IRS Raises Fees for Most Determination Letters

Fees.....where do we begin? Obviously, the burden of determining if fees are fair, reasonable and necessary is a daunting challenge even for professional fiduciaries. Very few practitioners enjoy going through a fee discussion with clients, the industry has been hiding fees and selling "free" plans for 35 years, necesitating the quite robust set of new rules forthcoming later this year. In many cases, it is hard to get clients to understand all of the moving parts and mechanics of Retirement Plan fees, even harder in some cases to get them to not pass them along to their participants. Of course, in difficult economic times like the present this task becomes even more unplesaant. With that stated, see the below list of IRS imposed fee increases, some of which are 250% increases.....gotta love the timing.

Effective Feb. 1, 2011, The Internal Revenue Service (IRS) has raised the fees for determination letters and advisory letters sought by qualified retirement plans.

These increases will be for almost every type of determination letter request, as follows:

(1) For a plan intending to satisfy a design-based or nondesign-based safe harbor, or a plan not seeking a determination letter with respect to any of the general tests, and the plan is not seeking a determination letter with respect to the average benefits test:

The single employer Form 5300 determination letter fee is increased from $1,000 to $2,500;
The single employer Form 5310 determination letter fee is increased from $1,000 to $2,000;
The multiple employer Form 5300 or Form 5310 determination letter fee is increased as follows:

• 2 to 10 employers from $1,500 to $3,000
• 11 to 99 employers from $1,500 to $3,000
• 100 to 499 employers from $10,000 to $15,000
• Over 499 employers from $10,000 to $15,000

Average Benefit Test Or General Tests

(2) For a plan seeking a determination letter with respect to the average benefit test and/or any of the general tests:

The single employer Form 5300 determination letter fee is increased from $1,800 to $4,500;
The single employer Form 5310 determination letter fee is increased from $1,800 to $4,000;
Adopters of a Master or Prototype Plan or a Volume Submitter Plan will pay a fee that is increased from $1,000 to $1,800;
The multiple employer Form 5300 or Form 5310 determination letter fee is increased as follows:

• 2 to 10 employers from $2,300 to $5,000
• 11 to 99 employers from $2,300 to $5,000
• 100 to 499 employers from $15,000 to $25,000
• Over 499 employers from $15,000 to $25,000

(3) For group trust submissions under Rev. Rul. 81-100, C.B. 1981-1, 326; Rev. Rul. 2004-67, C.B. 2004-2, 28, and Rev. Rul. 2011-1, I.R.B. 2011-2, the fee has been increased from $750 to $1,000. Form 5316 to be used for group trust submissions will be available soon, according to the IRS.

For the complete (260 pages) rule please view IRS Revenue Procedure 2011-8 ---> http://irs%20revenue%20procedure%202011-8%20---%3e%20http//www.irs.gov/pub/irs-irbs/irb11-01.pdf