Kevin C

QDRO, I don't think you and I are referring to the same situation. If you change your statement to "if you exclude anyone from the safe harbor contribution based on a year of service, you have to exclude everyone", I agree with you. 1.401(k)-3(h)(3) & 1.401(k)-2(a)(1)(iii) combine to say that the ADP/ACP carve out testing option to exclude NHCE otherwise excludables from the test is not available for safe harbor plans. 1.401(k)-1(b)(4)(iv) and (vi) Example 2 say that "Plan" for ADP/ACP purposes is the same as "Plan" for 410(b) purposes, which is determined after applying mandatory and permissive aggregation/disaggregation. So, you have to count all of the otherwise excludables when you determine if the disaggregated otherwise excludable "plan" satisfies the safe harbor rules. If some of the otherwise excludables receive the SH contribution, but not some others do not, you will fail the requirement that all eligible NHCE's receive the SH. I was referring to plan eligibility. The have to be eligible to defer before they are considered otherwise excludable. See 1.410(b)-6(b)(3). If full time employees enter immediately and part-time employees are subject to a year of service requirement, the only otherwise excludables will be full time. The part time employees who have not completed the year of service requirement and met their entry date are not otherwise excludable, the are just ineligible. As long as the provisions don't cause a coverage failure or other problems as mentioned in my first post, I don't see a problem. The SH rules only deal with eligible NHCEs and eligible HCE's.

I don't see any reason why the SH status would affect whether or not you could use the eligibility provision I mentioned in my post. I don't see any restrictions on deferral eligibility mentioned in 1.401(k)-3 or 1.401(m)-3. You would need to make sure that all NHCE's eligible to defer in the plan receive the SH contribution. I read the OP as saying they wanted the provision to apply to the entire plan, so that wasn't an issue. The adoption agreement for our VS document does not have any comments or warnings about use of the provision with a SH plan. I don't see any cautions about it in the base document, either. I also tried using that provision in a SH match document and ran the validation routine with no errors reported. I did not ask our document provider about it. Can you point me towards what you think requires this?

Yes, provided the lump sum meets certain requirements.

If it only involved one person, there were no other failures and the amounts would be a small percentage of the plan's assets, it would probably be an insignificant failure correctable under SCP. I say "probably" because it is a judgment call on whether the failure is insignificant. Here is a prior discussion on insignificant vs significant. http://benefitslink.com/boards/index.php?showtopic=47539

You can contact the IRS and ask if your determination letter request on perpetual hold would still qualify the plan for VCP. You might be surprised at the answer you get. Here is a page I found on their site with contact info. http://www.irs.gov/retirement/article/0,,id=96919,00.html Or, you could file VCP as a John Doe and disclose the DL status. You may want to do this even if they tell you the plan is currently eligible for EPCRS.

There is a special $500 VCP filing fee for missed RMD's, unless you have a lot of other participants with missed RMD's.

The DOL's VFCP has a class exemption that can apply to the sale of an illiquid investment to a party-in-interest. I don't know that they would allow another plan to purchase the asset, though. To me, that would seem to be using plan assets to benefit the fiduciary who was responsible for the pension plan getting into this situation in the first place. http://www.dol.gov/ebsa/compliance_assistance.html#section8 From the FAQs:

I hope it isn't common. I've heard of it being done with a document or two, but not on a large scale, until now. It's a way of back-dating a document without having to ask the client to sign using a prior date. If you are saying the EGTRRA restatements are still not done 14+ months after the deadline, that's even worse. Good luck and CYA.

Interesting. It does look like that is how it works. Take a look at 1.403(b)-4©(5) example 7.

Maybe the language you are looking for is hiding with the plan's deferral limit provisions instead of with the catch-up provision? 1.403(b)-4©(3) says that for someone eligible for the 15 yr catch-up, the 402(g) limit is increased by the amount of the catch-up. For the regular age 50 catch-up, the catch-up is not counted towards the limit. If your document doesn't allow an eligible employee to exceed $16,500 by both the 15 year and age 50 catch-ups, you may want to look into other document providers' options.

Can you fax or e-mail the 5500 and an authorization form for them to sign and send back? That's what we do with the ones that are close to the deadline.

I agree that #1 in the OP is not a problem. We have several plans that pair a new comparability allocation with the 3% SH. I've been using the option to have each person in their own allocation group. With the 3% SH counting towards the gateway, if you can pass the 401(a)(4) general test, you can get the HCE's to 9% total without being required to contribute more for the NHCE's. For OP #2, Quagmire addressed the BRF issues. I've looked over the SH regs and don't see anything that would prevent the design from being SH as long as the provisions are written carefully. It should fit within the match limitations in the SH Regs. If the discretionary match only applies to deferrals not in excess of 3% of comp and is limited to no more than a 100% match, it should work. I don't think you will find a prototype or VS document that allows that kind of provision. You would likely be using an individually designed document or a minor modification to a VS document, so you would be submitting for a determination letter. Since the design is a little outside the box, a determination letter would be a good thing to have.

