Effective date of "pick up" treatment

[Guest mlporter]

Will the IRS will issue a retroactive "pick up" letter under Code section 414(h)(2)? Put another way, is it possible for a governmental entity to implement a pick up arrangement (thus treating mandatory after-tax employee contributions as employer contributions) if it has not yet received the pick up letter?

I know that pick up arrangements cannot be made effective prior to the date that the last governmental action necessary to effect the employer pick up has occurred.

Your thoughts are appreciated.

[Everett Moreland]

A private letter ruling from the IRS is not necessary for a pick-up arrangement to be effective. I've never asked for one and would not unless I had doubts about whether the arrangement qualified.

[GBurns]

Although I have no idea what a ""pick up" letter under Code section 414(h)(2)" is, I do know that a PLR is optional not necessary nor even desirable unless there is some special circumstance with this particular plan design.

Effective date, as with other Plans, is after adoption by the person/Board/Commission etc with such powers on behalf of the entity. What action, whether legislative or statutory that must first occur to authorize the use of such powers depends on the entity. This adoption is possibily what you mean by "the last governmental action necessary to effect the employer pick up ".

The pick-up which is quite often timed to match the payroll cannot take place before adoption of the plan and its effective date.