Question - has anyone ever heard of any enforcement of this provision by any agency? 

It's been well established that there is no private cause of action to enforce it. I can't find that HHS has ever taken any action to enforce it. In theory, being out of compliance with it could trigger the excise tax under IRC 4980D, but does anyone know if the IRS has ever sought that? I cannot find any IRS guidance on it.

Has there been any consequence for failing to remove exclusions of certain types of provider, for self-insured health plans?  There are basically no court cases about this other than ones dismissing private actions.

Hi community,

I'm curious to hear from everyone what kind of wellness programming/workshops you offer at your office? Chair Massage, Yoga, something new, something old? Would be great to have a thread that others can use and be inspired by.

Thanks!

Plan A is merging into Plan B. Plan A allows for in-service at age 59 1/2 from deferral account and Plan B does not.  What needs to be done in order to protect this benefit?  Is an amendment required to Plan B's document, or do I need to just include language in the merger resolution?

I have 2 plans that are sponsored by the same company. They want to merge the 2 plans to make administration easier. One plan has a funding shortfall in the year before the merger and the other plan did not have a funding shortfall. Based on Rev. Proc. 2017-56, it seems like due to the fact that one plan had a shortfall and the other did not, that it does not qualify for an automatic approval. Therefore, we are requesting approval for a change in funding method. Does anyone know if this is required? As of the merger date, due to the assets in the 2nd plan, all shortfall amortizations are wiped out and the plan is over 100% funded. 

From what I can find in Rev. Proc. 2017-4, the user fee is $10,000. This seems excessive given the fact that one company sponsors both plans and the only reason they did not qualify for the automatic approval was the funding shortfall, which is taken care of as soon as the merger takes place. 

So have I got this right - probably not...

POP plan has salaried qualify after 1 month of service, and hourly after 3 months of service. Since the eligibility to participate for "that plan year" has everyone being eligible, does that mean it passes the reasonable classification? Or am I misunderstanding, and each "sub-class" must pass the safe harbor or the unsafe harbor test?

Edit - Well, they wouldn't necessarily ALL be eligible for the Plan Year, if they were hired quite late in the plan year. So I suppose that you would have to do the safe/unsafe harbor testing, which normally would pass with flying colors anyway.

Company A has a 401(k) Plan - On  March 1 of 2018 they were purchased by Company B ( no prior relationship). This was a stock purchase.  Company A terminated their 401(k) Plan February 27, 2018. All assets were distributed by June 2018.

My question is in regards to who signs the 5500 for 2017 and the final return for 2018.

Isn't the prior employer of Company A responsible for the 2017 filing.

Since this was a stock acquisition,  and the payouts and final 5500 are processed after the stock acquisition, is Company B responsible for the filing.  Or  does this responsibly still fall to the prior employer of Company A. 

Getting conflicting info from all the parties, so I thought I would ask the "experts"

Client is a religious organization with both 401(a) and 403(b) plans. Participant terminated employment and requested distribution- the distribution was delayed because of an incorrect address.

During the delay period (i.e. after the distribution would have otherwise been made but before it actually was), the plan administrator received a consent order for a pending divorce. Neither the sponsor nor the administrator (which is a MAJOR provider) seems to have any written QDRO procedures for the plans. Just a practice where the administrator generally receives a DRO and the plan administrator approves it. 

Any thoughts on whether the plans are satisfying 414(p)(6)(B)? Or whether the distribution should still be made? Given the financial situation laid out in the consent order, there is a chance that the spouse would get the full benefit available under one or both of the plans. 

Money purchase plan has single entry date.  If someone meets eligibility during the year, they become eligible as of the beginning of the plan year. 

Plan sponsor uses a temp agency to "test drive" workers.  If they like a worker, they hire them after 3 or 6 months.  Once hired as a regular employee and no longer temp, So it is possible for a worker to meet eligibility during the plan year and have worked as a temp for part of that plan year. 

The question is how to calculate the contribution for a participant who was a temp worker for part of the year.  Do you have to get the compensation paid by the temp agency for that period?  Or do you just use the compensation paid by the plan sponsor from the date the worker became a regular employee?

We have a 403(b) plan that excludes commissions and bonuses for deferral purposes.  Is there any nondiscrimination testing involved or is this okay?  Thanks.

Can this be done?

Plan A and Plan B are not a control group, but there is common ownership.

The Employers would like the service from either plan to count for both plans.  So Bob in plan A is hired and terminated with 2 years of service.  Goes to work for Plan B, has a year of service.  So his vesting in Plan A and Plan B would be 3 years of service.  Oversimplification perhaps, but this is the scenario.

Yes? No?  Thoughts?

If yes, have would you write the language in the plans?

Hi yall,

I'm working on a 2017 Form 500 for a plan and have a small issue

There was one participant got refund of $50 loan principal overpayment in 2017 for a 2016 loan.

How can i characterize this refund on 5500? 

