Retroactive Prototype Effective Dates

[JRG]

I am having trouble understanding the benefits/reasons of having a retroactive effective date (say 1/1/2002) for an EGTRRA prototype restatement, executed for example 1/1/2009.

If we made the effective date 1/1/2002, would this whipe out any nonamender defects? For example, client did not timely adopt a 401(a)(31)(B) amendment....but the provision is now correct in the new plan restatement (since plan is effective 1/1/2002 and the 401a31B amendment is in the plan document effective 3/28/2005). I would not think this would eliminate the nonamender error, but am I wrong? If it doesn't, then in theory the document is not really deemed effective in 2002.

If you have a GUST prototype that has been timely amended for all required law changes....why would you not simply make your EGTRRA restatement date the date/year executed (1/1/2009)?

What are the reasons to make the effective date 1/1/2002 instead of 1/1/2009?

[Bird]

I think it depends on how your document is written, and assuming you are using a document provider, they can tell you how to handle the effective date.

I do think most or all documents have the retroactive stuff hard-coded, so you probably want to make the nominal effective date of the restatement the first day of the current plan year. Many documents are going to have currently effective tweaks, or major changes, and it would really tie your hands if you had to make everything in the plan retroactive to 2002.

I agree that a retroactive eff date does not fix a nonamender problem.

To answer your question more directly, you would need to use a "way back" retroactive date if the plan didn't specifically say when the various changes were effective. Clearing away some cobwebs and going back several restatements, I think it was TRA '86 (yeah really) that changed the permitted disparity (then "integration") rules, and you could do what you wanted in operation and catch up the language in the document later, and so in 1994 or whenever we were indeed using a 1987 (?) effective date for the entire restatement. But the IRS now wants documents to currently reflect operations, so that's ancient history - but probably does explain why the concept is still hanging around.

Ow - that was harder than it sounded. Time for my geezer nap.

[JRG]

Thanks.