We are terminating and liquidating a non-account balance (defined benefit) NQDC Plan.  This is not in connection with a company dissolution, bankruptcy, or change of control.

I understand all the rules for terminating and liquidating a NQDC Plan (payment timing, aggregated plan termination, no similar plan for 3 years).  My only question is that since this is a non-account balance plan, are there any rules or best practices for determining the liquidation amount for each participant?  I don't see any official guidance, but how do we value benefits for purposes of making liquidation distributions?

Thank you!

One of my clients got a letter about prohibited transactions and the opportunity to correct via the VFC program.  This stems from the accountant marking on the Form 5500 that there were delinquent 401(k) contributions/loan repayments.

We've gone through making everyone whole, with charging the employer interest on the late payments.

My question is what's involved in responding to the VFC program?  Is it simply a letter aknowledging the deficiency and outlining what has been done to:

1) Correct the past issue
2) Prove that steps have been taken to ensure it isn't repeated

Or are there actual forms that need to be completed (similar to the VCP program)?  This isn't something I've done before, so I wasn't sure.

Thanks everyone!

Participant elected 75% J&S and started receiving pension benefit. Then she and her spouse divorce.  Divorce decree says the ex-spouse is not entitled to any pension benefit the  participant may have. 

Despite divorce decree, isn't ex-spouse still entitled to the benefit if the participant dies before the ex-spouse? 

Could use some advice...

Back in the late 90's I opened a 401k for my solo consulting company. That 401k had Money Purchase and Profit Sharing Keough accounts at Fidelity. At some point in the 2000's the combined values of those two accounts exceeded $100k (neither was over $100k) - I believe it was the year before the limit increased to $250k for requiring 5500's. I wasn't aware of that requirement and didn't find out until years later when I closed that consulting firm. I then got a bit freaked out about the possible penalties and just left the accounts sitting there. Dumb, I know. 

So, I need to finally deal with this. Can you confirm that it was the combined value of those two accounts that triggered the 5500 requirement? or did each account have to get to $100k? And if it is the combined value, how would you proceed? Send the final 5500 and hope for the best? Do the DVFC and pay the fines? Tear-stained letter begging forgiveness? Other options?

Thanks in advance for any guidance... 

HI, 

We do not do much work on cash balance plans. An actuary brought up the following:

A TPA that he works with set up a Cash Balance Plan. They are getting a maximum that is lower than the cash balance allocation per the formula. Does this sound right? Thank you.

My TPA firm is very small and 99% of our clients have less than 100 participants.  Most have less than 40.  I'm concerned that as time goes on, PEPs become more popular and my business is threatened.  Is there an option for a small TPA firm to market PEPs?  Can I join forces with a company that sponsors a PEP while I maintain TPA and consulting services for my clients?  Thankfully, my market values local service but I'm not going to fool myself into thinking that clients won't jump ship if a PEP makes more sense for them and the popularity grows.

I have a large company whose 401k excludes per diem employees. They have a 1 year, age 21 and 1000 hours requirement for eligibility. Some of these per diem employees have met that eligibility requirement but are still per diem. Are they still excluded from the plan?

Also, there are a few employees who were eligible for the plan then later on became per diem employees. Do they lose their eligibility to contribute?

401k plan is TH.  Owner is over age 50.  

Owner does NOT want to make any employer contribution to the plan for plan year.

I assume the owner cannot just make a $6500 deferral for the year without triggering the top-heavy minimum to the non-key employees.  I assume there is no way to classify a $6500 deferral as catch-up only and thus avoid TH minimum because the plan would not fail ADP or violate 415 or 402(g).  

Just wanted to confirm. 

A payroll system error caused a Participant deferral to be deducted at a lower amount and  as a result they did not get the opportunity to max out in 2021.

The problem continued until April 2022.

A 2021 QNEC for the MDO will be forthcoming.

However, for 2022,  do you give the participant the option to max out (maybe receive more match) or accept the QNEC.  If  they accept the 2022 QNEC then they cannot max out to the 402g limit for 2022 because the 402g limit takes into consideration the MDO.

Or would you fund a 2022 MDO QNEC and notify the payroll admin to reduce the 402g limit for 2022?

Thanks.

Newbie here. I have a plan that excludes a class of employees in the plan document, but one of the employees of this class was allowed to defer during the plan year. What is the best  corrective action - distribute the deferrals? Or is there anything else that can be done? Can't fix payroll since this is from last calendar year. 

There were also a few employees that did not meet any of the eligibility requirements that were allowed to defer. Can we do a retroactive amendment to let them in? If that is ok, would that be an issue with the employee above who is considered excluded? 

