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5500 Preparer's Manual for 2012 Plan Years
The premier resource in the field of Form 5500 preparation, 5500 Preparer's Manual will help you handle the required annual Form 5500 filings for both pension benefits and welfare benefit plans.
The IRS, in IRS Rev. Proc. 2009-36, has extended the remedial amendment period for governmental plans in recognition that the current 91-day extension provided in IRS Reg. &sec;1.401(b)-1(e)(3) may not be enough time for the adoption of retroactive remedial amendments that are necessary for the issuance of a favorable determination letter.
91-day extension of remedial amendment period
Currently, under IRS Reg. &sec;1.401(b)-1(e)(3), the IRS permits the timely adoption of retroactive remedial amendments that are necessary for the issuance of a favorable determination letter, if the determination letter application is filed with the IRS before the end of the remedial amendment period. If an application is filed on or before the end of a remedial amendment period, the period is extended until the expiration of the 91st day after:
(1) the date on which the notice of the final determination is issued by the IRS, the application is withdrawn, or the application is otherwise disposed of by the IRS; or
(2) the date on which the decision of the Tax Court about a petition for a declaratory judgment under Code Sec. 7476 on the final determination of an initial qualification or a continuing qualification of a retirement plan becomes final.
In Rev. Proc. 2007-44, the IRS updated its employee plan staggered remedial amendment period procedures for individually designed and pre-approved qualified plans under a system of cyclical amendment periods. Under this system, every individually designed plan has a five-year remedial amendment period and every pre-approved plan has a six-year remedial amendment period.
Additional extension for governmental plans
The IRS explained that 91-day extension of the remedial amendment period in IRS Reg. &sec;1.401(b)-1(e)(3) might not provide enough time for a governmental plan as defined by Code Sec. 414(d) to be amended to adopt retroactive remedial amendments that are necessary for the issuance of a favorable determination letter. The governing body with the authority to amend a plan might be prevented under the governing body's laws and procedures from considering the amendments until after the 91-day extension has expired.
The IRS has decided to provide an additional extension for governmental plans. Specifically, if an application for a determination letter on the qualified status of a governmental plan is filed on or before the end of the plan's remedial amendment cycle, the remedial amendment period will be extended until the expiration of the 91st day after the last day of the first regular legislative session beginning more than 120 days after the date in (1) or (2) listed above in which the governing body with the authority to amend the plan can consider a plan amendment under the laws and procedures applicable to the governing body's deliberations.
Option to elect Cycle C or Cycle E
In addition to the above guidance, the IRS has formalized a modification concerning the election of Cycle C or Cycle E that was issued last year. In the Employee Plans News issued November 5, 2008, the IRS announced a one-time modification of the staggered remedial amendment program that allows sponsors of individually designed governmental plan to elect Cycle C or Cycle E as the initial Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA; P.L. 107-16) remedial amendment cycle for the plans. Cycle C ended on January 31, 2009; the last day of Cycle E is January 31, 2011. Because this modification only applies to the initial cycle, a plan's subsequent cycle will revert to Cycle C.
Rev. Proc. 2007-44 has been modified for the extension of the remedial amendment period and the option to elect Cycle C or Cycle E.
For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.
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