When an overpayment is made from a plan, the EPCRS rev. proc. says that the employer must make reasonable efforts to collect the overpayment and, to the extent it cannot be recovered, then the employer or another person must contribute the difference to the plan. In the defined benefit multiemployer context, who makes the payment to make the plan whole when the recipient does not repay the entire amount? Any thoughts would be appreciated!

When an overpayment is made from a plan, the EPCRS rev. proc. says that the employer must make reasonable efforts to collect the overpayment and, to the extent it cannot be recovered, then the employer or another person must contribute the difference to the plan. In the defined benefit multiemployer context, who makes the payment to make the plan whole? Any thoughts would be appreciated!

A.T.A question to IRS: "Were there changes to the orginal Notice other than the addition of the footnotes?"

IRS Response: "No, the only changes in the Revised Notice 2012 - 61 was the addition of the footnotes."

An employer adopted a pre-approved EGTRRA prototype document by the deadline. However, it later materially modified that document to the extent it would be considered to be individually designed. Since the employer was technically an adopter of a pre-approved plan, it submitted that indivudally designed document for an EGTRAA letter by April 30, 2010 (the 6 year cycle deadline). Now that the EGTRRA deadline has passed, is the plan on the 6 year pre-approved cycle or 5 year individual cycle?

Since 9/15/12 is a Saturday. Does a DB plan get until 9/17/12 to make a contribution for the 2011 plan year?

In your experience, what is a typical charge to a participant's account for the determination and processing of a QDRO?

$200?

$400?

More?

Thanks.

Client currently allows excess diversification but would like to stop that and ony have the required diversification. I'm trying to determine if doing so would violate the protected benefit rules under 411(d)(6). Excess diversification is not an early retirement benefit, but arguably is an optional form. If excess is a protected benefit, it seems like the only cut back available would be for amounts accrued after the effective date of the change. That would be no fun to administer. Seems like another reason not to offer excess diversification. Thoughts are always appreciated.

Strange but true - I have an overfunded plan, all participants at 100% benefit and are terminating. I recall that some people brokered the sale of the company sponsoring such a plan to a company with underfunded plan(s). Does anyone still do this? If so, how can I contact them?

Hello everyone! Hopefully a question someone has already run across. We have a frozen defined benefit plan, 300 participants, amended via VCP to fully comply with PPA 2006, GUST, EGTRRA, PFEA 2004, HART 2008, WREA 2008, etc. The IRS released a model section 436 amendment in the case of underfunded plans at the end of 2011. Our plan is already frozen, and contains benefit restriction provisions applicable to plan years beginning as of January 1, 2008. However, they precede the 2011 Notice with the model provision.

Does this model language apply to frozen plans? If so, does all of it?

The Notice contains this language: The limitations on prohibited payments set forth in Sections 1(a), 2(a), and 3 do not apply for a plan year if the terms of the plan, as in effect for the period beginning on September 1, 2005, and continuing through the end of the plan year, provide for no benefit accruals with respect to any participants. This Section 7(b)(iii) shall cease to apply as of the date any benefits accrue under the plan or the date on which a plan amendment that increases benefits takes effect.

Does the language mean the model language does not apply? Should it be inserted anyway? Any thoughts or comments would be greatly appreciated. Thanks so much!

Not sure where best to post this question but wanted to try here first. 401(k) Plan document expressly limits plan loan terms to a maximum of 5 years. Plan Administrator and TPA permitted a participant to take out a principal residence loan for 10 years. That period is generally reasonable, in keeping with how TPA handles other principal residence loans under other plans without a five-year limit, and would otherwise comply with applicable plan loan rules, etc. except for the plan's express 5-year term limit. Plan has since been amended to permit longer terms for principal residence loans.

Is this an error that can be corrected by adoption of a retroactive plan amendment to permit longer plan loans per Section 2.07(2)(a) of Appendix B of Rev. Proc. 2008-50 and filing under VCP? If so, is there any easier way to correct the error given that the Plan now already permits longer plan loans, etc.? Thanks.

just wanted to say hello and that I am glad to be a part of this forum. thanks!

