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Question 172: Section 5.09 of Rev. Proc. 2002-21 says that, after the Compliance Date (the last day of the 2003 plan year), a PEO may not rely on an IRS determination letter for a plan that benefits worksite employees, regardless of when it was issued. We work with several PEO plans that operate as multiple employer plans (as they should, we presume, given the recent IRS guidance). If they apply for determination letters for their GUST restatements, will those letters become null and void after 2003? If so, should they wait and apply for determination letters (for GUST) in 2004? | ||
Answer: The answer to this question turns on the technical wording of Rev. Proc. 2002-21. The section in question says:
However, if a PEO were confident that it was, indeed, the common law employer of its workers, and accordingly chose to disregard the Rev. Proc., its single employer plan would be subject to Section 5.09. In that case, it would not be able to rely on any determination letter after 2003, regardless of the date that letter was issued. So it would not matter whether the plan chose to apply for a GUST letter in 2004. It would not be able to rely on that letter, even if it were to be issued. |
Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner or to readers. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of this and similar situations.
The law in this area changes frequently. Answers are believed to be correct as of the posting dates shown. The completeness or accuracy of a particular answer may be affected by changes in the law (statutes, regulations, rulings, court decisions, etc.) that occur after the date on which a particular Q&A is posted.
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