We had an issue where our fees were disclosed to participants incorrectly (404(c) issue).  Revenue sharing is allocated to participants in relation to the revenue sharing produced by their investments.  Our disclosures say revenue sharing the the plan as a whole is allocated among all participants, pro rata, no matter their investments.

This is only affecting pennies per Participant.  What does this mean for us?

• Are we subject to some penalty?
• Do we need to send out corrected disclosures?
• Is there some sort of "de minimis" exception, where we don't have to worry about penalties or corrected disclosures, and we can just correct disclosures going forward?

Thank you!

For those grappling with an absence of Internal Revenue Service guidance about how to interpret 2019 and 2022 changes to ERISA and the Internal Revenue Code about a long-term-part-time employee’s eligibility, here’s another wrinkle:

Who decides?

If a participating employer excludes from elective deferrals under a pooled-employer plan (or other multiple-employer plan) an employee the pooled-plan provider or administrator decides ought to be included, what corrective steps and remedies must or should the pooled-plan provider or administrator pursue?

Or imagine a single-employer plan has a § 3(16) administrator unaffiliated with the employer, and that administrator’s responsibility includes deciding which employees are eligible (for each kind of participation, including elective deferrals):

If the employer excludes from elective deferrals an employee the administrator decides ought to be included, what corrective steps and remedies must or should the administrator pursue?

Are there circumstances in which an administrator may defer to an employer’s interpretation about which long-term-part-time employees need not be eligible? Or would that be an abdication of the fiduciary's responsibility?

The Bakers helpfully pointed us to Nevin Adams’ alliteratively titled article on a court’s decision that ForUsAll, Inc. can’t sue the U.S. Labor department about EBSA’s “Compliance Assistance Release” about “cryptocurrencies”.

https://www.napa-net.org/news-info/daily-news/401k-crypto-case-crumbles-federal-court;

https://www.napa-net.org/sites/napa-net.org/files/ForUsAll%20Inc.%20v.%20U.S.%20Department%20of%20Labor%20et%20al_082923.pdf;

https://www.dol.gov/sites/dolgov/files/ebsa/employers-and-advisers/plan-administration-and-compliance/compliance-assistance-releases/2022-01.pdf.

Judge Christopher Reid Cooper finds that, even if the Employee Benefits Security Administration acted contrary to law by issuing its nonrule document, ordering the Release to be treated legally as a nothing would not relieve the harm ForUsAll asserts because prospective customers would still face the same risks about investigations and enforcement.

Also, the opinion finds that courts do not review a Federal government agency’s nonrule document if it sets no legal right or duty, and no legal consequence flows from the document. The judge found EBSA’s Compliance Release was “informational” and does not compel anyone to do anything. Rather, it suggests fiduciaries “be prepared to explain how [their] actions comport with their duties of prudence and loyalty—whatever those duties are.”

The opinion observes that the law is unsettled about what responsibility a plan’s fiduciary might have regarding an account that is not a designated investment alternative.

A participant in our ESOP got re-married in July and, with intention, sent in a new beneficiary designation form listing an adult child named as 100% primary in June. 

Now that they are married, does the date on the beneficiary form trump the spousal rights under ERISA?

I have a takeover profit sharing plan. The owner turned 72 on 12/31/22 and did not take the RMD.  My understanding is he should have taken the distribution by 4/1/23.  Can someone please explain the consequences of not taking the RMD by the required beginning date and how to best remedy the situation? 

Does anyone know how to get the 5500 participant count out of reports on Amer funds Plan Premier?   If so what is the report name?  My client has a census of 5000 rows+ which includes a couple hundred duplicate rows because employees start and stop at different divisions (McDonalds franchises.)   We can't reasonably combine wages, deferrals, hours and pick earliest DOH and latest DOT etc to get it to load correctly into Relius.  If we could, Relius would provide the participant count.  I phoned Amer Funds who really can't help.  I asked them what would they do if this were bundled and they had to do the 5500?  I know they have the data as the plan sponsor provide a full census file every pay period combined for all divisions. 

Just struggling with this.   I think I can get close by sorting data exports by who has a balance and is not terminated, etc.  Not sure I can get everything though.  Fortunately it is safe harbor match, no profit sharing.  I will probably ask the advisor to take it bundled for 2024 -thinking ahead about LTPT.

Takeover. Many issues. DB with document stating NRA age 50. This would violate §401(a)(14) and §1.401(a)-1(b)(2). We can correct late restatements under SCP, but can we also change the NRA to 62 under SCP as well? This appears to me to be a document issue, which cannot be corrected under SCP. Thoughts?

Also, assuming we have to do this from inception, would we also have to redo the actuarial valuations using the correct NRA (likely resulting in some past non-deductible contributions) or just look at open years?

Group:

I wasn't sure which area to post this.

Brief facts:

Case no. 1:  In June 2022 IRS TEGE issued a notice of plan disqualification for an ESOP client.

The agents notice clearly stated "The plan is disqualified" thereby allowing TP

to timely file in US Tax Court within 90 days.

In Dec. 2022 Govt files to dismiss based on lack of jurisdiction.

Pending USTC Case no. 1 is still pending and no order from USTC.

Pending USTC Case no. 2. - May 2023 IRS TEGE issues a one page notice of disqualification

stating:  The Plan is no longer disqualified under 401a and 501a.  No 886-A

 and no further information.

Q:  Is there a motion you'd file to stay proceedings?  I don't see IRC 6213a applying to retirement plan declaratory actions?

Here is what 6213 a states:  6213(a) states that “no assessment of a deficiency in respect of any

tax . . . and no levy or proceeding in court for its collection shall be made, begun, or prosecuted until

such notice has been mailed to the taxpayer.

