client correspondence

Pursuant to Revenue Procedure 2007-44, the Internal Revenue Service (“IRS”) is now requiring that all qualified retirement plans be amended and restated to comply with recent tax law changes which are already in effect.  These new documents are referred to as EGTRRA documents (see attached for a non-inclusive summary of EGTRRA changes).  The new procedure will require a similar restatement every six years, beginning in 2010.  The failure to amend in a timely manner could result in the loss of the plan’s qualified status.  Terminating plans must also be amended, as of the plan termination, to maintain their qualified status as of the plan termination date or risk similar sanctions.

Our master restated Defined Benefit Plan Documents have received approval of their qualified status.  We will be starting our restatement process for each Plan Sponsor as soon as possible.

Our fee for drafting and restating your Defined Benefit Plan, registering and securing a favorable determination letter from the IRS on its qualified status is $1,750.  In addition, the IRS imposes a “user fee” on some submissions.  For most plans, this fee will be no more than $300.  If your plan has under 101 participants, was adopted after January 1, 1997 and there is a non highly compensated employee participating in the plan, there will NOT be any user fee.

Each year, under the new procedure, the IRS will publish a “Cumulative List” of changes in the law required to be incorporated into all plans via interim amendments.  We will amend your plan each year to comply with these changes to whichever document is applicable.  You will be provided with the additional plan language for your files, and you will be listed as an adopting employer of the appropriate plan, as required by the IRS.  Our fee for maintaining your plan in this manner is $150 annually.  This methodology will avoid the inconvenience of adopting each amendment individually, and will significantly lower the overall cost of keeping your plan in compliance.  This fee does not apply to any elective amendments.

In order to proceed with the plan’s amendment and restatement, as well as future maintenance, please sign and date the enclosed authorization, and submit your retainer fee for $500.

Very truly yours,
Professional Pension Planners, Inc.
Fred Harrison, President
Mark Sadoff, Vice President & Enrolled Actuary

 


 

Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA)

Summary of the document changes (not all inclusive):

  1. Final regulations for minimum required distributions.
  2. Increase in compensation dollar limit (currently $245,000).
  3. Rollover rules have been enhanced and rollovers have been made more portable.
  4. Cash or deferred arrangements: 6 month rather than 12 month deferral suspension following hardship withdrawal, repeal of multiple use test, various other changes to 401(k) regulations.
  5. Roth 401(k) contributions allowed.
  6. Faster vesting for matching contributions.
  7. Catch-up contributions to 401(k).
  8. Loans to S-corporation shareholders allowed.
  9. Processing fees may be charged to current and former participant’s accounts.
  10. Interest Rate and Mortality Rate changes, as required. (Defined Benefit Plans Only)

 


 

I hereby authorize Professional Pension Planners, Inc. to amend and restate the above-referenced qualified plan for a fee $1,750.  We also authorize you to maintain these plans with updated amendments, as required.

ENCLOSED IS OUR RETAINER CHECK FOR $500, PAYABLE TO PROFESSIONAL PENSION PLANNERS, INC.

By: ___________________________________                                             __________________

Name and Title                                                                                                  Date

If you have any questions regarding these provisions or any other questions, please do not hesitate to contact us.