Kevin C

I haven't seen that one. Our problem lately is that they are waiting until a week or two after they send a "your filing is late" letter before they process the 5558. Some of the 5558s we filed in July 2013 were not processed until the last week of November 2013. If the client consents, I would suggest sending a copy of the letter and extension to ASPPA GAC. If you need the e-mail address, let me know.

I don't think you will find a definite answer. The 415 regs define restorative payments in relation to a reasonable risk of liability for breach of a fiduciary duty. That ends up being a judgement call.

What is the company's fiscal year? If it is a calendar year, you have section 415 issues.

I would suspect that either payroll or the recordkeeper can't handle the catch-up properly. While the regs don't directly address Roth deferrals, I think that limitation violates the universal availability requirement. I also doubt that limitation is included in the plan document.

Having never seen a document that provides for a discretionary contribution to become accrued when "declared", I'm skeptical that the late PS contribution would be considered a correction of an operational failure. If it's not a correction, it will be current year annual additions. It will depend on what the document says. The SH contribution is required, so failure to deposit is an operational failure that can be corrected under EPCRS.

Our new VS document allows forfeitures to be used to reduce contributions in the year following the year of forfeiture. The EGTRRA version had the same provision. The 403(b) document we use also allows it. I don't see a problem with having it in a plan.

What I'm saying is that terminating the SH plan in connection with a 410(b)(6)© transaction allows you to have a short SH year. I also see it as both a termination and a merger, not one or the other. The merger is the method for getting the benefits out of the terminating SH plan. If they want to continue the SH contribution for those in the SH plan through the end of the year, take advantage of the 410(b)(6)© transition period, continue that plan through the end of the year and merge at year end. I don't see any other way to have that group continue to be SH for the remainder of the year. You certainly can not add SH for that group to the non-SH plan during the year.

It sounds like calculating the lost income would require time of a much higher value than the lost income. How about telling the custodian to send you their calculation of the lost income? They want to be a fiduciary, so let them be one. If their lost income calculation is less than what your time would cost to deal with the matter, the employer may decide it's easier to just deposit the lost income.

If you terminate the SH plan and those participants become eligible for the other plan, 1.401(k)-1(d)(4) forces you to merge balances for the actives into the Employer's "alternative defined contribution plan" since the plan termination will not be a distributable event. In that case, a merger is the only way to complete the plan termination.

There is no guidance for mergers of SH plans. That section of the regs just says "Reserved". If they want to temporarily continue the SH only for the participants currently in the SH plan, I would keep the plans separate until the end of the 410(b)(6)© transition period. Or, until the end of the plan year of the transaction. If they want to stop the SH mid-year, the plan can still be SH for the final year if the termination is in connection with a 410(b)(6)© transaction. 1.401(k)-3(g)(4)(ii).

Another issue is that the in-plan conversions need to be tracked separately by year of conversion for at least five years. (Notice 2010-84 Q&A 12) Depending on the number of sources and number of investment options, you may run into the limitation on the maximum number of accounts the valuation system can handle. I don't know if any of the daily software vendors have reprogrammed to increase the number of available accounts.

From a little farther down on the link above: http://www.dol.gov/ebsa/FAQs/faq_DFVC.html

Andy, Have you seen PLR 200836034?

The plan document should say what kinds of post severance compensation count as plan compensation. It may be in the Section 415 amendment. The plan will also say what the requirements are to receive the safe harbor contribution. The standard answer of "What does the plan say?" applies here. The type of compensation and whether it would have been paid if the participant continued to be employed will likely affect the outcome.

From your description, it looks like Z and the other 5 companies are "related organizations" under 414(m)(5). With 65% of Management Co's income coming from that related group, to me, it looks like all 7 are a controlled group under 414(m)(5).

I forwarded the IRS notice, the extension filed and its delivery confirmation to ASPPA GAC. I would encourage anyone else who has a client get one of these to do the same. They will forward it to the IRS. I don't have much faith in the the IRS actually fixing this any time soon, but I think it's important to keep reminding them they are messing this up and causing problems for us. In my opinion, one erroneous IRS letter to a client claiming a timely filing missed a deadline and will cost them $$$ is one too many. This client has already received two.

