Transcript IRS Education, Outreach and Compliance Efforts for the

IRS Education, Outreach
and Compliance Efforts
for the Governmental
Plans Community
Association of County Retirement
System Administrators
November 11, 2008
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Andrew Zuckerman
Director, Employee Plans – Rulings and
Agreements
(202) 283-9515
[email protected]
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IRS Governmental Plan Initiative
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On April 22, 2008, the IRS held a Governmental
Plan Roundtable in DC.
Representatives from over 40 governmental
plans attended.
The Roundtable was the first step of an initiative
by Employee Plans to open a dialogue with the
governmental plan community.
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IRS Governmental Plan Initiative
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Presentations specifically geared toward governmental
plans were made by representatives of
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EP Determinations
TEGE Counsel
EP Examination
Voluntary Compliance
Federal, State and Local Governments
Copies of these presentations are available at
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www.irs.gov/ep, then click on the link to the Governmental Plans
webpage.
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EP – Rulings and Agreements
Compliance Programs
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Determination Letter Program – Rev. Proc
2007-44
Employee Plans Compliance Resolution System
(EPCRS) – Rev. Proc. 2008-50
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Why get a Determination Letter?
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It lets the plan sponsor know that the plan provisions
meet the requirements of the law.
Once the IRS approves a plan, the plan sponsor can
rely on the determination letter even if a defective
provision is later discovered in the plan.
Filing a timely request for a determination letter
provides the plan sponsor additional time to correct
improper plan provisions.
Self-correction of significant operational failures
requires a current determination letter.
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Determination Letter Program –
Cycle C
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The current filing cycle for governmental plans
to request a determination letter opened on
February 1, 2008 and closes on January 31, 2009.
Filing after the end of Cycle C would require the
governmental plan to file off-cycle and lose its
priority review status.
Off-cycle filings are not reviewed until
completion of all on-cycle cases.
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Change In Filing Cycle –
Cycle C or E
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On November 5, 2008, a special edition of the
Employees Plans newsletter announced that
governmental plans can now choose to file in Cycle E.
No election is required – just file in Cycle E.
If you have already filed, you can withdraw the
application and get a refund of the user fee.
If you file in Cycle E – you need to amend for the
Cycle E Cumulative List and make all required interim
amendments for Cycle C and D.
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Remaining in Cycle C
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You can choose to remain in Cycle C and file a
determination letter application by January 31, 2009.
Incentives to remain in Cycle C
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Move to the top of the DL queue.
One-half reduction in VCP user fee for all qualification
failures
Moved to the top of the VCP queue
One-half reduction in sanction for non-amender failures
discovered during review of determination letter application
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EPCRS
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Set forth in Revenue Procedure 2008-50.
Allows plan sponsors to correct disqualifying
plan provisions through self-correction, by filing
an application (with a fee) to the IRS, or through
correction on examination.
Information about EPCRS can be found at
www.irs.gov/ep - click on the link “Correcting
Plan Errors.”
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Common Failures for Governmental
Plans
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Failure to timely amend the plan for changes in
the law.
Failure to make minimum distributions.
Failure to limit compensation in accordance
with IRC section 401(a)(17).
Failure to limit benefits in accordance with IRC
section 415.
Allowing ineligible employees to participate in
the plan.
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Issues raised by the
Governmental Plan Community
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A number of issues were raised by the various
representatives of governmental plans.
Some were specific to the IRS determination
letter process.
Others dealt with general issues related to state
laws.
Finally, a series of questions were submitted to
the IRS.
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Single Plan Document
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We recognize that a governmental plan may not have a
cohesive single plan document.
We’re willing to work with the governmental plan
community if a single plan document cannot be
submitted.
We only request that the various documents be
organized in a manner where we can identify the plan
provisions to show the plan is qualified.
A “working copy” of a plan document would be
acceptable.
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Extension of the Remedial
Amendment Period
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During the determination letter process, IRS
may require amendments to the plan.
Those amendments must be adopted by the 91st
day following issuance of the determination
letter.
A number of governmental plans cannot meet
this date because the legislative body that needs
to adopt the amendment(s) will not be in
session.
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Extension of the Remedial
Amendment Period
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The Service has the authority to extend the
remedial amendment period.
We are working on guidance addressing this
issue which should fix the problem.
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Governmental Plans
without
GUST Determination Letters
Failure to timely amend a plan would result in a
disqualifying defect.
The Service reviews prior plan documentation
before issuing a current determination letter.
Governmental Plans that have not received a
GUST determination letter will be required to
provide proof of compliance with GUST.
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Redlined Documents
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A redlined version of the plan document will no
longer be required.
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Annual Determination Letter
Submissions
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State legislatures could pass interim and
discretionary plan amendments each year.
While plans are required to timely amend for all
interim and discretionary amendments, those
amendments only need to be submitted during
the plan’s filing cycle (Cycle C for governmental
plans).
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Customer Outreach and Education
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Dialogue with you to raise awareness.
Governmental Plans Webpage –
www.irs.gov/ep
Dedicated Email for governmental plan
questions - [email protected]
Newsletters.
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