It looks like they moved the transcript. They have the audio for it, too. http://www.irsvideos.gov/SmallBusinessTaxp...mentPlans/EPCRS I also noticed they have another phone forum on EPCRS scheduled for 8/25/2011. http://www.irs.gov/retirement/article/0,,id=218995,00.html

If the plan excludes part-time employees from match eligibility without having an exception for those who complete a year of service, I think you have a plan document failure. But, unfortunately 403(b) plan document failures can't be corrected under Rev. Proc. 2008-50. The new EPCRS Rev. Proc. is supposed to cover 403(b) document issues, but there is no telling when it will be out. One suggestion from the IRS EPCRS phone forum on 8/24/2010. The speaker addressed the failure of a 403(b) to timely adopt a plan document, but I think a plan document failure would be similar. He said to go ahead and fix it, don't wait for the new Rev. Proc. From the transcript: The entire transcript is here: http://www.irs.gov/pub/irs-tege/epcrs_phon..._transcript.pdf The handout from the forum can be accessed from here: http://www.irs.gov/retirement/article/0,,id=218995,00.html

Were those catch-up eligible limited to 15% or limited to 15% + the catch-up?

The IRS letter forwarding program is free as long as you don't make more than 49 requests in a 12 month period. http://www.irs.gov/retirement/article/0,,id=110139,00.html For 50 or more, they charge a fee. http://www.irs.gov/retirement/article/0,,id=110142,00.html

Rev. Proc 2008-50, Section 1.03 says that SCP is available for 403(b)'s. Unless your failure is listed in (a), (b) or © below, I think there would have to be an IRS determination that the failure is egregious, or it is not egregious. We had your issue come up in a recent audit of a client's 403(b). The client, without telling us, decided that the <20 hour per week exclusion in the document at the time (2007 & 2008) really meant that "part time" employees were excluded and started excluding everyone who worked <32 hours per week. We found out about it when their main HR person explained what they were doing in a meeting with the IRS agent. The IRS has been very clear that the situation must be corrected, but they have never used the word egregious. From discussions with the IRS agent, this kind of failure is fairly common. He commented several times that every plan he has ever audited that used the <20 hour per week exclusion had mistakes in applying the provision.

I think they have a potential problem. What happens the first time someone wants to defer (for example) 2% and the employer says no? if 2% would be more than $200 for the year, I think they would fail the effective availability requirement. Do their deferral election forms and SPD say the minimum deferral is 2.5%?

It depends. If they corrected the operational failure under EPCRS they could still meet the requirements for the TH exemption. If they haven't corrected, they have qualification issues from the failure to worry about, too. Here is a previous discussion that ended with a discussion of corrections and the TH exemption. http://benefitslink.com/boards/index.php?s...ic=45280&hl

The instructions for line 9 say for custodial accounts under 403(b)(7) to mark trust for both plan funding arrangement and plan benefit arrangement. look for the paragraph that starts "Trust".

Sieve, I read Rev. Proc. 2005-16 as saying it is possible to amend the trust provisions of a NS prototype or VS document without losing reliance on the opinion letter as long as you don't amend in a way that would disqualify the plan. Section 5.09 says a NS prototype can amend administrative provisions of the trust without becoming an individually designed plan. Section 14.04 says a VS can amend adminstrative provisions of the trust without becoming an individually designed plan. That doesn't necessarily mean they can substitute a new trust without submitting for a letter, but they may be able to modify the trust to do what they need witout losing reliance on the opinion letter. It would also be a good idea to consult with an ERISA attorney before amending the trust.

I was thinking more along the lines of: Is it a fiduciary breach for the Plan Administrator, who knows the plan termination has been approved and is imminent, to withhold that information from terminated participants in an attempt to avoid the requirement to 100% vest them due to the plan termination?

There are several older discussions of this issue. Here is one. http://benefitslink.com/boards/index.php?s...10&hl=39310 You can find others by searching for "GCM 39310". I’m not clear on whether the situation changes when the plan fiduciary tries to avoid the 100% vesting requirement by paying these individuals after the decision to terminate the plan has already been made, but before the termination resolution/amendment has been signed. Anyone see fiduciary issues with misleading the terminated participants? I would think that most, if not all of them would delay their distribution until the plan termination if they were informed of the situation.

The DOL can work outside the box if they decide it is in the plan's best interest. We recently finished two cases with them that were handled outside of existing programs. We presented proposed corrections in both cases and the DOL approved. They were surprisingly reasonable and helpful. But, this situation might fit in VFCP. From the 4/19/06 VFCP Notice: