Leaderboard

For distributions, the stability period can be the plan year, calendar year, plan quarter, calendar quarter, or calendar month containing the distribution date. The applicable interest rate can be determined as of the 1st, 2nd, 3rd, 4th or 5th month preceding the stability period, or may be an average of interest rates during those months. See 1.417(e)-1(d)(4). For funding, the segment rates are the ones published for the applicable month, which is the month containing the valuation date. However the plan sponsor may elect an alternative applicable month of one of the 4 months preceding the month containing the valuation date. The plan sponsor may also elect to use the corporate bond yield curve instead of the segment rates. Once an election is made, it may only be changed or revoked with IRS approval. See 1.430(h)(2)-1(e).

From the point of view of recordkeeping, treating the amounts posted in the system as pre-tax and accounting for the correction as if an in-plan Roth rollover occurred is creative and gets the plan accounting close to what should have happened, but consider some of the other potential implications of of this approach. The impact on the personal taxes for each individual could vary significantly. The amount of Roth deferral reported as taxable on a W-2 could increase an individual's marginal tax rate for the year for which the income is reported which would result in the individual overpaying taxes had the error not occurred. The amount of Roth deferral not reported as taxable could decrease and individual's marginal tax rate resulting in a larger amount of unpaid taxes. If a correction happens to involve a plan fiduciary, company executive or HCE and the correction resulted in less taxes than should have been paid, then that individual's correction and the plan would be looked upon unfavorably by the regulators. This could expose the individuals involved and the plan to more serious issues tied to fiduciary responsibility, to nondiscrimination or to tax avoidance. Conceivably, the plan may want to try to characterize the correction as an Eligible Inadvertent Failure. However, the EIF rules generally are designed to encourage self-correction, but they are not designed to allow a plan to make up its own correction method. Given that the IRS has a prescribed correction, it makes sense to follow it. A mistake happened. Own it, follow the rules, fix it, take steps to prevent it from happening again, and know steps were taken to protect the plan and the individual's involved.

In addition to the standard options provided by the IRS website, what about having the plan issue 1099-R showing the amounts (base amounts) as taxable? as an in-plan Roth conversion Then the recordkeeper also recodes the earnings as Roth as a corrective actions. Advantages: The participant's tax situation is pretty much what it would have been The plan is the position it would have been no need to redo any W-2s. Disadvantages Tax returns might need to be redone depending on what year the 1099-Rs are for it isn't quite the same method the IRS provides

If we have an option to force these balances out, then that's a better play than hoping to keep updated information on two never-employees. The document provider said that we can treat "beneficiaries" as "participants" in this instance and force them out. I guess that gives the plan sponsor something to stand on.

Exactly what you pointed out - the basic plan document says that a participant can be forced out... but doesn't say anything about a beneficiary getting treated the same. However... this is the definition of "participant": Hmmm. Seems that I can treat the unpaid beneficiaries ass participants for this purpose... ?

My point was this: If, instead of getting the plan administrator’s signatures each year, a service provider were allowed to rely on a standing-instruction authority that continues indefinitely until revoked, a service provider might lack records to prove that the plan’s administrator had read and approved each year’s report. Under ERISA § 3(21)(A)(iii), “a person is a fiduciary with respect to a plan to the extent . . . [the person] has any discretionary authority or discretionary responsibility in the administration of such plan.” Many interpretations of ERISA § 3(21) look past formal labels and consider whether a service provider had or used discretion. Even compiling a Form 5500 report might involve some arguably discretionary choices about how information is reported. If there were no record that the plan’s administrator reviewed and approved a particular year’s Form 5500 report and the available evidence suggests the TPA compiled the Form 5500 report, I can imagine an argument that the TPA was the plan’s fiduciary to the extent of its discretion had or used for that reporting. While I see that a standing-instruction authority is possible, a cautious service provider might prefer a showing that the plan’s administrator granted authority to file the particular year’s report. Consider, an email or fax (perhaps one that sends the manually signed Form 5500 page), if it includes the authorizing person’s name, can be an electronic record, and even an electronic signature. 15 U.S.C. § 7006. This is not advice to anyone.

Yes, the PCORI fee applies to retiree-only HRAs. Although other excepted benefits are exempt from PCORI, retiree-only plans do not enjoy the exemption. https://www.federalregister.gov/documents/2012/12/06/2012-29325/fees-on-health-insurance-policies-and-self-insured-plans-for-the-patient-centered-outcomes-research II. Retiree Coverage and Retiree-Only Plans As noted in the preamble to the proposed regulations, sections 4375 and 4376 may apply to a retiree-only plan because, although group health plans that have fewer than two participants who are current employees (such as retiree-only plans) are excluded from the requirements of chapter 100 (setting forth requirements applicable to group health plans such as portability, nondiscrimination, and market reform requirements), this exclusion does not apply to sections 4375 and 4376 because these sections are in chapter 34. In addition, section 4376(c)(2)(A) states explicitly that an applicable self-insured health plan includes a plan established or maintained by one or more employers for the benefit of their employees or former employees. Some commentators requested that the final regulations exempt from the PCORI fee retiree coverage on public policy grounds, but generally agreed that a retiree-only insured plan or retiree coverage under an applicable self-insured health plan may be subject to the PCORI fee. Consistent with the statutory language, the final regulations apply the PCORI fee to specified health insurance policies or applicable self-insured health plans that provide accident and health coverage to retirees, including retiree-only policies and plans.

We used to use Reliance for a long time (going back to when it was Corbel) and exclusively used the volume submitter IDP format. If we were amending a provision that was another standard checklist item, I would find a plan that had that provision and use that language to create the amendment, otherwise it was a manual crafting of the required language. We also had many plans with language modifications that were always fun to deal with and required IRS submissions. My description is for our actuarial DB/CB plan practice only. We have been off Relius for maybe 10 years now. Currently, we use FT William which our DC plan practice had migrated to earlier. The DC side uses the adoption agreement format, the DB side uses the adoption agreement format for most plans and the IDP format for others, especially those with modifications. All are pre-approved and licensed under our name as sponsor. Adoption agreements are a snap to amend, for IDP format I can change my checklist item(s) and generate another document to pull the new language into an amendment - not very difficult. If changes are extensive then we just make it a restatement. If changes are not standard (checklist) provisions then your manually crafting amendment language (and likely taking the plan out of pre-approved reliance), hopefully not a frequent occurrence.