Bantais

On 10/23/2004 at 12:02 AM, Guest erisafried said:

Apologies if this has been asked and answered in prior posts, but I am wondering what experiences folks have had in negotiating with the DOL over corrections relating to the late remittance of elective deferrals. More specifically, how far back do you have to go to address this issue?

I am working with a small-ish company that carried over its payroll practices from a much larger company from which it spun off. Recently, the company got a love letter from DOL which led to an audit for PY2000. The audit came up clean except for DOL's favorite topic--late remittance of deferrals.

Since the spin in 1999, the company has remitted deferrals once a month, but has a bi-weekly payroll. I knew there was an issue here right off the bat, and we fixed it from 2000 forward. Now, DOL is trying to hold us up for 1999 too. I would like to tell them to go jump in the lake, but I didn't know whether they take the same sort of position the IRS does on corrections: once you/we find a problem, you have to fix all the way back, even if it's outside the statute of limitations.

We're talking about small dollars here so we may just hold our noses and pay up. Of course, if we have a decent basis for telling them to buzz off, I'd like to do so.

Anyone?


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From my experience with DOL audits, they tend to be fairly strict when it comes to the timing of elective deferrals, even for small amounts. Unlike the IRS, which sometimes allows you to rely on correction programs (like the EPCRS) with certain limits, the DOL often expects plan sponsors to correct late contributions back to the date the deferrals should have been made, regardless of statute of limitations.

That said, DOL examiners will usually consider whether the amounts involved are truly de minimis and whether the plan sponsor acted in good faith once the issue was discovered. Since you already corrected the deferrals from 2000 onward and the amounts for 1999 are small, it may be possible to negotiate a resolution that limits the liability or reduces penalties. Having thorough documentation showing your intent to comply and the steps taken to correct the issue helps a lot in these discussions.

In practice, many small companies end up paying the owed contributions for the earliest period if the amounts are minor, but you can often avoid additional penalties if you demonstrate prompt corrective action and cooperation. Essentially, it’s a balance between minimizing administrative burden and satisfying the DOL that you are acting responsibly.

A good approach is to provide a clear explanation of your correction process, the relative size of the 1999 amount, and ask if they would consider this sufficient to close the issue. Often, they will be reasonable if the amounts are small and there’s a documented good-faith effort.

On 7/8/2024 at 8:54 PM, MoJo said:

Well, just to muddy these waters a bit.  We are a recordkeeper and have multiple pre-approved documents for use by our clients (plan sponsors)  Ever since EGTRRA, the IRS (or at least the reviewer of our 401(a)/401(k) document has MANDATED that the document contain language that PROHIBITS the deceleration of installments (including stopping them), once started, and has insisted on language that MANDATES that installments be calculated based on life expectancy at the time first taken (i.e. you can't setup installments for a fixed period of time (even if les than life expectancy).  We argued, Relius says they argued (we are a major modifier of their docs) to no avail.  The reviewer indicated that any flexibility would/could be a violation of the RMD rules, and therefore is not allowed (even though the RMD section clearly overrides any other distribution form, when required).  Interestingly, there is no such provision in the 401(b) plan.  Consequently, our document specifically precludes cessation of installments, and requires any change in installments to be a single lump sum of the balance (or arguably higher installment amounts - but that isn't clear.)  Presumably, anyone else using the Relius document also has this provision - as it was in their off-the-shelf version before our modification.

I think the IRS is full of it.  Groom Law agrees with us, and since the reviewer is now retired, we intend to try again in the next (k) restatement.  Unfortunately, we a re locked into what the document says, and even if allowed (as I believe it is), to do so would be failure to follow the terms of the document....




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I see what you’re saying, and it makes sense why you feel stuck. The IRS reviewer’s strict interpretation of RMD rules has clearly forced your hands, even if, logically, the plan should allow more flexibility. It sounds like the real issue is the language in the document itself, rather than the underlying rules, which is frustrating because it limits what you can do for plan participants. Waiting for the next restatement seems like the only practical option for now, but it’s definitely worth pushing back and making sure the updated language reflects the flexibility you and Groom Law believe is allowed. Until then, following the document to the letter is unfortunately the safest course.

On 12/13/2013 at 9:50 PM, gregburst said:

Joe is a 10% owner of a partnership. He gets paid $300,000 per year from the partnership (on a K-1). The partnership has non-highly-compensated employees. Joe wants to establish a pension plan for just himself. My initial response is NO.

Joe asks if it makes a difference if his $300,000 is paid to an LLC that he'll set up rather than to him directly. His hope is that this other entity, that has no employees, can establish a plan for just him. My response is still NO.

