Can the Form 5307 relating to Volume Submitter Plans be used to get a

[Guest RMM]

Can anyone point me in the right direction? There is a debate in the office as to whether we can use Form 5307. If we cannot use Form 5307, then what form should we use? Thanks.

[mwyatt]

Not sure at this point. The IRS did come out and say that New Comparability plans could not use prototype documents which would lead one to believe that Form 5300 would be used as you have an "individually designed" plan.

However, keep in mind that the big attraction of Form 5307 over Form 5300 is the User Fee. This advantage is somewhat negated if you are filing for a General Test review (which you basically have to do with a New Comparability plan). User fees are as follows:

Form 5307: $125 if no General Test; $1000 with General Test

Form 5300: $700 if no General Test; $1250 with General Test

Why the addition of General Test costs $875 for Form 5307, $550 for Form 5300 is unclear (maybe factoring in additional review time inherent in regular Form 5300 filing as a credit). The main point, however, is that your client will be spending at least $1000 for a User Fee; extra $250 savings from Form 5307 probably won't overcome outrage at the first $1000 spent.

[Guest JF]

Perhaps another view on this. Depending on the formula in your doc, you are probably better off not getting a determination on the general test. If you use the basic simple rate Group definitions (shareholder, non-shareholders etc..) and leave the amount paid to each group flexible in the doc each year, then getting a determination on the general test is only really helping you for the first year. Since the test will apply each year (unlike an age weighted formula), getting a determination for the first year allocation doesn't help you in the future. I sugest looking at a volume submitter version of the new comparability pan such as those from Corbel, which can still be submitted on 5307 for the $125 user fee.

[mwyatt]

JF: Agree with you as to the value of the IRS review of General Test (when you get down to it, the IRS's review doesn't certify that you performed the test correctly as they have no way of knowing that your census data is accurate). We never applied for the General Test back in 1994 w/ TRA '86 restatements for our age-based PS plans for this reason.

That said, however, I'm not so sure that you have the option of not applying. For sure, when you apply for DL on plan termination you have to apply for General Test (read the fine print in instructions). Although the IRS has not yet issued final procedures for GUST restatements, there is a very real possibility that you need to apply for General Test review in order to get the letter.

We use Autodoc also; I'm not sure that you can get the volume submitter rate (although you're generating document using VS system). Have they clarified this yet?

[Guest JF]

Good question for Corbel, but , in my discussions with some attorneys there, they felt that if you used the new comp language in their VS plan without alteration, it could get the lower user fee. Basically, you are just checking "no' t othe question on the app that asks if you are applying for determ on the general test. Not sure about terms, haven't done one with a cross tested plan yet. As far as GUST, I have not seen any guidance on this issue yet. Anyone else ?