Qualified retirement plans must be amended and restated since the IRS approval letters on which they rely have expired and the law has changed. The deadline for restating qualified retirement plans under Revenue Procedures 2000-20 and 2000-27 (the so-called “GUST” amendments) is the last day of the plan year starting in 2001. For volume-submitter plans, this deadline may be extended a few months. GUST allows sponsors to obtain opinion letters relating to the qualification of their plans under changes made by the following laws: Uruguay Round Agreements Act, Uniformed Services Employment and Reemployment Rights Act of 1994, Small Business Job Protection Act of 1996, Taxpayer Relief Act of 1997, and the Internal Revenue Service Restructuring and Reform Act of 1998. In these laws, changes were made to allocation formulas, the family aggregation rules, testing methods, combined plan limits and adoption agreements. (One wonders how Uruguay happened to be included in this process.) Nevertheless, all qualified plans are affected and you should note the following information:
When to Amend
The IRS has extended the deadline for amending plans to reflect the changes required by GUST. Generally, the GUST amendment deadline for all non-governmental plans ends on the last day of the first plan year beginning in 2001. For example, a calendar year plan must be amended by December 31, 2001; a plan with a year beginning May 1, 2001, must be amended by April 30, 2002. Previously, the deadline was the last day of the 2000 plan year.
An exception exists for employers using certain volume-submitter plans; such employers have until the later of the deadline stated above or the last day of the 12th month beginning after the date the volume submitter practitioner receives approval for its volume submitter plan. The volume-submitter practitioner must request a GUST opinion by December 31, 2000.
The IRS has cautioned against updating plans immediately. Specifically, there are proposed regulations that may not be relied upon prior to finalization. For plans that may be affected by the proposed regulations, if a determination letter is obtained currently, another application and user fee may be required to obtain a determination letter taking into account the final regulations.
Who Must Amend
According to Rev. Proc. 2000-20, all qualified retirement plans which received approval letters issued under Rev. Proc. 89-9 and 89-13 must be amended since the extended reliance granted in the Tax Reform Act 1989 has expired. Further, law changes over the past few years have affected qualified retirement plans and therefore mandate document amendments.
We are working with those clients for whom we have acted as counsel in connection with plan amendments. All employers maintaining qualified plans should pay careful attention to these requirements and contact the advisor with whom they have been working in the past. If we can be of assistance, please call Cynthia Dixon, Leslie Heffernen or me.
– Mike Beausang