rules) is greatly appreciated.

[Blinky the 3-eyed Fish]

You can amend from prior to current year testing. The GUST remedial amendment period has nothing to do with it. Though, there are some people that will aruge that it may be a 411(d)(6) cutback to change the testing method at this juncture, their point being an NHCE could have received a QNEC had the plan failed testing.

Personally, I don't think many people hold this position, including myself, and I would say you are fine to change the testing method at this time for 2002.

[g8r]

I agree with everything Blinky the 3-eyed Fish stated.

And, to answer your specific question, even though the plan has been amended for GUST, the RAP doesn't end until 9/30. Of course by the time you read this it's too late. But, you indicated that you filed and received a DL letter. The RAP actually extends 91 days past the issuance of the letter. So, you might still have time on that basis as well.

[QDROphile]

q8r:

Could you explain more about the additional 91 days?

[Mike Preston]

If one submits, the IRS issues an LOD (hopefully). The IRS may, or may not, ask that an amendment be adopted _after_ the LOD in order to satisfy qualification requirements. For example, during the submission process, the IRS may approve a proposed amendment. If they do condition the LOD on such an amendment, the Plan Sponsor has 91 days after the LOD is issued in order to adopt the amendment. The authority for that is 1.401(b)-1(e)(3). In fact, if memory serves, the RAP is extended pursuant to that section whether or not the IRS requests that an amendment be adopted after the issuance of the LOD.

Whenever a deadline revolves around the RAP, the 91 day extended RAP applies in the case of a plan that receives an LOD.

I think there is an example in the ABA Q&A's where an individually designed plan was required to adopt an amendment before 2/28/2002 (the end of the GUST RAP for individually designed plans) but had not done so. Nonetheless, the LOD was issued something like 1/15/2002 so the Plan Sponsor could adopt said amendment up through 4/15/2002 (or thereabouts).

Maybe somebody else can find it.

[Guest Bob K]

Blinky - some IRS reprentatives have taken the position that the amendment needs to occur before the end of the plan year being tested. This is an issue that was not addressed by the new 401(k) regulations but I know that some industry groups will include it in their comment letter on the new regs.