IRA Resource Guide: On CD and Online

Do you have a SEP or SIMPLE IRA plan or have you thought about setting one up? Maybe you could

use some help convincing employees to get serious about retirement savings. Or maybe you’re interested

in learning more about your own IRA.

The IRS has a new CD-ROM containing one-stop information about traditional and Roth IRAs and

retirement plans based on IRAs, including SEPs, SARSEPs, and SIMPLE IRA plans. Included on the

CD is information from the IRS, Social Security Administration, the Securities and Exchange

Commission and other federal agencies about setting up, investing, making withdrawals from and

correcting mistakes in operating these powerful retirement savings tools. Research material relating to

IRAs is included in a section for tax and benefits professionals. You’ll also find IRA forms and

publications, investing tips, video clips and links to other Federal agency web sites with useful

information for you and your employees.

Some of the topics on the CD-ROM include:

• Rules for traditional and Roth IRAs as well as SEP, SIMPLE IRA and SARSEP plans;

• Investing your IRA assets;

• Publications and forms;

• A calculator to provide a ballpark estimate of the amount you’ll need at retirement;

• Video clips, including “man on the street” interviews, on planning for retirement and maintaining

your IRA and IRA-funded plan; and

• Frequently asked questions.

Order a free copy of the CD-ROM (Pub 4395) by phone at (800) 829-3676

or online by visiting the Retirement Plans Community web page and

clicking on “Educational Services” under the “Related Topics” section. An

online version of the IRA Resource Guide can be found at the Retirement

Plans Community web page.

 The resource guide encourages:

• Business owners to establish and properly operate IRA-funded

retirement plans.

• Individuals to evaluate their own retirement planning and set up and

fund IRAs.

• Tax and benefits professionals to assist their clients with IRAs

and IRA-funded plans.

Get your free CD now!

Volume 2, Spring 2005

Inside This Issue

IRA Investments

page 2

It’s Our First Birthday

page 2

The Fix Is In: Common Plan

Mistakes

page 3

Since You Asked: SIMPLE

IRA Plan Exam Program

Selections

page 4

It’s Not Too Late! The 2005

IRS Nationwide Tax Forums

page 5

Your 401(k) and Your TPA

page 5

New Tax Shelter Reporting

Rules

page 7

The Filing Cabinet

page 8

DOL News

page 9

Calendar of Events

and Deadlines

page 10

Retirement News

for Employers

Helping Business Owners with Retirement Plans

Internal Revenue Service Tax Exempt and Government Entities
Spring 2005 Retirement News for Employers

It’s Our First Birthday

With this edition, the Retirement News for

Employers celebrates its 1st birthday. This past

year we’ve worked on providing you with

information that meets this newsletter’s mission:

Helping Business Owners with Retirement Plans.

For example, through recurring articles such as

“The Fix Is In: Common Plan Mistakes” and

“Let’s Just Take It One Three-Month Period at a

Time,” we want to help you better operate your

plan.

But, YOU as our subscribers are the best judge of

whether we have done OUR job. Getting your

feedback is essential to us as this newsletter

continues to grow. Tell us what information will

best help you operate your business’s retirement

plan. Your ideas and suggestions for future articles

are most welcome. To find out how you can

share with us see “Contacting Employee Plans.”

We also hope that you’ll take an upcoming

subscribers survey that we will be sending out later

this year. More details on this survey will be in a

future edition.

IRA Investments

Individual Retirement Accounts (IRAs) are an excellent vehicle to help Americans save for

retirement. One important feature of IRAs is that they provide investment flexibility: You can

basically invest in anything your IRA trustee allows provided the investment is not a collectible or

a prohibited transaction. Here are some of the rules you need follow when it comes to investing

your IRA’s assets.

No Investment in Collectibles

If your IRA invests in collectibles, the amount invested is considered distributed to you in the

year invested. You may have to pay a 10% additional tax on early distributions.

Here are examples of collectibles:

• Art works,

• Rugs,

• Antiques,

• Metals – there are exceptions for certain kinds of bullion,

• Gems,

• Stamps,

• Coins – there are exceptions for certain coins minted by the

 U.S. Treasury,

• Alcoholic beverages, and

• Certain other tangible personal property.

