I haven't happened to run into this before, and wondered if others had, or if not, what your interpretation might be.

Employer improperly excluded a couple of participants from making deferrals. No problem fixing that. Question is, how you interpret Revenue Procedure 2013-12, Appendix A, .05(4). I would interpret this to be that the correction for an age 50+ employee who was excluded does not mean that you give them the "catch-up" correction IN ADDITION TO the "normal" correction. Rather the catch-up correction is only for someone who actually deferred, but was improperly prevented from utilizing the catch-up. The only example in Appendix B that addresses this talks about someone who deferred but was improperly excluded from utilizing the catch-up.

Thoughts?

After reading through Rev. Proc. 2013-12, which now adds 403(b) plans to the mix, it seems to me that the ability to correct an operational failure through retroactive amendment is subject to the full submission fee under Section 12, while the correction of a failure to timely adopt the 403(b) plan document itself is subject to a 50% reduction (at leat for a limited period). I'm just wondering if I'm reading this correctly.

We have a situation in which the plan document has always been in place (ERISA 403(b) plan), and was timely amended and restated to reflect the final 403(b) regulations. However, we failed to follow the terms of the plan with respect to the contribution sources available for loans. The only fix is to retroactively amend the plan to conform its terms to actual operation and, in our case, the fee would be $15,000.

Since 403(b) plans are new to this whole correction thing, I'm wondering if I'm missing something or if I've read the Rev. Proc. correctly. Thanks in advance!

To define an employer that might have enough full-time-equivalent employees that it might incur a 'play-or-pay' excise tax on not offering health coverage, Internal Revenue Code section 4980Hc(2)C(i) provides that "[a]ll persons treated as a single employer under subsection (b), c, (m), or (o) of section 414 ... shall be treated as [one] employer."

Imagine that there are six non-natural persons (a mix of S corporations, limited-liability companies, and limited partnerships) that are treated as one employer. None of these organizations uses a common paymaster or shares an EIN with any other. None of these organizations combines its Federal income tax return with any other. None of the five flow-through owners makes a personal income tax return with any other.

Together, the six organizations have 73 full-time employees. But none has more than 14 employees.

Corporation Alpha, which has nine employees, does not offer health coverage to anyone. (If it helps, organizations B, C, D, E, and F also don't offer health coverage to anyone.) Mary, an Alpha employee, gets a tax credit or cost-sharing reduction that subsidizes her Exchange-bought health insurance.

Imagine that the Exchange application that Mary completed asked her for her estimate of how many employees her employer has, and she answered what she knew - nine.

Unless the Internal Revenue Service has an amazing relational database, does the IRS lack a practical means to assess the excise tax in circumstances like these?

Am I just being stupid, or is there a gap in the Government's ability to enforce the 'play-or-pay' idea?

Can someone give me some guidance on what normally happens in an acquisition situation or when an employer moves their plan to another vendor and holds onto participant deferrals a little longer than the segregation rules allows. Is there leeway for these type of circumstances? I mean like a 5 day delay or so, nothing extreme.

Thanks!

Heads up, the Form 5500 Web Client does not currently support Internet Explorer version 7. I know they are fixing the inability to Print, but don't know if the other functions will work or not.

Plan has no eligiblity requirement for deferrals. Entry is date of hire. Plan excludes interns from participation. If regular full time employee becomes intern, are they still eligible to defer?

§1.409A-3(j)(4) allows for the acceleration of Plan payment to the extent necessary to comply with a domestic relations order. Let's say the document contains this acceleration provision but also contains the nonassignability provision below -- do you see a conflict? Or am I correct in thinking that the distinction lies between one provision referring to payment and the other provision referring to assignment? Your thoughts, please. Thank you.

