Kevin C

Per the 5330 instructions, the late filing penalty with that small of a tax would be the amount of tax due if the filing is over 60 days late. The late payment penalty is a maximum of 25% of the tax due. Interest gets added to both. Would you be willing to pay 125% of zero, plus interest if the IRS decides at some later date that the form should have been filed? That's what I would do.

The requirements for the compensation definition used to calculate the SH contributions in the current regs is the same one used in Notice 98-52. The only recent guidance I've seen on this issue is the informal IRS comment at the 2014 ASSPA Annual conference that if your definition of SH compensation fails 414(s), you can correct with an -11(g) amendment adopted after the end of the plan year. Prior to that, there were some who thought this might not be fixable. I agree that amending to exclude bonuses can't be done retroactively. If you are looking at making the change for 2015, the problem isn't the amendment timing, it's the SH notice requirement. The amendment has to be adopted before the beginning of the 2015 year, but the SH notice has to be distributed a reasonable period of time before the beginning of the year. Is a revised notice provided now delivered a reasonable period of time before 1/1/2015? It's a facts and circumstances determination. If audited, the IRS gets to decide what is reasonable. And, providing a revised notice listing a smaller SH contribution could result in some upset employees. We've only had one plan that excluded bonuses from the SH comp definition. Everyone received a bonus and everyone eligible to defer received the SH. Fortunately, they always passed 414(s). I'm not sure how 414(s) testing would work if only NHCEs receive the SH, but I can't see the IRS letting you test the SH comp by only considering the NHCEs.

Sorry, but I have to disagree with you. Compensation used to determine the SH contribution must satisfy 414(s). It is not required to be a 414(s) SH definition. The cite you posted says the definition of 1.414(s)-1 is incorporated. That definition includes 1.414(s)-1(d) "Alternative definitions of compensation that satisfy 414(s)". Our PPA approved VS document allows the exclusion of bonus, commission or overtime from the SH compensation definition. Of course, it also cautions that electing those options may cause the definition to fail to satisfy 414(s). Question 1 at the 2014 ASPPA Annual Conference DC Q&A session dealt with how to correct a SH plan using a definition of compensation that was determined to not satisfy 414(s).

I think a non-fiduciary TPA covered by Circular 230 would need to advise the client of the possible consequences of the noncompliance / omission under section 10.21 of circular 230. From the DOL side, I can't think of what else would be required, although a letter like the above might come in handy. It wasn't the scenario from your post #6, but I did see a situation where a client's former, non-fiduciary TPA got into trouble with the DOL/DOJ for helping a Trustee avoid reporting a series of PTs on Form 5500.

I guess it depends on your business model. We've fired several clients over the years because they insisted on taking improper actions with their plans. A couple of other practical questions: 1. Is the plan paying $X of fees for a settlor function any less a PT than the employer withdrawing $X from the plan for use by the employer? 2. If the plan pays $X of fees for something that is clearly a settlor function, how are you going to answer the PT question on the Form 5500 / 5500-SF?

We got a new client late last year who set up a plan as described in the OP in 2012 with another TPA. They asked if the design would be a problem and say they were told there would be no problems. When the prior TPA was finishing up the 2012 year in October 2013, they realized the plan failed 410(b) and calculated a correction of $40,000. For 2013, they calculated a correction of $140,000. We amended the plan effective 1/1/14 to include everyone and they stayed with the SH match. Out of 70+ hourly employees now eligible, only 7 are deferring. Yes, they provided enrollment forms, notices and the SPD to everyone. Maybe that audit fee doesn't seem so bad now?

The DOL has a good description of what they consider Settlor functions on their website. You'll find it more in line with your opinion than the attorney's. http://www.dol.gov/ebsa/regs/AOs/settlor_guidance.html

A few thoughts: 1. You are not required to use a compensation definition for allocations that complies with 414(s), see 1.414(s)-1(a)(2). 2. Unless the definition used for the allocation is addressed in 1.414(s)-1(e) or (f), I don't see how it will satisfy the reasonable definition requirement of 1.414(s)-1(d). It shouldn't be a big issue if the allocation comp definition doesn't satisfy 414(s) provided you can find a 414(s) compliant definition that can be used to show you pass testing. Hopefully, your plan document allows flexibility in the compensation definition used for testing. 3. If a participant has gross compensation of zero, you are likely to have 415 issues with trying to allocate contributions to him because I would expect his 415 compensation to be zero. It sounds like an interesting situation. Good luck.

The deemed CODA issue was discussed as Question 4 at the 2011 ASPPA annual conference IRS DC Q&A Session. The IRS representative's answer will probably surprise you. If you can get access to the recording, it's worth listening to. In this case, it's a good surprise. The IRS concern with a deemed CODA came from an unusual plan design, not from the typical new comparability plan. But, it's worth repeating that the PS contribution decision is made by the employer, not the individual participants.

I doubt the DOL will go away. I don't see a reference to SIMPLE IRA in the deposit regs, but the preamble to the final regs published 8/7/1996 specifically says it applies to salary reduction contributions in a SARSEP. I can't see deferrals in a SIMPLE IRA being any different. http://benefitslink.com/src/erisaregs/403.html#.VG-5cvldXRM

If you follow the requirements, you can remove optional forms of payment from a DC plan. You'll also need to look at 1.401(a)-20 for the survivor annuity requirements that apply if the spouse's death benefit isn't 100% of the participant's vested account balance.

