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Compliance May 6, 2003
IRS Promises Pension Reform Language, No GUST Extension
June 29, 2001 (PLANSPONSOR.com) - Before the end of
August the Internal Revenue Service says it will publish
sample amendments that plan sponsors may adopt or copy to
incorporate provisions of the new pension reform
bill.
Reported by Nevin E. Adams
Plan sponsors can adopt, or model those individualized amendments after, in order to incorporate provisions of the Economic Growth and Tax Relief Reconciliation Act (EGTRA) and operate in “good faith” reliance from IRS for the 2002 plan year.
GUST Goes Forward
The IRS, in Notice 2001-42, also noted that administrators
of individually designed pension plans are still required
to submit a determination letter application to the Service
by the end of the 2001 plan year for amendments adopted to
bring them into compliance with GUST requirements.
GUST is the acronym for a number of pension-related laws
that have been enacted over the past several years.
While many plan sponsors have hoped that the current remedial amendment period might be extended to allow changes from the new law to be incorporated, it will not be, according to the IRS. Previously the Service has said that it believes many plans have already taken the necessary steps to comply with the so-called GUST amendments, the timeframes for which have already been extended.
The Service says that tax bill pensions provisions incorporated into a plan by a model, or by statutory change, have a remedial amendment period ending no earlier than the end of the 2005 plan year, when retroactive tax bill plan amendments may be adopted if necessary.
According to the notice the remedial amendment period for pre-approved master and prototype plans that have been amended for GUST has been restated such that it will be treated as not expiring before Dec. 31, 2002.
Good Faith
A plan is required to adopt a good faith amendment – either a sample or modeled after a sample – by the end of the plan year in which a plan is required to or chooses to adopt a provision of the tax bill, or the end of the remedial amendment period, if the plan language or operation is not consistent with the tax bill provision, the notice said. Individually designed plans that have already submitted determination letter applications may reflect tax bill provisions.
IRS said that, until further notice, determination, opinion, an advisory letters will not take into account tax bill provisions.
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