A hospital client contacted me with a question. Several years ago, the hospital had several 403(b) vendors on an approved list. An employee could select one of the vendors to place their 403(b) money with. The hospital was not involved in any way, other than to process the payroll deduction. Years ago, one employee requested to move their 403(b) account balance from their current vendor to another 403(b) vendor that was not on the hospitals list of approved vendors. The employee was permitted to do this (I was not involved with the client at that time). Now a broker involved with this employee has called the hospital's HR staff and asked them to approve the transfer of the 403(b) account balance to yet a different 403(b) vendor.

The multiple 403(b) vendors concept is somewhat foreign to me. My gut reaction is that the hospital doesn't have the authority to grant such a transfer. The 403(b) contract is between the vendor and the employee. The hospital isn't a party.

Any thoughts on this?

Thank you.

I'm not entirely certain exactly where this falls - I couldn't necessarily find where this is specifically addressed.

Plan excludes certain compensation in the form of a fringe benefit or two. However, the employer didn't monitor this, and allowed deferrals on this compensation.

Clearly this should be correctable under RP 2008-50. However, I'm not certain if it is specifically addressed. 5.01(3)(a)(i) might cover it, but I'm not sure if this counts as a deferral in excess of the "maximum" allowed in the plan. Alternatively, I suppose it could be considered an "excess allocation" under 5.01(3)(b), but that doesn't see to quite "fit."

How would you correct this? Let's assume that ADP/ACP testing still passes if these amounts are refunded. Should they just be refunded with interest, or is the a better or more correct method? We are talking about trivial amounts, so I'd certainly think SCP is allowable, rather then using VCP.

A single participant defined contribution plan wishes to make an investment in a rental property. The Plan would hold about a 10% interest in the property. The other 90 % would be held by an LLC or LLP in which the sponsor (and participant) is the sole member. Is this a Prohibited Transaction under IRC 72(t)? Or is it exempt?

Could the Plan make the down payment and hold the mortgage in the Plan?

For small plans, are salary deferrals considered timely deposited as long as they are deposited to the plan within the 7 day safe harbor deadline or do the deferrals have to be allocated to the participants by the deadline? For example, for an employer who has weekly payrolls, would they be in compliance by depositing the employee deferrals into a pooled plan account each week and then allocating the deferral amounts to participants monthly, quarterly, etc.?

From hot-off-the-press IRS Notice 2012-61 (9/11/2012):

"(b) MAP 21 does not change the annuity substitution rule. Accordingly, for purposes of measurements to which the MAP 21 segment rates apply, the present value of a distribution that is subject to § 417(e)(3) is determined using the MAP 21 segment rates to discount the projected annuity payments in accordance with § 1.430(d) 1(f)(4)(iii)."

I the Non-profit that sets up a 403 b plan for it's employees. what are the responsigilities of of the non profit - sdo they have to approve the individual investments available for employees. Is the level of oversight different from the level required of a 401 K plan trustee.??

A single participant defined contribution plan wishes to make an investment in a rental property. The Plan would hold about a 10% interest in the property. The other 90 % would be held by an LLC or LLP in which the sponsor (and participant) is the sole member. Is this a Prohibited Transaction under IRC 72(t)? Or is it exempt?

Could the Plan make the down payment and hold the mortgage in the Plan?

When applying FAB 2009-02 to 5500 reporting should the excludable participants (meeting the 4 criteria) be excluded in the participant count and the assets reported or can I just excluded them from the participant count but still report the total assets as stated by TIAA?

Thanks in advance

A terminating participant has an outstanding loan. He doesn't want it to default, doesn't want to pay it off fully and there is no provision to continue paying after termination. He is rolling over the funds to a different 401k Plan. Is there any provisions available in the original Plan that would allow this to occur? I haven't been able to find anything. Thanks.