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Kevin C

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Kevin C last won the day on August 12 2021

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  1. Unfortunately, this problem goes way back. I had a client that had this happen two years in a row about 10 years ago. Got a 2848 signed and waited on hold for a live person. That took care of the issue and even got an apology. But, the damage was already done. Even if it's a mistake, no one likes getting a penalty letter from the government. After receiving the second letter, their Board started looking for a new TPA and moved the plan. I contacted ASPPA about it at the time. They went to the IRS about it, but not much changed. Most of our clients received the letter "approving" the extension of their calendar year 2021 returns around the first of November. I haven't heard of anyone receiving penalty letters yet.
  2. As you noted, since the plan is under examination by the IRS, SCP is only available for insignificant operational failures. The IRS agent will decide if it is insignificant. I would try suggesting your plan in your first post. If they don't approve it, I would probably suggest removing the ineligible people from the plan as an SCP correction. The IRS usually wants amounts left in the plan, so that might encourage them to reconsider your first option. If they don't let you correct under SCP, you will be under audit CAP. Best case for the Audit CAP sanction Is the amount the VCP filing fee would have been. It may be higher. Good luck.
  3. You aren't missing anything. There was a fairly long thread on this back in late 2018, with the same conclusion.
  4. The regs allow extending the length of the loan beyond the original 5 year period if certain conditions are met. There are two options, yuck and double yuck. See 1.72(p)-1 Q&A 20 (a)(2). ASC's cycle 3 401(k) document includes an optional loan program that allows restrictions on loan renegotiations, provided the ability to renegotiate is available on a non-discriminatory basis. It also has an optional to not allow renegotiation.
  5. The only exception to the three month plan year requirement in the Regs is for a newly established employer.
  6. There are a couple of places. Deferrals can only be made from Section 415(c) compensation and deferrals including catch-up can't exceed Section 415(c) compensation. And
  7. The reg section you cited is below. The example should be helpful. In short, if the lump sum available after the amendment is available with the same timing (and other terms) as the partial distribution, the removal of the partial distribution doesn't violate 411(d)(6). Likewise, if the lump sum after the amendment is available with the same timing as the the start of the installment payments being removed, the removal of the installments doesn't violate 411(d)(6). In most cases, the lump sum and other optional forms of payment are already available with the same timing and under the same terms, so eliminating the other optional forms of payment is not a problem. Of course, if the plan has any money purchase amounts in it, they can't eliminate the annuity option for those MP amounts.
  8. Is the participant an HCE in the plan paying the refund? There is a discussion of this in one of the Asked and Answered in the Qualified Plan eSource on ERISAPedia. If you search for QA2986, then scroll down a bit, you'll find it. The gist is that if an HCE receives a higher rate of match after the refund, you have a BRF problem unless the match based on the refund is forfeited. The plan may provide that it is forfeited even if it isn't discriminatory.
  9. I agree common sense doesn't always apply to plan rules. But, in this case, I read the Code as agreeing with you.
  10. It's not dealing with 404(c), but the DOL has published a less than favorable opinion of self directed plans that only provide a brokerage window in their fee disclosure guidance. From FAB 2012-2R Q&A 39: "... Nonetheless, in the case of a 401(k) or other individual account plan covered under the regulation, a plan fiduciary's failure to designate investment alternatives, for example, to avoid investment disclosures under the regulation, raises questions under ERISA section 404(a)'s general statutory fiduciary duties of prudence and loyalty. Also, fiduciaries of such plans with platforms or brokerage windows, self-directed brokerage accounts, or similar plan arrangements that enable participants and beneficiaries to select investments beyond those designated by the plan are still bound by ERISA section 404(a)'s statutory duties of prudence and loyalty to participants and beneficiaries who use the platform or the brokerage window, self-directed brokerage account, or similar plan arrangement, including taking into account the nature and quality of services provided in connection with the platform or the brokerage window, self-directed brokerage account, or similar plan arrangement." Field Assistance Bulletin No. 2012-02R (1) | U.S. Department of Labor (dol.gov)
  11. I agree with FtWilliam's analysis. The cited reg section has not changed since that was written. It refers to a limitation on "matching contributions" for HCE's. Other sections of the reg refer to "safe harbor matching contributions" and "qualified matching contributions". I don't think the reference here to "matching contributions" was accidental. From the article:
  12. There is a way to have a safe harbor contribution deposited after the Section 415 deadline counted as an annual addition in the prior year. Corrective allocations under EPCRS are treated as annual additions for the year they relate to, not the year of deposit. Rev. Proc. 2021-30 6.02 (4)(b). Note, this only applies to required contributions. If you don't feel that having a 2020 safe harbor treated as a 2021 annual addition is something that warrants correction, have them deposit on 1/1/22 or later.
  13. Kevin C

    True up

    The answer to your question will be in either the plan document or the amendment terminating the plan. What do they say?
  14. You need to contact the Department of Labor. You can get contact info for your regional office here: https://www.dol.gov/agencies/ebsa/about-ebsa/about-us/regional-offices
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