Check Pub 590, Individual Retirement Arrangements (IRAs)

(page 44), for more information on collectibles.

Prohibited Transactions

What exactly is a “prohibited transaction?” Generally, a prohibited

transaction is any improper use of your IRA by you, your

beneficiary, or any “disqualified person.” Disqualified persons

include your fiduciary and members of your family (spouse,

ancestor, lineal descendant, and any spouse of a lineal

descendant).

Here are some examples of prohibited transactions with an IRA:

• Borrowing money from it;

• Selling property to it;

• Receiving unreasonable compensation for managing it;

• Using it as security for a loan; and

• Buying property for personal use (present or future) with IRA funds.

So what happens to your IRA if there’s a prohibited transaction? In most cases, if you or your

beneficiary engages in a prohibited transaction in connectionwith your IRA at any time during the

year, the account stops being an IRA as of the first day of that year. This means the IRA loses its

tax advantages.

2
Spring 2005 Retirement News for Employers

You might wonder what happens to you if there’s a prohibited transaction. If your account stops

being an IRA because you engaged in a prohibited transaction, the account is treated as

distributing all its assets to you at their fair market values on the first day of the year. If the total

of those values is more than your basis in the IRA, you will have a taxable gain that is includible

in your income. The distribution may be subject to additional taxes or penalties.

For more information on prohibited transactions check out Pub 590, Individual

Retirement Arrangements (IRAs) (pages 43-44). Our web site, www.irs.gov/ep, also

has plenty of information on IRAs.

The Fix Is In: Common Plan Mistakes

In each issue of the Retirement News for Employers we’ll present a common mistake that

happens in retirement plans. We’ll describe the problem, how it happened, how to fix it

and how to lessen the probability of the problem happening again. This edition of the

column focuses on the “Failure to Timely Start Minimum Distributions.”

The Issue

Internal Revenue Code (IRC) section 401(a)(9) establishes a mandatory date, known as

the “required beginning date” (RBD), by which payments to a plan participant must start.

A minimum payment must be made to the participant by the RBD and for each following

year. A participant is not allowed to delay distribution beyond the RBD. However,

participants may still have choices regarding the form of the payment as long as the form

doesn’t violate the law’s minimum distribution requirements. Note that different plans may

have different available payment methods.

Normally, the RBD for a participant who is not a 5% owner is the April 1 following the end

of the calendar year in which the latter of two events occurs:

(1) The participant reaches age 70 1⁄2 or

(2) The participant retires.

For a participant who is a 5% owner, the RBD is the April 1 following the end of the calendar

year in which they attain age 70 1⁄2 regardless of whether they retire by the end of that year.

Minimum distribution requirements also apply after a participant’s death. When a participant dies,

even if that death occurs before what would otherwise have been the participant’s RBD, the law

sets minimum distribution requirements on the payment of the participant’s death benefit.

The Problem

Plan sponsors often discover that required minimum payments have either not been paid timely or

at all. This is especially true when a non-5% owner continues working after reaching age 70 1⁄2.

The minimum distribution rules are qualification requirements, meaning they must be written into

the plan. Failure to follow the minimum payment rules as written in the plan document can lead to

the loss of the plan’s tax-qualified status. If participants or beneficiaries do not receive their

minimum distribution on time, they (not the plan) are subject to a 50% additional tax on the

underpayment.

To pay the additional tax, the participant or beneficiary must attach Form 5329 to their federal

income tax return for the calendar year in which the minimum distribution was due. The IRS may

waive the additional tax for reasonable cause, if reasonable steps are being taken to make up the

distribution.

How to Subscribe to

Retirement News for

Employers

The Retirement News for

Employers will be issued only

through IRS e-mail. For your

free subscription, please go

to the Retirement Plans

Community web page and

subscribe online by selecting

“Newsletters” under “Related

Topics.” All editions of the

Retirement News for

Employers will be archived at

the Retirement Plans Community

web page.

For your convenience, we

have included Internet links

to referenced materials

throughout the electronic

version of Retirement News

for Employers. These links

are identified on the printed

version by the underlined

text. The electronic version

may be found at the

Retirement Plans Community

web page.

