austin3515

That;s exactly what I told this person to do! And then wait and see if anything comes out, even if they say nothing is coming... They have to address it. They;ve spoiled us over the years so they know we're looking for it.

Well I get sticking it to for profit business, but some of these non-profits, especially the ones too small to hire big law firms, are out doing God's work as they say, so it seems like they really ought not stick it these organizations. Youre not punishing the "bad owner" you're punishing the people who rely on the org for services. So anyway, I am optimistic the IRS will see it that way. No guarantees of course, but I'm still waiting with hope!

Has anyone heard if the IRS is going to come out with any non-amender program as a means of allowing these non-profits to correct the fact that they did not restate by 6/30th? Already have someone in that situation (not a client I should point out!). It occurred to me that they did away with all the $325 VCP options so I do wonder if there will be anything...

Another question: how do people feel about including "formulas" in the Summary of Material Modifications? So for example, I can write my SMM to include a similar formula to the one I have included above. It will be worded more plain-English, but is that permitted? I assume there is no prohibition on SMM's. I'm willing to stipulate that it of course would be "better" to customize each one, but that is an enormous additional cost in terms of manpower.

This fits better with the overall structure of the amendment. Expansion of sources available for a hardship distribution. Pursuant to Amendment Section 3.2, are QNECs and QMACs available for hardship distributions? a. [ ] YES. QNECs and QMACs are available for hardship distributions. b. [ ] NO. QNECs and QMACs are not available for hardship distributions. c. [X] Pursuant to Adoption Agreement. QNECs and QMACs will only be available for hardship distributions if in the Adoption Agreement the Employer has elected that such distributions are permitted from all Accounts (other than those restricted by law).

We use FIS and this is what I came up with for the "will QNECs and QMACs be available?" question. It really blows my mind that this was not the approach since as far as I can tell it comes up with the correct outcome 100% of the time. Expansion of sources available for a hardship distribution. Pursuant to Amendment Section 3.2, QNECs and QMACs will only be available for hardship distributions if in the Adoption Agreement the Employer has elected that such distributions are permitted from all Accounts (other than those restricted by law). I appreciate any feedback, ESPECIALLY if I screwed something up!

Wow, that's a pretty darn good auditor! Most auditors don't know that much about correction principles.

I think you misunderstood. John Doe makes $135,000 in 2019, so he is an HCE for 2020. In 2020 he makes $110,000 so he is NOT an HCE in 2021. In order to avoid John Doe flipping back from one plan to another every year, we want him to stay in the 403b plan "permanently" regardless of his HCE/NHCE status.

Well the consensus seems to be that exercising discretion causes ERISA coverage, but it happens every day to not much consequence. Rest assured if anyone seeks my counsel they'll get the by-the-book answer!

Interesting!

I was talking to one of the vendors in this space and when I asked them about it, they were like "it happens all the time? I've been here 13 years and no one has ever asked me that before?" Carol I certainly would not question the accuracy of your guidance! And to clarify I am referring to non-governmental non-ERISA plans.

Seems to me that many non-ERISA plans require employer sign-offs for things like distributions and loans. I read some articles that seem to suggest that the only way to have a non-ERISA plan is for an independent party to sign off on everything. Is that how it works in the real world (I only work with ERISA plans so forgive my ingorance on this aspect).

Ha, I've taken both positions! Also Derrin Watson recommended just writing "This SMM is intended to provide updates to the Safe Harbor Notice" or something to that affect to make it clear that it was fulfilling both requirements.

The plan is a creditor of the business. Tell them to get on a payment plan... Even if it takes years to repay it, you need to do something. Especially if someone is the Trustee or a fiduciary as they need to try and collect what is due to the plan. Does the owner have $64K in their account? Take a loan for $32K and avoid this horrible headache.

