Benefits & ERISA Law

One Last Look at Cycle B and Looking Ahead to Cycle C

By Suzanne Wynn

In a few weeks, on January 31st, Cycle B ends and Cycle C begins. Cycle C marks the middle of this great experiment called the EGTRRA remedial amendment cycle restatement period. Like all experiments, charts and tables come in handy. When the IRS issued Rev. Proc. 2007-44 last year, they also updated the Quality Assurance Bulletin (QAB) on the EGTRRA Staggered Remedial Amendment Period and Remedial Amendment Cycle for Individually Designed Plans, with charts and tables included within the QAB.

Rev. Proc. 2007-44 revised and superceded Rev. Proc. 2005-66, which established cyclical remedial amendment periods under Code section 401(b) for individually designed plans and pre-approved prototype and volume submitter plans. Rev. Proc. 2005-66 and Rev. Proc. 2007-44 established a five-year remedial amendment cycle for individually designed plans where individually designed plans are assigned a specific 12-month period for restating for EGTRRA and filing for a determination letter. The 12-month period begins on February 1st and end on the following January 31st.

The reason I like this QAB so much is that it contains easy-to-follow charts for determining which plans are assigned to each remedial amendment cycle. The first chart provides a guide to determine the last day of the remedial amendment cycle using the last digit of the plan sponsor’s EIN. For example, if the plan sponsor’s EIN ends in 2 or 7, the chart states that the plan’s cycle is Cycle B and the last day of the initial remedial amendment cycle is January 31, 2008.

The IRS also assigned certain plans to certain remedial amendment cycles based on the type of plan, no matter what the last digit of the plan sponsor’s EIN is. The second chart provides a list of those plans and the cycles they are assigned to. For example, individually designed Multiple Employer plans are assigned to Cycle B except for governmental multiple employer plans.

Rev. Proc. 2007-44 also contained a provision which permits new plans filing off-cycle to be treated as an on-cycle filing if certain conditions are met. Table 4 provides an easy-to-follow guide for the filing exceptions for new plans. For example, if the normal remedial amendment cycle for a new plan is Cycle E, A, or B, the new plan can file for a determination letter in Cycle C and not be treated as an off-cycle filing.

Technorati Tags: Pension Protection Act, ppa, Rev. proc. 2005-66, Rev. Proc. 2007-44, QAB, quality assurance bulletin, remedial amendment cycle, Cycle C, Cycle B, ERISA

Full post as published by Pension Protection Act Blog on January 14, 2008 (boomark / email).