Joe asks, "What if I get paid $0 on my K-1 as a passive partner, and then the partnership pays me $300,000 on a 1099 for the actual work I do; can I set up a plan for just me with this 1099 income as an independent contractor?" "Or what if I get paid $0 on my K-1 as a passive partner, and then the partnership pays $300,000 to my newly established LLC for the actual work I do; can the LLC then establish a plan for just me?"

None of these pass the smell test to me, but after a while my head starts spinning. Is there some way to set this up so that Joe's plan doesn't have coverage issues?



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You’re right to be skeptical—this is a tricky area. Generally, under the IRS rules, if Joe is a 10% owner in a partnership with non-highly-compensated employees, it’s very difficult to establish a qualified pension plan just for himself without running into coverage issues. The plan has to satisfy nondiscrimination rules, which are designed to prevent owners from benefiting disproportionately compared to rank-and-file employees.

Setting up an LLC to receive the income or recharacterizing the income as 1099 or K-1 doesn’t really change the underlying issue. The IRS tends to look through these arrangements to see if the substance is really the same—i.e., Joe is still economically benefiting from the partnership income. So creating an LLC or paying himself differently probably won’t help avoid coverage requirements.

One potential path might be to consider a solo 401(k) or a defined contribution plan through an entity where he truly has no employees and is genuinely self-employed. But the moment the plan is tied to the partnership income or the partnership itself, coverage rules kick in.

Bottom line: there’s no simple “loophole” here. Any plan connected to partnership income with employees will likely trigger nondiscrimination rules, so Joe would need to either accept a broader plan covering employees or establish a separate entity where he is legitimately self-employed and has no other employees. Consulting a plan attorney or ERISA specialist is essential before trying any of these maneuvers.

On 7/29/2024 at 4:29 PM, Bcompliance2003 said:

We have a client who gives premium incentives to the employees for getting a physical- I know that's fine. But now they want to require spouses to have a physical if they are on the plan as well-- and "require" them to do so to be on the plan. Can they do that?  I know they can probably give an additional premium discount, but can they require the physical for them to be enrolled? That seems extreme, but I need to know the rules so we can forward it to them. 








You might point your client toward resources on building wellness programs (for example, this guide on how to build a wellness app) — it explains how to structure incentives in a fair, compliant way without making medical exams mandatory: https://www.cogniteq.com/blog/how-build-wellness-app-complete-guide

That’s a good question — and you’re right to be cautious. Generally, employers can encourage preventive health actions like physicals through wellness programs, but requiring spouses to get a physical as a condition of plan enrollment is a different issue.

Under the Affordable Care Act (ACA) and HIPAA nondiscrimination rules, wellness programs must be voluntary. This means employees (and their spouses) can’t be required to undergo medical exams or disclose health information as a condition for eligibility in the health plan. Incentives like premium discounts are allowed, but outright requirements can cross into noncompliance territory.

It might be best to advise your client to structure it as an optional wellness incentive instead of a mandatory requirement — that way they can encourage participation without risking a violation.

On 1/21/2025 at 4:53 PM, Tax Cowboy said:

I apologize if this isn't the proper group to post. 

Anyone use Judy Diamond to obtain updated lists of retirement plans for marketing purposes?

I always thought the DOL website would have similar information but maybe not in a all on one solution which provides reports and analysis based on 5500 filings.

Does anyone use judy diamond? Other marketing provider to target retirement plans for marketing?

Thank you in advance.

 

 

If you're looking for something broader that also helps manage and automate outreach strategies for international audiences, FlexFuture could be worth checking out. It’s an omnichannel marketing agency that specializes in helping businesses reach the right audience more efficiently — including B2B segments like financial services.

No worries, this is a perfectly fine place to ask that question.

Yes, I’ve used Judy Diamond before — it’s a solid tool if you’re specifically targeting retirement plans or benefits administrators. The main advantage is that it compiles and cleans up the 5500 data, adds filters, and makes it easy to segment by plan size, industry, or geography. That’s something the DOL site doesn’t do well, as it’s more of a raw data dump.

That said, it’s not cheap, so it depends on how much you’ll actually use it. If you only need a few lists or want to test a campaign, there are smaller providers or even some CRM integrations that can pull similar datasets.

If your goal is consistent outreach or niche targeting in the benefits/retirement space, Judy Diamond is reliable — just make sure the ROI matches your campaign scale.

On 10/7/2008 at 3:49 AM, mwyatt said:

One thought is that the bond is being held under the account (forget the terminology). How about you literally holding the certificate yourself in the old file cabinet? Since the thing is worthless, shouldn't be triggering any bonding/audit issues (assuming this is a small plan). Perhaps you could use this as wallpaper along with old Pets.com stock certificates?







