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Peter, there are definitely a lot of open questions. Section 305 does seem crystal clear on removing the three-year limit for significant errors. I.e., if a plan administrator discovered a significant error going back 10 years for which the correction is clear under the IRS's current guidance, then the employer can self-correct now. I think Congress also tells the IRS in Section 305 (although this is not as clear) that it wants IRS to publish principles-based correction guidance, perhaps so that if an error is not precisely included in any of the prefabricated corrections, an employer could proceed anyway with SCP by applying the newly articulatyed general principles. Whether the IRS will give this part of Section 305 an expansive interpretation, e.g. providing general guidance regarding what to do about missing data or documents, for example, is uncertain. Regarding the requirement of having established procedures, as well as the issue of whether having a VCP compliance letter is important for deal work, I think this may make attorney involvement in correction even more attractive than it has been in the past. An attorney can advise, or even give an opinion, in some cases, that self-correction "should" be available, and that a particular correction "should" fix the error. And that advice will be protected by attorney-client privilege. And unless in such a case the accountants (in the case of a large plan) can require the plan administrator to inform them of counsel's opinion (and I don't think they can) and the fact that they applied SCP, the advice and correction could remain secret. Moreover, unless the acquirer in a deal specifically asks whether the plan has used SCP in, say, the preceding 5 years (as opposed to what I typically see, which is just that the plan sponsor has no reason to think that the plan has failed a document or operational qualification requirement), maybe the employer is good to go. I'm not saying this is the most conservative course or that it is what all, or even most, employers will want to do, but it does seem to me to be a possible course of action under Section 305. But to go down this route the employer would definitely need a lawyer to be in charge and have all the experts working for the lawyer, as often do now anyway. Finally, regarding your point, AKowalski, I totally agree that a broad interpretation of Section 305 really puts the ball over in the DOL's court, if they devote the resources to dealing with it. I have always thought that EPCRS should work the way Section 305 now seems to require, for two reasons. First, the penalty of disqualification is inappropriate in many ways (that I will not go into here) for the types of errors that can be corrected under SCP as broadened by Section 305, even if one gives Section 305 its broadest possible effect. Second, in difficult cases, VCP's can involve a lot of practical compromise between the plan sponsor and the IRS, and because the VCP compliance agreement is confidential, neither the DOL nor the participants are informed of what the compromises were. And the IRS works solely from correspondence, and may not have seen all of the employer's cards, even though the employer may have been able to provide the penalties of perjury representation without risk.

Actually, it has to - contractors aren't employees.

Doesn't really matter how it sounds. What matters is how it impacts the group. Are you generally restricting the compensation of HCEs, or NHCEs. You would need to annually demonstrate that the definition is non-discriminatory.

Solutions: Parent Company or Company A upon sale, issue a Plan Termination Notice with Model Exchange Notice - English and Spanish. If Company B is only offering a MEC plan, not a Minimum Value Coverage qualified plan (MVP), then Company A employees are eligible for a special enrollment period (60 days from loss of MVP Coverage) for Individual ACA Marketplace Coverage, with possible Advanced Premium Tax Credit and Cost Share Reduction Health Plan coverage. Four out of five enrolls pay under $20 per month and those under 250% of federal poverty are eligible for Cost Share Reduction Health Plan coverage. The model notices are also available in Spanish and MS Word format at http://www.dol.gov/ebsa/healthreform/. Company B is also required to offer the Model Exchange Notice: Employers must provide the Exchange notice to new hires within 14 days of the employee's start date. Best practice: Include the Exchange Notice as part of the standard new hire materials. Company A employees also have a year round opportunity to enroll in a Medical Share Program - two are advertised nationally - Medi-Share and Christian Health Ministries, see exclusions and enrollment requirements. Add a Prescription Assistance Program option - see attached as many of the Medical Share Programs do not cover Prescription Drugs. Many large agencies use Rx Help Centers and group billing is an option. Medi-Share® - Official Website - Medi-Share® Get Your Pricing Ad·https://www.medishare.com/ Christian Healthcare Ministries | Healthcare cost sharing ministry https://www.chministries.org Christian Healthcare Ministries is a faith-based healthcare cost solution for Christians in all 50 states and around the world. Prescription Assistance and Discount Programs.docx

As far as correcting it, you would ask him for the money back (with earnings). If he pays it back, put it back in his account; if he doesn't, (assuming the money came out of his account and not someone else's by mistake) the plan sponsor doesn't have to put the overpayment back in. If it's an insignificant failure and it was inadvertent (not on purpose), you can self-correct it (even if under examination). Not sure if IRS will believe it's inadvertent if the plan administrator himself got the extra cash (in which case an audit cap sanction may be assessed).

True, wasn't thinking about that, and I don't think a Jekyll and Hyde defense works here.

Nah, once you blow past 20,500 any deferrals start filling that catchup bucket.

Belgarath, you’re right that a question of this kind (if not solved by recognizing that the pattern of the visa workers’ employment will make an exclusion practically unnecessary) involves law beyond what’s comfortable for most retirement-plans practitioners, even really smart ones like you. You spotted the issue: An exclusion that fits ERISA participation rules and comports with tax law coverage and nondiscrimination rules might nonetheless violate one or more Federal or State civil-rights or employment laws. Further, an incautious exclusion could violate the conditions of a visa or work permit, or violate other immigration law. The next time you see a question of this kind, tell the employer you can help much more efficiently if you know which visa or work-permit program the employer relies on. For the employment law firms I’m counsel to, we’ve been able to design an exclusion or otherwise solve these needs in as little as one tenth of an hour if we know which program the employer relies on. And you too could solve one if you can look up the terms of the program involved. CuseFan is right that it often fits to specify an exclusion by the name of the immigration program under which the employer is permitted to hire the workers otherwise ineligible to work in the United States.

