When does the GUST program close?
On May 9, 2005, the IRS issued Announcement 2005-36 indicating that the GUST program for new defined contribution (DC) pre-approved plans (i.e., master and prototype (M&P) and volume submitter (VS) plans) will close on June 15, 2005. Thus, opinion and advisory letter applications for DC pre-approved plans postmarked after June 15, 2005 will be returned.
The IRS will announce the closing of the GUST program for defined benefit pre-approved plans and determination letters (i.e., letters issued to adopting employers’ plans) at a later date.
Who and what plans are affected by the June 15, 2005 deadline?
New M&P sponsors, new VS practitioners, new non-mass submitter plans and new mass submitter plans (i.e., the mass submitter sponsor) applications for word-for-word adopters, minor modifiers, change of EIN, etc.) are subject to the June 15, 2005 deadline.
Why does the GUST program close June 15, 2005?
Rev. Proc. 2005-16 modified and superseded Rev. Proc. 2000-20. As a result, Rev. Proc. 2005-16 simultaneously closed the GUST program and opened the initial (i.e., EGTRRA remedial amendment period) six-year amendment/approval cycle for DC pre-approved plans. However, recently, the IRS has received a number of GUST opinion and advisory letter applications from DC and defined benefit M&P sponsors and VS practitioners of pre-approved plans. A number of sponsors and practitioners have asked the IRS not to close the GUST program with the issuance of Rev. Proc. 2005-16 (i.e., as of February 17, 2005), but rather close the program prospectively in order to prepare their staff for the closing of the GUST program and for the possible use of an interim plan document, and to communicate with their clients. Announcement 2005-36 was issued to clarify when and to what extent the GUST program will close.
What is an interim plan document?
An interim plan document is a defined contribution pre-approved plan that has not received a GUST opinion or advisory letter and was put into effect after December 31, 2001.
An interim plan document is a plan document that reflects a good faith attempt to satisfy all required provisions necessary to be a qualified defined contribution pre-approved plan.
What interim reliance will be available for M&P sponsors and VS practitioners?
Under normal procedures, M&P sponsors and VS practitioners could not have their clients adopt their respective plans before the date of the opinion or advisory letters. However, employers may adopt interim plan documents from M&P sponsors and VS practitioners without any qualification consequences in form if the requirements listed below are satisfied.
What are the requirements to obtain interim reliance?
An M&P sponsor or VS practitioner who establishes a defined contribution pre-approved plan document and trust as a qualified plan after June 15, 2005 using a document (or documents, if applicable) that has not received a GUST opinion or advisory letter is deemed to have established a qualified defined contribution plan using a GUST-approved document provided the following procedures are satisfied:
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The M&P sponsor or VS practitioner provides an interim plan document which contains not only the necessary law changes applicable under GUST but also all other plan provisions needed to maintain the qualified status of the plan. For example, a new defined contribution pre-approved plan would contain all the GUST provisions in the plan document, the applicable EGTRRA “good faith” amendments, the section 401(a)(9) amendments which reflect the final section 401(a)(9) regulations, and all other amendments necessary to maintain the qualification requirements of the defined contribution pre-approved plan.
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The M&P sponsor or VS practitioner submits an opinion or advisory letter application for EGTRRA for the interim plan document by the end of the applicable submission date (that is, October 31, 2005 for sponsors or practitioners of mass submitters and national sponsors or January 31, 2006 for sponsors and practitioners of non-mass submitter plans).
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The M&P sponsor or VS practitioner is issued an opinion or advisory letter for EGTRRA from the IRS.
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The employers who adopted the interim plan document must re-adopt the EGTRRA pre-approved plan, another EGTRRA pre-approved plan, or under limited circumstances, an EGTRRA individually designed plan during the time period announced by the IRS at a later date.
Is there an alternative to interim reliance for plan sponsors using a mass submitter plan?
An M&P sponsor or VS practitioner who intends to be a word-for-word identical adopter of a mass submitter plan but does not have a GUST opinion or advisory letter in its own name may rely on the GUST opinion or advisory letter previously issued to the sponsor or practitioner of the mass submitter plan. In this situation, the mass submitter sponsor would act on behalf of the M&P sponsor or VS practitioner until it receives its own opinion letter or advisory letter.
The sponsor or practitioner of the mass submitter plan must submit the first page of Form 4461-B as a placeholder for the sponsor or practitioner who is an identical adopter or minor modifier by the January 31, 2006 deadline, but mass submitters are encouraged to submit these placeholder applications at the time of their submission period deadline, October 31, 2005.
What reliance, if any, do plan sponsors, practitioners and adopting employers have?
Notice 2001-42 provides that the EGTRRA remedial amendment period ends no earlier than the end of the 2005 plan year, as long as EGTRRA “good faith” amendments are timely adopted. Rev. Proc. 2004-25 extended the remedial amendment period for all disqualifying provisions of new plans, that is, plans that have been put into effect after December 31, 2001, and to all disqualifying provisions arising from a plan amendment adopted after December 31, 2001 to the end of the EGTRRA remedial amendment period. Thus, the remedial amendment period for all disqualifying provisions of new plans, that is, plans that have been put into effect after December 31, 2001 and any disqualifying provisions resulting from a plan amendment adopted after December 31, 2001 will not end before the end of the EGTRRA remedial amendment period. Rev. Proc. 2004-25 permits the use of an interim plan document as described above.
What if the sponsor or practitioner does not submit an EGTRRA opinion or advisory letter application by the end of the submission period?
Those M&P sponsors and VS practitioners who do not submit an opinion or advisory letter application for EGTRRA by the end of the applicable submission period may be eligible for EPCRS.
What is the effect, if any, on adopting employers who signed an interim plan document, but the sponsor or practitioner did not timely submit an EGTRRA opinion or advisory letter application?
The adopting employer would be considered to have adopted an individually designed plan and would determine their remedial amendment cycle under the five-year remedial amendment cycle based upon the last digit of their employer identification number. EPCRS may be available, if necessary.
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