A Church sponsored 403(b) generally isn't subject to the discrimination rules under 403(b)(12). See 403(b)(1)(D) and 1.403(b)-5(d). That includes universal availability on the deferrals , 410(b) and 401(m). Does the sponsor fall under the definition of Church in 1.403(b)-2?

I don't see a problem with it. There is nothing in published guidance that would prohibit this. In a situation like that, our document provider recommends notifying the client that there is a slight chance someone at the IRS might have a problem with the amendment. Yes, "slight chance" is exactly what he said. I also had a chance to ask him about the origins of the claims that the IRS has been saying at conferences that absolutely no mid-year amendments may be made to safe harbor plans unless the IRS specifically says the amendment can be made. The IRS statements being referenced to support those claims are the same statements I've heard at conferences. I've heard the IRS repeatedly express concerns about mid-year amendments and explain that those concerns are the reason for the mid-year amendment prohibition in the regulations. Some individuals have interpreted those same IRS comments to mean the IRS wants a draconian prohibition of all mid-year amendments to safe harbor 401(k) plans.

If they don't allow deferrals from tip income, I think you would have a problem with universal availability for the catch-ups under 1.414(v)-1(e)(1), particularly with the effective opportunity rules under (i). I couldn't find anything directly relating to deferrals in your situation with a quick search. I did see something saying the employee can give the employer additional funds for tax withholding if the paycheck isn't enough to cover it in Pub 531. Not sure if that helps here. From your example, if the participant has $50 of deferrals and $1,000 of plan comp for the pay period, under your match formula (100% on the 1st 4%), the match would be $40. But, I also wonder what the deferral election says. He/she elected to defer 10% of what?

If choice #1 is the statutory definition from 411(a)(8), i.e. the later of age 65 or the fifth anniversary of participation, I think they yield the same date, assuming no changes in the plan year. Under 1.411(a)-7(b)(1), for determining the NRAge, participation is treated as commencing on the first day of the plan year in which participation commenced. So, with a calendar year plan and an age 62 participant entering 7/1/2014, the NRAge under 1 is 1/1/2019, since that is treated as being the 5th anniversary of participation. Under option 2, the 5th anniversary of participation is in the 2019 plan year, so NRAge is 1/1/2019, too. Now, if they change the plan year after someone starts participation, but before reaching NRA, I think you could get a different NRA under #1 versus #2.

I'm with John on this one. Some of the rules for an automatic contribution arrangement are listed in 1.401(k)-3(j)(ii). That makes the ACA "provisions that satisfy the rules of this section" and per 1.401(k)-3(e)(1) they can not be amended mid-year. If it's a 2/28 plan year end, you can amend now to be effective 3/1/2015.

Your question is similar to part of Q29 at the 2011 ASPPA Annual Conference IRS Q&A session. In response to the part of the question where ASPPA proposed that you could grant prior service credit for an acquired group and still count them as excludable, the IRS responded with "However, it (IRS) was inclined to disagree with Answer #3 on the basis that the plan cannot have it both ways - recognize the predecessor service for eligibility rights, but disregard it for the purpose of classifying the employee as an otherwise excludable employee for nondiscrimination testing purposes."

The IRS guidance on mergers for safe harbor 401(k) plans in the regulations is "[Reserved]". Since we are nearing the 10th anniversary of the publishing of the final 401(k)/401(m) regulations, I doubt we will get any guidance any time soon. The typical approach when there is no guidance is to follow a reasonable, good faith interpretation of the code. If there is a pay date or bonus paid on 12/31/2014, I think you would need to treat it under the 2014 plan provisions. Otherwise, you don't have your provisions that satisfy the rules of 1.401(k)-3 and 1.401(m)-3 in effect and unchanged for the full 12 month 2014 plan year.

If nothing else, you can combine the audits for the two plan years since the final plan year is less than 7 months. FWIW, I would merge at 12/31/14 as long as both plans exist in 2014. I do not consider a merger at the close of business on 12/31/14 to be something that makes the SH plan not be in effect and unchanged for a full 12 month 2014 plan year.

He turned 70.5 in the 2014 calendar year, so his ownership at any point during the 7/1/2013-6/30/2014 plan year determines if he is treated as a 5% owner for RMD purposes. Based on your facts, if the plan provides that RMDs for non 5% owners begin with the year of retirement, he won't have a 2014 RMD unless he retires in 2014.

From the DOL website: http://www.dol.gov/ebsa/faqs/faq-EFAST2.html I looked at some of our filings. The "Submit Date" on the DOL website uses Eastern Standard time. The AckID shows the date and time using the time zone of the filer.

What does the plan say? It may not directly address forfeitures from merged MP accounts, but it will say what happens to forfeitures and when.

The model tax notice from Notice 2009-68 has a good description of the available rollover options for a surviving spouse.

If you are going to the ASPPA annual conference this year, you'll want to look at question 38 in the DC IRS Q&A session handout. It deals with top heavy minimums when a participant moves to an excluded class during the year. They changed the facts slightly, but it is basically the TH part of your question. I find it interesting that after the response to essentially the same question at the Ask the Experts session last year, ASPPA's proposed answer disagrees with the response from last year. But, note that the IRS response disagrees with the proposed answer, points to a similar question in the 2000 Q&As and says the participant gets the TH minimum for the year of the change.

Maybe I'll get a new card when I renew in 2015. I'm not sure it matters because I've never had an opportunity to flash my ERPA card.