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If you’re asking what the plan provides, Read (and interpret) The Fabulous Document. A typical IRS-preapproved document partially paraphrases and refers to the tax-law rules, including 26 C.F.R. § 1.401(a)(9)-5. https://www.ecfr.gov/current/title-26/chapter-I/subchapter-A/part-1/subject-group-ECFR6f8c3724b50e44d/section-1.401(a)(9)-5 That rule looks to “the account balance as of the last valuation date in the calendar year immediately preceding that distribution calendar year[.]” Q&A-3(a). If the plan has valuation dates quarter-yearly or more often, it seems likely a December-close date fits that description.

Given that the April 1 and December 31 dates in Code Section 401(a)(9) don't depend on the plan year, I would be much surprised if any plan document provided for different dates merely because the plan year is not the calendar year.

Pooled non-calendar year profit sharing plans are often valued annually on the last day of the plan year. The 401(a)(9) regs address this. You take the balance on the valuation date, add in in contributions from the valuation date to 12/31, subtract distributions from the valuation date to 12/31 and that is your adjusted 12/31 balance for figuring out next year's RMD.

I don't see the quoted language in the preamble to the proposed RMD regulations, but here's an excerpt from a comment letter from the SPARK Institute summarizing the issue as I understand it: Application of 10-Year Rule to Non-Governmental 457(b) Plans. There has been some confusion as to whether or not the SECURE Act’s 10-year rule applies to section 457(b) plans of non-governmental entities. The reason for this confusion is that Code section 401(a)(9)(H)(vi) states: “For purposes of applying the provisions of this subparagraph in determining amounts required to be distributed pursuant to this paragraph, all eligible retirement plans (as defined in section 402(c)(8)(B), other than a defined benefit plan described in clause (iv) or (v) thereof or a qualified trust which is a part of a defined benefit plan) shall be treated as a defined contribution plan.” The cross reference to Code section 402(c)(8)(B) suggests that, perhaps, section 457(b) plans of non-governmental entities would not be treated as a defined contribution plan, and thus may not be subject to the 10-year rule. We believe most have read the quoted language above as not exclusive, that is, it confirms that IRAs are treated as defined contribution plans, but does not serve to exclude non-governmental 457(b) plans. Such plans are subject to the 401(a)(9) rules, and most 457(b) plans are defined contribution plans, as that term is usually understood. The Proposal does not address this question directly, except to confirm that all 457(b) plans are subject to the RMD rules under Code section 457(d), and laying out a set of rules that apply to “defined contribution plans” in the -5 portion of the regulations. In Footnote 1 of the preamble, the Service references Code section 402(c)(8)(B)(iv) and (v), but does not provide further guidance on non-governmental 457(b) plans. In any event, we recommend that the Service confirm in the final regulation that all section 457(b) plans, except those that are defined benefit plans, are treated as defined contribution plans for purposes of the SECURE Act changes described in Code section 401(a)(9)(H), which includes the 10-year rule.

What does the plan document say? Does the plan have a QDRO procedure? If so, what does it say? If none of the above questions take you directly to the answer to your question what is the legal justification to say no to a person who is otherwise legally entitled to a distribution? I know I am answering a question with questions but this is the process you need to go through to get to the answer in my mind. If the plan has a document that tells you what to do or if it doesn't I really don't see a legal way to stop the payment. I know there are people who come around this board who disagree with this kind of position. If you search this board you can find many threads were this question is debated.

DC math is never close.

The Plan Administrator must pay the money in the account the children pursuant to its own rules saying that the money goes to the children. Kari E. Kennedy, Executrix v. Plan Administrator for Dupont Savings and Investment Plan, 129 S.Ct. 865, 555 U.S. 285 (2009). But read Andochick v. Byrd, 709 F.3d 296 (2013) dealing with post-distribution recovery by an intended beneficiary. However, under the Pension Protection Act of 2006 it is possible for the former spouse to return to the state court and seek a posthumous QDRO awarding the PSP proceed to her. But a promise in an Agreement to name your former spouse as the beneficiary in not the equivalent to a transfer of retirement benefits to the former spouse that is enforceable under ERISA by use of a QDRO, so I have my doubts that the QDRO is an appropriate remedy. A QDRO would effectively change the nature of the language of the Agreement. BUT the children were never the intended beneficiaries of the account at any time. The former spouse was the intended beneficiary and since she cannot sue the Plan, she would have to sue her children as unintended beneficiaries under Andochick. Perhaps she needs to sue her attorney for malpractice. A very thorough explanation of this entire issue is set forth at Hennig v. DIDYK, Tex: Court of Appeals, 5th Dist., No. 05-13-00656-CV, (2014) - https://law.justia.com/cases/texas/fifth-court-of-appeals/2014/05-13-00656-cv.html And the Plan Administrator should do nothing, or at the very most file an interpleader action and ask the court what to do with the money, and let the court figure it out. David

