Deadline for Determination Letter Request for Amended Plan

[Guest wwest]

What is the rule for time to file for a determination letter request for an amended plan? (Non-legistlative change)

[Dave Baker]

Filing for a letter is optional, of course.

You'd want to get it in before the end of the "remedial amendment period" per the Treasury regs under Code section 401(B), if you want to be sure the amendment doesn't cause the loss of the plan's tax-qualified status. By filing before the end of the RAP, you get the ability to retroactively fix anything that's wrong with the amendment.

(Please excuse me if I'm preaching to the choir here <g>.)

Currently the RAP hasn't ended for amendments made in the past couple of years, though -- a revenue procedure says that even amendments that have nothing to do with the GUST amendments can be fixed retroactively, if the plan is submitted by the end of the deadline for GUST amendments. See Revenue Procedure 99-23 (click): "This revenue procedure provides that the extension of the remedial amendment period also applies ... to all disqualifying provisions of new plans adopted or effective after December 7, 1994, and all disqualifying provisions of existing plans arising from a plan amendment adopted after December 7, 1994."

So basically I think you're good to go until the end of 2000.

[Kirk Maldonado]

The RAP only applies to amendments required because of that legislation. If the IRS determines that your plan does not comply with some other provision, then you're dead if you wait. I never recommend waiting for a determination letter with respect to new and amended plans. It would be nice if the IRS allowed the RAP to apply to the GUST changes and any other change that the IRS reviewer might request, but I don't read the rules that way. Thus, unless you are absolutely 100% positive that your plan is in compliance with all conceivable rules except for the GUST change, I'd wouldn't recommend waiting.

[M R Bernardin]

I agree with Dave; the current extended RAP will cover any amendment made since approximately the end of 1994, and any plan adopted since approximately the end of 1994, whether the disqualifying defects (if any) relate to the GUST laws or not. However, if you have amended your plan to do something that is fairly aggressive, the earlier you submit it for a ruling, the better, since the RAP only gives you the ability to retroactively cure something, and you probably don't want to have to go back for 3-4 years or more to fix a defect. The non-GUST RAP is generally the due date for filing the employer's tax return for the year in which the change was made. Look at the regulations under 1.401(b) for more guidance.

[Dave Baker]

Kirk, are you basing your conclusion on the term "disqualifying provision" meaning something other than any provision that causes the plan to fail the qualification rules?

[Kirk Maldonado]

I wish to retract my prior comment. Revenue Procedure 99-23 states that "disqualifying provision" for purposes of the RAP includes all disqualifying provisions of new plans adopted after December 7, 1994. Thus, there is no need to file a determination letter with respect to a newly established plan until the GUST deadline.