All too common situation of definition of compensation in plan document not being applied operationally.

Has anybody had any success in getting the good folks at EPCRS to accept a retroactive document correction?

This might sound strange but does anyone have a script for an enrollment meeting, where the focus is on motivating people to save more? So stuff like "Social security is not enough" and "to replace income in retirement you need to save 10% a year" and "the longer you wait the harder it gets to meet your goals because of compounding, etc."

Maybe not a script per se, but detailed talking points.  I know everyone has their own flavor to these things, but the good advisors I have watched do a fantastic job of motivating people to save with these little tid-bits.

I'm not talking about anything to do with the investments, just education on the importance of saving.

Thanks!

Plan Sponsor's Deferral and Loan Payments for 7 payroll periods were deposited late.  Payroll periods start in March and end in May. This occurred when the Plan Sponsor changed HR management and went unnoticed until the plan's investment platform sent an alert regarding a late loan repayment issue.  All 7 payroll periods were deposited immediately when this was realized, all were within 75 or fewer days of when they should have been deposited but for the oversight.

The Recovery Date is June 13.  Amounts involve about $5,800 in total deferral deposits (aggregate all payroll periods) and $100 in loan repayments (aggregate). This is a self directed plan and 20 participants are affected. This oversight was addressed immediately and steps/protocols were established to prevent this from happening in the future. This is a Prohibited Transaction but not an operational defect as the plan does not specify a deposit date for deferrals.

Questions:

1. Lost Earnings: it is my understanding the Employer may determine Lost Interest (from date deposits should have been made (usually 1 day after payroll date) to actual Recovery Date) based on the greater of the (i) DOL Calculator or (ii) the Plan's actual "Investment Experience" had the deposits been timely made*.  *To determine the "Investment Experience" it is my understanding the Employer may use the highest performing investment offered within the Plan, for each of the affected payroll periods in lieu of determining each participant's Investment Experience for each of the periods, if doing it individually is more costly than the benefit itself. The measurement period is the date the deposit should have been made, i.e. the Loss Date, to the Recovery Date (date actually deposited). IS THIS CORRECT?
2. Interest on Lost Earnings: are determined from the Recovery Date to the Final Payment Date (the date the Lost Earnings are actually deposited along with interest on the Lost Earnings). DOL Calculator determines this easily using the DOL rates. HOW WOULD YOU DETERMINE THE INTEREST ON THE PLAN'S "INVESTMENT EXPERIENCE" LOST EARNINGS (referring to the greater of (i) DOL or (ii) Plan in #1 above)? Select a reasonable interest rate, e.g. Prime +1%?
3. I read a post that suggested If the Employer were to determine the "Lost Earnings" and the "Interest on Lost Earnings" correctly (as above) and opted not to submit VFCP, it should be acceptable (no action nec) if ever audited since the Employer made the correction using the greater of the DOL or Plan Experience determination. IS THIS CORRECT?
4. If submitting VFCP the Employer can use the DOL Calculator and ignore the plan's Investment Experience - correct?
5. Restoration of Profits: is this an amount equal to a reasonable rate of interest (e.g. prime + 1%?) accumulated on each PT (i.e. each payroll period), measured from the Loss Date to the Recovery Date? If this cumulative amount is greater than the Lost Earnings determined as described above, then this amount should be remitted to the Plan in lieu of the Lost Earnings as determined above (and the Interest to the Final Correction Date is likewise adjusted)?
6. Form 5330: essentially the Employer must pay a 15% excise tax for 4975 PT, and it is equal to 15% of the Lost Earnings amount (or Restoration of Profits amount if greater)? If the 15% Excise Tax is less than $100, the Employer may opt to deposit it into the Plan and allocate it to the affected participants (as per plan provisions)?
7. Notice Affected Participants: is not necessary if the 5330 excise tax is deposited into the Plan and allocated to the affected participants in lieu of submitting Form 5330 and paying the tax?
8. Are there any further corrective steps necessary?
9. Should the VFCP submission be completed in spite of the small amount involved? Again, I thought I read a post indicating not to submit if the cost to prepare the submission exceeds the correction necessary. But of course the Employer must be certain all is calculated correctly and the correction is the greater of the DOL calc amount or the plan experience...

Thank you.

forgive me if a similar question was asked and answered on this forum that I seem not to find it.

My client wants to file for IRS Plan Termination Determination Letter.

Assuming every other notice and filing requirements are met and the DB Plan proposed termination date is 8/31/2017, can I use 2/25/2018 as a proposed distribution date.

Please help

PTIN System to reopen today

PTINs issued without charge for now.

It seems that most (all?) prototype/volume submitter plan documents that I have seen explicitly reference the 410(b)(6)(C) transition rule as either a default in the basic plan document or an election within the adoption agreement.  As a result of this practicality; I have always assumed that, in order to take advantage of the 410(b)(6)(C) transition rule, it must be explicitly stated in the terms of the plan document.  

I am now confronted with a prospective client's plan that is being spun-off from an individually designed MEP. The MEP document does not reference 401(b)(6)(C) or the transition rule at all but the sponsor of the MEP claims that "while the plan document does not specifically reference the rule, the plan covers it."  My gut reaction was to "call BS" on that but, being a careful person, I thought I should try to look for some actual support for my position.  Unfortunately, I came up with nothing.  

Any thoughts, guidance or insight (or even better a citation) that anyone can offer regarding whether it is necessary for an individually designed plan to include explicit reference to the 410(b)(6)(C) transition rule in order for the sponsor to take advantage of it?