Another alternative to look at is simply to leave the money in the plan, but determine that the employee is not entitled to it. The money could then be offset against the employer's next contribution obligation. So long as there are other employees entitled to receive contributions, this would have the same financial effect as giving the money back to the employer, without the problematic issues that come up when you actually take money out of the plan.

And if the plan was first in existence no earlier than January 1 of the 10th calendar year preceding the year in which the application is filed, you may be exempt from paying a user fee if you meet the eligible employer requirements under Exemption From User Fee in the instructions to the Form 8717.

That depends on the plan document. If you have per payroll match you are violating the terms of the Plan document. If your plan matches on annual compensation or you have a true up you have no problem with what you are doing; I assume you are doing it for all similarly situated employees and not just a specific HCE who maxed out.

Those penalties were magnified so additional revenue could be manufactured, real or imagined, to offset the cost of SECURE (or maybe CARES). I wonder if the government tracks the actual revenue raised from these changes during the 10-year budget period versus their projections used to get the law passed. Like pension contribution relief, which was supposed to reduce pension contributions and deductions to increase tax revenue. Who is most likely to cut back on their pension contributions? Companies losing money (so paying little or no taxes) that don't need deductions and tax-exempt NFPs that don't pay taxes - so all that did was further weaken already under funded plans which further stressed the PBGC and likely raised very little of the projected additional revenue. Sorry, didn't mean to go off on a rant, talk about tangents, or as my wife and I say to each other in such instance - squirrel!

and then you can all chant "here comes the Judge!"

There is not a deadline/due date. If an IDP has never received a D-letter then it is eligible to apply for one at any time. However, submitting within a certain time after a new plan is adopted can afford the sponsor a remedial amendment period to correct any deficiencies without penalty. If a plan waits 3, 4, or 5 years, for example, and then submits and there is a deficiency beyond the applicable provision's RAP (or whatever the current terminology), then I think you're looking at audit CAP.

If the zip code of the plan sponsor is not in a designated disaster area, it will be denied or questioned.

That's a tough call. I think it would depend on whether the designated signer is a preference and someone else could have signed as Plan Admin. 866-562-5227 is the IRS number for affected taxpayers outside of the disaster area. You can call it as a service provider as well.

My recollection is that years ago if the plan was considered a "multiple-employer plan (other)" you had to use plan number 333. That requirement apparently has been dropped, but the current instructions from Form 5500 state..."If Part II, line 8a is completed and 333 (or a higher number in a sequence beginning with 333) was previously assigned to the plan, that number may be entered on line 1b."

A governmental § 457(b) plan and its trust or trust substitute include provisions designed to meet Internal Revenue Code of 1986 § 457(b)(6), which require that “all assets and income of the plan . . . are held in trust for the exclusive benefit of participants and their beneficiaries.” Analogizing to a recognized exception from ERISA’s exclusive-purpose command and Internal Revenue Code § 401(a)’s exclusive-benefit condition, some governmental § 457(b) plans include a provision for returning a contribution an employer made by a mistake of fact. ERISA allows “[in the case of a contribution . . . – if such contribution or payment is made by an employer to a plan (other than a multiemployer plan) by a mistake of fact, paragraph (1) [about noninurement and exclusive-purpose commands] shall not prohibit the return of such contribution to the employer within one year after the payment of the contribution[.]” ERISA § 403(c)(2)(A)(i) [29 U.S.C. § 1103(c)] http://uscode.house.gov/view.xhtml?req=(title:29%20section:1103%20edition:prelim)%20OR%20(granuleid:USC-prelim-title29-section1103)&f=treesort&edition=prelim&num=0&jumpTo=true See also Internal Revenue Service Revenue Ruling 91-4, 1991-1 C.B. 57. http://www.legalbitstream.com/scripts/isyswebext.dll?op=get&uri=/isysquery/irl466b/1/doc. If the plan has such a provision, the plan’s sponsor and administrator might want its lawyer’s advice about whether the circumstances fit the plan’s provision. JOH, if you want BenefitsLink neighbors’ help about whether the employer’s error fits tax law’s concept of a mistake of fact, you might describe in more detail what mistake caused the employer to pay a contribution the plan did not provide. For example, did the employer pay over the contribution with someone within the employer not knowing that the employee’s classification changed from one that gets an alternative-to-FICA contribution to one that does not get that contribution?

