Plan document

[Gary]

A plan sponsor signed a plan in late december for 1/1/09 effective date. Just a few employees in plan who only get 0.5% accrual and an owner.

The plan was submitted to IRS for dl.

Sponsor now says he wants plan effective 1/1/10 and just redo dates and he will sign now.

What do we tell IRS agent? Anyone experience this?

This is on basis that employees won't have a problem and the plan will provide benefit service at least as far back as 1/1/09 so no impact on their pension.

Thanks.

[david rigby]

Sounds like a failure to follow the written document.

[Guest Chamnix]

In a similar situation once, we sent a letter to the IRS asking them to reject the application. The IRS complied so we didn't have a qualified plan at all.

In your situation, I suppose you would have to prepare an entirely new submission for the plan with a 1/1/10 effective date.

[Gary]

So one idea is to contact IRS and ask that the current submission be tossed out and that we intend to file a new submission at a later time w eff date of 1/1/10. IRS not accepting volume submitter GUST plans anymore so we would wait until EGTRRA plan approved and submit that.

Not a bad idea.

Other views appreciated too.

Thanks.

[Effen]

Seems to me that if he signed the plan document, then he has a plan. Just because you ask the IRS not to look at it, doesn't mean you no longer have a plan. If everyone ends up whole, then if might be "no harm no foul", but I would look closely at anyone who might be impacted by his attempt to delay the effective date. For example, did anyone terminate during 2009? How about the vesting provisions?

Personally, I would want a lot of cover from an ERISA attorney before I did much of anything on the plan.

[AndyH]

This one qualifies among Gary's most interesting situations. Should be a reality show.

Seriously, if the client does not want a 2009 deduction, why not have him file his tax return on time (if it is due 4/15) and make the pension contribution for 2009 in time for minimum funding but not in time for deducting in 2009, the old includable contribution rule.

Doesn't that accomplish the client's objective?

[Guest Chamnix]

Seems to me that if he signed the plan document, then he has a plan. Just because you ask the IRS not to look at it, doesn't mean you no longer have a plan.

It's not just asking the IRS not to look at it - it is specifically asking the IRS to rule that the plan is not qualified.