Advisory Committee on Tax Exempt and Government Entities (ACT ...

More documents

Recommendations

Info

PROTECTING PLAN BENEFITS:IMPROVING GOVERNMENTAL DEFINED CONTRIBUTION PLAN COMPLIANCEVIII.RecommendationsThe ACT makes the following recommendations that fall into four basic categories:• Establish a Pre-Approved Plan Document Program for governmental plans• Enhance the Employee Plans Compliance Resolution System (EPCRS) to assistgovernmental plans• Develop Government Plan-oriented educational tools• Build on the IRS-led initiative to partner with governmental plans sponsors andpractitionersThese recommendations are described in more detail in the pages that follow.Establish a Pre-Approved Plan Program Oriented to Governmental PlansThe ACT recommends that the IRS extend its pre-approved plan document program togovernmental 401(a) defined contribution plans in the near-term and further extend theprogram to 457(b) plans and 403(b) plans over time. Implementation would necessitatedrafting of a Listing of Required Modifications (LRMs), as well as procedures, with whichACT members could assist. Although the existing program is far from perfect, it deliversbenefits and efficiencies to small employers as well as standardization in plan designthat could avert the incidence of some Plan document errors in the governmentalsector. The IRS’s estimate that 94% of qualified plans are pre-approved plans providesevidence of general marketplace demand for the program.Importantly, the availability of a pre-approved plan document program would put publicsector plans on an equal footing with their corporate counterparts within this servicecategory just as EGTRRA put governmental plans on a par with corporate plans withrespect to distribution flexibility. While it is possible that some industry participants (e.g.TPAs) will continue to offer only individually designed plans, the benefits that wouldinure outweigh less than 100% participation from service providers. A reduction in thenumber of uniquely designed plans should reduce the risk of plan document andoperational failure in the market place, lower the cost of adoption and encourageemployers to adopt plans. In summary, a Pre-Approved Plan Program would deliver thefollowing benefits to governmental 401(a), 403(b) and 457(b) plans:• Provide employers with a standardized form of agreement for which IRS approvalmay not be needed• Provide a lower cost of adoption• Minimize the need for employer-initiated amendments when tax laws change• Minimize failures attributable to 401(a) plan service providers’ misuse of currentLRMs.ADVISORY COMMITTEE ON TAX EXEMPT AND GOVERNMENT ENTITIES (ACT) June 11, 2008 24
PROTECTING PLAN BENEFITS:IMPROVING GOVERNMENTAL DEFINED CONTRIBUTION PLAN COMPLIANCEThe ACT is encouraged that the IRS is currently considering a Pre-Approved PlanProgram for 403(b) plans. On the other hand, the ACT recognizes a challenge withrespect to 457(b) plans since the IRS TE/GE Division evidently lacks rulings jurisdictionfor these plans.Enhance the Employee Plans Compliance Resolution System (EPCRS)The 2008 ACT Report entitled “Improving the Employee Plans Compliance ResolutionSystem: A Roadmap for Greater Compliance” contains a full set of well-developedrecommendations for improving EPCRS. This report does not attempt to duplicate thedepth of these recommendations. However, as that report states, EPCRS is animportant tool in assisting plan sponsors to voluntarily comply with IRS requirements.As effective as EPCRS is, many governmental plans are not utilizing it due to its currentlimitations. Therefore, this report reiterates the recommendation that EPCRS beenhanced for the benefit of governmental plans by:• Expanding EPCRS to include coverage of IRC section 457(b) plans 27• Expanding EPCRS to permit correction of IRC section 403(b) plan documentfailures 28• Reforming the VCP fee structure to encourage greater participation among smallemployers 29In addition to availing governmental plans of correction tools that are already availableto corporate plan sponsors, expanding EPCRS coverage to 457(b) plans and 403(b)plan document failures would likely reduce the confusion a governmental plan sponsormay otherwise experience in attempting to navigate IRS voluntary correction-relatedmaterials. As noted previously in this report, governmental 457(b) and 403(b) plans arean important and growing segment of the retirement