GUST Amendment Deadline Extended

November 20, 2002 ( - Plan sponsors have almost another year to comply with GUST tax law changes, according to an Internal Revenue Service (IRS) announcement.

According to Revenue Procedure 2002-73. the deadline for amending pre-approved plans so they will be GUST compliant is now September 30, 2003, Washington legal publisher BNA reported.

The IRS had scheduled the remedial amendment period for pre-approved master and prototype plans or those intending to adopt them, until the later of December 31, 2002, or the end of the 12th month beginning after the date on which IRS issued a GUST opinion or advisory letter.

Officials of the tax agency said they made the move after getting numerous requests from plan sponsors who admitted they wouldn’t be able to meet the earlier deadline due to unforeseeable business circumstances.

According to the IRS, the plan sponsors also asked for a time extension to adopt plan amendments to comply with Revenue Rulings 2001-62 and 2002-27 so that the amendments would not be required to be made before the GUST deadline. The plan sponsors further asked for an extension of the deadline to amend plans for the Community Renewal Tax Relief Act of 2000.

Revenue Ruling 2001-62, issued December 14, 2001, updated mortality tables for determining the present value of benefits under tax code Section 417(e).

Plans were to be amended to comply with the new tables by the last day of the plan year that includes the effective date of the 1994 GAR mortality table, which itself would be no later than December 31, 2002. Rev. Proc. 2002-73 extends that deadline to the later of the time determined under Revenue Ruling 2001-62 or the end of the plan’s remedial amendment period.

Revenue Ruling 2002-27 provided that a plan’s definition of compensation that otherwise satisfies Section 415(c)(3) will not fail to do so just because it is amended to incorporate cafeteria plan compensation under Section 125.

The revenue ruling required such amendment to be adopted by the later of the 2002 plan year or the end of the plan year for which the changed definition is first effective; IRS said the amendment could be made by the later of that date or the end of the GUST remedial amendment period.

The revenue procedure extends the time for plans to comply with the CRA’s requirement that the definition of compensation reflect the amount of the compensation reduction elected for qualified transportation fringe benefits that are not included in the employee’s gross income.

The deadline is the latest of the end of the first plan year beginning on or after January 1, 2002, the end of the plan’s remedial amendment period, or June 30, 2003.