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Catch-up contributions are not included in the ADP test, in other words, the participant's ADR is determined without regard to their catch-up contributions. Deferrals which are reclassified as catch-up due to exceeding the 402(g) limit (or another limit such as a plan-imposed limit) are not taken into account when determining the amount of a participant's excess contributions and would not be refunded. If a participant is eligible for catch-up and has not otherwise exhausted their catch-up limit, their excess contributions may be reclassified as catch-up, up to the available limit, rather than being distributed.

I went to school with SpongeBob and I don't think he would like that, but I can ask him at class reunion in three weeks. I understand your frustration but financial institutions are required by law to know and verify their customers. I would think the important matching up would be the name of the plan sponsor (not the plan name) with the name on the check/bank account. If I'm holding the assets for a plan sponsored by XYZ company, or John Smith, but accept deposits of funds coming from an account for MAGA company or Osama Been There, can't you see where that could be an issue unless such entity or person is also listed as a sponsor to the plan? And if the check writing account does not belong to a party to the plan then contributions shouldn't be coming from that account either. Some CPAs might play loose with those rules but they are not the ones forced to comply with all the government regulations designed to combat terrorism and money laundering. Change the plan sponsor or add participating sponsor to match the source of funds and move on. Moving to another financial institution should still see the same requirements.

You raise interesting points, WCC. The statute could, I think, be interpreted in the manner you set forth, but thankfully I think the DOL's position in their regulations is to make the 45-day period penalty free (at least for DOL) if the IQPA is filed before the end of the 45-day period. See 29 C.F.R. 2560.502c-2(b)(3). They seem to pretty clearly reject that interpretation of the statute. As for the above question, I have struggled with that myself in the abstract, but I don't prepare 5500's and have thought that ignorance is bliss on that one.

For a governmental § 457(b) plan, distributions typically are processed using some combination of services of a trustee, custodian, or insurer and the recordkeeper. For a nongovernmental tax-exempt organization’s unfunded § 457(b) or § 457(f) plan, some employers process deferred compensation through the employer’s payroll function to support Form W-2 wage reporting and withholding. Others process deferred compensation with an investment or service provider that offers needed wage reporting and withholding services. The employer would check carefully its investment and service contracts.

Agree that there does appear to be inconsistency between the 6088 instructions and the Rev Proc, but that section of the RP then goes on to reference filing per the 6088 instructions, which do call for the 6088 for a collectively bargained DBP. The primary (sole?) purpose of the form is for IRS to monitor accrued benefits versus 415 limits, to which cb'd plans are subject, so it makes sense that a 6088 would be required.

Once you file timely (without the audit), the filing is deficient not delinquent; therefore DFVCP is no longer an option. At least that is how an EBSA agent explained it to me a while back. Curious if everyone agrees. Maybe the IRS is catching on and sent this letter quickly knowing they can't remedy this via DFVCP and are now subject to IRS penalties??

Filing the 5500 without the audit and just attaching the coming soon letter has always bothered me because of this statement on page one: Caution: A penalty for the late or incomplete filing of this return/report will be assessed unless reasonable cause is established. 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. (bolding is my doing). When your clients file without the audit, are they leaving Schedule H part III blank? Does the IRS and/or DOL not care about this statement? Or is everyone who files late relying on "reasonable cause" (which I doubt is established in most cases). Or does this statement have nothing to do with the attachment? Thanks for your help. I have just never understood how that statement relates to knowingly filing an incomplete form.

FWIW, I have talked to a lot of auditors in October, and none had seen the type of scenario that Austin brought up in the other thread. I agree, guidance is clear that even after IRS issues a penalty for late filing, you can avoid the penalty by filing DFVCP. Personally, that's how I think late audits should be corrected. The practice of attaching the audit coming soon letter has become so pervasive that I'm not seeing much urgency from auditor's anymore. They used to push and push once you are within a few weeks of the filing deadline, but now many of the auditors will just ask us to attach an audit coming soon letter.

If the plan requires it, you have to do it. The plan document will outline what refunds to do for a 415 excess.

TPA pricing structure might have some influence on the plan sponsor's choice. Consider carefully.

From a participant perspective, one advantage to a pay period deposit is the benefit of dollar cost averaging. The best possible scenario for a participant is a document written with an annual match but the contribution is funded per pay period (so you get both a true up and dollar cost averaging). A plan administrator may feel that an annual match funded once per year is better due to the reason's Bird provided (to which I agree).

My remarks are colored by the fact that we (a TPA firm) work in the micro plan market. My worldview is that other people - the plan sponsor, the payroll company - are going to screw things up. If you do calcs each payroll (and I am assuming the plan says this - you can have annual calcs but still make estimated deposits each payroll) you are relying on someone else to make the calcs (I hope the TPA isn't expected to do that). That's "easier" for us in theory, but prone to mistakes (that no one will ever know about, but I digress). It can also lead to unhappiness for those folks who front-load their contributions. Using annual comp is what we're used to and prefer. If someone asks how their match is calc'd, it's easy to show how it is done. If it is done by payroll you just shrug. If matches are deposited each payroll but the plan calc is annual, then yes you have true-ups. That seems fairest to me but may not be convenient. In the large plan market, and I guess some small plans, the idea is to more-or-less pay people out the minute they walk out the door, and the only way to do that is to do the calcs on a payroll basis.

I think you're making a big professional mistake if you don't reconsider Bill Presson's comments and communicate same to your client, and quickly.