Perhaps you could use this as wallpaper along with old Pets.com stock certificates? You could even take it a step further and create custom designs with print on demand wallpaper from FancyWalls to turn those nostalgic certificates into a stylish and unique wall feature.

Haha, yeah, literally holding the certificate yourself could work if it’s just for nostalgia or display purposes. Using it as “wallpaper” alongside old Pets.com stock certificates is actually a pretty fun idea—turning a pile of worthless paper into a quirky office or home decor. As long as it doesn’t interfere with any official record-keeping or audits, it seems harmless and definitely adds character!

On 10/18/2024 at 8:40 PM, 401 Chaos said:

Thanks.  I'm wondering if anyone out there has direct, recent experience or further thoughts with this issue?

I have a new client facing a similar situation.  They just filed both 2022 and 2023 on October 15th.  Apparently received advice from recordkeeper to just go ahead and file both.  Then, a couple of days ago, they received IRS Notice CP-406 with respect to 2022.  (They say they were unaware of prior notices or missing filing; responsible employee no longer there, company moved, etc.) 

The CP-406 notes in one part:  "If you are required to file a Form 5500 and have not filed, you may be eligible to participate in the DOL Delinquent Filer Voluntary Compliance Program (DFVCP) . . . ."  I'm not sure the phrasing there is meant to be strictly interpreted so as to suggest a plan that has already filed is disqualified from the DFVCP but  it seems possible. 

In looking through the DOL fact sheets on DFVCP, I don't see this directly addressed.  It is clear that once the DOL notifies the plan of intent to assess that DFVCP is no longer possible but the fact sheets do not say having filed the Form 5500 disqualifies the plan.  To my mind, the late 5500 that gets filed is still a "delinquently filed" 5500, it's just that it was initially filed before going through the DFVCP.  If the plan files under the DFVCP before any DOL notice, it would seem to me that should be OK.  Of course, the fact that they went ahead and filed the 5500 may make it more likely that the DOL will notice and initiate a penalty assessment so time may be more of the essence as Sabrina1 notes.

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From my experience, the situation you describe is fairly common. Filing the Form 5500 late does not automatically disqualify a plan from the DFVCP. The key factor is whether the Department of Labor has already notified the plan of intent to assess penalties. If no such notice has been issued, the plan generally can still participate in the DFVCP even after a late filing.

The late-filed Form 5500 is treated as "delinquently filed," so submitting it before engaging with the DFVCP doesn’t negate the plan’s eligibility. However, as you noted, filing first may increase the likelihood that the DOL will notice and potentially start the penalty process sooner, so it’s prudent to move quickly if planning to enter the DFVCP.

It’s also helpful to keep detailed documentation explaining the circumstances of the late filing—like changes in responsible personnel or relocation—as this can support a reasonable cause argument if the DOL does assess penalties.

On 2/9/2024 at 6:06 PM, ejohnke said:

We have a client that was using a Custodian that allowed for participant loans to be repaid using ACH. The Plan permits a terminated participant, making payments via participant ACH, who has elected to defer receipt of a final distribution, to continue making scheduled installment payments on the participant's outstanding loan. 

When the Plan document was restated as a Post PPA document, the ACH/terminated participant repayment loan provisions were not maintained. Since 1/1/22, the Plan has not been operating in accordance with their written loan policy. (They continued to allow for ACH/terminated participant repayment because it was never their intent to remove this provision. The Post PPA loan policy change was a Scrivener's error.)

We are thinking about doing a retroactive amendment to return the ACH/terminated participant repayment loan provisions to the Post PPA document. Is this an appropriate correction? It almost seems too straightforward. Am I missing something?


Also, has anyone had experience documenting similar retroactive fixes? We’ve been reviewing comparable cases and tools— carteza.com, for example, offers some insightful compliance resources for plan sponsors, especially when navigating complex post-amendment reconciliations.

On 7/7/2025 at 6:30 PM, RatherBeGolfing said:

A recent reply to an old thread got me curious, what do you use AI/LLM ("AI") for in your practice, if any?  Are you allowed to use it all?  Do you use it internally or externally (with clients)?

I have had this discussion in smaller settings, and I recognize that use of AI varies greatly.

I'll start us off with some easy examples from my practice:

- We do not use AI for anything with PII data, even if the workspace is locked down (not used to inform the AI outside of our workspace)

- We do not use it for legal or compliance questions. I have seen many benefits adjacent professionals do this and the answers can be frightening.  "ChatGPT said we are not an Affiliated Service Group" is a scary sentence...

- We use it to review and revise communications.  Don't like how your email sounds?  feed it to an AI to make it easier to read, understand, etc.