I was thinking about putting that $50 as negative ($50) in other income or $50 in the Benefit payment - directly to participants.

 I looked into 5500 instruction 

Line 2c. Other income.  Enter all other plan income for the plan year. Do not include transfers from other plans that are reported on line 2l. Other income received and/or receivable would include: 1. Interest on investments (including money market accounts, sweep accounts, STIF accounts, etc.). 2. Dividends. (Accrual basis plans should include dividends declared for all stock held by the plan even if the dividends have not been received as of the end of the plan year.) 3. Rents from income-producing property owned by the plan. 4. Royalties. 5. Net gain or loss from the sale of assets. 6. Other income, such as unrealized appreciation (depreciation) in plan assets. To compute this amount subtract the current value of all assets at the beginning of the year plus the cost of any assets acquired during the plan year from the current value of all assets at the end of the year minus assets disposed of during the plan year. 

Line 2e(1) Directly to participant. payments made (and for accrual basis filers) payments due to or on behalf of participants or beneficiaries in cash, securities, or other property (including rollovers of an individual’s accrued benefit or account balance). Include all eligible rollover distributions as defined in Code section 401(a)(31)(D) paid at the participant’s election to an eligible retirement plan (including an IRA within the meaning of Code section 401(a)(31)(E));

How do yall think this should be in the 5500? I'm leaning more on the Benefit payments directly to participant. This is a new situation for me.

I appreciate all the inputs.

Thank you.

We have a couple of participants who have not been cashing their required minimum distribution checks for a few years.  The plan administrator is moving the funds from the stale checks into a forfeiture account (this is for a 401(k) plan) to be used to pay plan expenses.  Is this kosher?  I guess the participants have already been taxed on the distributions.

I've seen a few prior threads on this but wanted to get current input.

A plan's loan policy allowed 15 year loans for primary residences. Loans longer than 15 years (but assume still reasonable) were made. Plan sponsor is fine with amending the loan policy to allow longer primary residence loans (both for outstanding and future loans).

Section 6.07 of EPCRS (including current version now in 2018-52) allows for correction of loans in violation of 72(p)(2)(B) and (C), but here the primary residence exception applies and allows for a reasonable loan term. No violation of (B) or (C). VCP would seem to be required, but 6.07 only mentions correction by re-amortizing, which isn't the plan sponsor's preferred course because the original term is permissible under 72(p).

I suppose the alternative is to retroactively amend to conform to prior operations under the more generic VCP provisions of Section 4.05. 

Section 2.07 of Appendix B allows certain retroactive amendments under SCP. Section 2.07(2) allows a retroactive amendment under SCP to add loans to a plan whose terms did not allow them. But it does not mention amending under SCP to extend the term of an otherwise permissible loan. 

Is VCP required to retroactively approve the longer term? if so, would Section 4.05 be the appropriate section? 

Try SCP and document file stating that extending the loan term seems more analogous to SCP under Appendix B? 

Thanks in advance. 

I just took over a plan who changed their EIN number during '17 (I'm not 100% sure why, but that's irrelevant).  Anyone have any experience on notifying the IRS of this change, so we don't have an issue when filing the Form 5500?

Thanks in advance!

no more paper filings permitted for VCP

in accordance with

sections 10 and 11 of this revenue procedure or by filing paper VCP submissions in accordance with the procedures in sections 10 and 11 of Rev. Proc. 2016-51. However, the IRS will not accept paper VCP submissions postmarked on or after April 1, 2019.

(3) Modifications to section 11. Section 11 sets forth filing procedures for VCP submissions. These procedures have been modified to reflect electronic filing of VCP submissions and payment of applicable user fees using the www.pay.gov website. An electronic VCP submission filed using the www.pay.gov website must include many of the same documents as a VCP submission filed on paper pursuant to Rev. Proc. 2016-51; however, there are procedural differences.

First, an applicant must use the www.pay.gov website to create a pay.gov account. This pay.gov account will be used when filing a VCP submission and paying applicable user fees.

Second, after a pay.gov account has been established, the applicant must complete Form 8950, Application for Voluntary Correction Program (VCP) Submission Under the Employee Plans Compliance Resolution System, using the www.pay.gov website. Beginning April 1, 2019, applicants are not permitted to submit a paper version of Form 8950.

Third, documents relating to the VCP submission, including the description of failures, Form 14568 (Model VCP Compliance Statement), Schedules 1 through 9 of Form 14568, and any other applicable items (as set forth in section 11.04) for a VCP submission generally must be converted into a single PDF (Portable Document Format) document and then uploaded onto the www.pay.gov website. However, there is a 15 MB size limitation for uploading a PDF document onto the www.pay.gov website; thus special instructions are provided for PDF files that exceed that limitation.

