Kevin C

I've had the same experience. The 2848 and ERPA is for the IRS. With rare exceptions, the DOL doesn't care who they deal with as long as they get the information they want.

Being a small plan filer under the 80-120 rule also makes you a small plan for determining if you qualify for a waiver of the audit report requirement under §2520.104-46. The paragraph in that reg that mentions it is (d)(2). The small plan audit waiver is not limited to just 5500-SF filers. Small plans that file a Form 5500 can also qualify for the audit waiver under §2520.104-46. Line 4k of Schedule I is where you indicate on the 5500 that you qualify for the small plan audit waiver.

You will also need to keep an eye on the small plan audit waiver requirements. My experience has been that private placements don't meet the requirements to be "qualifying plan assets" under §2520.104-46 (b)(1)(ii). If they are not careful with their bond amount, they could be in for an unpleasant surprise and find an audit required for their 5500. Don't be surprised if the "proper valuation" each year he is referring to ends up being a copy of the K-1.

I think they are on the 5 year cycle. Rev. Proc. 2007-44 Section 17 has the requirements for eligibility for the 6 year cycle. To be a prior adopter (17.02) you have to have adopted and made effective a pre-approved plan as of the last day of the prior 6 year cycle. AND, they must adopt a newly approved pre-approved document by the end of the current 6 year cycle. They were in an individually designed document before 4/30/2010, so I think you don't meet the first part as of 4/30/2010. I don't see any mention of going back to a pre-approved document, so I think you don't meet the second part, either. You have to meet both conditions to be a prior adopter. I don't think it fits the new adopter (17.03) or intended adopter (17.04) criteria, either. If they are planning on being back in a pre-approved document before the end of the current 6 year cycle, have them sign Form 8905 and become an intended adopter.

Take a look at the plan provisions for direct rollovers and the definition of eligible rollover distribution. Plans are allowed to, but are not required to allow participant loans to roll out. If the document says eligible rollover distributions may be directly rolled over without any language saying that participant loans can not be rolled over, I think your plan allows the loan to roll out. A loan offset is an eligible rollover distribution (§1.402©-2 Q&A 9) and §1.401(a)31-1 Q-16, dealing with loan offsets refers to being able to roll over a participant loan. As previously mentioned, the other plan doesn't have to allow the loan to roll in, so you have to check both places.

We have a client that received the same letter. The first try on the electronic filing had errors and it was re-submitted. The second try was accepted and shows up on the DOL website and our gvt forms software as properly signed. We decided the IRS letter was in response to the first attempt at filing and sent them a letter explaining the situation. We'll see what happens.

EPCRS correction and correcting the loan before it becomes deemed are two different things and two different sets of rules. Rev. Proc. 2008-50 is very clear that its loan corrections are only available during the original maximum time period for the loan. But, you don't get to EPCRS until after the loan has already been deemed at the end of the cure period. EPCRS is not available when regulations or the code provide for a correction (Rev. Proc. 2008-50, section 6.08). Until the end of the cure period, you are under the regulations. Once the cure period has ended and the loan is deemed, you are under EPCRS if you want to correct.

And, what other choices are available? In our VS document, you would have to use the "tiered match" option instead of the "enhanced match" option to do a 400% match on the first 2% because of the wording in the adoption agreement.

Tom has it, although I would add the phrase "at all deferral levels". The SH restriction is here: ( If your prototype or VS document requires that the enhanced match must be on at least the first 3%, you have another issue because one condition of reliance on the opinion letter is that you only select options allowed by the document.

You may find Rev. Ruling 2007-43 helpful. Here is an excerpt from the Analysis section:

The EOB points out that the 414(s) regulations pre-date Roth deferrals and says that presumably deferrals would be treated the same regardless of whether they are regular or Roth. It also says that a literal interpretation of the regs would lead to the interpretation that you could exclude regular deferrals and count Roth. It ends by saying that the IRS will probably at some point clarify that different treatment is not intended.

Is it a 401(k) Plan? If so, perhaps the employer could designate $12,000 less for group one for the PS contribution and allocate $12,000 as a QNEC for the NHCEs. Of course, that assumes the document does not require a test failure to make a QNEC. That doesn't get you exactly where they want, but it might be close enough.

I've used it before, but it's been a few years. I didn't review the valuation system's numbers enough to verify the details of the calculation you are looking at. I think you are on the right track about distributions, that all would be included, regardless of the type. I also think it makes sense to exclude non-related rollovers. The plans we tested did not have any rollovers, so I didn't look at that. Looking at the regs now, I'm not sure you would include related rollovers, either.