It's ironic isn't that you choose the right to direct investments as an example of something you would love to prevent? The Employer does in fact have the "unilateral" right to deny them that opportunity. And they do it to prevent the participants from making stupid decisions. That's actually another good example of an arbitrary policy within the plan sponsors domain where they get to decide what is and is not in their document. I guess this is kind of silly anyway because if I see a plan with no money purchase money that includes the j&s requirements, I do whatever I can to get rid of it. I don;t want anyone to think I am a proponent of such a provision. My point is only that the plan sponsor has wide latitude to design a plan as it sees fit. Unless it violates some law, then they can do it. Hence if their policy is to require a notarization on all forms, then that is also their prerogative. By the way, if someone is lost, and we track them down using a skip-tracing service, we won't give them the time of day unless they get a notarized form saying they are who they say they are.

The one I had just said no distributions period without spousal consent. You know, trying to prevent the dirt bag spouse from running out on the stay-at-home-with-the-kids-spouse, drains the 401k and blows the money in Vegas. Tale as old as time basically. Gee I wonder where plan sponsors got the idea to make that a requirement? Hmm... Oh I know, probably from the existing laws that make that a requirement for pension plan distributions. Yeah that's a strong possibility. Oh I know you're going to say. It's not the same thing at all. The spouse is waiving their right to a QJSA! Oh please. Has anyone actually seen someone take an annuity out of a 401k plan? Ever? I've been at this for near 20 years and never seen it once. The reality is that the spouse needs to approve the spouse taking their money as a lump-sum. Even a loan! That's just reality. So really, the argument that in a non-J&S plan suddenly the very same requirement with the very same purpose is now an outrage and will probably result in a gynormous lawsuit and a DOL investigation to boot is a bit hard to imagine.

I can see I've struck a nerve here. But since that wasn't the issue at hand, I still maintain that requiring a notary is not at all the same thing as keeping someone sepaarated from their money. Quite the opposite actually, it is ensuring that a participant's money will be their waiting for THEM and not some identity thief in northern Africa.

For the record a) this was an attorney drafted plan that required spousal consent for all transactions, even though it was not a J&S plan; b) they had an IRS determination letter (FWIW, I know it doesn't mean everything is ok, but worth noting nonetheless); and c) when we restated onto our document I told them to get rid of it for the sheer fact that it was a pain and unnecessary. I'm certainly not endorsing a policy like that. I was only making the point that plans can and do have weird and arbitrary and unnecessary requirements. But if they are in the plan, then by definition they are required.

Well, if the document says the spouse must sign, then it is by definition a requirement. No different then the document says you can;t get paid out until after the end of the plan year. It's arbitrary and pointless and stupid and it makes participants hoppin' mad. But because the docment says it, it is so.

Plans mandate things all the time that are not required. I have seen plans require spousal consent when not necessary for example (I don't mean a profit sharing plan including annuity options, I mean just an arbitrary requirement for spousal consent). Fiduciaries have personal liability for protecting plan assets. It would be improper in my opinion for someone to say how far a fiduciary should go in fulfilling that role (and thus protecting his or her own home, quite literally), barring something really quite extraordinary. So a notarization is relatively inexpensive and widely available. i.e., if it's not your home on the line, then you don't have too much right to 2nd guess. In contrast, saying that a distribution will not be approved unless a participant presents him or herself in person at the corporate headquarters with 3 forms of ID is almost certainly going too far (even though it's probably a great way to get "close to absolute" certainty of one's identity).

I'll bet the plans most likely to add such a feature are plans that had money stolen through identity theft. Just a hunch.

Wow, that's an interesting thought...

So this got more complicated and not less complicated. That's great.

There was another thread that was super long on all of this stuff. Curious to know if others agree that retirement contributions are almost certainly moot now with the 24 week period as opposed to 8 weeks? Obviously a company that has been shut down since March is a different story, I'm talking about the for whom payroll over 24 weeks will exceed the amount needed for forgiveness.

The employee actually didn;t care at all. It was the "bundled recordkeeper" who is putting their foot down on the corection. I got the impression from the CPA auditor I was speaking with that perhaps they would accept a different correction, but only if a hold harmless was obtained. They haven't said that yet, but I think that's where it would end up.