3
Spring 2005 Retirement News for Employers

The Fix

Revenue Procedure 2003-44 is the latest update of the IRS’s various resolution

programs for correcting disqualifying defects in retirement plans and avoiding the tax

consequences of plan disqualification. These programs are known collectively as the

Employee Plans Compliance Resolution System (EPCRS). Employers may avoid

disqualification of their plan by using EPCRS to correct the failures.

The Self-Correction Program (SCP) or Voluntary Correction Program (VCP) can be used

to correct the failures. (Note: explanations of and eligibility for these programs can be found

in Sections IV and V of Rev. Proc. 2003-44.) For more information on these

programs, see the Summer 2004 edition of the Retirement News for Employers.

Under the SCP, a plan sponsor may self-correct minimum required distribution errors, even

where significant. The self-correction period under SCP for significant violations is two

years after the plan year in which the violation occurs.

If there has been a failure to satisfy the minimum distribution requirements, the IRS will

waive the 50% additional tax mentioned earlier if the plan sponsor applies for relief through

VCP and requests the waiver as part of the submission. If the affected participant is an

owner-employee or a 10% or more owner of a corporate plan sponsor, an explanation

supporting the waiver request must be attached. If VCP isn’t used to waive the additional

taxes, each affected participant or beneficiary must apply for relief on an individual basis

using the Form 5329 attachment to their individual federal income tax return.

Making Sure it Doesn’t Happen Again

Plan sponsors should carefully monitor the age of all participants who are approaching age

70. Not making required minimum distributions can not only lead to plan disqualification, it

also creates a 50% additional tax on the participant for missed distributions. Fortunately,

VCP offers a course of action that can restore the qualified status of the plan and obtain

waivers of the additional tax for all affected participants and beneficiaries.

Since You Asked: SIMPLE IRA Plan Exam Program Selections

After our Winter 2005 Edition of the Retirement News for Employers, featuring a

story on a new examination program on SIMPLE IRA plans, a reader asked for

more information on this initiative. The reader had been informed the

selections for examination were made on a random basis and suggested that

examinations of larger organizations would be productive.

Beginning with SARSEPs, Employee Plans (EP) is reviewing several

small employer plan segments that are not required to file the Form

5500 return. EP is now reviewing SIMPLE IRA plans and will

continue with SEPs.

The current SIMPLE IRA plan examination selections were indeed

chosen on a random basis. EP looked at the total population of

SIMPLE IRA plans based on W-2 filings for 2003 and made selections

based on entities showing a salary deferral for their SIMPLE IRA plan. EP

had not reviewed the SIMPLE IRA plan market segment in any significant

way before and believed random reviews based on a nationwide sample would be the best

approach.

Mistakes

happen. In

fact, the IRS

sees a lot of

the same

mistakes again

and again. In

“The Fix Is In”

we’ll help you

avoid some of

these common

problems.

4

What’s New on

the Web

The IRS’s Small

Business/Self-Employed

(SB/SE) Division has just

issued the 2005 Small

Business Resource

Guide on CD-ROM.

This year’s version

features a new look and

added features like a

searchable IRS Tax

Map. You’ll find all sorts

of information - pubs,

forms, instructions and

relevant tax law changes

- to help you run your

small business. Of

course, there’s also lots

of material on retirement

plans. To order this free

CD, visit www.irs.gov,

click on “Businesses,”

then “Small Bus/SelfEmployed” and click on

“The 2005 Small

Business Resource

Guide.”
Spring 2005 Retirement News for Employers

EP does have other examination programs where it reviews larger plans on an ongoing basis.

However, EP hadn’t focused on some of these smaller plan segments in the past because it was

believed there were fewer problems in these plans. In addition, there weren’t any good

methods of identifying plans that don’t file a Form 5500 return. Now, EP has improved

methods of analyzing other IRS materials filed that allow for the review of these smaller plan

segments. Importantly, EP has found some significant compliance problems within the small

employer plans areas.

