The IRS’s plan amendment deadline for employers with Master and Prototype or Volume Submitter plans amending to comply with GUST is September 30, 2003. The IRS recently issued Revenue Procedure 2003-72 extending the deadline for filing an application for a favorable determination letter in order to retain the benefits of an extended remedial amendment period. The Revenue Procedure provides that, as long as an employer adopts plan amendments by the September 30, 2003 deadline, the employer will have until January 31, 2004 to file the amended plan with the IRS for a favorable determination letter.
However, all is not lost for employers who fail to adopt their amendments by September 30, 2003. For those who do not amend by September 30, 2003, they will still be in compliance and retain the extended remedial amendment period as long as the amendments are adopted and filed with the IRS by January 31, 2004, along with payment to the IRS of an extra $250 compliance fee. (This is in addition to a user fee.)
Please note that to meet the requirement that the employer adopt plan amendments by the September 30, 2003 deadline, the amendments must represent “a bona fide effort to comply with the requirements of GUST” and must be adopted and not “in proposed form.”
In addition, the Revenue Procedure also extends the time by which defined contribution plans must be amended to comply with final and temporary regulations under section 401(a)(9) of the Internal Revenue Code, relating to required minimum distributions. Under Rev. Proc. 2002-29 (as modified by Rev. Proc. 2003-10), employers had until the end of the first plan year beginning on or after January 1, 2003 to adopt amendments to defined contribution plans that are necessary to comply with section 401(a)(9) regulations. However, Rev. Proc. 2003-72 extends that deadline to the later of the last day of the first plan year beginning on or after January 1, 2003, or the end of the GUST remedial amendment period.
The Revenue Procedure gives an example of how these extended deadlines will work: Suppose an employer with a prototype plan adopts its GUST amendments before September 30, 2003 and then files a determination letter application by January 31, 2004 in accordance with this new Revenue Procedure. The GUST remedial amendment period would be extended through the 91st day following the issuance of a favorable determination letter and the employer would have until then to adopt section 401(a)(9) amendments.
Comment:As you may recall, Revenue Procedure 2003-10 provided that section 401(a)(9) amendments for defined benefit plans were to be postponed until the end of the EGTRRA remedial amendment period with the requirement to amend pre-approved defined benefit plans being postponed indefinitely until further notice.
Additional comment: For those who do not know, “GUST” refers to the following: the Uruguay Round Agreements Act (“GATT”), the Uniformed Services Employment and Reemployment Rights Act (“USERRA”), the Small Business Job Protection Act of 1996 (“SBJPA”), the Taxpayer Relief Act of 1997, the Internal Revenue Service Restructuring and Reform Act of 1998, and the Community Renewal Tax Relief Act of 2000.
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