ASC Winter 2008 Newsletter
In this issue:
- Need a new statement look?
- Want to save time processing daily trades?
- First 403(b) Regulations Released in 41 years!
- Using Form 8905: Better Safe than Sorry
- Interim Amendments for the Final Code §415 Regulations
Need a new statement look?
Matrix Communications Technologies (formerly ICC Plan Solutions) produces attractive participant statements, including investment performance, individual rate of return, pie-chart graphics, and direct mail to participants. These are based on comprehensive extract files generated from ASC’s Exporter program. Utilizing ASC’s onDemand engine, the program was originally designed for our Daily Valuation users, but may also be used by any Balance Forward client who inputs data as transactions. To save you time, you may run this feature on multiple plans in Unattended Mode. For details and ICC contact information, see the user documentation on the ASC web site. An extract is also available for Newkirk’s Super Statement.Want to save time processing daily trades?
In case you are not aware, a new DV Direct feature was introduced in 2007 that allows you to update transactions directly to the Pending Summary File from your transition files. This eliminates the need to separately update the Pending Transaction File, which will save processing time each day. A simple file setting is all you need. Contact Tom or Bob for details.First 403(b) Regulations Released in 41 years!
Starting 2009 403(b)s subjected to 5500 filing and plan documents
Every 403(b) plan sponsor must have a formal, legal plan document in place BEFORE the regulations become effective (i.e., January 1, 2009). That means that 403(b) practitioners must be able to generate documents for their clients and manage them on an ongoing basis. Failure to properly do so may lead to significant IRS penalties for employers and their employees. ASCi has EGTRRA-compliant 403(b) plan documents available through its DGEM system. Practitioners may license the ASCi 403(b) plan documents (which are similar to the ASCi prototype defined contribution documents) by signing up for the DGEM system ($50 per month) and paying a one-time fee of $2,500 or $500 per plan. Click here to learn more about how ASCi’s document system can help you with your 403(b) plan documents. With the comprehensive regulatory requirements now imposed on 403(b) plans, it’s a new game in the 403(b) arena. ASCi is prepared to help you meet your document challenges. Contact us at asci@asc-net.com to get a better understanding of how ASCi can help you meet your compliance needs.Using Form 8905: Better Safe than Sorry
We continue to receive many questions about the use of Form 8905, Certification of Intent to Adopt Pre-Approved Plan, when DGEM users generate new or restated plans for their clients. While the IRS has addressed some of the issues, questions and confusion remain. Given that we don’t yet have full clarity from the IRS, ASCi recommends that every time you generate a prototype or volume submitter plan from the DGEM system, you also generate and execute a Form 8905 for the client. This article explains the purpose of the Form 8905 and the reasoning for our recommended approach with your clients.What is Form 8905?
Employers who utilize individually-designed plans and pre-approved (i.e., prototype and volume submitter) plans receive special, but distinct, remedial amendment periods (RAPs) to adopt required amendments to their qualified plans. The Form 8905 allows an employer using an individually-designed plan (or in some cases a pre-approved plan) to indicate its intention to adopt a pre-approved plan (like one of the ASCi mass submitter plans) in order to receive the special remedial amendment period (RAP) available to adopters of pre-approved plans. Generally, employers using individually-designed plans are on a 5-year RAP cycle. Employers with EINs ending in 1 or 6 needed to adopt EGTRRA restated plans and file for determination letters by January 31, 2007. Employers with EINs ending in 2 or 7 needed to adopt EGTRRA restated plans and file for determination letters by January 31, 2008. This pattern, based on the employer’s EIN, continues for 5 years and then repeats itself. On the other hand, employers using or planning to use pre-approved plans receive a 6-year RAP cycle, with EGTRRA amendments not necessary until the prototype or volume submitter plan receives its opinion or advisory letter from the IRS. Employers using pre-approved defined contribution plans will adopt EGTRRA restatements during the two-year window beginning April 2008 and ending March 2010. The two-year window for pre-approved defined benefit plans is expected to begin sometime in 2010. ASCi note: ASCi has received preliminary approval of its mass submitter defined contribution prototype and volume submitter documents from the IRS. We expect IRS to issue opinion and advisory letters for these plans by April 1, 2008. So, Form 8905, Certification of Intent to Adopt Pre-Approved Plan, is just that – it is a form that “certifies” an employer’s intent to adopt a pre-approved plan, such as one of the ASCi mass submitter plans. If completed properly, the employer will be able to delay its adoption of any required plan amendments until the end of the 6-year cycle applicable to pre-approved plans. With respect to EGTRRA, this means prototype and volume submitter practitioners do not need to start the final EGTRRA restatements for their defined contribution plan clients until April 2008.So what do we know for sure about the Form 8905?
The following points relating to the Form 8905 appear clear:- An employer wishing to use the Form 8905 must complete the form before the end of its applicable 5-year RAP. For example, employers with EINs ending in 3 or 8 must complete the form by January 31, 2009.
- Form 8905 is relatively simple to complete – the only required information is the employer’s name and EIN; plan name, number and type; M&P sponsor or volume submitter practitioner name, EIN and plan name; and signatures of the employer and M&P sponsor or volume submitter practitioner.
- The adopting employer is responsible for keeping the signed original and it is not filed with the IRS unless the employer files the plan for a determination letter. The Form 8905 is never filed separately with the IRS.
- The M&P sponsor or volume submitter practitioner may sign the form electronically, but the employer must manually sign and date the form.