I'm looking at guidance for which US Tax Court rule (or Fed Rules) allow me to motion

the Court to stay Case no 1?  other than saying it would deprive petitioner of due process rights

to not allow him to have that matter resolved.

Thoughts and comments appreciated.

I have a large plan that is audited for 2022.  A participant requested a maximum loan ($13000) from his account on a weekend.  The account balance he saw online was $26,406.45.  By the time the loan was approved and processed, his account had fallen to $25,851.50.  It appears that he is over his maximum loan amount by $74.25.

I looked at the IRS Fix-It Guide and found that the participant must repay the excess loan amount and if needed amortize the remaining principle. Is there anything else i need to be doing?

Had a plan subject to audit for 2022, that showed 120 active participants as of 12/31/22, but only 95 with balances. Plan is now fully liquidated this year. How would you report this on a 2022 Form 5500 for the short final year in 2023? Don;t have a box for participants with balances as of 1/1/23.

When a Plan chooses to allow brokerage accounts, is it acceptable for the Plan Sponsor to expect the participants to get them a copy of the statement(s) at the end of the year? Should the Plan Sponsor be receiving a copy of each individual statement monthly or at least quarterly? What are the consequences if they are not keeping copies themselves? 

I would like to get some thoughts on the following:

Assume a plan offers three JSAs: a 50% JSA, a 75% JSA, and a 100% JSA.

The plan designates the 50% JSA as the QJSA.

I assume that means the 75% would be the QOSA. 29 U.S.C. § 1055(d).

Now, I understand that the QJSA and the QOSA must be actuarial equivalent to the offered SLA. 29 U.S.C. § 1055(d).

What about the 100% JSA. Is that also subject to AE requirements?

Thanks for your thoughts and comments!

If a DB plan is non-compliant (either a discriminatory benefit formula or failed 401(a)(4)) may it still terminate under PBGC if the assets are sufficient? We understand that a plan may potentially be disqualified, but does the PBGC care or is it only concerned with sufficiency?

Case in point floor/offset  plan, but the sponsor did not correctly fund the DC plan to meet aggregated testing. They want to terminate the DB plan. We are reluctant until they get the combo compliant. They dispute the need for additional contributions to the DC plan in order to terminate the otherwise sufficient DB plan. If we warn the sponsor of consequences, will the PBGC allow the termination without regard to testing?

A client had an employee who was not paid out for a couple of years (she kept him in the plan thinking maybe some work would come up and he would be back in).  Over the summer the employee died.  The plan states that vesting does not count if someone dies or becomes disabled.  The employee died and had a break in service prior to their death.  

Is the deceased terminated employee 100% vested?
Or do I pay him out based on his vested % at the time he terminated?

Thanks

A new client was not taken care of in the past.  I went back a few years and discovered that in 2020 the 2 HCEs didn't receive the full 3% NEC.  The 2 NHCEs did but not the 2 HCEs.  During COVID the business didn't make a PS contribution but regardless of that the plan called for a 3% SH NEC so everyone needed to get it, right?  I ask, there is no exception is there?

Thanks

I've having a difficult time finding a clear answer on whether DFVCP may be used to eliminate IRS penalties for a late 5500 after the IRS has already imposed a penalty. The available IRS late-filer relief guidance does not seem to address this squarely. It says that IRS will waive penalties if, among other things, the filer complies with DFVCP. The DFVCP FAQs say an "IRS late-filer letter" will not disqualify a plan from using DFVCP, but it doesn't address a situation where the IRS has already imposed a penalty. There has been no correspondence from the DOL on the late 5500. 

My initial reaction is that using DFVCP now probably would not automatically waive the IRS penalties already imposed (but that it may be a good idea to minimize further DOL liability) and that a separate reasonable cause statement would need to be filed with the IRS requesting abatement of the penalties.

Am I off base?

Relatedly, the penalty is imposed on a Letter CP283, which I have understood to be specific to a 5500-EZ. The plan at issue files a 5500-SF reporting around 50 participants. Is this the typical form letter for a non-EZ Form 5500?

Hi!

My employer failed to correct the contributions to my 401k until after I left the company, so they paid a 50% QNEC.

However, I elected Roth and they paid pre-tax. This seems wrong to me since it's way less money ultimately going to me.

Can somebody verify?

(There's another thread suggesting an in-plan rollover, but that doesn't make sense since it's a taxable event and will immediately show how much less the pre-tax amount is compared to the same roth amount

Best,
Andrew

I was wondering if anyone could provide the name of a dc recordkeeper only for a 401k/cash balance

combo plan for a small employer(< 20 participants) preferably not too pricey. Thank you.

I have been reading through the text, as well as some articles on the credits. My question is specifically about the start-up plan employer contribution credit (not the admin cost credit or auto enroll etc). 

I understand it creation is through an addition /modification to §45E. 

One ASPPA article in particular says this: 

*If the employer maintained a 401(a), 403(a), SIMPLE, or SEP plan in the three taxable years immediately preceding the tax year in which the plan is adopted, the employer cannot take a deduction for the year of adoption, but is eligible for tax credits in the next four tax years.

https://www.asppa.org/news/where-credit-due-tax-credits-small-employer-plans-under-secure-20

Can some explain where that reasoning comes from? 

If I have a SIMPLE for a year, then terminate and switch to a 401(k), wouldn't I be precluded for the first three years of the 401(k)? And is there clarification somewhere about how to apply this credit if I maintained (but discontinued mid-year) a SIMPLE or one of the other types listed in the ASPPA article?

Just because I'm in year two of my new 401(k) plan, I would have still had a SIMPLE in the preceding 3 years, so how would I be an 'eligible employer'? 

I'm sure there is something simple I'm overlooking or understanding. 

Thank you for your insight!