Jump to content

Consequence of Missed Restatement Date


Recommended Posts

Anyone have information on the consequences of a plan sponsor failing to get the 403(b) plan restated by March 31?

Thanks!

PNJ

Patricia Neal Jensen, JD

Vice President and Nonprofit Practice Leader

|Future Plan, an Ascensus Company

21031 Ventura Blvd., 12th Floor

Woodland Hills, CA 91364

E patricia.jensen@futureplan.com

P 949-325-6727

Link to comment
Share on other sites

If not corrected, this could lead to employees being taxed on all contributions to the plan when they become vested, and rollover treatment being unavailable on distributions.  In the case of a 403(b) custodial account (as opposed to a 403(b) annuity), it could lead to the custodial account becoming tax-exempt.

To avoid this, the failure can be corrected under VCP (but not SCP).  Rev. Proc. 2019-19.

Employee benefits legal resource site

The opinions of my postings are my own and do not necessarily represent my law firm's position, strategies, or opinions. The contents of my postings are offered for informational purposes only and should not be construed as legal advice. A visit to this board or an exchange of information through this board does not create an attorney-client relationship. You should consult directly with an attorney for individual advice regarding your particular situation. I am not your lawyer under any circumstances.

Link to comment
Share on other sites

Thanks, Carol.  I have seen some old charts for 401(k) restatements which show sliding scales of cost for the VCP submission depending on how far after the deadline the correction occurs.  It is probably too soon to hope for such a thing for 403(b) but we are still getting plans which need to meet the deadline which now is only 2 weeks away!  I am anticipating plans coming for help after the deadline and hoping to be able to give them as much information as possible.  I will review the information in the Rev. Proc. and also speak with some attorneys we use in such situations.   

Thank you again.  Hope this finds you well and that you stay that way!

Patricia

Patricia Neal Jensen, JD

Vice President and Nonprofit Practice Leader

|Future Plan, an Ascensus Company

21031 Ventura Blvd., 12th Floor

Woodland Hills, CA 91364

E patricia.jensen@futureplan.com

P 949-325-6727

Link to comment
Share on other sites

I also am hoping for a little relief of some sort - perhaps a streamlined and inexpensive VCP filing for the next year, etc.similar to what was done in the past - this is particularly true for schools. Yes, they have had 2 years to adopt updated plans, but human nature is such that too many of them have waited until the last minute, and with schools all over the nation now shut down due to the Corona virus, they have far more important things to worry about, and there will be a lot of missed deadlines.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share

×
×
  • Create New...