Leaderboard

No. DFVC filing fees are settlor expenses. They must be paid by the plan sponsor.

You can never make the participants pay for the Plan Sponsor's/Administrator's mistake and not filing on time is their mistake.

Someone filing an incomplete return is probably not going to like the fine print on the 5500 itself: Under penalties of perjury and other penalties set forth in the instructions, I declare that I have examined this return/report, including accompanying schedules, statements and attachments, as well as the electronic version of this return/report, and to the best of my knowledge and belief, it is true, correct, and complete.

Here's another take on the IRM hardship substantiation method: the employer is required to give the employee certain information, which is easily provided in a preprinted packet, as well as a certification form for the participant to use to advise the plan of the amount of hardship needed, what it was for, and that the participant promises to keep the backup. If this is done correctly, the IRS can still ask for the source documents but (a) it can only do so under very restrictive situations, and only with a manager's approval; (b) if the participant can't cough up the support documentation, the problem is not the employer's or the plan's ... it has done what is required under the procedure. So, in my opinion, the substantiation method of the IRM takes much of the burden away from the plan administrator and lessens the burden on the plan if the IRS audits. I can't see the down side, unless the packet given to the participant is insufficient. So, be sure to read the IRM and follow it assiduously.

If auditor's report is not available, you should file your Form 5500 without attaching anything in place of this report. You will leave 3(a), 3(b), and 3(d) blank, but still fill out 3(c). I would also suggest attaching explanation why the report is not available as the Other attachment. See Q25 here: https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/efast2-form-5500-processing.pdf The current answer is short, but back in 2014 it looked like this: Q25: Will the EFAST2 system still receive my filing if I do not attach the IQPA report with my Form 5500 annual return/report when it is required? The EFAST2 system will receive your filing, but submitting the annual return/report without the required IQPA report is an incomplete filing, and the incomplete filing may be subject to further review, correspondence, rejection, and assessment of civil penalties. Also, if you do not submit the required IQPA report, you must still correctly answer the IQPA questions on Schedule H, line 3. This means you must leave lines 3a and 3b blank because the IQPA report is not attached and must also leave line 3d blank because the reason the IQPA reports is not attached (i.e., was not completed on time) is not a reason listed in any of the available check boxes. You should still complete line 3c if you can identify the plan’s IQPA. Please note that failing to include the required IQPA report and leaving parts of line 3 blank will result in the system status indicating that there is an error with your filing because, as noted above, submitting your annual return/report without a required IQPA report is an incomplete filing, and may be subject to further review, correspondence, rejection, and assessment of civil penalties. Thus, if you find it necessary to file a Form 5500 without the required IQPA report, you must correct that error as soon as possible. And yes, after this filing the plan sponsor will receive letter granting either 30 or 45 days to complete filing with the report attached. Obviously it is even better to file amended form with the auditor's report before DOL issues the letter.

1) Money is fungible. 2) As someone who has both paid and received child support, I find your naiveté cute. Child support's purpose notwithstanding, it operates as an income transfer, plain and simple.

This is an unusual case because the AP left the money in the plan. It would seem to me that if a family lawyer can convince a domestic relations court to modify the existing QDRO to award less to the AP, even $0, then that is not a QDRO against an alternate payee, but just restores to the participant his benefit. I don't see it as a problem under ERISA or the Code, but a family law problem.

Interesting question; hadn't thought about it. As you note, it's not all that frequent. We'll probably offer whatever the law allows just to avoid confusion.

While I agree in principle, there really is nothing that says the DRO has to be specific to "pay" for child support. It could simply be payment in settlement of a an obligation, which in this case, is child support. I would question why the custodial parent would want to roll over this payment - as it shifts the tax burden - as you say David, when they could simply take it in cash - and if they so choose, invest it otherwise (maybe even take a deduction for a contribution to an IRA). Money is fungible.... And BTW, once the money is in the name of the AP in the plan, they are, in fact, a "participant" and I can't see why a DRO couldn't be issued against those proceeds.

