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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.
from Spencer’s Benefits Reports: The Internal Revenue Service has issued guidance that simplifies the process for establishing when certain applications for determination letters on the qualified status of small employer retirement plans are eligible for exemption from the user fee requirement under IRC Sec. 7528(b)(2). IRS Notice 2011-86 amplifies IRS Notice 2002-1 by explaining how to determine, for purposes of the exemption, if an application has been filed within a plan’s remedial amendment period beginning within the plan’s first five plan years.
IRC Sec. 7528(b)(2)(B) and 7528(b)(2)(C) provide that an application for a determination letter on the qualified status of a small pension, profit-sharing, stock bonus, annuity, or employee stock ownership plan (ESOP) or the exempt status of a trust that is part of the plan is exempt from user fees if, among other things, the application is filed by the later of the last day of the fifth plan year the plan is in existence or the last day of any remedial amendment period of the plan beginning within the first five plan years. The IRS noted that determining whether an application satisfies the exemption requirements would require looking at the effective dates of changes in law and published guidance that pertain to a particular plan, the adoption and effective dates of the plan and the plan amendments, and the plan’s current remedial amendment cycle.
Simplification Of Process For Determining User Fee Exemption
To simplify this user fee exemption analysis, the IRS stated that it will treat a plan’s application as having been filed by the last day of the plan’s remedial amendment period beginning within the five plan years if both of the following conditions are met:
The IRS noted that there may be situations where an application that is filed by the last day of a plan’s remedial amendment period beginning within the first five plan years would not be treated as such under the above conditions because the remedial amendment period ends on the last day of a submission period that begins more than ten years after the year in which the plan first came into existence. The IRS stated that, in these cases, where the other requirements for the user fee exemption are met, the applicant should not include a user fee payment with the application, but should explain in a cover letter how the application meets the exemption requirements. If the IRS determines that the application is not exempt, the applicant will be asked to pay the user fee.
Applicability Date
These requirements apply to all determination letter applications that are filed with the IRS after Jan. 31, 2011, except for applications filed by April 30, 2012 for Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) determination letters for defined benefit plans that are eligible for the six-year EGTRRA remedial amendment cycle ending on April 30, 2012. These later applications fall under the purview of IRS Notice 2003-49, according to the IRS.
For more information, contact James Flannery of the Employee Plans, Tax Exempt and Government Entities Division at RetirementPlanQuestions@irs.gov.
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