If It Isn’t Written Down, It Didn’t Happen

November 8, 2011

Authored by: benefitsbclp


We’ve all heard the old adage, advising us to record our thoughts and actions, lest they become lost to obscurity. In EP Quality Assurance Bulletin 2012-1, released November 2, the IRS reminds us of the importance of documentation with regard to the qualified plans in our lives. The Bulletin, entitled “Verification of Prior Plan Documents in the Absence of a Determination Letter,” provides IRS determination letter specialists with updated guidance on verification that retirement plans have been timely amended for prior legislation.

If you are filing your plan during the second remedial amendment cycle and you already have a d-letter covering the first cycle, you need to include all good-faith and interim amendments adopted after your first cycle submission.  In addition, you should include any discretionary amendments adopted since the issue date of the d-letter. However, if you are filing for a plan that does not yet have a d-letter, all amendments going back to the beginning of the EGTRRA amendment cycle should be included in your submission.

If a specialist determines that verification of compliance with additional laws beyond the cycles described above is warranted, he or she may expand the inquiry with managerial approval. This is where it could get tricky for plan sponsors. What if plan documentation cannot be produced? In the Bulletin, the IRS provides that if pre-GUST documentation is necessary (but the plan documents are missing), specialists should secure other evidence from the employer, including a prior d-letter, board of directors’ resolutions, corporate minutes, summary plan descriptions, annual reports and internal plan-related memos, among other documentation. The specialist evaluates the sufficiency of that evidence based on the particular facts and circumstances.

 Before you file your d-letter submission, be sure to determine if any documentation is missing. You may be able to file a VCP application and avoid Audit CAP sanctions once your application has been submitted. Hopefully, your diligence will be rewarded with a clean letter from the IRS.