Kevin C

We had the same discussion about two years ago. I think it still applies. The title above is a link to the prior discussion.

kwatts, The Employer can correct the situation, but you haven't given us many details. When were the loans taken? What is the loan program's cure period, if any? If the loans are still within the loan program's cure period, it's fairly easy to fix. The missed payments can be made up, with interest, or the loan can be reamortized. If the loans have gone beyond the end of the cure period, they are taxable and the only way to change that is to request a change in the tax treatment as part of a VCP filing. The Employer should be able to get the IRS to agree to reamortizing the loans and having them not be taxable as part of a VCP correction.

How about 1.402(c)-2?

Forms 5500 are freely available on the DOL website. The fastest way to get a copy is to go there and search for the filing. https://www.efast.dol.gov/portal/app/disseminate?execution=e1s1 Please note the search engine they use is really picky, so you will need to exactly match the first part of the plan or employer name as it appears on the Form 5500. Or, you can search using the EIN listed on the SAR. It should bring up all the Form 5500's they've filed since 2009. Find the one you want and you can print or save it. If it was filed very recently, the site may show a message that the attachments to the filing are not available yet. That is normal and the attachments will show up on the site after someone has looked at them to make sure they did not attach something they were not supposed to attach.

From the preamble to the DOL's 1996 Final deposit regulations:

Looks like someone is really cranky. A CEO who regularly makes false promises ends up with a company full of disgruntled employees. However, the transcript of the CEO's comments is irrelevant to the operation of the plan unless they have really bizarre document wording that makes verbal comments of the CEO part of the plan document.

Verbal communication does not supercede the plan document unless the plan document says it does.

We used Datair documents back then. You might try contacting them.

We have clients that have that situation occur each year. For some of them, the spouse fills in for people who are out sick. As long as the spouse actually performs services for the compensation received, I don't see a problem. Of course, the reasonable compensation issue is really the client's issue, not ours. If the spouse is a participant and has compensation, the regs are clear that he/she is in the ADP/ACP test.

The SH mid-year amendment rules prohibit a mid-year amendment that makes someone who was eligible no longer eligible. See Notice 2016-16, III D 2. Before we had that guidance, I think it would have fallen under the category of suspending or reducing the SH contribution under 1.401(k)-3(g), which means no safe harbor for the year of the amendment.

The CE requirements are in Circular 230, 10.6 (e):

Our disclosures do not show a seven-day yield for the money market fund.

FWIW, we had an IRS audit of a 403(b) plan for the 2008 plan year where the agent tried to apply the current (2009) rules. His position was that someone who dropped below 1,000 hours became ineligible the following year and if you included them, regardless of the reason, you were no longer allowed to use this exclusion. At the time, this agent trained other agents in our region on 403(b) audits This conflict between the IRS 403(b) regs and ERISA is supposed to be resolved in the coming pre-approved 403(b) documents, but until then, the only advice I've heard from the IRS is don't use the <20 hours per week exclusion.

It was a question from the person seated next to me. She was convinced that when you amended eligibility you were required to exclude those who did not meet the new requirements. Apparently, she did not like the answer she got from the speaker and the same answer from a couple of us who talked with her after the session. Someone submitted the same question to the Ask the Experts session, saying the prior session audience was split evenly on whether the speaker was correct. I remember seeing a few who looked like they disagreed with the speaker, but nowhere near half. But, I was sitting toward the front, so I didn't see the whole room.

The plan document should address what happens when there is a change in the eligibility requirements. Our VS base document says those previously in the plan, but not meeting the new eligibility requirements stay in the plan unless a certain part of the adoption agreement specifies otherwise. I was in that session, too.

Another slightly different angle: How are they sending the funds and what are they using as the deposit date? The preamble to the final regs has a footnote with a mailbox rule of sorts. For deposits that are mailed, the deposit date is the date they were mailed as long as the check clears. If that doesn't help, you might want to read through that preamble. It contains some interesting comments regarding monthly deposits that might be helpful. I haven't had to deal with this issue since the 7 day safe harbor was established, but prior to that I had favorable results after providing copies of the preamble (with applicable sections highlighted) to DOL investigators. http://www.dol.gov/e...al/96_19791.pdf

Interesting plan design. After some reading, it appears you would not be able to do this using a safe harbor match in the design. 401(k)(3)(A) and 401(m)(2)(B) have language that with HCE's in 2 or more plans of the employer, you count all deferrals and all match in each plan when you determine if the plan passes the discrimination rules. I think that prevents you from having the HCEs receive a SH match in both plans because of the limits on SH matches . 1.401(m)-3(d)(5) is pretty specific that it would cause a problem with the ACP safe harbor. I'm guessing that's why the two examples mentioned used the 3% SH.

I'm not sure I understand your point. The applicable sentence of the cite is: I've never seen a plan document use anything other than "Plan Year" in this context. Our current VS document says: Of course, it becomes, "What does the plan say?".

The rules regarding 30 day advanced notice and giving participants a reasonable period of time to change their deferral elections, etc. are in 1.401(k)-3(f), which deals with mid-year amendments to safe harbor plans. The amendment under discussion would be adopted prior to the beginning of the year, so those rules do not apply. I agree it could be a PR problem.

And for mid-year entrants, their participation is treated as starting on the first day of the plan year in which participation began. 1.411(a)-7(b)(ii)(B).

Not really. We set them up with a default password to start. But, you could login and set your security questions to something off the wall that you don't write down. You can't login later if you can't answer the security questions, unless you contact our office to get it reset. It may be possible to completely remove a single participant's web access, but I wouldn't want to do it. We provide web access in part so they don't have to contact our office every time they want to look at their balance.

We use a similar disclaimer. Remember this one? http://www.plansponsor.com/401k_Participant_at_Fault_in_Account_Withdrawal_Dispute.aspx If that doesn't work, the case is Foster v. PPG Industries Inc., N.D. Okla., No. 06-CV-423-GKF-TLW.

That's the problem with using the less than 20 hours per week exclusion for an ERISA covered plan. When you follow the IRS regulations, he will no longer be a participant for the year following the year he completes fewer than 1,000 hours. But, as My 2 cents points out, that would violate ERISA. To make matter worse, under the IRS regs, if you include one person who could be excluded under the less than 20 hour exclusion, you are no longer allowed to use the exclusion. This is supposed to be fixed in the pre-approved 403(b) documents that are expected to be available next year. The other way to deal with it is to stop using the less than 20 hours per week exclusion. We had a pre-2006 final reg IRS audit on a 403(b) where the less than 20 hours per week exclusion became an issue. The supervising IRS agent told me he had never seen a 403(b) plan that used the less than 20 hours exclusion that did it properly. Currently, all of our 403(b) plans are Church plans, so none of this applies to them.

My 2 Cents, it's a 403(b) thing. Although, it is possible in the 401(a) world to have different eligibility requirements for full and part-time employees, as long as the part-time employees enter if they complete a year of service. Our current VS document allows it.

K2, The regs should help with your question. For the initial plan year of employment, eligibility is determined by expected hours of service. For later plan years, eligibility is determined by actual hours in the prior plan year. For your question in post #5, the person is not a participant for the year ended 6/30/16 because he/she was not expected to work 1,000 hours in his/her first 12 months. When he/she did work 1,000 hours in the plan year ending 6/30/2016, he/she became eligible 7/1/16. I suspect the article you quote is saying that the person doesn't become eligible mid-year when they reach 1,000 hours during the year. But, rather, they become eligible at the beginning of the following year.