For example, in the initial review of SARSEPs, EP found

some significant problems that indicated that sponsors were

not correctly monitoring their SARSEPs and were, in fact,

failing required tests. EP is seeing some of these same

problems with the SIMPLE IRA plan review. EP has seen

that some employers haven’t timely updated their IRS model

or prototype plans for EGTRRA law changes as needed and

outlined in Rev. Proc. 2002-10. Also, some are not giving

their employees timely annual notice to make a salary

reduction contribution or change their previous election.

When EP reviews these IRA-based plans – SARSEPs,

SIMPLE IRAs and SEPs – it needs more than just the

transaction history from the financial institution holding the

IRA accounts and W-2s to complete the review. These are

important sources of information but EP also needs to see:

• A copy of the plan document to insure it was properly

and timely adopted;

• Annual notices of the right to make salary reduction

contributions or to modify previous ones;

• A review of employer matches and other contributions

to verify that they are done properly and timely; and

• That the employer is following the terms of the plan.

To reduce any possible inconvenience, some of these

examinations are conducted by correspondence. And,

based on the facts and circumstances of review, the EP agent

can limit the review to key selected areas.

Your 401(k) and Your TPA

Each year, the IRS – through its Employee Plans Division – makes contact with thousands of 401(k)

plans through its examination and voluntary compliance programs. A common thread existing among

many issues we see is a lack of communication between the plan sponsors and the parties involved in

providing service to the plan. Many of these issues exist because the persons performing the required

nondiscrimination tests do not have all the information necessary to do the job you’re paying them to

carry out.

You have a third party administrator (TPA) that performs your 401(k) nondiscrimination tests at year

end. In a very common scenario – repeated each year in 401(k) plans from coast to coast, in plans

large and small – the TPA identifies deferral amounts for distribution to Highly Compensated Employees

(HCEs) in order to pass the 401(k) test. But the accuracy of that test relies on the TPA receiving all the

information needed to properly perform the test. Any breakdown in this information exchange may lead

to an inaccurate result and a failed test – even plan disqualification.

It’s Not Too Late!

The 2005 IRS Nationwide Tax Forums will be held in

six locations across the country starting next month.

The EP seminars are “About Your Retirement” and

“Retirement Toolbox.” “About Your

Retirement” presents real life examples to help you

and your clients choose the right retirement plan.

“Retirement Toolbox” features information geared

toward helping small business owners keep their

retirement plans operating properly. In addition, EP

will sponsor a booth in the exhibit hall where you can

pick up our products or speak with a retirement plan

specialist.

The locations and dates are:

San Francisco, CA June 28 – June 30

Houston, TX July 12 – July 14

Atlanta, GA July 26 – July 28

New York, NY August 9 – August 11

Las Vegas, NV August 23 – August 25

Chicago, IL August 30 – September 1

To get additional information about the Tax Forums,

visit www.irs.gov and then go to “Tax

Professionals,” “Tax Pro Events” and “IRS

Nationwide Tax Forum.” You can register online at

www.taxforuminfo.com.

5
Spring 2005 Retirement News for Employers

There are several areas where improved communication with your TPA can help keep your

401(k) plan in compliance.

For example, your TPA can’t include participants in the tests if they are unaware of them.

Information must be shared with the TPA on all employees eligible to make a salary deferral

at any time during the year. This includes employees eligible for only one pay period during

the plan year, employees who chose not to defer, and eligible employees who left

employment during the plan year. Additionally, information about any related companies

with common ownership interests should be shared with the TPA. Your 401(k) plan may

require participation by employees of these related companies.

Plan sponsors and administrators must also be familiar with the terms

of the plan document to ensure they use the proper definition of

compensation for contributions, limitations, and nondiscrimination

testing purposes. It is important to know whether compensation is:

(1) Excluded for certain purposes;

(2) Limited for certain purposes; or

(3) Determined using different computation periods (i.e. plan year

 vs. calendar year).

If the compensation amounts forwarded to the TPA do not meet the

plan definitions, your 401(k) tests will be inaccurate and provide false

results. In addition, the plan sponsor may be required to make

corrective contributions for missed deferral and deferral match

opportunities.

CONTACTING

EMPLOYEE PLANS

The Retirement News for Employers welcomes your

comments about this issue and/or your suggestions

for future articles.

