EGTRRA Non-Amender

[austin3515]

Can someone please explain to me what is required for an IDP Plan Document which was NOT restated on-cycle for EGTRRA, but DID make all of the amendments required (EGTRRA, final 401k, rmd, ppa, HEART, etc)./ The client obviously never submitted for a DL (which WOULD require restatement), but I didn't think every plan was automatically required to restate as a condition of qualification.

This IRS web-page does not indicate anywhere that it's non-amender program is for plans that did not RESTATE their document - only that it is for plans that have not made the required amendments.

http://www.irs.gov/retirement/article/0,,id=205524,00.html

Thanks in advance...

[ETA Consulting LLC]

Good question.

I questioned this a while back and this was explained to me:

When you amend for the interim amendments (i.e. EGTRRA), these are only Good-Faith amendments that you "may" rely on as long as you restate your plan by the end of the remedial amendment period. This, effectively requires the plan to be restated.

Good Luck!

[QDROphile]

I am not informed on this subject, but on general principles, restatement is purely formal. The IRS wants a restatement for convenience of review for a determination letter, but there is no legal requirement for a restatement just as there is no requirement for a determination letter. A series of timely amendments complies with the law.

To reconcile ERISAtoolkit's commment, I would agree that the IRS amendments that were adopted by most plane as snap on interim good faith amendments cannot serve as final amendments -- a plan would have to adopt subsequent amendments that integrated with plan terms and style. It seems silly not to restate the document to clean it up and make it consistent, but a patchwork of appropriate amendments could be compliant.

That leads to the conclusion that the nonamender program is for a plan that failed to make some proper and timely amendment, including amendment of the interim good faith snap-on amendments. The required amendments do not have to be expressed as a restatement, although a "restatement" is required for a determination letter application. That "restatement" is another subject.

If the plan truly was amended on time and with passable language for each of the required amendments, the plan simply appears to have missed its opportunity to get a determination letter within the time required to take advantage of remedial amendment deadlines based on the cycle filings and retroactive amendments in response to IRS views about sufficiency of language. If you want to use the nonamender program, I think you have to identify some way in which some plan term does not make the grade. You cannot assert that the plan meets all formal requirements and also be a nonamender. Failure to express the amendments as a restatement is not a formal failure.

[austin3515]

It sounds like the due dates of my inteirm amendments may have been different than what the attorney may have thought originally. Where do I find the due dates for amendments for plans that did NOT submit for a DL on their 5 year cycle?

[QNPG]

Good question.

I questioned this a while back and this was explained to me:

When you amend for the interim amendments (i.e. EGTRRA), these are only Good-Faith amendments that you "may" rely on as long as you restate your plan by the end of the remedial amendment period. This, effectively requires the plan to be restated.

Good Luck!

This has also been my question in the past and it was explained to me exactly the way that ERISAtoolkit previously explained.

[austin3515]

If the plan truly was amended on time and with passable language for each of the required amendments, the plan simply appears to have missed its opportunity to get a determination letter within the time required to take advantage of remedial amendment deadlines based on the cycle filings and retroactive amendments in response to IRS views about sufficiency of language. If you want to use the nonamender program, I think you have to identify some way in which some plan term does not make the grade. You cannot assert that the plan meets all formal requirements and also be a nonamender. Failure to express the amendments as a restatement is not a formal failure.

This is verbatim the answer I got from an ERISA Attorney who suffice it to say "knows his stuff."

But if someone can show me that "section 401Whatever says thou shall restate every 5 years" I would LOVE to read it. It seems to me that any such requirement would be mandating Form and not Content.

[movedon]

If the plan truly was amended on time and with passable language for each of the required amendments, the plan simply appears to have missed its opportunity to get a determination letter within the time required to take advantage of remedial amendment deadlines based on the cycle filings and retroactive amendments in response to IRS views about sufficiency of language. If you want to use the nonamender program, I think you have to identify some way in which some plan term does not make the grade. You cannot assert that the plan meets all formal requirements and also be a nonamender. Failure to express the amendments as a restatement is not a formal failure.

