Employee Benefits Bulletin, June 2002
NEW GUIDANCE
IRS Issues Revenue Procedure 2002-29 containing model amendments that plan sponsors may use to adopt the provisions of the new required minimum distribution ("RMD") regulations under IRC §401(a)(9). Plans generally must be amended by the end of the plan year beginning on or after January 1, 2003.
IRS Issues Revenue Procedure 2002-35 establishing streamlined procedures to avoid disqualification for plans that failed to timely amend for GUST. The procedures treat the late filing plans as qualified for GUST if they pay a set fine (from $1,000 to $10,000 based on the number of participants). The plan must apply for a GUST determination letter by September 3, 2002, in order to use the procedures. If the streamlined procedures are not available, the plan must resolve the failure to timely amend under Rev. Proc. 2001-17 (Voluntary Corrections Program) or be subject to disqualification.
IRS Issues Revenue Ruling 2002-42 as guidance on merging or converting money purchase pension plans ("MPPP") into profit sharing plans ("PSP"). (Because EGTRRA raised the deduction limit for profit sharing plans to 25% of compensation, it is no longer necessary for employers to maintain both a MPPP and a PSP to utilize the entire permissible contribution and deduction amounts. Thus, there is a lot of merging going on out there!) The IRS maintains that EVERY merger or conversion requires an ERISA 204(h) notice to be sent to employees.
Centers for Medicare & Medicaid Services ("CMS," formerly "HCFA") announces final regulations establishing that the federal Employer Identification Number ("EIN") issued by the IRS to all employers that pay wages is the standard unique identifier for employers under HIPAA.
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