plan community. Employers thatoffer these plans are becoming increasingly sophisticated and are committed toproactive compliance.In addition to expanding coverage of EPCRS and developing a sliding fee schedule thatwould encourage increased EPCRS utilization, the IRS should consider developing acorrection tool for governmental plans that is similar to the “401(k) Fix-it Guide.” Theaddition of these tools would not only provide a resource for governmental plans, itwould also send a message that the IRS is increasingly committed to assistinggovernmental employers’ voluntary compliance efforts.Develop Educational Tools tailored to Governmental PlansThe IRS has developed a number of tools, communications and products that arehelping both governmental and non-governmental plans achieve their compliance27 Improving the EPCRS: A Roadmap for Greater Compliance, IRS <strong>Advisory</strong> <strong>Committee</strong> on Tax-Exempt and Government Entities,28 Improving the EPCRS: A Roadmap for Greater Compliance, IRS <strong>Advisory</strong> <strong>Committee</strong> on Tax-Exempt and Government Entities, 200729 Improving the EPCRS: A Roadmap for Greater Compliance, IRS <strong>Advisory</strong> <strong>Committee</strong> on Tax-Exempt and Government Entities, 2007ADVISORY COMMITTEE ON TAX EXEMPT AND GOVERNMENT ENTITIES (ACT) June 11, 2008 25
Page 5:
ADVISORY COMMITTEE ON TAX EXEMPT AN
Page 9 and 10:
MEMBER BIOGRAPHIESGOVERNMENT ENTITI
Page 11 and 12:
GENERAL REPORTOF THEADVISORY COMMIT
Page 13:
General Report of the Advis
Page 18:
Improving the Employee Plans Compli
Page 23 and 24:
Page 25 and 26:
Page 27 and 28:
Page 29 and 30:
Page 31 and 32:
Page 33 and 34:
Page 35 and 36:
Page 37 and 38:
Page 39 and 40:
Page 41 and 42:
Page 43:
Page 47 and 48:
Page 49 and 50:
Page 51 and 52:
Page 53 and 54:
Page 55 and 56:
Page 57 and 58:
Page 59 and 60:
Page 61 and 62:
Page 63 and 64:
Page 65 and 66:
Page 67 and 68:
Page 69 and 70:
Page 71 and 72:
EXHIBIT DSubmission Type:(insert fr
Page 73 and 74:
EXHIBIT D (CONTINUED)18. Descriptio
Page 75 and 76:
EXHIBIT D (CONTINUED)VCP CHECKLISTT
Page 77 and 78:
EXHIBIT D (CONTINUED)23. Have you i
Page 79 and 80:
EXHIBIT D (CONTINUED)Instructions f
Page 81 and 82:
EXHIBIT D (CONTINUED)23. Under Exam
Page 83 and 84:
ADVISORY COMMITTEE ONTAX EXEMPT AND
Page 85:
The Appropriate Role Of The Interna
Page 88 and 89:
Page 90 and 91:
Page 92 and 93:
Page 94 and 95:
Page 96 and 97:
Page 98 and 99:
Page 100 and 101:
Page 102 and 103:
Page 104 and 105:
Page 106 and 107:
Page 108 and 109:
Page 110 and 111:
Page 112 and 113:
Page 114 and 115:
Page 116 and 117:
Page 118 and 119:
Page 120 and 121:
Page 122 and 123:
Page 124 and 125:
Page 126 and 127:
Page 128 and 129:
Page 130 and 131:
Page 132 and 133:
Page 134 and 135:
Page 136 and 137:
Page 138 and 139:
Page 140 and 141:
Page 142 and 143:
Page 144 and 145:
Page 146 and 147:
Page 148 and 149:
Page 150 and 151:
Page 152 and 153:
Page 154 and 155:
Page 156 and 157:
Page 158 and 159:
Page 160 and 161:
Page 162 and 163:
Page 164 and 165:
Page 166 and 167:
Page 168 and 169:
Page 170 and 171:
Page 172 and 173:
Page 174 and 175:
Page 176 and 177:
Page 178 and 179:
Page 180 and 181:
Page 182 and 183:
Page 184 and 185:
Page 186 and 187:
Page 188 and 189:
Page 190 and 191:
Page 192 and 193:
Page 194 and 195: The Appropriate Role Of The Interna
Page 201: The Streamlined Closing Agreement F
Page 204 and 205: The Streamlined Closing Agreement F
Page 217: ADVISORY COMMITTEE ONTAX EXEMPT AND
Page 220 and 221: PROTECTING PLAN BENEFITS:IMPROVING
Page 267: ADVISORY COMMITTEE ONTAX EXEMPT AND
Page 271 and 272: Tax Treatment Of Cellular Telephone
Page 279 and 280: IRC, 2007-CODE-VOL, SEC. 280F. LIMI
Page 281 and 282: PENIRC S 274 Page 1 of 12IIRC, 2007
Page 283 and 284: PENIRC S 274 Page 3 of 12relationsh
Page 285: Employee Cell Phones Page 1 of 1Emp
Page 289 and 290: 15. Special Rules for Various Types
Page 292: Withholding RequirementsACCOUNTING
Page 299:
ADVISORY COMMITTEE ONTAX EXEMPT AND
Page 303 and 304:
Governmental Relationship and Commu
Page 305 and 306:
Page 307 and 308:
Page 309 and 310:
Page 311 and 312:
Page 313 and 314:
Page 315 and 316:
Page 317 and 318:
Page 319 and 320:
Page 321 and 322:
Page 323 and 324:
Page 325 and 326:
Page 327 and 328:
show all

Advisory Committee on Tax Exempt and Government Entities (ACT ...

Create successful ePaper yourself

Delete template?

Save as template?