Amend your retirement plan now

GRAPHIC/Courtesy Peratrovich, Nottingham & Drage Inc.
pruett.jpg After years of delay, it is now time to amend every qualified pension and profit-sharing plan to comply with the provisions of four major tax laws that were enacted from 1994 through 1997. These amendments are collectively known as the GUST amendments. The first letter of each of these acts make up the acronym.

If you sponsor a 401(k), pension, profit sharing, employee stock ownership or employer-contributed 403(b) plan, you may be required to amend your plan as early as Dec. 31 -- that’s less than 60 days away.

General amendment requirements

If the plan document is not on a form that has been pre-approved by the Internal Revenue Service (prototype or volume submitter documents are pre-approved), and the last day of the current plan year is Dec. 31, the plan must be amended by that date. All employee stock ownership plans and most defined benefit plans employ individually designed documents.

If the current plan year ends on a date other than Dec. 31, then the plan must be amended by the last day of the plan year ending in calendar year 2002.

If you adopt a plan that is a prototype of volume submitter plan sponsored by a provider, such as a mutual fund company, an insurance company, a bank, a law firm, a certified public accounting firm or a third party administrator, and that provider submitted its lead documents to the Internal Revenue Service for review and approval by Dec. 31, then a plan sponsor who intends to adopt one of those documents has an extended remedial amendment period.

If you are, or intend to be, an adopter of a prototype or volume submitter document that was timely submitted to the IRS, then you will have until 12 months after the document sponsor receives its final approval letter from the IRS, or until December 31, 2002, if later.

If you have previously adopted a prototype or volume submitter document, and:

Your previous provider has timely submitted and you plan to adopt their new plan, you have to take no action to get the extended reliance period (December 31, 2002 to adopt the amended plan). If your previous provider is no longer providing a prototype or volume submitter document or if you intend to adopt another provider’s plan, then both you and the new provider need to certify that you are intending to adopt that other provider’s document and the other provider is intending to provide that document to you. If you presently maintain an individually designed plan but are planning on adopting a prototype or volume submitter plan, then both you and the other provider must certify your intent to adopt.If you fail to timely adopt the GUST amendments, your plan risks disqualification and/or you may face monetary sanctions.Contact your third party administrator or financial institution to find out your status with respect to your plan document. It is a good idea to do that before the end of the year, just to be sure.J. Michael Pruett is president of Cache Pension Service Inc. in Anchorage. He can be reached via e-mail at ([email protected]).
11/18/2001 - 8:00pm