Sept. 27, 2007 – The IRS issues Quality Assurance Bulletin FY 2007-2 on the EGTRRA Staggered Remedial Amendment Period and Remedial Amendment Cycle for Individually Designed Plans. In 12 pages, it explains the remedial amendment cycles established by Rev. Proc. 2005-66 for individually designed plans as they were changed by Rev. Proc. 2007-44.
Rev. Proc. 2005-66 was issued by the IRS on Sept. 12, 2005. It created different remedial amendment cycles for pre-approved and individually designed plan document, essentially splitting the plan document world in two. According to Rev. Proc. 2005-66, pre-approved plans, which have reliance on a valid IRS opinion/advisory letter, follow a 6-year restatement cycle whose beginning and ending dates would be established by the IRS at a future date, and all other plans, which are considered individually designed because they lack a valid IRS opinion/advisory letter, follow a 5-year restatement cycle based on the last digit of the sponsoring employer’s Employer Identification Number (EIN).
On July 5, 2006, the IRS issued Quality Assurance Bulletin 2006-2 explaining how the remedial amendment cycles created by Rev. Proc. 2005-66 would work.
On July 9, 2007, the IRS issued Rev. Proc. 2007-44, which revised and superseded Rev. Proc. 2005-66.
On Sept. 27, 2007, the IRS then issued Quality Assurance Bulletin 2007-2, explaining how Rev. Proc. 2007-44 changed the remedial amendment cycles established by Rev. Proc. 2005-66, and superseding QAB 2006-2.
QAB 2007-2 contains a number of helpful charts for understanding the remedial amendment cycles for individually designed plans, including a chart which contains the exceptions to using the last digit of the sponsoring employer’s EIN to establish the Rev. Proc. 2007-44 remedial amendment cycle.
One of the explanations of Rev. Proc. 2007-44 contained in QAB 2007-2 is about terminating plans. QAB 2007-2 states:
For plan terminations the RAC will generally be shortened. Thus, any retroactive remedial plan amendments or other required amendments for a terminating plan must be adopted in connection with the plan termination. This will include plan amendments required to be adopted to reflect qualification requirements that apply as of the date of termination regardless of whether such requirements are included on the most recently published CL. An application will be deemed to be filed in connection with the plan termination if it is filed no later than the later of:
- One year from the effective date of termination or
- One year from the date on which the action terminating the plan is adopted
In no event can the application be filed later than 12 months from the date of distribution of substantially all plan assets.