This is verbatim the answer I got from an ERISA Attorney who suffice it to say "knows his stuff."

But if someone can show me that "section 401Whatever says thou shall restate every 5 years" I would LOVE to read it. It seems to me that any such requirement would be mandating Form and not Content.

I like this answer, and it's a better said version of my own conclusion. I have never found any clear authority on the subject. All the material deals with the what you need to do assuming you want a DL, but there isn't anything that I know of that deals with what happens if you choose not to bother with a DL.

Furthermore, suppose you are on a pre-approved document and you fail to restate timely - are you now simply on an IDP without a letter?

And what about plans not subject to ERISA? Supposing they don't want a DL, are they required to have a plan document at all?

Whoa, sorry for the threadjack.

[Kevin C]

If the plan truly was amended on time and with passable language for each of the required amendments, the plan simply appears to have missed its opportunity to get a determination letter within the time required to take advantage of remedial amendment deadlines based on the cycle filings and retroactive amendments in response to IRS views about sufficiency of language. ...

I think the "passable language" part is where you will have problems. Have you compared the good faith interim amendments to the appropriate cumulative list to make sure sure all the necessary items are covered? Of course, without either submitting for a determination letter or using a pre-approved document, you won't know for sure if the IRS would consider the included language to be sufficient.

I've only done a few non-amender VCP filings for plans we've picked up that did not maintain their documents properly. Luckily, the VCP filing fees were fairly small. In those cases, it was an easy decision to file under VCP.

[Bird]

At the very very least you have an IDP without a DL, and I wouldn't use the modifier "simply" with that scenario.

I am sure the IRS considers it (failure to restate) a document failure. I half remember pondering/researching this and while I don't remember a bright line, there is an overwhelming amount of guidance that pretty much says you have to restate within such-and-such time frame. And if you don't, then we have programs to bring you back into compliance.

(Looking back on this thread, ETK's first response really answers/explains it nicely.)

When you amend for the interim amendments (i.e. EGTRRA), these are only Good-Faith amendments that you "may" rely on as long as you restate your plan by the end of the remedial amendment period. This, effectively requires the plan to be restated.

[austin3515]

just to be clear, I'm not advising a client not to restate. Rather the client did NOT restate, and we're trying to figure out if any response is required. We are putting them on our prototype so going forward they're ok. (it's a brand new client for us by the way )

[movedon]

And just to be clear, I'm not suggesting anyone should play chicken with the IRS with their plan documents, but just that, as some were suggesting here, if you remove concerns over DLs from the equation, it's not all that clear what the document/amendment requirements are.

[Guest Sieve]

Look at Rev Proc 2007-44 (quoted below). It says that good-faith amendments extend the normal time period that you must amend for certain provisions. That assumes that good-faith amendments are not sufficient to meet all the necessary requirements, which probably is going to be the case, and therefore an amendment to supercede the "good-faith" amendment will be required. But, if your good faith amendments are in full compliance (which is unlikely, based on the fact they usually are required before regs are issued), then there's no need to make other amendments or to restate.

"SECTION 7. EXTENSION OF EGTRRA REMEDIAL AMENDMENT PERIOD

".01 The EGTRRA remedial amendment period is extended to the end of the initial five-year and six-year remedial amendment cycles, respectively.

".02 This extension of the EGTRRA remedial amendment period extends the remedial amendment period for all disqualifying provisions to which the EGTRRA remedial amendment period applies, including plan provisions required or permitted to be amended for EGTRRA, final regulations under § 401(a)(9) of the Code, Rev. Rul. 2001-62, Rev. Rul. 2002-27, and disqualifying provisions described in Rev. Proc. 2004-25.".03 This extension is only available to plans that satisfy the conditions for eligibility for the EGTRRA remedial amendment period as set forth in Notice 2001-42 which requires the adoption of timely good faith EGTRRA plan amendments or other plan amendments."

Also see Notice 2001-42, discussing EGTRRA good-faith amendments permitting an extension of the remedial amendment period.