VCP Filing for missing GUST deadline

[Guest dyoder]

The plan sponsor is in bankruptcy. Although the GUST restatements were sent to the sponsor in plenty of time to meet the GUST deadlines, his bankruptcy attorney insisted that the bankruptcy court needed to authorize the sponsor to adopt the restatement. Finally on February 16 the court issued this approval.

It is my understanding that the only way to keep this plan in compliance is through a VCP filing since the January 31 deadline was missed. My questions are:

1. Is the VCP filing permissible if the plan is already under a DOL audit due to an unrelated matter?

2. The restatement is on a non-standardized prototype document...does a determination letter application need to be submitted along with the VCP filing?

3. Since the company is in bankruptcy, can the VCP filing and preparation fees be charged to the trust?

Thanks for your insight.

[Belgarath]

1. My opinion would be that since the Revenue Procedure (2003-44) is an IRS program, that a DOL audit should not preclude using VCP. Section 4(.02) says that if the Plan Sponsor is under Examination, VCP is not available, but I'm assuming this means an IRS examination. Section 5(.03) defines the term "Examination" and I don't see anything about a DOL audit. I don't know if others have a differing opinion.

2. I believe yes, although I didn't delve through the Rev. Proc. to make sure.

3. That's a sticky one, and I would seek legal counsel. My personal inclination would be no, but I'm pretty conservative in my views of fees being paid from plan assets. To me, since the filing is due to a plan sponsor error/delay, I'd be inclined to consider this a "settlor" expense that shouldn't be paid from plan assets. Since the DOL is auditing it already, perhaps the client could discuss this with them?

[mbozek]

I have a question: why couldnt the plan sponsor adopt the restatement pror to the deadline subject to approval of the bkcy ct. at a later date? That would have prevented this problem. I believe that the trustee for the bankrupt co will determine who will pay for the filing fees.

[Guest dyoder]

The GUST restatement was not adopted prior to the dealine because the plan sponsor's bankruptcy attorney would not permit the adoption of the GUST restatement without the court's permission. The restatement was provided to the sponsor/attorney last August and it took until now to get the court's approval. We were continually in contact with the attorney regarding the various adoption deadlines and ramifications of missing them, but he still insisted on waiting for court approval.