- We use it as a tool to help with formulas and macros for excel.

- I am playing with it as an internal Q&A tool.  By creating your own GPT, you can have the AI prompt you with questions (instead of asking it questions) and limit the source material it looks at to the specific documents you provide. 

If you're interested in exploring AI tools beyond the usual, I recommend trying out https://overchat.ai/chat/ai-brainrot-generator — a free and versatile AI platform great for brainstorming, generating creative content, or simply experimenting with different AI models. It’s been quite handy for me to get fresh ideas and insights during work.

Thank you for the interesting question and for sharing your experience! I have similar approaches to working with AI.

I completely agree with the limitations of using AI with personal data and in matters related to legal or regulatory responsibility - these areas require a very careful and professional approach, and AI does not yet replace experts there.

For me, AI is a great assistant in routine tasks, such as editing and improving texts, writing drafts of letters or documents, helping with formulas and code. It is especially convenient to use AI for generating ideas and speeding up work with information.

The idea of internal Q&A via custom GPT sounds very promising - this can significantly increase the efficiency of access to the necessary information within the team.

In general, I try to use AI as a tool for supporting and speeding up work, and not as a final source of decisions, especially in critical issues. Thank you for raising such an important topic!

On 3/31/2025 at 5:06 PM, jimbo1962 said:

My husband went through a nasty divorce.  He did what was ordered by the Court, she received over $200,000 for house and he paid child support- never late.  Part of the divorce was he get half of her pension, 401K from Disney.  For years, it was a cat and mouse game where exwife and Disney Fidelity would not disclose the name of her plans.  Discovery, subpoenas filed (this was back in 2005).  Finally in 2022, my husband got an award from Disney Fidelity.  Not much, but it was purpose.  Now in Feb, we get a letter from Disney Fidelity that ex-wife is trying to retire but her funds are being held up.  Trying to speak to somebody from Disney Fidelity QDRO dept is virutally impossible, but we did get this one guy who was super helpful and although couldn't come right out - told my husband to do another QDRO because she had another plan which he could be entitled to.  My husband and his previous lawyer back in 2005 always felt she hid money.  His ex-wife has hired her new 5th lawyer and they are trying to do a Motion to Vacate the original QDRO back in 2005.  My question is that the QDRO would apply to the plans the ex wife had during their marriage of 1988 to 2005, I dont understand why the guy from Disney Fidelity told us to subpoena Fidelity for her plan subsequent to 2005?  Why then?  Any advice would be so helpful.  Thx


 

Honestly, the whole ordeal is so draining that sometimes the only break I get from thinking about it is when I watch my husband unwind with Counter-Strike — he’s big on opening cases at case opening sites just to clear his head for a bit. It’s small distractions like that which help us keep our sanity through all of this.

 

On 12/20/2022 at 3:20 AM, Luke Bailey said:

Brian, I'm impressed and not impressed. Basically, all I've seen so far from ChatGPT is intelligent cutting and pasting of what is out on the internet. Granted, it's a real achievement for it to figure out what information is relevant to the question and to scrape it from the internet and cut and paste it into an intelligible answer, but this is newsletter type stuff, not an actual solution to a hard problem. I read the NY Times article on ChatGpt a week ago and the example that really struck me was the algebra question. The NY Times article linked to a post on Twitter: "A line parallel to y = 4x + 6 passes through (5, 10). What is the y-coordinate of the point where this line crosses the y-axis?" Chat GPT begins by explaining the problem and that we need to find a parallel line and do some algebra, about as well as a middle school math teacher at the chalkboard, but then boldly spits out a humorously wrong answer.

ChatGPT is just regurgitating, cleverly to be sure, the stuff it scrapes off the internet.

Try asking it one of the more difficult questions that you have received on BenefitsLink over the last year and see what you get.


 

If you want to see how it handles truly tough or niche questions, you could also try bouncing them around on https://overchat.ai/. A lot of folks there push these AI tools to their limits in more specialized discussions, which can be eye-opening.

 

That’s a fair take, and honestly a pretty balanced critique. I think it’s important to keep in mind what these language models actually are: sophisticated pattern-matchers that generate plausible text based on enormous amounts of training data. They don’t truly reason or understand, so they can easily give you a beautifully worded — but completely wrong — answer.

Where they do shine is quickly organizing general information, drafting summaries, or helping think through straightforward problems. For anything involving rigorous logic or deeper subject expertise (like the algebra example you mentioned, or complex compliance scenarios from BenefitsLink), they’re still hit or miss and always need human oversight.

I’d say the technology is impressive for what it is, but you’re absolutely right that it’s not a drop-in replacement for actual expertise — at least not yet.