Streamlined or Full VCP

[Guest jjren]

Here's an interim amendment correction issue that is perplexing me.

DB plan cycle A. Restated for EGTRRA and filed for and received a favorable letter.

Before end of cycle A for PPA (1/31/12) signed 8905 certifying intent to adopt pre-approved plan. This qualifies plan for 6 year cycle for PPA.

After the 1/31/12 end of PPA cycle A, it was discovered that 415 amendment was adopted late. 415 was not required for Cycle A EGTRRA restatements.

Is it too late to use a streamlined VCP (with Schedule 1 and $375 fee) to correct this interim amendment?

A. Yes - the "applicable" cycle for this interim amendment ended 1/31/12 and the 8905 doesn't change that.

B. No - the 8905 entitles the plan to a 6 year cycle, so the plan has until 4/30/12 (the EGTRRA 6 year) to adopt this amendment.

C. No, and the "applicable cycle" for this plan is the second 6 year cycle - ending about 6 years from now. The VCP would still be streamlined if filed by then and not pickled up on audit first.

Follow up question - if you picked B, is a restatement to an EGTRRA pre-approved required by 4/30/12 even though the plan has an EGTRRA letter?

Thanks for your opinions.

[Kevin C]

If you read through Rev. Proc. 2008-50 and look up all the cites used in defining "interim amendments or amendments required to implement optional law changes, as described in section 6.05(3)(a)", I think you will find that is says you qualify for the $375 submission. Will you get it processed for $375? Maybe, but maybe not. I've heard varying descriptions from IRS personel about when they think the $375 fee applies. My suggestion is that if you think the $375 fee applies, file that way. But, let your client know that if the IRS disagrees, they will ask for more money.

If you are using Form 8905 to get the 6 year amendment cycle, I think you have to restate using a current pre-approved document by 4/30/2012.