Plan Document Non Amender

[HarleyBabe]

I have inherited a Money Purchase Plan and a 403(b) Plan. The money purchase last document was signed 1992. There is no 403(b) doc. My concern is the MP doc. I want to be sure I am understanding VCP. Because it has missed many regulatory updates, I am assuming, that I can simply restate the plan completely with a brand new document currently which will include Tra 86, Gust, PPA..... and use the streamline VCP approach. That's the first question. Second question is, do I have to also submit for determination letter as well with the VCP? It appears based on one of the appendixes under VCP, that I do because it's one of the steps and goes on to state that you have to send 2 separate checks.... I want to be sure I'm not missing something when I explain this to the client.

The 403(b), which is a non-Erisa 403(b), I am doing a document now. Haven't really seen a correction program for that.

Any advise as I have a meeting tomorrow 9/6 in the afternoon and I"m trying to gather all the info.

Thanks.

[ETA Consulting LLC]

You should be fine under the Appendix F as it will include your full correction; amending all the way back to 1992. I don't think that amending to a current prototype will work. Tried it and had to go back and amend to prototypes for the respective time period.

Good Luck!

[John Feldt ERPA CPC QPA]

Since the EGTRRA restatememt window closed for DC plans, I've been surprised that we've already stumbled across 3 separate prospects that had old money purchase plans that had never been restated for TRA 86, GUST, or EGTRRA. In each case we put together TRA 86, GUST, and EGTRRA documents, plus a lengthy list of compliance (how did you operrate) questions. One compliance statement came back from its VCP submission, another is waiting for the IRS to reply, and the most recent one is answering the long list of questions now, but is expected to be submitted soon.

The most recent case was when the plan sponsor asked the bank holding the plan assets to pay an age 70.5 RMD. The bank wanted a copy of something official that named the trustees so the payment could be properly authorized. The document that designated the trustee was from 1987, so the bank let them in on a little secret about keeping a document up-to-date.

[HarleyBabe]

You should be fine under the Appendix F as it will include your full correction; amending all the way back to 1992. I don't think that amending to a current prototype will work. Tried it and had to go back and amend to prototypes for the respective time period.

Good Luck!

Would providers such as FT Williams have access to those prototypes and what about the determination letter? Would I also submit for determination?

Add to that, the 5500s have never been prepared properly when asked the required contribution question. Not sure on that one yet so if you have direction for me for that fix, it would be appreciated.

[ETA Consulting LLC]

You should be fine under the Appendix F as it will include your full correction; amending all the way back to 1992. I don't think that amending to a current prototype will work. Tried it and had to go back and amend to prototypes for the respective time period.

Good Luck!

Would providers such as FT Williams have access to those prototypes and what about the determination letter? Would I also submit for determination?

Add to that, the 5500s have never been prepared properly when asked the required contribution question. Not sure on that one yet so if you have direction for me for that fix, it would be appreciated.

FTWilliam is a fairly new company, so they wouldn't have any prototypes pre-dating the GUST restatement, but Corbel will. It appears as if you already have a TRA '86 document since that is what the plan would've been written to in 1992. You should ensure that the sponsor amendment for OBRA' 93 and all good-faith amendments (add-ons) are incorporated into that 1992 document. So, you're basically looking at a GUST document and EGTRRA document (while ensuring you include other post-EGTRRA-restatements such as RMD) in your submission. You can rely on the opinion letters for these adoption agreements, so you wouldn't need to file for a favorable determination letter. Even though they've never filed a Form 5500, you should still be able to ascertain a count. The Fees for the filing are typically based on the participant count, but it appears as if it's a small employer so they will likely be under the $750 fee.

Should be pretty straight forward since you won't have restate to a TRA '86. A GUST document should be easier to find.

Good Luck!

[HarleyBabe]

You should be fine under the Appendix F as it will include your full correction; amending all the way back to 1992. I don't think that amending to a current prototype will work. Tried it and had to go back and amend to prototypes for the respective time period.

Good Luck!

Would providers such as FT Williams have access to those prototypes and what about the determination letter? Would I also submit for determination?

Add to that, the 5500s have never been prepared properly when asked the required contribution question. Not sure on that one yet so if you have direction for me for that fix, it would be appreciated.

FTWilliam is a fairly new company, so they wouldn't have any prototypes pre-dating the GUST restatement, but Corbel will. It appears as if you already have a TRA '86 document since that is what the plan would've been written to in 1992. You should ensure that the sponsor amendment for OBRA' 93 and all good-faith amendments (add-ons) are incorporated into that 1992 document. So, you're basically looking at a GUST document and EGTRRA document (while ensuring you include other post-EGTRRA-restatements such as RMD) in your submission. You can rely on the opinion letters for these adoption agreements, so you wouldn't need to file for a favorable determination letter. Even though they've never filed a Form 5500, you should still be able to ascertain a count. The Fees for the filing are typically based on the participant count, but it appears as if it's a small employer so they will likely be under the $750 fee.

