Retirement plan practitioners are very aware that the EGTTRA restatement deadline was April 30, 2010, for plans that qualified to use the prototype or volume submitter plans. If a plan sponsor missed its restatement deadline, the plan sponsor should correct the failure under the IRS’s voluntary correction program (VCP). However, before a plan sponsor proceeds with a VCP application, it should determine if the plan really missed the deadline. The April 30, 2010, deadline is part of the 6-year remedial amendment cycle for prototype and volume submitter plans. The 6-year cycle provides a process to have documents pre-approved by the IRS. Plan sponsors who adopt such documents will have reliance on the letters issued by the IRS. The 6-year cycle generally provides a longer time period in which to restate plans than otherwise would apply – but not always. The 6-year cycle effectively is an exception to the 5-year cycle. Although the 5-year cycle generally is considered as providing the restatement deadline for individually designed plans, the 5-year cycle applies to all plans, including prototype and volume submitter plans.
Under the 5-year cycle, the plan’s restatement deadline is determined by the last digit of the plan sponsor’s EIN. Special rules apply to certain types of plans, such as governmental, multiple employer, multiemployer and controlled group plans. For plan sponsors with EINs ending in 1 or 6 (cycle A), the EGTRRA restatement deadline was January 31, 2007. Of course, a plan sponsor that qualified to use a prototype or volume submitter document could have taken advantage of the delayed deadline of April 30, 2010. Plans sponsors with an EIN ending in 5 or 0 (cycle E) have until January 31, 2011, to complete their EGTRRA restatement. Therefore, a plan sponsor on cycle E that is using a prototype or volume submitter document can rely on the 5-year cycle deadline if it missed the April 30, 2010, deadline. So, approximately 20% of the plan sponsors who thought they were late are not. They can qualify for the January 31, 2011, restatement deadline.
In the following FAQs, we address some of the questions practitioners have regarding this extended deadline:
Q-1: If a plan sponsor using a prototype or volume submitter document utilizes the January 31, 2011, deadline (i.e., cycle E) rather than the April 30, 2010, deadline, will the plan sponsor be able to have retroactive reliance (i.e., back to the beginning of the 2002 plan year) on the prototype or volume submitter letter?
Yes. By adopting a pre-approved plan by January 31, 2011, the last day of the (cycle E) plan’s remedial amendment period cycle, the plan is entitled to reliance upon the pre-approved plan sponsor’s approval letter (assuming the sponsor only makes elections permitted under the pre-approved plan).
Q-2: If the plan sponsor applies for a determination letter for the plan, will the plan sponsor need to apply for the determination letter on a Form 5300 and add the provisions from the 2009 cumulative list (Notice 2009-98)?
No. A prototype or volume submitter user on cycle E may apply for the determination letter on a Form 5307 and the plan will be reviewed on the basis of the 2004 cumulative list. See IRS Retirement Plan Newsletter, August 20, 2010. Of course, if the employer adopts an individually designed plan, the plan sponsor will need to use a Form 5300 and update the plan for provisions identified in the 2009 cumulative list.
ERISA Workshop 2010 to Focus on New Service Provider Regulations
The focus of this year’s ERISA Workshop is indeed on ERISA, as the workshop will look in-depth at the new regulations mandating disclosure from service providers to plan administrators. We’ll show you how to know if you are subject to the new rules and what you must do to comply (and what happens if you don’t). We’ll also analyze the rules in terms of modern business practices and revenue models. Of course, this seminar will also keep you up-to-date on all other recent changes in tax rules, and important developments affecting qualified plans. With the new service provider regulations, this seminar is a “must attend" for all those servicing retirement plans. Registration is now open on our Web site.
Don’t miss our upcoming Web seminars on these timely topics:
Correcting Nonamenders: Restatement and Other Amendment Failures – An encore presentation, Tuesday, September 21, 2:00 p.m. ET
EFAST2: Amendments, Late Filing, and Short Plan Years – An encore presentation, Thursday, October 7, 2:00 p.m. ET
Visit our Web site to learn more and to register.
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