Non Amender VCP

[Scuba 401]

if the sponsor has never amended the plan which includes a period of many law changes and 3 remedial amendment period would you just send the IRS the most recent EGTRRA document or would they request that you recreate all the amendments?

[Guest Sieve]

Need amendments to be effective at the appropriate time. Therefore, one document will not work (unless it's a very complicated & sophisticated document), and individual amendments will be the proper approach..

[Scuba 401]

Need amendments to be effective at the appropriate time. Therefore, one document will not work (unless it's a very complicated & sophisticated document), and individual amendments will be the proper approach..

how can i go back and get amendments from 10-15 years ago. we are dealing with a plan that has never been amended.

[Guest Sieve]

You must recreate all proper amendments--TRA '86, UCA, OBRA, GUST, etc., etc.--as necessary. Find a regional prototype or contact a document provider (like Corbel) to get the necessary restatements--the ordinary amendments should not be difficult to prepare (i.e., copy the format from other clients' files). They are out there. Many of us on this Board (including me) have had to go back 10-15 years, or more--for an EGTRRA restatement due on 4/30, I amended one client back to TRA '86. Adopt and sign the restatements & amendments currently, with a current date. This is all a precondition to getting a VCP compliance letter--don't file for one (except at your own peril) without all proper and delinquent amendments/restatements in place.

[katieinny]

I am also doing a VCP filing for a plan that didn't get restated in time. The GUST document was a volume submitter plan (I think the prior document sponsor did all their plans that way), but we're putting them on a prototype this time around. If I'm reading the Rev Proc correctly, I don't think I need to do a 5307 for a determination letter, since the employer can rely on the opinion letter (per the last sentence of Section 6.05(1)). I would feel better though if I could get other readers' confirmation, or not, as the case may be.

[Guest Sieve]

I think you're correct (assuming that the only other amendments missed are interim amendments--see EPCRS Section 6.05(3)(a) & Schedule 1 to Appendix F).

But, in an extra bow to caution, I always go to the IRS with an FDL application (as part of the VCP application) when there is anything more than an interim amendment missing (like GUST). But that may just be me.

[katieinny]

Sieve: Your point is well taken. Since I'm doing the VCP anyway, might as well get the DL letter, whether it's required or not. Since it's a small plan with a 2004 start date, I don't think they need to pay a user fee, so there isn't much of a down side to applying for the letter.

[Guest jjren]

I am also trying to help out a client who had not amended since adoption of their plan in 1987 (they adopted 415, PPA and EGTRRA restatement timely). We thought we would try submitting the VCP without going back and doing a TRA amendment, GUST, etc. I understand that the proposed method of correction on Appendix F, Schedule 2 requires retro adoption of each amendment. It seems a rather expensive and pointless exercise.

Has anyone tried submitting a only a current restatement under VCP (maybe using appendix D instead since proposed correction for AppF not followed) and been told by the IRS to go back and create and adopt each retroactive amendment? I thought we would start simple and only create the pointless paperwork if they asked for it? Client is small nonprofit and we are trying our best to keep costs down, but to help them get in compliance.

[Guest Sieve]

The IRS does not see it as a pointless exercise, nor should you. A plan must comply with all language requirements at all times--miss an amendment, and the plan is out of compliance, i.e., not tax-qualified. So, the idea is not simply to cause the plan's language to meet current requirements, but to amend the plan so that, along the way, based on the delinquently-adopted provisions' effective dates, it always met language requirements. ("Generally, a failure is not corrected unless full correction is made . . . for all taxable years (whether or not the taxable year is closed)." EPCRS, Section 6.02.) Tough to do unless you adopt the amendments individually, with appropriate effective dates.

Keeping a plan up-to-date is not an easy or cheap process. Why would the IRS, by its own procedures, encourage non-compliance followed by a restatement that completely ignores prior delinquent amendments?

[Guest jjren]

I don't think the IRS would encourage non-compliance; that's why VCP isn't Free!

I have little doubt that the IRS will agree with your take that form is just as important as substance approach and require someone to draft a plan the way it would have been drafted 16 years ago. That doesn't mean it isn't pointless. For example, changing required beginning date from the original rule in the plan to the intermediate rule that has now been superceded doesn't do anyone any good. Of course, if there was any operational failure related to the provision, that is an entirely different problem.

I was just asking if anyone has pushed the envelope and, if so, what the result was.

[Guest bobolink]

FWIW: I had a doctor whose doc & spouse plan was discovered during an estate planning review. It hadn't been amended since TRA86. I restated it into our current format and submitted vcp. Got the compliance statement without response. In this case, the 5500s were timely filed. I have encountered other non-amenders where the failure to file 5500s is the biggest problem.

[Guest new2this]

Confused - Would the EGTRRA nonamender VCP Application use Appendix F, Schedule 2? If that is the case the instructions for that Appendix require a DL Application, as well. Is the DL definately required with the EGTRRA nonamender VCP?

[Guest jjren]

Great news! Today I received a compliance statement for the plan I mentioned above. The plan hadn't been updated since 1987. We created documents from GUST forward and submitted an application proposing retroactive adoption of the GUST restatement and later interim amendments. We further proposed that the plan be deemed to have been amended retroactively to comply with TRA 86 and other amendments prior to GUST without producing those documents. The IRS accepted this proposal without discussion.