Should be pretty straight forward since you won't have restate to a TRA '86. A GUST document should be easier to find.

Good Luck!

What about PPA, we'll need that too? Gosh, so I will need 3 documents basically. Thanks for this direction. Documents have always been done by another party, so this is my first go round on correcting.

[ETA Consulting LLC]

What about PPA, we'll need that too? Gosh, so I will need 3 documents basically. Thanks for this direction. Documents have always been done by another party, so this is my first go round on correcting.

Most prototypes will already contain the good-faith language require by PPA, but we still are in the RAP; so there is technically not missed "restatement" deadline for PPA. You're really looking at only two documents plus add-ons. The add-ons will, typically, be sponsor level amendments with default provisions referencing the effective date of the change (i.e. effective for 2009 there are no RMDs). There appears to be much uncertainty, but really isn't. You'll look back with surprise on how easy the process was.

Good Luck!

[HarleyBabe]

What about PPA, we'll need that too? Gosh, so I will need 3 documents basically. Thanks for this direction. Documents have always been done by another party, so this is my first go round on correcting.

Most prototypes will already contain the good-faith language require by PPA, but we still are in the RAP; so there is technically not missed "restatement" deadline for PPA. You're really looking at only two documents plus add-ons. The add-ons will, typically, be sponsor level amendments with default provisions referencing the effective date of the change (i.e. effective for 2009 there are no RMDs). There appears to be much uncertainty, but really isn't. You'll look back with surprise on how easy the process was.

Good Luck!

do you promise?? Okay. The VCP Streamline does look pretty straightforward. Now the 403(b) that they told me was Non -Erisa, they have filed tax forms for so, I'm guessing it's ERISA and has to go through the same process.

[ETA Consulting LLC]

Now the 403(b) that they told me was Non -Erisa, they have filed tax forms for so, I'm guessing it's ERISA and has to go through the same process.

I promise Actually, the 403(b) doesn't. The non-amenders is "failure to qualify in Form" and, generally, does not pertain to any operational aspects. You simply failed to write the plan to a document containing language required for qualification after the list of required modifications were issued. There is no such "required" language for 403(b) plans. The only requirement is that the plan is written. So, when you attempt to submit to the IRS that you merely failed to write the plan back in 2009 when the rules required it; it's not defined by the IRS as a non-amender and they've been documented as refusing to even look at it.

So, unless the 403(b) as an operational or demographic issues (i.e. loan failures or ineligible employers) then you'd be best to just write the plan with a current date and wait for some guidance from the IRS.

Good Luck!

[Belgarath]

Darned if I can remember where I first saw this, but I pass it along with the caveat that I just can't remember the source.

The IRS is promising that changes to the Employee Plans Compliance Resolution System program are coming soon, and those changes will provide a way to correct plan document errors. The IRS has also proposed a “remedial amendment period” for 403(b) plans, as part of its proposed 403(b) prototype program, which will allow employers to retroactively correct certain plan errors for employers that adopt a prototype plan in a timely manner.

IRS regulations issued in 2007 imposed a written plan document requirement on 403(b) plans, making it for the first a condition of a plan obtaining and maintaining 403(b) status. This rule became effective, with some exceptions, Jan. 1, 2009.

However, the 403(b) plan document rule was made effective after the IRS published its latest version of its corrections program, EPCRS. This program provides a systematic way for employers to cost-effectively fix many 401(a) plan document problems that may otherwise cause a plan to become disqualified. But the current version of the EPCRS program does not provide any process to fix 403(b) plan document problems. So there is no systemic way to currently correct 403(b) plan document errors.

Monika Templeman, IRS’ director of employee plans examinations, has announced an interim program to address this problem until the EPCRS and prototype programs are in place. Though not provided in formal, published guidance, Templeman has announced that under the interim program, IRS examination staff will approach plan problems in an accommodating manner:

1. If an examining agent has discovered on audit that an employer has not adopted a formal plan document, the employer may (under non-abusive circumstances), enter into a type of closing agreement where the lesser “Voluntary Corrections Program” (VCP) sanctions will apply, rather than the more expensive “Closing Agreement Program” (CAP) sanctions (which will normally apply to errors found during an audit).

2. If a plan has been found to have a plan document error, the employer will be given the option of: (a) amending the plan prospectively while fixing the past error as an operational error (either as a self-correction, where applicable, or under the favorable VCP sanctions); or (b) committing instead to adopting a prototype program (when issued) and following the rules for the remedial amendment period under that program.

If the employer chooses the second option, the IRS will put the employer on a “follow-up” list, where the agency will seek to verify that the prototype has been adopted, and the remedial amendment rules changed.

P.S. it may have been some web posting from an attorney named Robert Toth - he does a lot of 403(b) stuff. But I honestly can't recall. When I pasted into e-mail, I lost the portion saying who it was from. P.P.S. - found it - here's a link. http://smarthr.blogs.thompson.com/2012/02/...ocument-relief/