Nonassignability. Neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage, or otherwise encumber, transfer, hypothecate, alienate, or convey in advance of actual receipt, the amounts, if any, payable hereunder, or any part hereof, which are, and all rights to, expressly declared to be unassignable and non-transferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure, attachment, garnishment, or sequestration for the payment of any debts, judgments, alimony, or separate maintenance owed by a Participant or any other person, be transferable by operation of law in the event of a Participant’s or any other person’s bankruptcy or insolvency, or be transferable to a spouse as a result of a property settlement or otherwise. If a Participant, Beneficiary, or successor in interest is adjudicated bankrupt or purports to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber transfer, hypothecate, alienate, or convey in advance of actual receipt, the amount, if any, payable hereunder, or any part thereof, the Plan Administrator, in its discretion, may cancel such distribution or payment (or any part thereof) to or for the benefit of such Participant, Beneficiary, or successor in interest in such manner as the Plan Administrator shall direct.

We seem to be running into more resistance from plan custodians as we're trying to assist our clients in transitioning from one platform to another. We're seeing refusals to issue checks to the successor custodian, outright refusal to wire funds to the successor custodian, required medallion guarantees, etc... It feels like simple trustee instruction isn't sufficiant anymore. Is anyone else seeing this? Maybe it's all just in my head...

Hi. We have an elective deferral only plan (no employer contributions). We have been investigating the possibility of changing the plan's definition of compensation to exclude certain types of compensation. Specifically, we want to exclude bonuses from compensation so that no elective deferrals come out of bonus payments.

My research has been inconclusive on this. Some of the information I have found suggests that this type of exclusion could violate the requirements of effective opportunity under the universal availability rule. This is based on the notion that such an exclusion could impact a participant's ability to make a full deferral up to the 402(g) limit. Other information I have read suggests that the above position is simply conservative and that such an exclusion does not violate the rule.

Does anyone have any thoughts on this? Have you researched this?

Thanks for any thoughts.

I Have a participant who received a RMD in error, due to a bad birth date. He cashed the check. We are asking for a return of the distribution, but I believe there is an interest calculation to include. Not sure of how to calculate the interest.

After several years in TPA and Bundled plan administration, working year over year doing the same testing, and other recurring responsibilities, etc., I'm now looking to elevate my knowledge in the areas of 401k Plan Design and Consulting, particularly in areas of Controlled Groups, Plan Documents, Conversions (protected benefits), Prohibited Transactions, ERISA, and or NonQualified Plans - I know it's a real 'grab bag.'

Can anyone make recommendations of any upcoming seminars, training resources, webinars, materials, etc. that cover the above areas, or what you might deem to be a "higher-level" area of retirement plan expertise? Can anyone identify areas that will be critical to be knowledgeable about in the near-term (e.g. fee disclosures, or??). Thanks in advance!

Plan started 10/1/2012.

401(k)

415 limit is 50,000*3/12 =12500

Do they get to take the catch up on top of the 12500 for a total of 18000?

Haven't had one of these short plan years in awhile and want to make sure they don't exceed the 415 limit .

Thanks

Pat

ok - I know short plan year vesting credits have been reviewed before.

This relates to anyone who is not yet a participant when the short plan year occurs. For example, off calendar plan PY ends 10/31/2012. I'm hired 01/01/2012. Short plan year is 11/01/12 - 12/31/2012. Let's say for argument sake that I worked 1000+ hours from Feb - Oct 2012 and with the plan year & entry date change I enter the plan as of 01/01/2013. Do I get the "extra" vesting credits that active participants realize for the overlap period of the short PY if I continue to work (and over 1000 hours each 12 mos)?

I believe that vesting credits/vesting periods are a separate issue from eligibility and that an employee can be earning vesting credits prior to participation (of course depending on the Plan Doc). Someone else has opined that they believe the short plan year has no effect on the vesting calcs for the person who was not yet a participant when the short plan year occured.

Has anyone on a Daily platform ventured to execute In-Plan Roth Transfers in Relius yet? Is there a recommended workaround until updates are posted? Can't figure out how to do the withholding and remit the taxes. Are you just waiting for the IRS to come out with guidance before doing anything?

Can an individual, age 74, take in in-service distribution from her 401(k) plan (plan allows)in January, 2013, via direct transfer to a new IRA, and then make a QCD to charity prior to Jan 31, 2013?

