Kevin C

I agree 3 submissions would be the way to go. There is more involved in a merger than just the plan document. Also, have they been filing separate form 5500s each year? If so, they have been telling IRS/DOL they have three plans for each of those years.

EPCRS, Rev. Proc. 2013-12 has information on loan corrections. You can start with sections 6.02(6) and 6.07. There is a correction method for a plan that allowed loans in operation, but the document doesn't have loan provisions in Appendix B, 2.07(2)(a). A VCP filing is the only way to change the taxation on the loan, but it must be corrected before the end of the original maximum loan period and you have to request tax relief. With the original loan set up with interest only until a final balloon payment, it would be taxable to him in 2009 unless corrected under VCP. if you treat it as an improper distribution, it would be taxable to him in 2009.

We use IntelliConnect. It's a CCH (Wolters Kluwer) product. Other companies have similar products. I keep the .pdf files in directories by year and use the Acrobat Pro search feature for searches within a file. I don't have anything to search within multiple .pdf files at the same time.

There may be something in the document after the part you posted. Documents typically have sections dealing in some detail with participation upon rehire, so there should be more participation related provisions. Our VS document lets you list a separate effective date for regular and Roth deferrals. Setting that to 10/1/2014 should accomplish what you want to do. You will want to check whether the plan uses entry date or full year compensation for determining employer contributions. You may need to change that depending on how they want the 2014 match calculated. If you are not sure, most document providers are willing to answer questions about how to fit certain provisions into their document.

Is the current PS plan 21 & 1 with semi-annual entry? If so, set the 401(k) portion up with the same provisions, effective 10/1/2014 and everyone who is a participant in the PS will become a participant in the 401(k) portion as soon as it is effective. Everyone else will enter semi-annually after attaining 21 & 1. Our VS document contains the following: Your document should have similar language.

A document reviewer used to DC plans probably wouldn't notice a problem with that. I've seen a number of plans with determination letters that contained clearly prohibited provisions. However, as many times as I've had my eyes glaze over reviewing a draft document, I have sympathy for the IRS reviewers that do it on a regular basis. I certainly would not want that job.

The web based reference product we use is quick and easy enough to navigate that I don't save much for future use any more. If I find some obscure helpful item on the web, I'll bookmark it If it is something really important, I still put a paper copy in my desk drawer. I save a .pdf of the session handouts for conferences I attend and every Q&A session handout I can find. I also save the recordings of the sessions, if available. Newsletters typically arrive by e-mail and I archive them by sender. With all the technology improvements, research is much easier and much faster than it was 15-20 years ago.

AtA, I think we will have to agree to disagree. I read the following as saying you can't impose a last day requirement on accrual for DB plans. (b)Rules generally applicable to computation periods.— In general, employment at the beginning or the end of an applicable computation period or on any particular date during the computation period is not determinative of whether the employee is credited with a year of service or a partial year of participation, or incurs a break in service, for the computation period. Rather, these determinations generally must be made solely with reference to the number of hours (or other units of service) which are credited to the employee during the applicable computation period. There are exceptions listed, but they do not apply to accrual in a DB plan.

AtA, Year of service is highlighted because that was the search term I used. The paragraph refers to service/participation crediting for purposes of eligibility, vesting and accrual. I was mainly looking at sentences 1 & 2. The exceptions start with sentence 4, but I don't see one that applies to accrual for a DB plan. There is an exception that allows a DC plan to have a last day worked requirement to receive a contribution for the year. I've only worked on a few plans that used elapsed time. They all credited fractional years for accrual. That seems consistent with §2530.200b-9. Is there some place it says they don't have to get any accrual credit for a period of service if they are not employed on the last day of the computation period?

Corrections are not uncommon with takeovers of existing plans. In a couple of cases, the prior TPA offered to fix the issues. In most cases, especially the with the larger firms, they don't do corrections, so we take care of it. I even had the owner of one TPA firm threaten to sue me for pointing out their mistakes. You refer to multiple qualification errors over multiple years. Does the auditor really think the service provider(s) who created the problems have the expertise needed to correct them?

I've done two very late amender VCP filings that included TRA 86, GUST and EGTRRA. I prepared all missing amendments and restatements and submitted them under Rev. Proc. 2008-50. Both were approved with no problems. Neither situation had missing documents, they just never amended or restated after adopting their plan. I had a one-man plan where the sponsor came to us after an IRS auditor discovered he had missed a couple of restatements. The IRS only made them do a current document, but the Audit CAP fee was over $6,000 That makes the VCP filing fee look really good. I've also done a few non-amender filings where they only missed some post GUST amendments. All of those were under 2008-50 as well. The only issue I had with any of those was over the filing fee. The IRS changed the eligibility requirements for the $375 missed interim amendments filing fee several years before they were updated with Rev. Proc. 2013-12. You won't have a problem with that now because 2013-12 reflects how they were determining the fees prior to its release.

I would say they got lucky with their determination letter application(s). A little more searching brought up the following

This seems to prohibit using a last day requirement for accrual service in a DB plan. §2530.204-2,Accrual computation period. It appears the 411(b) cite should be 411(b)(4)(B), not (3)(B)

If you read the contracts from the larger firms in the field, you will find the opposite. Without exception, the ones I've seen very clearly state that the TPA/Recordkeeper has absolutely no responsibility for their work and all responsibility and liability rests with the plan sponsor. As long as plan sponsors are willing to hire them under those terms, I don't think you will see anything change. Some smaller firms stand behind their work, others don't. My employer stands behind our work. As for guarantees and contract language, I'm more than willing to leave those to the lawyers and E&O carriers.