Fourth, section 11 provides new procedures relating to the payment of user fees using the www.pay.gov website, including the generation of a payment confirmation. For submissions made using the www.pay.gov website, the IRS will no longer mail an acknowledgment letter to the applicant. Receipt of a submission will be acknowledged through the generation of a unique Pay.gov Tracking ID on the payment confirmation after the VCP submission is filed and the user fee is paid. A Plan Sponsor may designate an authorized representative to file a VCP submission with the IRS using the www.pay.gov website. Section 11.08(2) sets forth specific instructions on how to designate an authorized representative using the Form 2848, Power of Attorney and Declaration of Representation.

Would appreciate someone confirming the thought process here.

Governmental 457(b) plan document terms do not require spousal consent to name a non-spouse beneficiary. 

The only other relevant requirement would be 401(a)(11), which requires spousal consent as part of naming non-spouse beneficiary for exception of QJSA/QPSA requirements. 

Section 401(a)(11) does not apply to governmental plans or 457(b) plans. 

No requirement for spousal consent to name non-spouse beneficiary. Correct?

Terminated DB distributed all participant benefits, satisfying all benefit liabilities.

Rather than pay surplus excise tax, the surplus will be transferred to a qualified replacement plan. Then allocated to participants (same as DBP participants).

Is Form 5310-A necessary?

For a plan year ended 12/31/2017, an auditor determines that, during 2017, there were multiple failures to timely remit participant deferrals and loan repayments to the trust. The TPA does not agree with this assessment, as the plan became a large plan on 1/1/2017 and the employer was following the small plan safe harbor (7 business days) in remitting contributions. Even using this guideline, the auditor found multiple violations of the 7 day window.

The TPA now realizes that they must file a Form 5330 regarding the IRC Section 4975 excise tax; however, no extension was filed, and they are concerned about possible Penalites and Interest for a late filing of the return. Does the TPA have any possibilities of filing the extension now, providing a "reasonable cause" for not filing the extension, and see what the IRS does? I have never had this particular circumstance come up before and was wondering if anybody had experience with this scenario.

Thanks for any replies.

Treas. reg. 1.409A-1(g) says that a controlled group is to be treated as a single service provider. 1.409A-1(h)(3) says that for the purposes of the definition of "separation from service," the required quantum of ownership to determine a controlled group is reduced from 80% to 50%, whether you are dealing with a parent-sub (1563(a)(1)) or brother-sister (1563(a)(2)) relationship, but I can take the 50% up in my plan document, apparently for any reason, but not above 80%. I can also, but this time only if I have a business reason, instead reduce the 50%, but not below 20%. I think I've got all that right.

However, either for some policy reason that escapes me or because it simply slipped the minds of the reg writers, the ability to ratchet the 50% down to 20% or any point in between is tied to the statute's reference to "80%." Works fine if the relationship you are dealing with is a parent-sub, but if you have a brother-sister, ratcheting down the 80% requirement (i.e., 5 or fewer individuals, estates, or trusts must own at least 80% of each company) will not help if you cannot also reduce the separate 50% requirement (i.e., looking to the lowest percentage that each of your five individuals, estates, or trusts own in each company, the 5 or fewer group must own at least 50% of each company).

It's possible that part of the problem (either mine or the reg writers') stems from the fact that 1563(a)(2) is really 1563(f)(5) for purposes of 414(b) and (c). I'm pretty sure, however, that the references in 1.409A-1(g) and1.409A-1(h)(3) to 1563(a)(2) are really (i.e., really "really," not just intended "really") to 1563(f)(5), but I'm not sure if even that is absolutely certain.

So say you have a fairly large 401(k), 100's of employees, a few million dollars in deferrals ever year, $100k or so in deferrals each payroll period. CPA says that employee contributions should have been made, say, within 2 days of payroll date. That's reasonable. Most were, but some were made 3, 4, 5, or in one case 8 days later. Out of 24 payroll dates, maybe 10 have a problem. You calculate the lost interest and it is, say, in the 10's of dollars for each payroll, maybe $1,000 for the entire year.

DOL's VFCP Notice says the correction is to contribute the "Lost Earnings," but does not elaborate further. So good, you contribute the $1,000. My question is, how do you allocate it? The lost earnings arguably should be allocated as of each payroll date that had a late contribution, to the accounts of the participants who deferred on that date, in proportion to their deferrals. This will result in hundreds of separate allocation amounts, many less than one dollar. The administrative expense of doing that may easily exceed the amount being allocated. And some of the participants will have left and already cleared out their accounts.

Assuming your plan document can be interpreted to permit this and it passes nondiscrimination, can you do something different, like allocate per capita to anyone who (a) deferred during the applicable year, e.g. 2017, and (b) still has an account in the plan?

I am aware of the recent EBSA regional office letter urging employers to use the formal VFCP process, even for small amounts, rather than self-correcting, so my question is not directly about that, although maybe that is involved because if you go through the VFCP process you could get your short-cut allocation method approved by EBSA?

If you've heard this one before and it's got an answer, just point me to it. Thanks in advance.