New plan, Cycle A, to be signed March 2007

[Trekker]

We will be drafting a new individually designed profit sharing plan for an employer with an EIN ending in "1" early next year. The plan will not be signed until March, 2007. When should this plan be submitted?

Must it be submitted off-cycle or can it wait until the next Cycle A years down the road?

Thanks for any help.

[Belgarath]

I will caveat this heavily - I haven't gone back and read 2005-66 with regard to this question. My memory of it is that you could generally wait to file. The purpose is supposed to be that plan sponsors generally don't have to file more than once in a given cycle, and there's no reason why a new plan should be treated less favorably.

[Trekker]

Just checking back in. Has any official proclamation been issued on new plans adopted after 1/31/07, but in Cycle A?

For example, a new profit sharing plan is adopted effective April 1, 2007, and is in Cycle A due to EIN ending in 6.

What is the deadline for submitting this plan?

Thanks.

[Bob R]

There is no recent guidance on this. But, I think it's clear you can wait until the next cycle A to submit.

One of the unknown issues is whether you can file now, if you want to, and get a letter within a reasonable period of time. Right now an offcycle submission is the lowest priority. The IRS is considering some sort of priority for certain off-cycle submissions such as new plans, rulings (rather than requests to review the plan document), and mergers and acquisitions. This has been a problem for those people who want a letter now rather than waiting until the next cycle.

The other issue where guidance is expected fairly soon relates to new plans and the old remedial amendment period rules in the 401(b) regulations. This is an issue when you adopt a new plan during the cycle that applies to the employer. For example, suppose the employer has an EIN ending in 2 (so it's subject to cycle B which ends 1/31/08). The employer adopts a plan on 12/31/07. Does the employer need to submit by 1/31/08 to be timely or does the employer have the old rule whereby it can file by the due date of the tax return for the 2007 year? My guess is the IRS guidance will give us the later date based on the fact that it's regulatory whereas the 5 year approch is by Rev. Proc.

[Trekker]

Bob R - thanks for taking the time to provide this information. Let's hope some guidance comes soon.