Internal Revenue Code of 1986 § 401(k)(14)(C) allows relying on a claimant’s certification “that the distribution is on account of a financial need of a type which is deemed in regulations prescribed by the Secretary [of the Treasury] to be an immediate and heavy financial need, and not in excess of the amount required to satisfy such financial need, and that the employee has no alternative means reasonably available to satisfy such financial need.” SECURE 2.0 § 312 [attached]. If the hypo’s mention of a facts-and-circumstances hardship provision refers to an evaluation beyond the seven needs 26 C.F.R. § 1.401(k)-1(d)(3)(ii)(B) deems “an immediate and heavy financial need”, § 401(k)(14)(C)’s tolerance for relying on a claimant’s certification does not apply. Further, even if the plan allows only deemed hardships and adopts § 401(k)(14)(C)’s self-certification regime, one doubts § 401(k)(14)(C) would protect ostensible reliance if the human who acts for the plan’s administrator is the human who submitted the claim and its certification. In those circumstances, if the certification was false the Internal Revenue Service might plausibly assert that the plan’s administrator “ha[d] actual knowledge to the contrary of the employee’s certification[.]”

Any reasonable classification is fine from the plan perspective but I can see your general labor law discrimination concerns. I would find out the specific name of the program and use that as the exclusion. Even if it only includes one nationality I don't think you have an issue. If these employees become permanent and "graduate" from that program, then they join the eligible class and would likely participate immediately based on their prior service which could not be discounted.

To expand on Bri, Catch-ups don't count toward any applicable limit (which includes 415(c)) You still need to have compensation to make a 401(k) deferred contribution, that is you can't defer compensation you don't earn, but you can go over the 100% of pay limit or the 415 dollar limit if employer contributions push you over the regular limit but not past the catch-up limit plus the regular limit assuming 401(k) contributions are at least equal to the catch-up limit, the participant is old enough to qualify for catch-up, and they plan allows catch-ups.

Yeah that's a bummer. Happens all the time unfortuantley. The spouse's general purpose health FSA is unfortunately disqualifying coverage for both the spouse and you. Spending the health FSA down to zero doesn't change that. The health FSA will remain disqualifying coverage for both you and the spouse for the full plan year. The only exception would be if the spouse revokes the health FSA (permitted election change event needed) or terminates (and doesn't elect COBRA for the health FSA)--in which case you could prospectively start HSA contributions on a prorated limit basis (HSA eligibility is determined as of the first day of each calendar month). Here's an overview: https://www.newfront.com/blog/hsa-interaction-health-fsa-2 I recommend notifying your employer not to make the ER HSA contribution because you are not HSA-eligible. You can revoke your EE HSA contribution election for any reason (you don't need a permitted election change event), so you'll also want to do that, too. Here's an overview: https://www.newfront.com/blog/hsa-contribution-election-changes-2 If you still have HSA contributions deposited before they can be stopped, I recommend working with the HSA custodian to take a corrective distribution. That will avoid a 6% excise tax that would otherwise apply for the excess contribution. Here's an overview: https://www.newfront.com/blog/correcting-excess-hsa-contributions Slide summary: 2023 Newfront Go All the Way with HSA Guide

The 6,500 in catchups don't count towards the 415(c) annual additions limit. So that total is really just the 20,500 plus 1,100.

The SMM requirement here is 60 days after adoption of the material reduction in health benefit. More details: https://www.newfront.com/blog/distribution-timing-rules-spds-smm-2 The SBC rules do require 60 days advance notice of a material modification, but that's generally not interpreted to include plan terminations. Really you're looking at a generalized fiduciary obligation here to disclose, which is going to be a gray area. But if the deal hasn't isn't public, I don't see how you could disclose even if you wanted to. 29 CFR §2520.104b-3: (d) Special rule for group health plans. (1) General. Except as provided in paragraph (d)(2) of this section, the administrator of a group health plan, as defined in section 733(a)(1) of the Act, shall furnish to each participant covered under the plan a summary, written in a manner calculated to be understood by the average plan participant, of any modification to the plan or change in the information required to be included in the summary plan description, within the meaning of paragraph (a) of this section, that is a material reduction in covered services or benefits not later than 60 days after the date of adoption of the modification or change. Slide summary: 2023 Newfront ERISA for Employers Guide

You'll want to read up on break in service rules, and rule of parity. Depending on the circumstance rehired employees can be made to resatisfy service for eligibility, and prior service disregarded. Your plan document (look at the basic plan document too if you have one) likely addresses that in detail.

"However, a corrective allocation is not required to be adjusted for losses. Accordingly, corrective allocations must include gains and may be adjusted for losses." So someone has to make a decision on what to do. i would document my findings and process with no adjustment. Or I would use the VFCP calculator for earnings and be done. Chances are someone has another opinion

Yes In theory. In practice you may have some trouble with payroll taxes.