austin3515

Under the DOL's new procedures that allow the TPA's to sign the 5500 on their behalf (i.e., they fax us the manually signed copy, etc), how are you completing the signature line? Are you leaving the actual plan administrators name, and then entering the TPA credentials (which obviously don't match the name), or are you entering the TPA credentials AND the corresponding TPA name as plan administrator? As far as I can tell, this is not addressed anywhere...

i.e., an -11(g) amendment?

Sometimes I hate this profession...

Are you sure an 11(g) amendment is out of line? Couldn't it be viewed as fitting within and (a)(4) failure? Maybe a bit indirect to apply this to 414s, but it seems unfair to suggest that the only allowable correction for a routine "ADP test like" failure is an IRS submission... (2) Scope of corrective amendments. For purposes of satisfying the minimum coverage requirements of section 410(b), the nondiscriminatory amount requirement of §1.401(a)(4)–1(b)(2), or the nondiscriminatory plan amendment requirement of §1.401(a)(4)–1(b)(4), a corrective amendment may retroactively increase accruals or allocations for employees who benefited under the plan during the plan year being corrected, or may grant accruals or allocations to individuals who did not benefit under the plan during the plan year being corrected. In addition, for purposes of satisfying the nondiscriminatory current availability requirement of §1.401(a)(4)–4(b) for benefits, rights, or features, a corrective amendment may make a benefit, right, or feature available to employees to whom it was previously not available. A corrective amendment may not, however, correct for a failure to incorporate the pre-termination restrictions of §1.401(a)(4)–5(b).

Gotcha, this came up with the failure to deposit the SHNCE by 12/31 too. Essentially, you never go back to the ADP test in a safe harbor plan, because the plan would have to be amended to add the ADP test back, and there is no basis for such an amendment (absent a submission, but who knows where that would go).

1) Failed 414(s) on a safe harbor = ADP Testing. When we've excluded bonus in the past it's only when the bonuses are negligilble and affect HCE's and NHCE's alike. 2) There is only one definition of an HCE that is applied for ALL purposes.

1.410(b)-5(d)(5): Determination of employee benefit percentage. The employee benefit percentage for an employee for a testing period is the rate that would be determined for that employee for purposes of applying the general test for nondiscrimination in §§1.401(a)(4)–2, 1.401(a)(4)–3, 1.401(a)(4)–8 or 1.401(a)(4)–9... Based on soleley on the title it appears clear to me that they are referring to the CALCULATION of the EBAR, not the minimum amount that the EBAR should be. Then you read the manner in which it references (a)(4)-8, and it becomes more clear.

From the OP: Do we not all agree that no gateway is needed if cross-testing is used solely to pass coverage?

The gateway rules are under 401(a)(4), and the OP refrenced coverage testing failures. I didn't think the gateway applied if you were just running coverage testing.

We have a connection/friend who is an RIA. They are getting audited by the DOL. They had requested a listing of all of their qualified plans that they do work for, and she has selected a sample from that list. The DOL apparently knows that they are just the RIA. What could the DOL be looking for? We've never heard of these sorts of audits before... Has anyone been through one?

I say there's really three to choose from: Relius Relius Relius OK there;s others out there, Blaze is supposed to very very good too, and I've heard ASC is also top nothc. But if you want testimonial from someone whose used a package and ehard nothing but great things, then my vote is Relius.

My advice, PenChecks!!!

If he is buying it for display in his living room, it would be prohibitted transaction. Definitely a gray area. If it was on display in a museum, then probably it would be OK.

From Sungard's FAQ's on EFAST: May a filing signer use a Form 2848 (power of attorney) to authorize a TPA to sign a Form 5500 on his/her behalf? No. The Form 2848 does not provide authority to sign a Form 5500 on paper (for 2008) or electronically (for 2009). http://www.sungard.com/en/sitecore/content...faq_part15.aspx Other thoughts still appreciated...

This has been discussed before but we are getting renewed pressure from some clients to obtain a POA to signt he 5500. According to the 2848 instructions, a POA can only be used to sign a TAX return in a few isolated events, including absence from the country, severe illness, etc. Can anyone confirm whether or not the DOL has indicated spefically that this standard should also be applied to a 5500 even though it is not a TAX return? I have to imagine this is coming up all the time these days... (*By the way, we would never do this for our clients, but we would prefer to be able to come back and say it is not even possible).

An interesting point, I do see what you mean. BUT, let's say that the net pay was decrease in such a way that additional medical bills could not be paid. Or if it's tuition, and the employee was planning on allocating a portion of each paycheck to the tuition. Again, we have to have actual knowledge to the contrary. But you made an excellent point, I had not noticed that nuance before.

So I assume you are agreeing with me? (or at least indicating that I'm not way off base?) Because reading that, I question how a plan administrator could ever have actual knowledge to the contrary of that...

Here's my opinion. The regs are very clear that: a) You do not need to take a loan if it would increase your hardship b) You are allowed to rely on the representations of your employees for this "needs" portion of the test (assuming safe harbor standards are being used). SO, if the employee represents to you that the loan would increase the hardship, then it should not be required to make the employee take a loan first. Really, the only way we could possibly have "actual knowledge to the contrary" would be to get copies of their financial information, mortgages, credit cards, personal investment accounts, etc. Am I way off base here?