Our RTO document doesn't specifically address this and I can't find it in the Regs. After someone has a new child, so a Status Change event, is there any sort of deadline that they have to make an election to start contributing to a Dependent Care FSA? It seems like during the 12 week or so maternity leave, the decision for child care could change a couple of times before something is decided. So, I can see where an employer might give the employee a pretty long period of time before they shut off the ability to make a DCA election after this Status Change event.

Can someone point me to something in the Regs that states a definitive time period? Thanks 

A participant passed away in 2020.  The family and employer just notified us in 2022.  One of the beneficiaries is a Trust.  The claim form states that "The Trustee of the Trust must certify whether the underlying trust beneficiaries are designated or non-designated beneficiaries as defined by Section 401(1)(9)(E) of the Code.  The trustee must provide the certification by October 31st of the year immediately following the participant's death."  Since 2 years have passed, what is the impact of the trustee not having met that October 31st certification date?

 A Non-Electing Church sponsors a Money Purchase plan which needs to be restated for Cycle 3.  We understand that there is a newly allowed type of pre-approved plan for this situation under IRS procedures but our current document provider is not offering one.  I found some notes published by ASC on such a document but have not located anything else.  Does anyone know of a document provider with a pre-approved plan document (exempt from the requirements of Title I) for a Money Purchase plan sponsored by a Non-Electing Church?  Thank you!

Patricia Neal Jensen

patricia.jensen@futureplan.com

The IRS Form 720 was updated in March 2022; however, the dates and rates for the PCORI fee  on line 133 were not updated (from $2.66 to $2.79).  Does anyone have a work-around for this or how are you handling this?  The service that we use is not allowing an override of the amount due.  This is for Plans with a 12/31/2021 year end.

Just had an initial call with the financial advisor, so some of this is subject to change as I get more details, but it sounds like:

> NFP has a 403b with a large insurance co and is tired of bad service, high fees, etc.
> NFP is looking into a new recordkeeper and wants to move the plan, but the insurance co says that the accounts are individual annuities (though they are the only provider and there is a company contribution, so this should be an ERISA plan with all that entails) so the plan sponsor does not have the right to pick up all the accounts and move them - each participant would have to agree to do so.

Is there anything legally preventing the opening of a new 403b plan and saying that effective 7/1/22, all deferrals go to New Plan at New Recordkeeper, and all participants have to complete a new deferral election form?  Any participant who wants to make a transfer from Old Plan to New Plan may do so, but not vice-versa.  Old Plan would still exist separately for document, 5500 and whatever other purposes; if someone wanted a plan loan, for example, they would only be eligible for the balance in the plan they are applying in.  The real problem is that the extra expense of two plans will likely offset the savings the New Recordkeeper is offering.  But at this point, I'm just trying to figure out options.

I know this isn't a perfect solution, but we've been burned several times with trying to manage a plan where there are still accounts in the old recordkeeping platform and trying to get information from them each year is a complete hassle.  You think "oh, the balances will just decline each year, it won't be that bad"... five to seven years later, and they're still going strong!

A client provided a revised census for 2020 testing. When 2020 testing was rerun it was determined that the plan failed less than the original test. Corrective distributions had already been paid out and reported for 2021 taxes by the time the revised test was run. Participants are no longer able to return the excess corrective distributions to the plan. What is the correction? We are thinking that the client needs to submit the difference back to the plan but not the participant accounts. Is this correct?

Client has a bond but needs to increase coverage.  He is asking....

"to meet the coverage requirement does it matter if I have 2 bonds that in total meet or exceed the coverage requirement?"

I don't see a problem... but thought I would ask

If the company adds in a new pay code, what procedure or regulation does the plan sponsor need to base off to determine if it's pensionable earning?

Thank you

EPCRS gives a correction for "[f]ailure to distribute elective deferrals in excess of the §402(g) limit (in contravention of §401(a)(30))."

401(a)30 just points to 402(g).

Can there be excess 402(g) deferrals NOT in contravention of 401(a)30?

And also, the plan MUST remove the 402(g) excess (in contravention of 401()(30)), or the plan risks disqualification.

I seem to remember if the excess deferrals were there after April 15, you didn't do anything until the participant took their money (year?) later.

And I read that if the excess deferrals are NOT in contravention of 401(a)(30), then the deferrals HAVE to stay there until there is a distributable even.  Again, under what circumstances would that be? 

On the client's census, they tell us that Jim owned 2.5% of the company last year (S Corp), and belonged to the Union.  He made $121k in 2020.  This year (2021) however, they tell us he owns 6% and is still in the union.  Now he's an HCE for 2021.  He's the only union person that defers (there's only one other).  So the ADP test is failing.

I thought I remember reading somewhere that a person cannot be an owner and a member of the union at the same time.  How can someone be part of management and be a union employee?  If that's true, how is it handled?