New IDP

[Guest Grumpy456]

Client #1 has an EIN ending in 1 and just installed (in February 2008) a brand new IDP (the client has never sponsored a qualified plan). The client is a Cycle A sponsor and the Cycle A deadline expired on 1/31/2007. Are the options (1) hold off on applying for a D-letter until 2/1/2010 to 1/31/2011 or (2) file "off cycle"?

Client #2 also has an EIN ending in 1 and installed a brand new IDP plan effective 1/1/2007 (the plan was signed in December 2007). This newly-installed IDP plan is a cash balance plan. At the time the cash balance plan was installed, the client sponsored a 401(k) profit sharing plan containing a "new comp" allocation formula (and this plan is also an IDP). Neither plan was submitted for a D-letter by 1/31/2007. The 401(k) profit sharing plan has/had a favorable D-letter. Are the only options for the cash balance plan the same as for Client #1's newly-installed plan? What about the 401(k) profit sharing plan?

Thanks in advance for any guidance.

[Guest Grumpy456]

This is a little frightening--shouldn't we, as practitioners, be provided with clear explications of the rules. I can only presume that other folks are equally confused.

One thing that I find particularly problematic with the IRS's new determination letter program is that they set out a bunch of new rules (which we all scrambled to understand) and then almost immediately began carving out exceptions to the new rules and granting extensions to various deadlines. Keeping track of whether an exception or extension applies to any given fact pattern is overly time consuming (or so it seems to me) especially given that there is no single place to look.

Thanks again for any help or guidance with respect to my two questions. It is much appreciated!

[John Feldt ERPA CPC QPA]

I think you can apply for a D letter now, off-cycle, and you will not be rejected, but only because the next cycle (2011) is more than 2 years away. I recently read something that indicated this, I think it was in an IRS EP newsletter. If I find it, I'll come back and add the link.

edited to add this link:

http://www.irs.gov/retirement/article/0,,id=146910,00.html

go to the heading near the bottom entitled "Off-Cycle Filing" and read the second bullet point

[Guest Grumpy456]

Thanks!