The overpayment would not have been allocated to other participants if the failure had not occurred, so the corrective deposit will go towards 2012 employer contributions. If they are still matching for 2012, it should still work.

The EPCRS correction method for overpayments from DC plans is in Rev. Proc. 2008-50, Section 6.06(3). If the employer is making a contribution for this year, the correction when the employee will not return the excess is painless. The overpayment, plus interest is deposited and used towards the employer contribution for the year. The Rev. Proc. has methods for calculating lost income, including some in the exceptions to full correction section 6.02(5). I don't know about the 1099R, but think you wouldn't amend unless the participant repaid the distribution. I don't see how you could reclassify this as a loan, even if it was possible. One of the requirements for a SH hardship is that the participant max out on available loans first. So, how can he have another loan? Even if you could, the retroactive loan would already be in default and beyond the maximum cure period. The only way to fix the tax consequences of the deemed loan would be a VCP filing. To me, that would be a bigger mess than what you started with. I think you are much better off using the EPCRS correction from above.

Start with post #12 of this thread. http://benefitslink.com/boards/index.php?s...mp;#entry219325

I think you overlooked the last part of Q&A 4 (a)

I agree with Bird and refer you to the first paragraph of 1.72(p)-1 Q&A 10. The level amortization requirement of 72(p)(2)© requires level payments over the term of the loan. We are talking about a loan that initially satisfies the loan rules, so the amortization schedule complies with the rules for maximum length of the loan. The failure here is failing to make payments according to the terms of the loan; see the question for Q&A 10. If they wanted to say the cure period could not extend beyond the original five year period, this is where it should be. Instead, it defines the maximum length of the cure period based on the date the required installment is due. If the missed installment is, for example, the final weekly payment of a five year loan, then to me, this clearly extends the cure period beyond the end of the original five year period for the loan.

So, how can it be a 2010 contribution if a flat dollar contribution wasn't allowed until 1/1/11? My crystal ball says you will soon become very familiar with Rev. Proc. 2008-50.

When was the employer contribution deposited? In order for it to be counted as an annual addition for 2010, with calendar plan and fiscal years, it must be deposited within 30 days of the due date for the 2010 tax return, including extensions. See 1.415©-1(b)(6)(i)(B). Does the plan allow a $500 per person contribution?

Among our partnership clients, some apportion the employer contributions for the employees based on ownership percentages, and some use earnings. The only way to find out which one they use is to ask. Starting with a K-1 number of $656,811 and only having 4 employees, I would expect the final plan compensation number for the partner to be over $245K. That should make it easier to figure out what the employees need to receive to satisfy the gateway and 401(a)(4) general test.

How many people are excluded due to age and service when determining how many are in the top 20%? Under 1.414(q)-1 Q&A 9 (b)(2), the employer can elect to use lesser age and service conditions to determine the size of the top-paid group. Making an election may result in 9 being in the top-paid group.

I disagree. If the receiving plan does not allow Roth deferrals, how does it have a "designated Roth account" as defined in 1.402A-1 Q&A 1 that can receive the rollover? The code and regs say it can be rolled into a designated Roth account, see 1.402A-1 Q&A 5. Notice 2010-84 addresses that issue regarding in-plan rollovers in Q&As 19 and 20. It's pretty clear the plan must have a designated Roth account that allows Roth deferrals at the time of the in-plan rollover. I don't see how the rules would apply any different when receiving a rollover from another plan's designated Roth account.

I disagree that they have already earned the right to receive contributions based on future compensation at the same rate as for past compensation. In your view, would they be able to terminate that plan now? If they have already earned the right to the same rate of contributions for compensation paid for the remainder of the year, terminating the plan mid-year would result in a 411(d)(6) violation. I do agree that they have earned the right to contributions already allocated and they have earned the right to receive an allocation of whatever PS contributions are made for the remainder of the plan year. They also have the right to receive the contributions the plan document says they get. If I'm missing something in 411(d)(6) or the regs that protects future accruals, please point it out. Whether it is a good idea or not is another issue. I would also recommend that it be handled another way, if possible.

411(d)(6) protects benefits to the extent already accrued and eligibility for a contribution for the year once the requirements are satisfied. As long as you don't change the eligibility for the PS contribution, I don't see a cutback issue with your proposed action. the benefit change will be prospective only. You are talking about a PS contribution, so the prefunding prohibition doesn't apply. The hard part will probably be fitting it into your prototype document.