Amnesty deadline approaches for qualified plans.An important deadline is approaching under a special IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. amnesty amnesty (ăm`nəstē), in law, exemption from prosecution for criminal action. It signifies forgiveness and the forgetting of past actions. program for sponsors of qualified retirement plans who did not timely amend their plans to comply with the Tax Reform Act of 1986 (TRA TRA Training TRA Transfer TRA Transition TRA Tennessee Regulatory Authority TRA Telecommunications Regulatory Authority (Oman) TRA Tax Reform Act (1976, 1984, or 1986) TRA Teachers Retirement Association ). The deadline for most plans eligible for this program is Mar. 31,1996. The TRA changed many of the requirements applicable to tax-qualified retirement plans, requiring plan documents to be amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. . The TRA provided a deadline for plans to be amended to satisfy the new requirements. This deadline was ultimately extended by the Service to the end of the 1994 plan year (Dec. 31, 1994 for most plans). Plan sponsors who do not timely amend their plans face potential loss of the plan's tax-qualified status, which may result in significant tax penalties. After the deadline for plan amendments had passed, the IRS discovered significant numbers of plan sponsors had not timely amended their plans. To address this problem, the Service opened a special amnesty program for a limited period to a]low nonamending plans to retain their qualified status. Under this amnesty program, sponsors of nonamending plans may make a voluntary application to the IRS to amend their plans. The program requires the sponsor to adopt all necessary amendments to the plan to bring it into compliance with the TRA, and to pay a negotiated sanction sanction, in law and ethics, any inducement to individuals or groups to follow or refrain from following a particular course of conduct. All societies impose sanctions on their members in order to encourage approved behavior. . The maximum sanction under this program is 20% of the tax that the Service could assess if it disqualified dis·qual·i·fy tr.v. dis·qual·i·fied, dis·qual·i·fy·ing, dis·qual·i·fies 1. a. To render unqualified or unfit. b. To declare unqualified or ineligible. 2. the plan. However, the ultimate sanction is subject to negotiation with the IRS and could be as low as $1,000. Plan sponsors eligible for this amnesty program must apply to the Service no later than 15 months following the final deadline for adopting the TRA. For plans with a Dec. 31, 1994 deadline to adopt plan amendments, this program will expire expire /ex·pire/ (ek-spi´er) 1. to exhale. 2. to die. ex·pire v. 1. To breathe one's last breath; die. 2. To exhale. Mar. 31, 1996. Plan sponsors who miss this amnesty program may amend their plans using other IRS compliance programs; however, these programs carry significantly higher penalties. |
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