I'm one of those who takes the position that this probably isn't a Section 125 eligibility test violation. But accepting the premise that it does violate the rules, I read the regs to say that all HCEs would have all cafeteria plan pre-tax contributions for the full plan year recharacterized as taxable income. I think there would likely be a standard three-year statute of limitations for going back to prior years and issuing corrected Forms W-2c. Prop. Treas. Reg. §1.125-7(m): (m) Tax treatment of benefits in a cafeteria plan. (1) Nondiscriminatory cafeteria plan. A participant in a nondiscriminatory cafeteria plan (including a highly compensated participant or key employee) who elects qualified benefits is not treated as having received taxable benefits offered through the plan, and thus the qualified benefits elected by the employee are not includible in the employee's gross income merely because of the availability of taxable benefits. But see paragraph (j) in §1.125-1 on nondiscrimination rules for sections 79(d), 105(h), 129(d), and 137(c)(2), and limitations on exclusion. (2) Discriminatory cafeteria plan. A highly compensated participant or key employee participating in a discriminatory cafeteria plan must include in gross income (in the participant's taxable year within which ends the plan year with respect to which an election was or could have been made) the value of the taxable benefit with the greatest value that the employee could have elected to receive, even if the employee elects to receive only the nontaxable benefits offered.

The final rule for PPP registration simply says to provide EIN and plan number. A quick search of PPP registrations show plenty of 001, 002, 003, etc. None starting with a 3.

Did you mean Hurricane Ian? NC is a declared disaster area for Ian. "Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief." If your TPA business is in NC, the answer is almost certainly yes. For employees working from NC but the TPA is in a different state, it gets a little tricky. I could see a situation where the NC employee had certain records that the non-NC firm cant access after the storm as qualifying for relief. In my situation at my prior firm, we had several offices throughout the state. A disaster hit the area where our main office was located, but not the other offices. Because a lot of the information needed was at the main office, this interrupted work from the other offices. We used relief for clients of all offices with no issue from the IRS. The matched the Zipcode of the main office to a county qualifying for relief.

5500-EZ---Page 5, instructions for line 1b is one place where it's discussed--I'm sure other IRS instructions have this content.

If the employee was a participant on 1/1/21, then SF

I could be wrong but my understanding is Pension Plans are supposed to start with 001 and Welfare Plans supposed to start with 501 and add 1 each time the employer adds a new plan. But I don't know if that's a hard fast rule or if there is any written guidance. That is can you assign any 3 digit number that hasn't been used by the employer before? I don't know. I do know if you go off convention the chance of the IRS asking you why and where the plans with a lower number are seem to increase. But I honestly don't think I've ever seen IRS written guidance on the where there convention comes from and if it's required that you follow it. Maybe someone else has something more on point.

I'll address your second question first. With respect to coverage testing, Treas. Reg. 1.410(b)-8(a) provides that plans may satisfy the coverage test using a daily testing option, a quarterly testing option, or an annual testing option. In practice, most plans will satisfy coverage using the annual testing option, but the other options may provide better results in certain circumstances. For nondiscrimination, Treas. Reg. 1.401(a)(4)-1(c)(3) provides that the nondiscrimination requirements will generally be met on the basis of the plan year. For the definition of compensation used to apply the various tests, you have to look at the test in question. For the ADP test, for example, compensation is defined in Treas. Reg. 1.401(k)-6, to mean compensation as defined in 414(s) and 1.414(s)-1, measured over either the plan year or calendar year, or the portion of the year in which the employee was eligible. For the top heavy minimum, however, the definition of compensation - as per Treas. Reg. 1.416-1 M-7 and T-21 - is the definition in 1.415(c)-2 and you do not get the option to measure it over just the period of the year in which the employee was an eligible participant. For HCE determination, Treas. Reg. 1.414(q)-1T Q&A-13 references IRC 415(c)(3). In general, the term "compensation" doesn't mean the employee's stated rate of pay, but rather the amount actually paid by the employer to the employee. A popular definition of compensation is the amount shown in box 1 of the employee's W-2, plus deferrals. However, compensation is a complex topic and this is only scratching the surface of it.

That should be the case, presuming nothing behind the scenes to interfere with the usual exceptions.