I could understand a reference to Form 8955-SSA. The IRS notice referred to Schedule SSA, which was removed from the Form 5500 starting with the 2009 filing. Schedule B became Schedules SB and MB starting with the 2008 filings.

I hate to be the bearer of bad news, but the problems from last year are still with us. One of our clients with a 9/30 year end received a late filing notice yesterday saying their PYE 9/30/2013 5500-SF filing was late and they owe $1,625. The extension was overnighted to the IRS on 4/25/2014 and signed for on 4/28/2014. The 5500-SF was filed on 7/14/2014, one day prior to the extended deadline of 7/15. We had several "approval" letters for extensions last year that were dated more than three months after the extension was filed. It appears that hasn't changed. I also thought it was interesting that the penalty notice mentioned the deadline and penalties for late filing of the "Schedule SSA" and "Schedule B".

Another option is to use the correction method for safe harbor plans from Appendix A .05(d). With a SH match plan, the missed deferral is the greater of 3% of comp or the highest level of deferrals that is matched at 100% or higher. With a 3% SH plan, it's 3% of comp.

For the brief period exclusion rule, the requirement is that the participant have the opportunity to defer for at least the last 9 months of the plan year. For someone improperly excluded from all deferrals, that effectively requires correction during the first 3 months of the plan year so that the participant is able to defer for the last 9 months. But, it doesn't specifically say that only failures corrected in the first quarter (at least 9 months before year end) are eligible. The actual wording is: I think that would also apply if someone was able to defer for at least the last nine months with the exception of a bonus check, provided that there is sufficient time after the error that the participant could change their election to max out deferrals if they wanted to. If the IRS really wanted to limit this to only apply to corrections done in the first 3 months of the plan year, I think they would have said so. That would have been a lot easier to write than what they did. Like so many things in this business, I'm sure others have differing opinions.

I was hoping someone with multiemployer DB experience would respond. I don't have any advice, just something else to consider. If I'm off base, hopefully someone else will jump in. If the plan is as underfunded as you seem to think, I don't think starting monthly benefits early gives him much protection from a benefit reduction if the plan ends up at PBGC. If I read the PBGC website correctly, his accrued benefit is more than what the PBGC guarantees for a multiemployer plan. If he retires early and the plan later becomes insolvent, I would expect his monthly benefit to be reduced to the maximum amount the PBGC guarantees. The guaranteed amount is reduced for early payment, so I would expect whatever he can get now to still be above the PBGC maximum. If the plan is better funded than you think, then the situation may be different.

Wouldn't that be an in-kind lump sum distribution? If someone does elect an annuity, it sounds like you are stuck. I would not want to be the fiduciary who made the decision to put investments in the plan that do not allow the distribution options provided by the plan.

Yes, everyone in their own group lets you do whatever you want provided there are no issues with what we are not supposed to tell you about. But, it's not the PS contribution amount that has to be definitely determinable, it's the allocation method. Everyone in their own group tells you which allocation group each person is in. The plan probably also says that the contribution designated by the employer for each allocation group is allocated among that group in proportion to compensation. It should also have a provision dealing with what happens if someone ends up qualifying for more than one allocation group, although hopefully that won't happen if everyone is in their own group . The only discretion the employer has is in deciding how much the contribution will be for each allocation group. Once that is done, the plan provisions determine who gets what. It makes more sense if there are fewer allocation groups. The IRS just decided to let you have as many groups as you have people. Is it logical? Maybe yes, maybe no. But how often has the IRS been logical? What happens if one of those 6 hours-a-day people ends up working more than 35 hours a week for part of the year? Or, what if one of the 40 hours-a-week people gets hurt and ends up working fewer hours?

I can't help with the TIAA-CREF part of your question, but based on my experience, it would be very unusual if you have anyone elect an annuity. In the 21 years I've been working with DC plans, our office has never had anyone elect an annuity from a DC plan.

I'd be concerned about using full-time/part-time as the criteria for a couple of reasons. First, the IRS seems to really get bent out of shape over the use of "part-time" in plan provisions. Also, I'd be concerned that deciding between full and part-time status might be seen as using employer discretion in determining which allocation class they are in. I think I would have everyone in their own group and the phrase "part-time" would not appear on the written contribution instructions required by our document.