Thanks.

Have a single participant DB that terminated 12/31/16. The one participant turned 70 1/2 today.

If the plan did not terminate, he would take his first annual annuity installment on 4/1/2018.

If the plan distributes assets in a few weeks, will he need to take his first RMD as part of his full distribution?

If so, I guess I could have him elect to take his RMD in annual installments based on a 26 year certain with a 4.99% COLA and this would get him close to what it would be if it were in an IRA.

We have a client who is thinking about contributing real property to it's underfunded pension plan.  We know of a few companies that have done this, such as Anheuser-Busch and Coca Cola, and we're trying to find more examples.  Are you aware of any employers who have done this?  If so, who (extra points if you have a link to an individual prohibited transaction exemption for the company!)?

I am a recent college graduate and just landed my first full-time job, so am very new to understanding 401(k)'s and retirement plans. My company says that they will match "up to the first 6% of your pre-tax contributions each pay period." For example, if I contribute $100 every pay period, they will match $6?

EDIT:

The rate is as follows:

200% on the first 2% that you contribute per pay period

50% on the next 4% that you contribute per pay period

Should every 69.5 year old 5% owner take an in-service distribution so long as the plan allows?  Rollover to an IRA and thus take an RMD on the account balance method and save money on personal income tax.  I'm struggling to find a reason not to.  I say 69.5 obviously so we get ahead of it before the first distribution calendar year.

-Dan

So, you have a SH nonelective 3%. Client wants to amend plan mid-year to exclude certain compensation categories.

1. Can this be done, with appropriate advance notice of 30-90 days? I've heard varying arguments on this. Some yes, some no.

2. If yes, I presume you would credit the 3% on this comp through the effective date of the amendment. Although for the non-SH contributions, such as PS, if they have a last day/1,000 hour requirement, could use the reduced comp for the whole year for that portion.

First of all big thanks to Dave for adding a FTW user group!

I am having a small issue in the 5500 module.  Every attachment is upside down no matter what the actual orientation is.  Is anyone else having this problem?  I spoke to support last week and so far the only work around that seems to be effective is to "print to .pdf" from the .pdf that shows upside down.  Basically a copy of a copy to make it work at the moment.  

Picture it if you will...

Husband owns 100% of the company.  Wife works at the company and is a trustee of the plan as well (yes, owner by stock attribution).  The wife has a son from a prior marriage (not adopted by the "new" husband).  The wife would like to hire her son as the financial advisor for the husband's 401(k) plan (that has employees...not a solo), so that the son can receive the commissions/fees.  The 401(k) plan allows for self-directed accounts.  Everything I read is very gray.  I read that it is unacceptable, but then goes on to say unless the fees are reasonable, etc.  Assuming that the fees would be reasonable, is this allowed?  Every fiber of my being says it's unethical from a fiduciary standpoint, and should be a prohibited transaction with a party of interest, but this client is going to want "proof" that it is not allowed.  Opinions?  Cites?  Thanks so much!

Hello!

I recently made a duplicative 8955-SSA filing on the IRS' FIRE system in error.  The message that the system gives me is " . . . If your file was submitted in error (it was a duplicate filing), this file will not be passed forward to SSA, however you must notify IRS to close the file."  However, I cannot find any information on how exactly to notify the IRS to close the file.  Has anyone else had this happen, and if so how did you close the file with the IRS?

Thanks for your help!

When a retirement plan’s fiduciary (whether it’s the plan’s sponsor/administrator, a § 3(38) manager, or a § 3(21) advisor) evaluates investment funds to consider which should be added to or removed from a plan’s menu for participant-directed investment, which sources of information does a fiduciary use?

Does a fiduciary look at the Beta, R2, Sharpe Ratio, Standard Deviation?

How does these measures aid, or distract from, one’s analysis?

Does a fiduciary use Morningstar?  Lipper?  Bloomberg?  Litman Gregory?  Zacks?  Zephyr?  Others?

Which sources do you like, and why?

Non-profit organization, non-governmental (a private college). They have a qualified plan (money purchase)  where, as a condition of employment, the employee MUST contribute 5% of pay. Employer then matches anywhere from 5 to 10 % of pay, depending upon service, etc. So far, so good.

The baffling part is that the SPD, and the plan audit notes on the 5500 form clearly indicate that these mandatory employee contributions are PRE-TAX. We’re under the impression, and the EOB seems to confirm, that such mandatory contributions are AFTER-TAX.

Am I missing something? Are mandatory employee contributions (non-governmental plan) allowed to be pre-tax? Or is it perhaps poor drafting in SPD?

I've got a participant who died at age 69 and one month back in December 2016.  Her beneficiary designation form says to pay her account balance to some charitable NFP (she was not married at time of death).  Is there any withholding taken from the payment?  Thanks.

If an employer begins to pay the related 403(b) fees, does that employer involvement cause the plan to fall under ERISA status to shift the plan from non-ERSIA 403(b) to ERISA 403(b)?

Hello everyone,

I just wanted to know if anyone here sat for ASPPA's DC-1 exam recently? I'd like to discuss few things.

Thanks.

With some recent threads regarding the fiduciary rule (is X a fiduciary under the new rule?), I wanted to revisit how people are handling their 408b-2 notices.

Is the fact that the fiduciary rule is now in effect changing your approach to your 408b-2 disclosures (or lack of 408b-2 disclosures)?  Or do you do 408b-2 disclosures for all clients regardless of covered service provider status?