VCP correction for loans is required if you want to change the tax consequences of a loan failure. If there is no need for that and the operational failure fits in the requirements for SCP, why couldn't you use SCP? Based on the OP, payments began before the end of the statutory cure period, so unless their loan provisions are unusual, being a couple of months late starting payments should not have caused the loan to be deemed. Hopefully, they either got caught up on payments or reamortized with the February paperwork.

My first concern would be correcting whatever allowed a participant to improperly withdraw funds from the plan. I would then look to EPCRS (Rev. Proc. 2013-12) and if the plan allows loans, the loan provisions/loan program. If the plan allowed loans and provides for the statutory cure period, taxation may not be an issue. I would first look at the possibility of correcting as a loan under SCP (self correction). VCP would be the last resort. http://www.irs.gov/irb/2013-04_IRB/ar06.html The IRS has a number of web pages with information on fixing plan mistakes.

"Very low cost" can also mean very little service. Make sure you understand what parts of the administration they do and do not provide. For example, determining eligibility, calculating the match and/or profit sharing allocation, ADP/ACP testing and other testing... Your level of involvement in the plan administration will make a big difference in how much of your time is occupied with plan issues. As they say, time is money. You should also look at what services they provide in the case of an IRS or DOL audit or if plan corrections are needed. "Very low cost" can also be mistaken for "very low direct charges". Make sure you understand the fee disclosure the service providers are required to provide. Pay particular attention to revenue sharing. If the disclosure they provide isn't easy to understand and read, ask for another one. They are required to provide you a disclosure that is readable.

It's possible the solo(k) plan document they were referring to does not allow matching contributions. A match certainly can be allowed in any 401(k), but the document has to provide for it. I've never seen any point to having a document pared down for use only with a one-person plan. I like flexible documents. We've also had a few clients that forgot to tell us they hired an employee. The current rule on match for self-employed is in

This Q&A list is in the news section today. http://www.americanbar.org/content/dam/aba/events/employee_benefits/2014_irs_qa.authcheckdam.pdf Q 2 asks if the 5 year period can start with the date the first payment is due and references the TEFRA Blue Book entry cited above. The IRS response is no, the start date for the 5 year period can not be later than the the date the loan is funded or the date the proceeds are paid to the participant.

The 2012 Form 5330 will show a 2012 PT of the lost income attributable to 2012. From your description, that may or may not be $25. If part of the $25 is lost income attributable to 2013, it would not be reported on the 2012 filing. For example, if total lost income on 2012 late deposits, calculated for a final deposit in May 2013 is $25, you would calculate the lost income through the last day of 2012, say $24 and the rest would be additional income attributable to 2013. If it was not corrected by the end of 2012, it will be reported again on the 2013 Form 5330 and so on until corrected. There will be a new PT reported for 2013 that is the lost earnings on the 2012 deposits attributable to 2013 and lost income on the 2013 attributable to 2013. So, assuming the 2012 lost income on late 2012 deposits is $24, the 2013 lost income on 2012 deposits is $1 and the 2013 lost income on 2013 late deposits is $45, The 2012 Form 5330 would show a single PT with amount involved of $24. The 2013 Form 5330 would show two PTs, the 2012 PT of $24 AND the 2013 PT of $46 ($45 + $1) If both are not corrected until 2014, the 2014 Form 5330 would show three PTs.

Page 7 of the Form 5330 instructions tells how to determine the "amount involved" for a PT involving the use of plan assets: If the use of money or other property is involved, the amount involved is the greater of the amount paid for the use or the FMV of the use for the period for which the money or other property is used. In addition, transactions involving the use of money or other property will be treated as giving rise to a prohibited transaction occurring on the date of the actual transaction, plus a new prohibited transaction on the first day of each succeeding tax year or portion of a succeeding tax year which is within the taxable period. ...

If the termination of a safe harbor 401(k) plan is in connection with a 410(b)(6)© transaction or a substantial business hardship, the advanced notice requirement in the regulations does not apply. 1.401(k)-3(e)(4). If they want to stop deferrals, but continue the plan, I agree the regulations prevent that. I can't imagine why anyone would want to do that, but it is prohibited.

Can you elaborate on how the plan is being split into four separate ADP tests for what sounds like a single plan?

Plan documents typically say that partially vested terminated participants forfeit the non-vested portion of their account upon the earlier of distribution or incurring 5 consecutive breaks-in-service. If this person had more than 5 consecutive BIS before the effective date of the amendment, he should not have any non-vested amounts in his account balance that could possibly be affected by the amendment. What does the plan say?

No contributions in 3 out of the last five years usually indicates a discontinuance of contributions, which results in 100% vesting of all affected participants. There are exceptions. For example, if the lack of contributions is due to a lack of profits, it may not result in a discontinuance. see Rev. Ruling 80-146. The big problem with these rules is that once you determine a discontinuance has occurred, the vesting ends uup being applied retroactively. Another issue to consider is that the plan must have a sponsor. If her business doesn't continue, who will sponsor the plan?