Any definite IRS authority on written amendment requirement for automatic rollover?

[Guest LMalone]

I've read a couple of articles that say plans MUST be amended by March 25, 2005, for the automatic rollover rules. I know plans must operate in compliance, but is there any definite word from the IRS that a written amendment is required?

It seems logical that since this is part of EGTRRA, it might fall into the staggered restatement system that is proposed.

Thanks.

[Demosthenes]

Try the latest IRS newsletter at http://www.irs.gov/pub/irs-tege/se_102204.pdf.

In part it says "In the next few months, the IRS expects to publish guidance under section 401(a)(31)(B) including a model amendment that may be used to apply the automatic rollover provision." There is also a link to the DOL regs on the page.

Not very definitive, I admit, but at least it's something.

[GBurns]

If elections, loans, transfers, distributions and almost everything else has to be in the PD etc and the plan has to be operated according to its PD, Why would automatic rollovers not be treated like everything else and be required to be in writing?

In any case, How would you amend anything without there being writing? How would you explain the amendment to plan participants and plan administrators? How would you provide proof of amendment in an audit? Since you could not do any of these verbally, it seems that the amendment must be in writing.

[Blinky the 3-eyed Fish]

One could ask those questions of the many provisions affected by GUST or previous legislative changes where the plan was required to be operated in accordance with current law, yet the plan document did not reflect those provisions.

[GBurns]

Are you implying that Plans that needed changes made no changes in writing for GUST amendments?

[Blinky the 3-eyed Fish]

No, that is not what I was implying. I was stating that plans have in the past often temporarily operated outside of the written terms of the plan and that that is not an argument for stating in this case that plans need to be amended by 3/05.

[E as in ERISA]

I've heard that if a plan is going to be updated to provide for the automatic rollovers, then it would follow an EGTTRA timeline: good faith amendment in 2005 followed by final amendment by end of EGTRRA remedial amendment period. However, if plan is going to be updated to remove force outs, then that should occur prior to March 28.

[GBurns]

I was not aware that anyone was thinking of anything that was to be "temporarily operated outside of the written terms of the plan ".

The posts were all regarding something permanent.

[Blinky the 3-eyed Fish]

I've read a couple of articles that say plans MUST be amended by March 25, 2005, for the automatic rollover rules.  I know plans must operate in compliance, but is there any definite word from the IRS that a written amendment is required?

George, the first post is asking if plans need to be amended by 3/05. Of course the plan will eventually have to be amended.

I assumed you read the first post and were responding to the question posed, and that you were arguing that the plan had to be amended by 3/05 because the plan had to operate within the terms of the plan document. I understand now you were just saying the plan eventually had to be amended.

[smm]

The IRS announced yesterday that they will be issuing a model amendment to comply with the automatic rollowever requirements. The announcement is in the Special Edeition of Employee Plans News that is available on their web site.