IRS Proposes Additional Filing Option

As governmental plans are aware, the IRS has established a five year filing cycle for qualified plans.  Governmental plans are currently assigned to the third cycle - "Cycle C" - which began February 1, 2008, and ends January 31, 2009.  The IRS is considering several ideas for giving governmental plans more time to complete their filing.  One idea is a "Cycle E Proposal," under which governmental plans would have the option of filing under "Cycle C" or "Cycle E" - which will begin February 1, 2010 and end January 31, 2011.  The IRS has described this as a "one-time choice." 

Even though the Cycle E Proposal would permit a later filing period, the IRS apparently still wants to encourage filing in Cycle C.  For governmental plans that have filed in Cycle C, the IRS is considering moving them to the "head of the queue," providing reduced compliance fees, and other incentives.  We think that it will be important for the IRS to make sure that all plans filed in Cycle C will have the same benefits under the program, such as reduced compliance fees. 

The IRS is asking for email comments on the Cycle E Proposal at governmentalplansdialogue@irs.gov.  We would be very happy to assist any governmental plan in providing comments.  We will also keep you informed of future developments on this issue.

Please contact your Ice Miller LLP Employee Benefits attorney with questions or contact Mary Beth Braitman, Terry A.M. Mumford, Lisa Erb Harrison or Katrina M. Clingerman.