Send comments/suggestions to:

EP Customer Education & Outreach

SE:T:EP:CEO

1111 Constitution Avenue, N.W., PE-4C3

Washington, D.C. 20224

or FAX (202) 283-9525

or E-Mail: RetirementPlanComments@irs.gov

For EP Taxpayer Assistance:

For retirement plans technical and procedural

questions:

Please call (877) 829-5500

Or visit the EP Customer Account Services section at

www.irs.gov/ep.

For questions relating to retirement income, IRAs,

Roth IRAs, educational IRAs, medical savings

accounts and section 125 cafeteria plans:

Please call (800) 829-1040

For further Employee Plans Information: Go to

www.irs.gov/ep.

Get the best bang for your buck:

Make sure your TPA has all the

information they need to

do their best.

Another important aspect of performing the 401(k) tests is properly

identifying HCEs. HCEs generally include any employee who: (i)

was a 5-percent owner at any time during the year or preceding year,

or (ii) for the preceding year had compensation from the employer in

excess of $95,000 (for 2005) and, if the employer elects, was a

member of the top-paid group (top 20%) of employees. Sounds

simple enough, but the ownership interests, including those of family

members, must be properly relayed to the TPA in order to correctly

identify all HCEs to include in the tests.

These are just three examples of areas where improved

communication with the TPA can improve the accuracy of your

401(k) nondiscrimination tests. Know what your plan document

says and discuss what information your TPA needs to best do their

job. Minimize those communication breakdowns and increase the

likelihood of accurate 401(k) testing.

6
Spring 2005 Retirement News for Employers

New Tax Shelter Reporting Rules

In recent years, there have been a number of retirement plan-related arrangements that have

been characterized as abusive. The IRS has identified some of the abusive plans through

published guidance. Some of these arrangements have been designated as “listed transactions”

under the tax shelter rules. On October 22, 2004, the enactment of the American Jobs

Creation Act of 2004 (AJCA) substantially changed the tax shelter rules. The changes have

important implications for plan sponsors, including substantial penalties that exist for failure to

report participation in an abusive plan.

Overview

In general, the tax shelter rules require that taxpayers report their participation in a

“reportable transaction” to the IRS. Failure to provide this report will result in substantial

penalties. In addition, advisors are required to report that they have provided advice on

the transaction, keep a list of to whom they provided the advice, and make the list

available to the IRS upon written request. The advisors also face substantial penalties for

failure to do so.

Reportable Transactions

A reportable transaction is one that the IRS determines as having a potential for tax

avoidance or evasion. Under current guidance, a reportable transaction is any one of the

following:

• A confidential transaction;

• A transaction with contractual protection;

• A loss transaction;

• A transaction with significant book/tax differences;

• A transaction with a brief asset holding period; or

• A listed transaction.

Every taxpayer who has engaged in a reportable transaction must attach a disclosure

statement (Form 8886, Reportable Transaction Disclosure Statement) to their income

tax return for each year of participation in the transaction. Also, the first time a reportable

transaction is disclosed, a copy must be sent to the IRS Office of Tax Shelter Analysis.

Penalties

Prior to the enactment of AJCA, there was no specific penalty for failure to disclose a

reportable transaction. Rather, a taxpayer might lose certain defenses to accuracy-related

penalties. AJCA amended the Internal Revenue Code to add specific monetary penalties for

failure to file the required reports. The severity of the penalty depends on whether the failure is

due to a listed transaction.

If a taxpayer that has participated in a reportable transaction fails to attach the required Form

8886 to the return, the penalty is as follows:

• For a reportable transaction that is not a listed transaction -

o $10,000 in the case of an individual, or

o $50,000 in other cases (e.g., corporation, partnership, etc.)

• For a listed transaction -

o $100,000 in the case of an individual, or

o $200,000 in other cases (e.g., corporation, partnership, etc.) 7

IRS employees

contributing to this edition

of the Retirement News

for Employers are:

Robert CreMeens

Evelyn DeWald

Jim Holland

Terri Holloway

Larry Isaacs

Ann Junkins

Roger Kuehnle

Peter McConkey

Todd Newman

Greg Nix

Mark O’Donnell

Nancy Payne

Beatrice Ramsey

Keith Ruprecht

John Schmidt

Brenda Smith-Custer

and Susan Taylor
Spring 2005 Retirement News for Employers

The Commissioner of Internal Revenue – at the Commissioner’s sole discretion – may rescind all

or a portion of the $10,000 and $50,000 penalties if rescinding the penalty would promote

compliance with the requirements of the Code and effective tax administration. There is no

authority to rescind the penalty with respect to failure to report a listed transaction; therefore, that

penalty will have to be paid.

