Announcement 2001-12

(This Item Posted April 2001)

Prepared By: Eugene A. Ferreri, Jr.

First Citizens Bank

Raleigh, North Carolina

The Internal Revenue Service ("IRS") recently issued Announcement 2001-12 which gives a summary of the rules governing the GUST amendment period for adopters of master and prototype or volume submitter plans ("M&P Plans"). Generally, the GUST remedial amendment period ends of the last day of the first plan year beginning in 2001 (the "Regular Period"). However, certain adopters of M&P Plans have a later deadline.

To be eligible for the later deadline, an employer must either:

1. Adopt an M&P Plan; or
2. Jointly certify with an M&P Plan sponsor that the employer will adopt that M&P Plan after GUST approval is obtained.

One of those two actions must be taken before the end of the Regular Period. In addition, the M&P Plan sponsor must have submitted the M&P Plan to the IRS for GUST determination letter by December 31, 2000.

If the above requirements are met, the employer’s deadline for making the GUST amendment is the later of:

1. The end of the Regular Period, or
2. The end of the 12^th month beginning after the date the M&P Plan gets its GUST letter.

By the deadline, the employer must adopt a GUST approved M&P Plan or individually designed GUST amendments. If a determination letter is required for reliance, the request of a determination letter must also be filed before the extended deadline. For example, an adopter of a non-standardized prototype plan would need to file the request before the extended deadline date.

If an employer has adopted an M&P Plan whose sponsor did not meet the December 31, 2000 deadline for filing, the employer must take one of three actions by the end of the Regular Period:

1. Adopt a GUST approved M&P Plan of another sponsor or adopt individually designed GUST amendments, or
2. Get an extended deadline by adopting the M&P Plan of a sponsor who did submit timely, or
3. Get an extended deadline by certifying with an M&P Plan sponsor, who had timely filed, that the employer will adopt that M&P Plan after GUST approval is obtained