IRS Extends GUST Retirement Plan Deadlines

April 10, 2002
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Much of the economy’s human resources sector — and that’s exactly what it is, a entire home-grown government-enabled sector — has a special issue with which to deal during the first quarter of this year.

It relates to the Internal Revenue Service granting an extension to thousands of firms which haven’t had the chance, or perhaps the energy, to deal with a major paperwork complicance demand concerning retirement plans.

For firms with individually designed retirement plans, the Internal Revenue Service has granted a two-month extension of its New Year’s Eve deadline for amending those plans in accord with GUST retirements.

The agency has granted a similar extension to firms that reply upon or intend to use master prototype or so-called volume submitter retirement plans.

Finally, the agency also has granted a much more lengthy deadline extension to firms whose plans were directly impacted by the Sept. 11 terrorism attack

According to Peter Sheldon, an attorney with the Lansing office of Dickinson Wright PLLC, the IRS adopted the deadline extension for firms which, for one reason or another, have failed to amend their qualified retirement plans to reflect GUST statutory requirements.

For the uninitiated, GUST is an acronym made up from the titles of federal statutes that Congress adopted from 1994 to 2000. Each of the acts contained one or more provisions that mandated amendments in tax-qualified retirement plans.

The so-called GUST amendments are comprised of provisions contained in the following:

** General Agreement on Tariffs and Trade

** Uniform Services Employment and Reemployment Rights Act of 1994

** Small Business Job Protection Act of 1996

** The Taxpayer Relief Act of 1997

According to Sheldon, corporations having self-designed retirement plans must incorporate the GUST amendments into those plans and then submit a restatement of those plans to the IRS for approval.

The original deadline for such plans, whose plan year normally is the same as the calendar year, was Dec. 31 of 2001. The IRS has extended that deadline to Feb. 28 of this year.

Among self-defined plans that the GUST amendments impact are: tax-qualified programs such as 401(k) plans, ESOPs, profit-sharing plans, and defined benefit and defined contribution pension plans.

Sheldon explained that GUST amendments changed a number of rules regarding eligibility, vesting and the allocation of contributions within such plans. Accordingly, he said, all plans affected by the GUST statutes must be amended to reflect those changes.

Sheldon told the Business Journal that in the past, the IRS has allowed an employer a “remedial amendment period” in which to retroactively amend a plan to comply with a new law.

Under guidelines that the IRS issued Nov. 14, the new deadline is Feb. 28 — not only for calendar year plans, but any plan which would have been affected by a deadline earlier than Feb. 28.

For a plan that operates on an April 30 fiscal year, he added, the deadline was and remains April 30.

The deadlines are different, Sheldon stressed, for so-called master or prototype plans that also are called volume submitter plans. Such plans are created by large insurance companies, brokerages or similar major institutions. Employers can adopt such plans in their entirety and the employers must amend such plans in accord with GUST requirements.

Here’s where the whole business starts to get more complex, even though the amendment process is simpler for the employers in question Sheldon explained that if by the end of the 2000 calendar year the sponsors of master prototype plans had submitted their plans to the IRS for rulings, then an employer who wishes to adopt such plans may signal that attempt through a simple certification process.

“Just file a certification form by the deadline that applies to you,” Sheldon said. “You don’t actually have to adopt the plan or submit the plan (for IRS approval). You have until Dec. 31, 2002, or 12 months from the date you are notified that the volume submitter has received a ruling letter.

“Then, when the IRS does rule on that prototype plan or volume submitter plan, then you just file your adoption or a certification of intent do adopt.”

Sheldon concedes that the entire GUST deadline issue is highly complex.

It really gets complicated,” he said, “and I’d say that if you have any questions — any at all — I’d recommend consulting an attorney or a tax consultant.”

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