In the case of a company that is required to file periodic

reports with SEC (or is consolidated with another

company for purposes of such reports), the payment of a

penalty with respect to a listed transaction must be

disclosed in the reports filed with the SEC. Failure to

make such disclosure is treated as a failure to report a

listed transaction.

Additionally, AJCA changed the law so that the statute of

limitations is extended for failure to report a listed

transaction. The effective date of this change applies to all

returns for which the period to assess tax had not expired

as of October 22, 2004, the date the AJCA was enacted.

Listed Transactions and Employee Plans

The IRS has specified the following retirement plan-related

transactions (including IRAs and Roth IRAs) as listed

transactions:

• Accelerated deductions for contributions to section

 401(k) plans - described in Rev. Rul. 90-105 or

 Rev. Rul. 2002-46.

• The establishment of an ESOP for a Subchapter S

 corporation - described in Rev. Rul. 2003-6.

• Transactions involving an individual, a Roth IRA, and a

 corporation - described in Notice 2004-8.

• Transactions involving ESOPs for a Subchapter S

 corporation as described in Rev. Rul. 2004-4.

• Transactions involving the purchase by retirement plans

 of excess life insurance - described in Rev. Rul.

 2004-20.

Additional Information

For additional information, see Notice 2004-80, Notice

2005-11, Notice 2005-12, and Notice 2005-22.

Also, go to the Retirement Plans Community web

page, select “More Topics” under the “Related Topics”

section and click on “EP Abusive Tax Transactions.”

The Filing Cabinet

Forms – you can’t live with them, you can’t live without

them. Just like you use forms when running your business –

everything from spreadsheets to receipts to invoices – you

also use forms when dealing with a retirement plan.

Form 5500-EZ – To File or Not To File?

If you sponsor a single-participant plan (meaning you, or you

and your spouse are the only participant(s)), you should

generally file the Form 5500-EZ, Annual Return of OneParticipant (Owners and Their Spouses) Retirement Plan

and an Annual Return of Fiduciary of Employee Benefit

Trust (Schedule P) for each plan you maintain.

An exception to this rule occurs when employers who are

otherwise eligible to file Form 5500-EZ, have $100,000 or

less in aggregate plan assets at the end of a plan year. In

these situations employers are not required to file Form

5500-EZ. This exception, however, does not apply when an

employer terminates a plan. In this situation, the plan

administrator MUST file a “final” Form 5500-EZ by the last

day of the seventh month following the date of plan

termination, even if the aggregate plan assets were NEVER

greater than $100,000.

Animal, vegetable or mineral: What is a

401(k) plan?

Many small employers/sponsors who file Form 5500-EZ and

have adopted a 401(k) plan are calling our customer service

folks wondering what “plan type” to check for item 6 of

Form 5500-EZ, Annual Return of One-Participant

(Owners and Their Spouses) Retirement Plan.

Because a 401(k) plan is considered to be a defined

contribution profit-sharing plan, you should check box D -

profit-sharing plan on line 6.

8
Spring 2005 Retirement News for Employers

DOL News

The Department of Labor’s Employee Benefits Security Administration continues to expand its

compliance assistance with new guidance and new dates for Fiduciary Education seminars.

Proposed Expansion of Department of Labor’s Voluntary Correction

Program

On April 6, 2005, the DOL/EBSA published in the Federal Register an expanded and simplified

Voluntary Fiduciary Correction Program (VFCP) that helps employers and their professional

advisors voluntarily correct violations of the law for employee benefit plans. The new program

is effective immediately and is available during the comment period.

The proposed amendments to the VFCP include:

• Three new eligible transactions dealing with delinquent participant loan repayments,

illiquid plan assets sold to interested parties, and participant loans that violate certain

plan restrictions on such loans;

• Simpler methods and an online calculator for figuring out the amount to be restored to

plans;

• Streamlined documentation and clarified eligibility requirements, and

• A model application form.