Off topic but I don't find this so odd. Presumably the father in this case spend money out of pocket already to pay the needed expenses. This is no making him whole after the fact.

The answer boils down to "yes", at least as we would handle it. All contributions for a self-employed are treated the same on his/her 1040, so then it is a matter of deciding how to allocate on the admin side. The way I see it, a self-employed cannot exceed 402(g) if things are done properly - and by that, I mean having an election in place before the end of the year, and that election cannot or at least should not elect greater than the 402(g) limit. So if s/he is just throwing money at the plan, which is not uncommon, then the amount received up to the 402(g) limit is deferrals, and anything else is...something else. Whether that something else is within those limits is another matter, but likely no problem at all.

Opinions may differ. I believe that the IRS has indicated it believes it would be too late to change now, but that the only thing in writing on this is a TAM. I don't think the answer under the Code and regulations is clear.

If the employer is a corporation, then only a duly adopted board resolution can amend the plan, unless the board has delegated that authority either in the plan document that it adopted, or in a separate delegation resolutions. That would preclude an employment agreement from being a plan amendment unless the board approved the employment contract, e.g. for the CEO.

We've seen this on occasion and have always taken the position that the employment agreement has no impact on the plan. We'll help them get to where they want to go if possible, with an actual amendment or creative ideas.

ERISA § 402(b)(3) commands: “Every employee benefit plan shall—provide a procedure for amending such plan, and for identifying the persons who have authority to amend the plan[.]” Employee-benefits lawyers understand that compound sentence to allow opportunities for widening or narrowing which people can amend a plan, and what kind of writing is valid or ineffective. A plan’s amendment provision could be broad, such as: “The Plan may be amended by anything that is the act of the Plan Sponsor.” Or narrow, such as: “Only a non-electronic written instrument signed by the Plan Sponsor’s Executive Vice President for Human Capital and witnessed by the Plan Sponsor’s Deputy General Counsel for Employee Benefits can amend the Plan.” Here’s a few of courts’ decisions: Horn v. Berdon, Inc. Defined Benefit Pension Plan, 938 F2d 125, 127, 13 Empl. Benefits Cas. (BL) 2492, 2493 (9th Cir. July 1, 1991) (“[T]there is no requirement that documents claimed to collectively form the employee benefit plan be formally labelled as such.”). Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73, 18 Empl. Benefits Cas. (BL) 2841 (Mar. 6, 1995) (Stating as little as “[t]he Company” may amend the plan is enough to meet ERISA § 402(b)(3)’s two requirements—that a plan “provide a procedure for amending [the] plan, and [a procedure] for identifying the persons who have authority to amend the plan[.]”). Cerasoli v. Xomed, Inc., 47 F. Supp. 2d 401 (W.D.N.Y. Apr. 30, 1999) (A written plan need not be a single, formal document.). Halbach v. Great-West Life & Annuity Ins. Co., 561 F.3d 872, 46 Empl. Benefits Cas. (BL) 2010 (8th Cir. Apr. 13, 2009) (A letter mailed to participants referred to a summary of material modifications. Those two writings formed an “instrument”. That instrument was sufficient to amend an employee-benefit plan.) Tatum v. R.J. Reynolds Tobacco Co., No. 1:02-cv-00373, 51 Empl. Benefits Cas. (BL) 2028, 2011 WL 2160893 (M.D.N.C. June 1, 2011) (An attempted amendment was void because it was not made according to the plan’s amendment procedure.), further proceedings on other grounds, No. 1:02CV00373, 61 Empl. Benefits Cas. (BL) 2860, Pens. Plan Guide (CCH) ¶ 24019B, 2016 WL 660902 (M.D.N.C. Feb. 18, 2016). To understand whether a writing beyond the thing called a “plan document” amends a plan, a starting point is to read the governing documents of the plan that might or might not have been amended.