EIN ends in 6, Cash Balance Plan

[John Feldt ERPA CPC QPA]

This client adopted a new cash balance plan 1-1-2003. Their EIN ends in 6.

Is January 31, 2007 the deadline for signing an EGTRRA restated document (I presume yes).

Is the Deadline for submitting the EGTRRA restated document for a determination letter also January 31, 2007 (I presume yes).

What is the retroactive effective date supposed to be for this restatement?

[John Feldt ERPA CPC QPA]

No replies? Well, I'm going to guess that it should be effective at the beginning of the 2006 plan year, but I'm concerned that the EGTRRA restatement portion has the RMD rules for DB plans perhaps should be effective earlier than that? Maybe someone will take a stab at this question now?

[Draper55]

No replies? Well, I'm going to guess that it should be effective at the beginning of the 2006 plan year, but I'm concerned that the EGTRRA restatement portion has the RMD rules for DB plans perhaps should be effective earlier than that? Maybe someone will take a stab at this question now?

I think you are right that it must be signed by 1/31/2007 and filed by that date. The general effective date will be either 1/1/2006 or 1/12007 depending which year you adopt it. Assuming that you adopted an EGTRRA good faith amendment at the time you adopted the cash balance plan then I don't think that you needseparate effective dates for these provisions unlike with GUSTwhere the effective dates were scatterd at restatement time. The RMD language probably should have an earlier effective date in accordance with the RMD regs.

[Guest paperchase]

Section 5.03 of Rev. Proc. 2005-66 extends the 410(b) remedial amendment period for a new plan to the end of the 5-year remedial amendment cycle. For a plan and fiscal year end of 12/31/06, the 410(b) remedial amedment cycle would end on the due date of the 2006 business tax return, which is 3/15/07 (for a corporation that does not go on extension). Since 3/15/07 is in the Cycle A that ends 1/31/2012, this section 5.03 appears to extend the 3/15/07 deadline to restate & submit until 1/31/2012.

The 2006 version of Sal Tripodi's ERISA Outline Book (section 1.D.4.a.1) says that the applicable (i.e., 5-year) RAP cycle in which the regulatory (i.e., 410(b)) RAP period ends determines the initial RAP for a new plan.

So, why would you conclude that a plan adopted in December 2006 or January 2007 would need to be restated & filed with IRS by 1/31/07?

[Mike Preston]

So, why would you conclude that a plan adopted in December 2006 or January 2007 would need to be restated & filed with IRS by 1/31/07?

Somebody must have edited their post, because I couldn't find a reference to the document being initially adopted in December of 2006 or January of 2007. The only thing I found was a document effective in 2003.

[John Feldt ERPA CPC QPA]

Mike,

In this example the original plan effective date is 1-1-2003 (as shown in the original post). Based on that, I still believe the restatement deadline is 01/31/2007, not 2012. I think paperchase is confusing the restatement effective date with the plan's original effective date.

The orginal effective date of the plan is 1-1-2003, will the restatement effective date be 1-1-2006?

[Mike Preston]

I have always found the "effective date" issue to be confused. That is, some people put one meaning on the term and others put a different meaning on the term.

I prefer to think of the issue encompassing a single adoption date (for example, a Cycle A individually designed plan must have EGTRRA provisions incorporated within an amended and restated plan no later than 1/31/2007) along with a requirement that the document provide for various things with effective dates that vary by provision.

So, to state that there is a general "effective date" is a bit of a misnomer.

The number of provisions which require varying effective dates is large and varies by year of adoption. This is part of what the Revenue Procedure describing the determination letter program is attempting to describe: exactly which provisions need to be in what document. Generally, one looks to the "list" as provided by the IRS near the end of a specific year to determine what must be in plans adopted in plans with adoption dates following the specific year (depending on the type of plan - mass submitter or individually designed - the lag period is different).

All of this says that one can make the "general" effective date something which is the earliest date amongst the provisions and then carve out later effective dates for individual provisions or one can provide for a general effective date which is later (perhaps no earlier than the adoption date) and then provide that various provisions are effective earlier than the general effective date.

Both approaches work.

Preference is in the eye of the beholder.

The details as to what needs to be included and with what effective dates can only be found by following the Rev. Proc.

[Guest paperchase]

What I did was misread the effective date; sorry for the confusion. I agree that a plan effective 1/1/03 must be submitted by 1/31/07.

Now that that is clarified, I'd like to hear your opinion regarding the case of a new plan effective 1/1/06. Do you agree that the deadline is 1/31/2012?