An amendment to add the sale of illiquid assets to the original VFCP class exemption is

simultaneously proposed but will not be effective until finalized.

The VFCP allows employers to voluntarily correct specific violations of the Employee

Retirement Income Security Act (ERISA). Applicants must fully correct any violations, restore

to the plan any losses or profits with interest, and distribute any supplemental benefits owed to

eligible participants and beneficiaries. A “no action” letter is given to plan officials who properly

correct violations.

The proposed revised program is available on the DOL/EBSA web site along with the

proposed exemption. Written comments on the revised program and the proposed

exemption are due by June 6. Comments may be mailed or submitted electronically. See the

relevant Federal Register document for the appropriate address for submitting comments.

Further information on the revised and original programs is also available on the web site.

Proposed Rules on Abandoned 401(k) Plans

Each year approximately 1,650 401(k) plans holding $868 million in assets and covering

33,000 workers are abandoned. On March 10, DOL/EBSA published in the Federal Register

proposed rules to allow financial institutions to take responsibility for these plans and distribute

the plans’ assets to workers and their families.

DOL/EBSA currently deals with abandoned plans on a case by case basis, often with the

involvement of the courts. The proposed rules provide standards for determining when a plan is

abandoned and establishes a process for winding up the affairs of the plan and distributing

benefits to workers. When implemented, the process would eliminate the need for costlier court

approvals and allow workers to regain access to their benefits sooner. The proposal also

provides guidance on the application of tax qualification rules to plans terminated under this

regulation. The recommendations of the Department’s ERISA Advisory Council contributed to

the development of the proposed rules. 9
Spring 2005 Retirement News for Employers

Let’s Just Take It One Three-Month Period at a Time

Operating a retirement plan can be a time-consuming job. There are deadlines, not just for reports

and forms but also for making contributions. There are conferences and seminars. And then there

is information you need to give to participants.

So to help you navigate the retirement plan timeline, here is our month-by-month look at some of

the important moments in the months to come. Please note that all of the filing dates below are for

calendar year plans - adjust the dates for non-calendar year plans:

May 26: DOL Seminar: Getting It Right – Know Your Fiduciary Responsibilities – New York, NY.

June 28-30: IRS Nationwide Tax Forum – San Francisco, CA.

June 28: DOL Seminar: Getting It Right – Know Your Fiduciary Responsibilities – Chicago, IL.

July 12-14: IRS Nationwide Tax Forum – Houston, TX.

July 13: DOL Seminar: Getting It Right – Know Your Fiduciary Responsibilities – Atlanta, GA.

July 15: Second quarterly installment due date for the 2005 plan year.

July 26-28: IRS Nationwide Tax Forum – Atlanta, GA.

August 1: “Form 5500 Day”– File 2004 Form 5500, Annual Return/Report of Employee Benefit Plan,

or Form 5500-EZ, Annual Return of One-Participant Pension Retirement Plan, with DOL/EFAST

or

File Form 5558, Application for Extension of Time to File Certain Employee Plan

Returns, with IRS to request a 2 1/2 -month extension (October 17, 2005) to file the Form

5500 or Form 5500-EZ.

August 9-11: IRS Nationwide Tax Forum– New York, NY.

For a comprehensive list of upcoming EP Educational Events, visit the Retirement Plans Community web

page, select “Educational Services” under “Related Topics”and then “Upcoming EP Educational

Events.”

Department of the Treasury Publication 4278 (5-2005)

Internal Revenue Service Catalog Number 37968B

www.irs.gov

= contribution

= conference

= file forms

A fact sheet detailing the proposed rules can be found at the DOL/EBSA web site as is the proposed

regulation and the proposed class exemption.

Update on Fiduciary Education Seminars

Fiduciary Education seminars have been scheduled for May 26 in New York, New York, June 28 in

Chicago, Illinois, and July 13 in Atlanta, Georgia. Further information on the Fiduciary Education

Campaign and registering for the seminars is available on DOL/EBSA’s web site. Stay tuned for

additional seminars coming to a city near you.