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Notice for Failure to Start Elective Deferrals


Tinman

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The new EPCRS procedure release in Rev. Proc. 2015-28 specifies the following:

(b) notice of the failure that satisfies specified requirements in new section .05(9)© of Appendix A of Rev. Proc. 2013–12 is given to the affected eligible employee not later than 45 days after the date on which correct deferrals begin;

Anyone know of a sample notice floating around out there?

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This is what we used, on letterhead/memo of the sponsor:

The xyz payroll system stopped taking your 13% 401(k) deferral, unbeknownst to us, sometime after January 2015. We migrated to a new version of xyx at the end of February and suspect it occurred at that time.

You did not receive any pay from [sponsor] from the end of January 2015 until the May 1st pay date as a result of your leave of absence. In the month of May, you received three pays; one on May 1st and two on May 29th. Your 401(k) deferral was not deducted during these pays.

You have elected to resume your deductions starting immediately and they will resume on the next pay. As we discussed, you will be increasing your deferral to make up for the missed opportunity. This is your right so long as you are within the applicable limits set by the IRS. Corrective contributions will not be made since the failure was for a short time and there is sufficient time to correct the failure by increasing contributions.

Should you have any questions about this, you can contact the plan's third party administrator: [TPA].

We are sorry for any inconvenience this system error may have caused.

Ed Snyder

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  • 3 months later...
Guest SoFlaEsq

Multiemployer retirement plan, experiencing missed deferral contribution remittances from contributing employers on behalf of participants that made valid election for non-ACA elective contributions.

In light of Rev. Proc. 2015-28, where contributing employers fail to deduct and remit, or deduct but fail to remit, elective contributions for more than 3 months (90 days) after start of pkan year, do the contemplated 25% payments that are required to be paid into the participants accounts get made by the plan's trustees, as "Plan Sponsors", or by participants' employers, as "Plan Sponsors", as defined by Plan document.

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Apart from whatever one might consider necessary or appropriate to meet the terms of a tax-qualification correction procedure, it seems unlikely that a multiemployer plan's trustee (whether labor-side or employer-side) would pay to the plan an amount because of a participating employer's failure to pay a contribution.

Consider that the plan's trustee might have some duty to make prudent efforts to collect a past-due contribution.

Consider too that the plan's documents or collective-bargaining agreements (or both) might state provisions, including interest, other adjustments, and attorneys' fees, concerning past-due contributions.

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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