June 6, 2002
IRS Streamlines Process for Late GUST Amendment Submissions
The Internal Revenue Service (IRS) has set up a simplified, reduced-cost procedure for protecting the tax qualification of retirement plans that are amended to comply with GUST1 after the applicable deadline. For most qualified plans the amendment deadline was February 28, 2002. For those directly affected by the September 11 terrorist attacks generally plans whose sponsors or professional advisors had offices in Manhattan, south of 14th Street the deadline is generally June 30.
The Streamlined Process
The streamlined process, as described in Revenue Procedure 2002-35, will enable plans that were not amended in time to protect their tax qualification by paying a fairly modest extra fee along with their determination letter submission. The table below notes the fees:
|Number of Plan Participants||Fee|
|1 - 100||$ 1,000|
|101 - 1,000||$ 3,000|
|1,001 or more||$ 10,000|
Deadline for Following the Streamlined Process
This streamlined process is available for plans that are properly amended by September 3, 2002. If a plan amended after its deadline is (or has been) submitted to IRS before July 17, 2002, the agent dealing with the submission will be in touch with the plan sponsor to request the Revenue Procedure 2002-35 correction fee.
Plans submitted after July 17, 2002, should be identified by writing "Rev. Proc. 2002-35" on the front of the submission form. The submission package should include the appropriate Revenue Procedure 2002-35 correction fee.
Consequences of Missing the Deadline
Plans amended after the September 3, 2002 deadline will have to use the IRS's regular correction programs to preserve their tax-qualified status. That involves paying a higher fee probably in the range of $20,000 for a plan with more than 1,000 participants and making an additional IRS submission.
- GUST is an acronym for the following laws: the General Agreements on Tariffs and Trade (GATT) Uruguay Round Agreements Act of 1994, the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA), the Small Business Job Protection Act of 1996 (SBJPA) and the Taxpayer Relief Act of 1997 (TRA'97).
Compliance Alert, The Segal Company’s periodic electronic newsletter summarizing important developments affecting benefit plan compliance, is for informational purposes only. It is not intended to provide authoritative guidance. On all issues involving the interpretation or application of laws and regulations, plan sponsors should rely on their attorneys for legal advice.