The IRS, in its Summer 2010 edition of Retirement News for Employers, explains some welcome relief for plan sponsors of pre-approved defined contribution plans that failed to adopt an approved restated document, or file for a determination letter application, by the April 30th deadline.  These types of plans, with some exceptions, were to have been amended for the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) restatement deadline on or before April 30, 2010. 

If a plan missed this deadline, the voluntary correction program (VCP) can be used to bring the plan into compliance with the law.  To assist adopting employers in utilizing the VCP to resolve qualification failures, the IRS has developed a Voluntary Correction Program Submission Kit.  The Kit includes instructions for how to complete the VCP application, line-by-line instructions, and how to figure the fees.  The consequence of failing to amend the plan is plan disqualification, and loss of tax-favored status. 

In addition, the Newsletter includes guidance relating to updating an individual determination letter.  While it is not necessary for a pre-approved defined contribution plan to obtain an individual determination letter, it is possible to do so by applying for an “off-cycle determination letter”.

The information contained in this Benefit Beat is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations.

As required by U.S. Treasury rules, we inform you that, unless expressly stated otherwise, any U.S. federal tax advice contained in this Benefit Beat is not intended or written to be used, and cannot be used, by any person for the purpose of avoiding any penalties that may be imposed by the Internal Revenue Service.