From the EOB, 2009. Shockingly, they're saying pre-2006 this would have been OK. I can't imagine the DOL would agree with that statement, but I suppose it is a moot point today, as I think we all agree that now BOTH the IRS and the DOL would not like this at all... And for the record, this would definitely be a PT, in addition to a violation of the new 401k regs. 1.e. Could forfeitures be used to reduce elective deferrals? IRC §402(e)(3) provides that "[f]or purposes of this title" (i.e., the entire Internal Revenue Code), elective deferrals under a 401(k) plan are not treated as employee contributions. In other words, they are treated as employer contributions. So, if the 401(k) plan contains language that provides for forfeitures to be allocated to reduce the employer's contribution liability, and does not specifically confine the definition of employer contributions for this purpose to matching contributions and/or nonelective contributions, is the employer able to use the forfeitures to pay for its elective deferral contribution liability? Regulations that took effect in 2006 address this issue directly. See 1.e.1) below. However, before those regulations were issued, there was no published guidance that precluded such an approach, so the IRS permitted forfeitures to be used in this manner. See the Q&A session at the ASPPA Conference in Washington, D.C., on October 25, 2004. 1.e.2) Use of forfeitures to reduce elective deferrals prohibited in post-2005 plan years. Treas. Reg. §1.401(k)-1(a)(3)(iii)© prohibits the contribution of elective deferrals made on behalf of an employee before the employee performs the services to which the elective deferrals relate (or before the compensation would have otherwise become currently available had the deferral election not been made). No exception is made for forfeitures that are allocated to satisfy the employer's contribution obligation with respect to elective deferrals. Note an exception for forfeitures applies for matching contributions (see 1.d.3) above), but not for elective deferrals. Thus, the allocation of a forfeiture to another employee's account to satisfy the employer's obligation to contribute the employee's elective deferrals would be in violation of §1.401(k)-1(a)(3)(iii)©. These regulations are effective for plan years beginning on or after January 1, 2006, unless the employer elects to apply them to earlier plan years ending after December 29, 2004. 1.e.2) Example. A 401(k) plan has unallocated forfeitures in the amount of $35,000. The employer has a contribution liability of $72,000 with respect to salary reduction elections made by eligible participants. The employer deposits $37,000 and has the remaining liability satisfies with the $35,000 forfeiture account. This would violate the regulations described in 1.e.1) above. However, for pre-2006 plan years, so long as the plan document allowed for forfeitures to reduce employer contributions, and did not preclude the application of such rule to the employer's elective deferral contribution liability, the allocation of the forfeitures in this manner was permissible.

Yeah but those increases are "hidden" so no one will ever know! (please read with the intended sarchasm which is a little hard to convery on a message board...)

There's no question it's a money saver if you only have to split into two plans. $10,000 is the low-end of what we're seeing for audit fees.

I could not find the site in the EOB. Any help would be appreciated...

This has been discussed out here before, but I am curious to know if anyone has actually split 1 plan into to two for the purpose of avoiding an audit. Has anyone actually done this? Has it ever been scrutinized by the DOL. I putlled this from TAGData, who pulled it from an ASPPA Q&A session. the question was raised at the 2000 annual ASPPA meeting, in the general Q&A session. The questions at this session were answered by Joe Canary, Scott Albert, Lou Campagna and Mabel Capolongo of the Department of Labor: Question 5: A 401(k) plan has 150 participants. The plan must file a full 5500 and have an audit by an accounting firm. Due to the cost of the audit ($10,000 or $15,000), my suggestion to the client is to split the plan into two plans, each with 75 participants. For 2000 there will be an audit. The plans could be split into two plans on December 31, 2000. Therefore, on January 1, 2001, both plans have less than 100 participants and no audit required. For tax qualification testing, they can be permissively aggregated. In fact, my plan is to administer as if it was one plan and just separate for 5500 purposes. Is my conclusion correct? Answer: This question raises issues of avoidance and evasion. It is not certain that you really have two plans for purposes of Title I of ERISA in this instance--even if there may be two plans for Internal Revenue Code purposes. In Advisory Opinion 84-35A, the Department stated it would consider, among others, the following factors in determining whether there is a single plan or several plans in existence: who established and maintains the plans, the process and purposes of plan formation, the rights and privileges of plan participants and the presence of any risk pooling, i.e., whether the assets of one plan are available to pay benefits to participants of the other plan. This Advisory Opinion also notes that the Internal Revenue Service has cited the existence or absence of risk pooling between funds as relevant to the determination of single plan status. See §1.414(1)-1(b) 26 C.F.R. §1.414(1)-1(b). In DOL Advisory Opinion 96-16A, the Department stated its position that whether there is a single plan or multiple plans is an inherently factual question on which the Department ordinarily will not opine in the Advisory Opinion process.

We always start there, I should have mentioned... Occassionally, it's a plan ein/number issue, but as you point it is often wishful thinking!

Client insists that they filed their 2007 5500. IRS sends out a notice saying the filing was never received. The first thing we do is respond saying, no it WAS filed, and here is a copy of the filing. They then respond and say, you need to efile this 2007 return. What are people doing at this point? Fighting with the governemtn to convince them that it was filed? Or doing the efiling/DFVC program? At the end of the day, sicne this goes back 2 years, I can't see how anyone could say with absolute certaintly that it was filed (client does not have return receipts). I've been taking the cautious route saying that a known $750 is better than an unknown $15,000. Also, now that they are asking us to efile, I think we have less basis for then going back and using the DFVC.