EGTRRA Restatement Deadlines

December 1, 2006

Background

In order to maintain their tax-qualified status, qualified retirement plans must comply with various legal requirements throughout the plan year.  Congress also typically enacts legislation for which qualified plans must be amended (e.g. the Economic Growth and Tax Relief Reconciliation Act of 2001 (“EGTRRA”), and most recently the Pension Protection Act of 2006).  The IRS provides employers with a “remedial amendment period” during which plans may be retroactively amended while retaining their tax-qualified status so long as the plans are operated in compliance with the new tax-qualification requirements.  In order to obtain assurance from the IRS that their plan remains tax-qualified, employers will request a favorable determination letter ruling from the IRS.

On August 26, 2006, the IRS unveiled a new determination letter program designed to provide staggered remedial amendment cycles for employers.  This program provides a 5-year cycle for individually designed plans and a 6-year cycle for pre-approved plans (master and prototype and volume submitter plans).  Pre-approved plans have different cycles for defined benefit plans and defined contribution plans.  Employers adopting pre-approved plans should also be aware that any amendment to the provisions of a pre-approved plan (other than to change the choice of options permitted under the plan) could result in the plan being treated as an individually designed plan – this issue should be discussed with employee benefits counsel to determine the proper status and cycle for such plan.

The cycle is based on the 12-month period beginning February 1 and ending January 31.  The EGTRRA remedial amendment period ends with the plan’s initial determination letter cycle as described in the chart below.  Employers will be required to restate their plan documents for compliance with EGTRRA and submit the plans for a favorable determination letter ruling by the IRS on or before the last day of the applicable remedial amendment period.

January 31, 2007 Deadline

For individually designed plans, the EGTRRA restatement and determination letter application deadline is generally determined according to the employer identification number (EIN) of the employer that maintains the plan.  The deadline for “Cycle A” plans is January 31, 2007  - these are generally plans maintained by an employer whose EIN ends with 1 or 6.

For pre-approved plans, in order to be eligible for the 6-year remedial amendment period plan employers must file a certification with the IRS no later than January 31, 2007.  This certification must be signed and dated by the employer and the sponsor of the pre-approved plan no later than the January 31, 2007 deadline.  The last day of the 6-year remedial amendment period is January 31, 2011 for defined contribution plans and January 31, 2013 for defined benefit plans. 

Summary of Deadlines

Following is a summary of the determination letter cycles and EGTRRA remedial amendment period deadlines for all qualified retirement plans based on the last digit of the employer’s EIN: