Volume 4, Summer 2007 

Inside This Issue 

Critical FewPoints ... by 

Monika Templeman (Director, 

EP Examinations) - EPCU 

Web Page 

page 2 

The Fix Is In: Common Plan 

Mistakes - Using EPCRS to 

Terminate an Orphan Plan 

page 3 

DOL News 

page 5 

The Filing Cabinet 

page 6 

Net Gains 

page 7 

Calendar of Events 

and Deadlines 

page 8 

“Timing is Everything” Flyer 

page 9 

Retirement News 

for Employers 

Helping Business Owners with Retirement Plans 

Internal Revenue Service Tax Exempt and Government Entities 

Announcing the New Interactive Navigator 

Our popular printed guide to retirement plan-related resources has just been 

launched as a web-based tool, expanding your capability to review helpful 

publications about choosing, establishing and maintaining the right plan for your 

organization. The online version of The Retirement Plans Products Navigator 

(available via the “Plan Sponsor/Employer” section of the “Retirement Plans 

Community” web page at www.irs.gov/ep) links you to plain language documents 

for various types of retirement plans. 

The Navigator’s suite of publications will help you answer questions such as: 

• Which plan is best for my business? 

• What are the basic plan requirements? 

• How do I maintain my plan? 

• How can I keep my plan compliant with tax law? 

• What if I make mistakes? 

By following the “plan paths” on the Navigator highway, you will learn the benefits 

of sponsoring a retirement plan, discover the plan best suited for your business, 

understand how to roll-out your plan and gain insights into taking the right steps to 

maintain your plan. You will also find information 

on IRS programs to fix administrative mistakes in 

your plan. 

The updated (May 2007) print version of The 

Retirement Plans Products Navigator 

(Publication 4460) and the products it features – 

with publications for tax-exempt organizations and 

goverment entities newly added – can be ordered by 

calling toll-free (800) TAX-FORM (829-3676). 

Use the Navigator to take the right steps for you 

and your employees; we’ve got it mapped out for 

you! 
Summer 2007 Retirement News for Employers 

Critical FewPoints ... by Monika Templeman (Director, EP 

Examinations) 

Hello. I want to share information with you about the new Employee Plans Compliance Unit 

(EPCU) web page. 

In our continuing effort to promote compliance in the retirement plans community, the EPCU 

recently established a web page devoted to assisting the retirement plans community in 

understanding the EPCU’s projects and associated compliance contacts or examination 

letters sent to taxpayers. 

The EPCU web page contains a wealth of information, including: 

• Overview of EPCU 

• Featured Project 

• Current and Upcoming Projects 

• Examples of EPCU Letters 

• Contact Us 

• Frequently Asked Questions 

First highlighted in the February 2006 Special Edition of the Employee Plans News, the 

EPCU reaches thousands of retirement plans via compliance contacts. These contacts inquire 

about potential noncompliance in plans based on information from Form 5500 and other 

sources. The EPCU constitutes one of the three “Critical FewPoints” priorities of IRS 

Employee Plans Examinations, specifically our dedication to “Expanding Compliance 

Contacts.” 

The EPCU “Featured Project” highlights the project generating the most buzz in the 

retirement plans community. The current focus is the Section 403(b) Universal Availability 

Project, with guidance and resources for plans contacted as a result of this undertaking. 

I hope you find this web page helpful in supplying valuable information on our EPCU 

projects. If you have any ideas or comments, please share them with me at 

RetirementPlanComments@irs.gov. 

IRS employees contributing to this edition of the Retirement News for Employers are: 

Avaneesh Bhagat, Kathy Davis, Peter McConkey, Mark O’Donnell, Nancy Payne, 

Keith Ruprecht, John Schmidt, Brenda Smith-Custer, Marjorie Taylor, Monika 

Templeman, and Kathy Tuite. 

2 
Summer 2007 Retirement News for Employers 

The Fix Is In: Common Plan Mistakes 

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

occurs in retirement plans. We describe the problem, how it happened, how to fix it and 

how to lessen the probability of the problem happening again. In this edition we focus on 

“Using EPCRS to Terminate an Orphan Plan.” 

The Problem 

An “Orphan Plan” is a plan that no longer has a plan sponsor. The sponsor may no longer 

be in existence or may have abandoned the plan before proper plan termination and 

disbursement of trust assets have taken place. The most common reasons an Orphan Plan is 

created are death of the lone sponsor, bankruptcy or corporate mergers. Plan participants 

and their beneficiaries are often concerned about their benefits and contact the third-party 

service providers to demand payment. Typically, these service providers do not have the 

authority to make distributions from the trust or to terminate the plan. Even trustees who 

are still available to work with the plan may lack such authority. 

An Orphan Plan faces potential problems under the Internal Revenue Code (IRC) and 

ERISA. In general, the IRC includes qualification requirements relating to a retirement 

plan’s tax-favored status. If a plan is no longer sponsored by an employer, the plan ceases to 

be a qualified plan. In addition, because the plan is no longer being maintained by the 

employer, the plan may fall out of compliance with other requirements of the IRC. 

(Note: The DOL’s Employee Benefits Security Administration (EBSA) oversees ERISA 

matters, including the law’s fiduciary requirements that govern the termination of Orphan 

Plans. The agency provides information about Orphan Plans on the EBSA web site (see 

“Abandoned Plan Program”). Questions regarding Title I of ERISA issues should be 

directed to the DOL.) 

The Fix 

For an Orphan Plan, an “Eligible Party” may apply for relief from the adverse consequences 

of plan disqualification by correcting failures through the Employee Plans Compliance 

Resolution System’s (EPCRS) Voluntary Correction Program (VCP) or Audit Closing 

Agreement Program (Audit CAP). 

Revenue Procedure 2006-27, which retirement plans may use to correct failures under 

EPCRS, includes two important definitions: 

(1) Orphan Plan. The term “Orphan Plan” means any qualified plan with respect to 

which an “Eligible Party” has determined that the plan sponsor: 

(a) No longer exists; 

(b) Cannot be located; 

(c) Is unable to maintain the plan; or 

(d) Has abandoned the plan pursuant to regulations issued by the DOL. 

However, the term “Orphan Plan” does not include any plan terminated pursuant to


DOL regulations governing the termination of abandoned individual account plans.


3 
Summer 2007 Retirement News for Employers 

(2) Eligible Party. The term “Eligible Party” means: 

(a) A court appointed representative with authority to terminate the plan and dispose 

of the plan’s assets; 

(b) In the case of an Orphan Plan under investigation by the DOL, a person or entity 

who the DOL determined has accepted responsibility for terminating the plan and 

distributing the plan’s assets; or 

(c) In the case of a qualified plan to which Title I of ERISA has never applied, a 

surviving spouse who is the sole beneficiary of a plan that provided benefits to a 

participant who was (i) the sole owner of the business that sponsored the plan and 

(ii) the only participant in the plan. 

Only Eligible Parties of an Orphan Plan can apply for relief under VCP or Audit CAP. If the 

VCP is used, a copy of the court order giving authority to terminate the plan and dispose of 

the plan’s assets should be included. Alternatively, the submission may include other 

evidence that the applicant is an Eligible Party. In general, the correction procedures and 

principles used for Orphan Plans are the same as other plans, except that the IRS has 

discretion to: 

(a) Determine whether full correction will be required in a terminating Orphan Plan; 

and 

(b) Waive the VCP fee in the case of a terminating Orphan Plan, if the submission 

includes a request for a waiver of the fee. 

Making Sure It Doesn’t Happen Again 

How to Subscribe to Retirement	 Employers should take necessary steps to prevent a 

News for Employers	 qualified plan from becoming an Orphan Plan. A sole 

proprietor could designate a successor to take charge if the The Retirement News for Employers principal is no longer able to, even if the sole purpose is to is issued only through IRS e-mail. wind up the business and implement the plan termination. In For your free subscription, please go 

to the “Retirement Plans	 the case of a possible bankruptcy, an employer should 

Community” web page and	 consider terminating the plan and distributing its assets 

before filing for bankruptcy. In a sale of business, merger or subscribe online by selecting spinoff, ensure that the employee’s new employer will “Newsletters” under “Retirement 

assume sponsorship of the plan; otherwise, implement the Plan Community Topics.” All 

plan termination before completing the sale, merger or editions of the Retirement News for spinoff transaction. Employers are archived there. 

If preventive actions such as those outlined above have not 

For your convenience, we have	 been taken and a third party is willing to take responsibility 

included Internet links to referenced	 for the administration and termination of an Orphan Plan, 

materials throughout the Retirement	 the third party should seek to become a court-appointed 

News for Employers. These links	 representative with the power to terminate the plan and 

are identified by the blue underlined dispose of the plan’s assets.


text.


Keep in mind that the Service is willing to work with 

Eligible Parties to ensure that participants and beneficiaries 

of Orphan Plans receive their benefits without jeopardizing 

the tax-favored status of those benefits (e.g., the ability to 

rollover monies to IRAs or other qualified plans). 4 
Summer 2007 Retirement News for Employers 

DOL News 

The Department of Labor’s Employee Benefits Security Administration (DOL/EBSA) 

announced new guidance and tools to assist plan sponsors and practitioners in complying 

with ERISA. You can subscribe to DOL/EBSA’s web site homepage as well as the 

Compliance Assistance page for notice of updates posted on the web site. 

Hearing on Computer Model Advice Programs for IRAs and 

Similar Type Plans 

On July 31, 2007, DOL/EBSA held a public hearing to assess the feasibility of 

using computer models to provide advice to participants with individual 

retirement accounts (IRAs) and similar plans. DOL/EBSA heard testimony from 

a number of witnesses at the hearing. 

The Pension Protection Act (PPA) amended ERISA by adding a new prohibited transaction 

exemption that allows greater flexibility for investment advisers to give advice to 

participants of 401(k) plans and IRAs. One of the ways in which investment advice may be 

provided under the exemption is through the use of an unbiased computer model. DOL/ 

EBSA, in consultation with the Department of Treasury, is required to determine the 

feasibility of such models in providing investment advice to IRA participants and report its 

findings to Congress by the end of the year. On December 4, 2006, DOL/EBSA published a 

request for information (RFI) regarding the use of computer model investment advice 

programs for IRAs. The comments received in response to the RFI are posted on DOL/ 

EBSA’s PPA dedicated web page. You can subscribe to DOL/EBSA’s PPA web page. 

Guidance on Tax-Sheltered Annuity Programs 

On July 24, 2007, DOL/EBSA issued Field Assistance Bulletin (FAB) 2007-02 clarifying 

that tax-sheltered annuity programs, also known as 403(b) plans, that comply with recently 

released tax regulations under section 403(b) of the Internal Revenue Code can still be 

structured so that they are excluded from coverage under Title I of ERISA. 

DOL/EBSA’s regulation on 403(b) plans provides a “safe harbor” so that, under certain 

circumstances, a tax-sheltered annuity program, funded solely with employee contributions, 

is not treated as a pension plan “established or maintained” by the employer for purposes of 

Title I of ERISA. FAB 2007-02 confirms DOL/EBSA’s view that tax-exempt employers 

can engage in a range of activities to facilitate the operation of a tax-sheltered annuity 

program under the new IRS regulations and still remain within the safe harbor’s criteria. 

Fee and Expense Disclosures to Participants in Individual Account Plans 

On April 25, 2007, DOL/EBSA published in the Federal Register an RFI to assist the 

department in improving information provided to an estimated 41 million participants 

about administrative and investment fees and expenses charged to 401(k)-type plans. 

5 
Summer 2007 Retirement News for Employers 

The RFI requested comments on fee and expense disclosure issues affecting participants and 

beneficiaries of 401(k)-type plans governed by ERISA. Specifically, the RFI requested 

information concerning what administrative and investment-related fee and expense 

information participants should consider when investing their retirement savings, the manner 

in which the information should be furnished to participants and who should provide that 

information. 

The comment period closed on July 24, 2007. The comments received are posted on DOL/ 

EBSA’s web site. 

Upcoming Compliance Assistance Events 

• Voluntary Fiduciary Correction Program Workshops: September 6, 2007, in


Philadelphia, PA.


• Fiduciary Education Seminars: August 29, 2007, in Juneau, AK; October 16, 2007, in 

Portland, ME; October 30, 2007, in Nashville, TN; November 7, 2007, in Detroit, 

MI; and December 13, 2007, in Tucson, AZ. 

Visit DOL/EBSA’s web site for the registration brochure for these seminars and for the 

announcement of additional seminars around the country. 

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 Developments – Schedule P Eliminated 

In conjunction with the Department of Labor’s July 21, 2006, Federal Register 

announcement mandating the electronic filing of the Form 5500, the IRS initiated certain 

measures intended to reduce burdens and expenses for filing requirements. Among those 

measures was the elimination of the Schedule P (Form 5500), Annual Return of Fiduciary of 

Employee Benefit Trust. 

With the release of Announcement 2007-63 on June 29, 2007, the IRS has announced that it 

will treat the plan’s filing of the appropriate Form 5500-series return as “if the filing 

constitutes a return of the plan’s employee benefit trust for purposes of §6501(g)(2).” 

Simply put, as of 2006 (or 2005 for Form 5500-EZ), the filing of a Form 5500-series return 

will replace the Schedule P as the triggering device for purposes of §6501(g)(2). 

Determination Letter Applications under Revision 

Although completion of the final versions is still months away, all of the EP determination 

letter application forms are in the process of being revised. Not only will the entire “series” 

be updated technically, most of the forms will be reformatted to accommodate EP’s new 

processing and control system. In addition, EP is creating a new form for Group Trust 

Rulings (Form 5316) that should be available by Spring 2008. Over the next few months, 

additional information will be available on the “Retirement Plans Community” web page and 

within future editions of the Retirement News for Employers, so stay on the lookout. 

6 
Summer 2007 Retirement News for Employers 

Net Gains 

Here are the latest updates and additions to the “Retirement Plans Community” web page. 

Customer Accounts Services (CAS) 

The “EP Customer Accounts Services” web page has been updated with new procedures for 

asking EP questions. Telephone representatives will provide assistance on basic EP questions 

and will refer questions beyond their scope to an Employee Plans Specialist to be answered 

within 15 days. 

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

 FAX (202) 283-9525


 E-Mail:


RetirementPlanComments@irs.gov.


For EP Taxpayer Assistance: 

For retirement plans technical and 

procedural questions: 

Please call (877) 829-5500 

Or visit the “Contact EP/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. 

The Employee Plans Compliance Unit (EPCU) 

The Employee Plans Compliance Unit has established 

“EPCU” web pages to assist the retirement plans community 

in understanding EPCU projects and what to do if contacted. 

For additional information on the EPCU, see the “Critical 

FewPoints” article on page 2. 

IRC 403(b) Tax-Sheltered Annuity Plans 

The recently published final IRC section 403(b) regulations 

are available on the “IRC 403(b) Tax-Sheltered Annuity 

Plans” web page. Other new features on the 403(b) page are 

the “Ask Bob Architect” page that provides 403(b) FAQs 

and links to the presentations Mr. Architect uses during his 

speeches to the retirement plans community. 

403(b) Plan Checklist (Publication 4546) 

Expanded explanations attached to the online checklist have 

been updated. This publication can be located on the “EP 

Forms/Publications/Products” web page. 

Staggered Remedial Amendment Cycles 

The “Staggered Remedial Amendment Cycles” web page 

has been updated to include Revenue Procedure 2007-44. 

Rev. Proc. 2007-44 clarifies, modifies and supersedes Rev. 

Proc. 2005-66, in which the Service established a system of 

remedial amendment cycles under section 401(b) for 

individually designed and preapproved plans. 

7

Summer 2007 Retirement News for Employers 

= contribution 

= conference 

= file forms 

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 noncalendar 

year plans: 

Aug. 28-30: IRS Nationwide Tax Forum – New York, NY. 

Aug. 29: Fiduciary Education Seminar – Juneau, AK. 

Sept. 6: Voluntary Fiduciary Correction Program Workshop – Philadelphia, PA. 

Sept. 11-13: IRS Nationwide Tax Forum – Anaheim, CA. 

Sept. 15: Deadline for making final required minimum contributions for 2006 

calendar-year money purchase and defined benefit plans. 

Sept. 18-20: IRS Nationwide Tax Forum – Orlando, FL. 

Oct. 15: File 2006 Form 5500, Annual Return/Report of Employee Benefit Plan, 

or Form 5500-EZ with DOL/EFAST if you filed for a 2-1/2 month 

extension prior to August 1. 

Oct. 15: Deadline for making third quarter contributions to 2007 calendar-year 

defined benefit plans. 

Oct. 16: Fiduciary Education Seminar – Portland, ME. 

Oct. 30: Fiduciary Education Seminar – Nashville, TN. 

Nov. 1: Last day for employer with SIMPLE IRA or SIMPLE 401(k) plans to 

notify eligible employees of their 2008 salary reduction rights and 

whether its required contributions will be matching or nonelective 

contributions. 

Nov 7: Fiduciary Education Seminar – Detroit, MI. 

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

Plans Community web page, select “Plan Sponsor/Employer,” then “Questions: 

Where to Get Answers” and click on “Upcoming EP Educational Events.” 

Department of the Treasury Publication 4278 (8-2007) 

Internal Revenue Service Catalog Number 37968B 

www.irs.gov 

8 
Summer 2007 Retirement News for Employers 

Timing is Everything 

Some helpful retirement tips for employees from the IRS... 

Taking Stock of Your Retirement Goals 

Every year your employer sends you information about your retirement plan. You may 

ask yourself, “Why should I read this?” The answer is, “Because the information is 

important to your financial future.” 

One purpose of this information is to update you on how your plan investments are 

performing. With that knowledge, you can begin to make informed choices about your 

financial future. It’s never too soon to start thinking about how much 

you’ll need in retirement savings. 

The IRS and the Department of Labor (DOL) have information on 

their web sites to guide you in planning your retirement finances. 

•	 IRS’s IRA Online Resource Guide (www.irs.gov/ep, see “Plan
 

Participant/Employee”) links to a calculator that will estimate
 

how much you’ll need in retirement savings and how you can
 

meet that goal.
 

•	 DOL’s, Taking the Mystery Out of Retirement Planning (www.dol.gov/ebsa/

publications/main, see “Featured Publications”), looks at your financial 

situation today and estimates your retirement expenses and how they will be 

affected by inflation. 

Reviewing your retirement savings plan each year will help 

you stay on target with your retirement savings goals. 

For additional information to help you with making retirement 

planning decisions, visit “Tax Information for Plan 

Participants/Employees” (www.irs.gov/ep). 

Department of the Treasury Publication 4278-B (08-2007) 

Internal Revenue Service Catalog Number 47879D 

www.irs.gov