Participant is an owner of the Employer and trustee of PSP. Self-direction for all participants. This participant invested portions of his plan account in property he owns outside the plan. Participant has access to other funds sufficient to purchase the bad asset back from the plan but refuses to do so.

Over $200,000 involved.

This is a sketchy facts situation, but I am hoping a quick answer may be found. A VFCP application was ready to go when the participant balked.

Thanks.

A 401(k) document says that the basic safe harbor match is to be calculated on compensation for the plan year, but the enhanced safe harbor match is to be calculated on compensation and deferrals per payroll period. This was a drafting error and they both should have been coded for compensation for the full plan year. The employer is making an enhanced SH match and intended to calculate on an annual basis and has been operating that way for years. What is the best method of correction? Can an amendment be prepared to cover the prior years stating that there was a drafting error? Please help me out of this mess.

Any Form 5330 experts out there, I'd love to speak with you regarding some questions I have on how to complete this form... these instructions are pretty intense...

1) A distribution was made in error to a participant in 2010 and repaid in 2011 - A) does this represent a prohibited transaction; if yes, B) do I use the FMV of the distribution made to determine the excise tax; C) - if the distribution to the participant was repaid, but not FIT withholding - is my transaction considered to be ongoing requiring continued 5330 filings until the FIT is recovered and re-deposited?

2) Most of the plan's elective withholding was considered to be paid late years 2006 - 2011 - A) when reporting the late deposits on 5330 can I enter on Sch C Line 2 "various dates" and note the months that had late deposits, indicating a total missed earnings figure for the plan year? If the detail is required can I use an attachment to provide the detail and reference it on Sch C Line 2.

3) Is it best to report the late deposits on one set of 5330's and the distribution made in error on a different 5330 (the instructions seem to request this).

4) For late filings of 5330 dating back several years - best to put them all in one big packet to IRS with a single check covering all excise tax due.

Any help anyone can provide, I'd greatly appreciate it.... Ted Triska 216.771.4242 ext. 209

Our parent company recently purchased another company. We're testing things to see how we'll pan out with the coverage test. Some of our plans now fail the ratio test (using the entire controlled group) so we're moving to the ABT.

As part of the ABPT on a stand-alone basis (no permissive aggregation yet), we need help with determining the denominator for each plan.

Plan A

NHCE avg benefit rate: 9%

HCE avg benefit rate: 10%

(1000 NHCEs and 200 HCEs)

Plan B

NHCE avg benefit rate: 4%

HCE avg benefit rate: 4.5%

(300 NHCEs and 50 HCEs)

Aggregate

NHCE avg benefit rate: 7.85%

HCE avg benefit rate: 7.25%

Are the results for Plan B 88.9% (ie 4/4.5) or as 55.2% (4/7.25)?

Is the NHCE Concentration 85.7% (300/350) or 19% (300/1550)?

Thanks.

I am somewhat familiar with SEC rules as they relate to employee benefits. Therefore, any guidance you can provide would be helpful.

SEC 10b-10(b) permits quarterly statements for investment company plans. One of the requirements under the definition of an investment company plan is to "advise each customer in the group if a payment is not received from the designated person on behalf of the group within 10 days of a date certain specified in the arrangement for delivery of that payment by the designated person and thereafter to send to each such customer the writen notification described in paragraph (a) for the next three succeeding payments."

Under 403(b) plans there is no date certain specified. There is some IRS and DOL guidance on when contributions should be made, but no date certain. The date seems to depend on the respective employers/TPA. Does this mean that the 10-day notification rule does not apply to 403(b) arrangements?

If it does apply, does this notice need to be sent by the vendor to participants who had been notified by their employers that future contributions will not be made to that vendor?

If a participant voluntarily changes vendors for future contributions, is he/she still a customer and therefore required to receive notice that the vendor did not receive contributions for him/her?

I did see some old (pre-final 403(b) regulations) no-action letters from the SEC. Could not find anything recent. In the prior requests vendors proposed getting around the 10 day rule by putting legends on their statements. This approach was approved by the SEC. But, I have not been able to find those legends on recent statements. What, if anything, has changed so that they are no longer required?

Thanking you in advance for your thoughts.