Sure, but he'll want an EIN for the venture rather than using the SSN. As for why, you get the extra 20,500 in deferrals on top of the same employer 25% limitation a SEP would have.

Agreed. It also tends to defeat the advantage of a prevailing wage provision in the plan because, if it's a CODA, the amounts are subject to all the FICA, etc, labor costs.

A few paths each sponsor/administrator might want its lawyer’s advice on: Many IRS-preapproved documents and other documents using an adoption-agreement format include texts about what provision results when an adoption agreement does not specify the user’s choice. A sponsor/administrator might look for provisions of that kind before assuming that what was administered is what the plan provides. If there is an ambiguity about whether the statute calls for a restated summary plan description or a summary of material modifications, one might interpret the ambiguity considering Congress’s purpose that a participant may look to the summary to know those of the plan’s provisions that ought to be summarized. And one might ask this rhetorical question: Could a participant—without asking the employer/administrator, and just by reading the SPD/SMM—know the plan’s service-counting provision (and check whether the plan’s administrator applied it)? If furnishing an SPD or SMM incurs almost no incremental expense, an administrator might weight its decision-making in favor of communication. Conversely, if the statute and rules for an SPD/SMM do not clearly require the update and a nontrivial expense would burden participants’, beneficiaries’, and alternate payees’ accounts, a fiduciary might consider that circumstance in evaluating when to furnish the next restated SPD or SMM.

It depends on the event. If it's a HIPAA special enrollment event, the employer will have to offer the ability to change medical plan options. Otherwise that's not required (and typically not offered). The following events qualify as HIPAA special enrollment events: Loss of eligibility for group health coverage or individual health insurance coverage; Loss of Medicaid/CHIP eligibility or becoming eligible for a state premium assistance subsidy under Medicaid/CHIP; and Acquisition of a new spouse or dependent by marriage, birth, adoption, or placement for adoption. Here's a quick summary and an example confirming from the regs: https://www.newfront.com/blog/hipaa-special-enrollment-events-2 HIPAA Special Enrollment Events: Right to Change Plan Options Upon experiencing a HIPAA special enrollment event, the plan is required to allow the employee to select any medical benefit package under the plan (e.g., move from Aetna to Blue Shield, Anthem to Kaiser, HMO Low to PPO High, etc.). ... 29 CFR § 2590.701-6(b): Example (2) (i) Facts. Individual D works for Employer X. X maintains a group health plan with two benefit packages–an HMO option and an indemnity option. Self-only and family coverage are available under both options. D enrolls for self-only coverage in the HMO option. Then, a child, E, is placed for adoption with D. Within 30 days of the placement of E for adoption, D requests enrollment for D and E under the plan’s indemnity option. (ii) Conclusion. In this Example 2, D and E satisfy the conditions for special enrollment under paragraphs (b)(2)(v) and (b)(3) of this section. Therefore, the plan must allow D and E to enroll in the indemnity coverage, effective as of the date of the placement for adoption. Here's a short overview from the DOL's FAQ piece: https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/faqs/hipaa-consumer.pdf What coverage will I get when I take advantage of a special enrollment opportunity? Special enrollees must be offered the same benefits that would be available if you are enrolling for the first time. Special enrollees cannot be required to pay more for the same coverage than other individuals who enrolled when first eligible for the plan. Here's a quick slide summary: Newfront Office Hours Webinar: Section 125 Cafeteria Plans

What type of safe harbor? Matching or Non-elective? I think you have some problems either way but your path to correction might be easier if you have Non-elective safe harbor. I'm not sure if this flies or if you need an EPCRS VCP submission but if they elected the 3% non-elective safe harbor you might be able to merge the existing 401(k) plan into the new 401(k) Plan and treat it as one 401(k) plan for testing, assuming both plans have the same eligibility and cover the same group of employees and you don't have any prohibited cutbacks in the the new document that conflict with the old. While not technically correct it would seem to have the same effect of amending the existing 401(k) Plan. If you put in Matching safe harbor and they had an existing 401(k) I think you have bigger problems as the old 401(k) would have had to be amended to be amended last year with notices given out timely for them to be a safe harbor matching for the current year. It's an odd set of facts I haven't seen before.

This is thinking strictly from the 1950's believing you're protecting the stay at home wife. What about the wife that has a decent job but an abusive home life. She wants to leave, but the only money she really has is in her 401(k). But the spousal consent requirement for any distribution or loan guarantees she can never access the funds to save herself because the husband would never agree. Perhaps consent requirements going away aren't "always to the detriment of those most in need..."