Kevin C

Your details in post #3 look to me like the same situation discussed in 1.401-10(b)(2). The reg says each of his trades or businesses is treated as a separate employer for purposes of applying sections 401-404. It also tells how to determine the self employed person's plan compensation if only one of his businesses sponsors the plan. I know it's dangerous to apply logic to IRS regs, but I'll give them the benefit of the doubt and take this to mean it is possible to have a plan where this rule applies. Whether or not Business B is covered by the plan will depend on what the document says. Our NS prototype has the following as part of the section on Eligible Employees: If you document has similar language and Business B did not adopt the plan, then they are not eligible employees and are not participants in the plan. Fortunately, in your case, 410(b) won't be an issue.

A self-employed person can have more than one trade or business.

Was this one a VCP filing? Or was it discovered on audit or during the 5310 filing? I helped a non-amender (not one of our plans) who was discovered on IRS audit. We only had to do the EGTRRA restatement, but the IRS penalty was $6,500.

With no amendments since 1977, it will likely take more than just a current restatement to correct the amendment failures. I don't think you are going to find all of the provisions for GUST, TRA 86, TEFRA/DEFRA/REA ... included in an EGTRRA document. But, VCP is still the way to go. Here is an excerpt from the transcript of the recent IRS phone forum on EPCRS: http://www.irs.gov/pub/irs-tege/epcrs_phon..._transcript.pdf

I think 1.401(a)(9)-5 Q&A 9 helps. With a few exceptions that do not apply here, all distributions are taken into account in determining if 401(a)(9) is satisfied. Now, if there isn't enough $$ left in the account to cover the RMD, the plan has a problem. Although, I handled an IRS audit where a participant rolled over his entire balance because the adminstrator forgot about the RMD. Fortunately, the participant took a distribution from his IRA that year of more than the plan RMD amount. The agent closed the case without making us do a correction.

If you are looking for a few extra ERPA CE credits, the IRS does some free phone forums that count as ERPA credits. The next one is scheduled for 9/30. http://www.irs.gov/retirement/article/0,,id=218995,00.html I've done two so far. You get an e-mail afterwards for documentation.

The speaker for the IRS's phone forum on EPCRS on 8/24 said the updated Rev. Proc. is in the clearance process, but the system is backlogged. It may or may not be released this year. He also said if you have a 403(b) failure, he suggests that if you know what the problem is and how to correct it, you should go ahead and fix it and not wait for the new Rev. Proc.

Look at the rules for plan coverage changes in 1.401(k)-2©(4).

The DOL regulations were changed on 1/14/2010 to include a safe harbor time period for deposits of amounts withheld from paychecks into plans with fewer than 100 participants. The safe harbor treats the deposit as timely if it is deposited within 7 business days. http://www.dol.gov/federalregister/HtmlDis...;DocumentType=2 That doesn't automatically mean a deposit later than 7 business days is late. The regular timing rules would apply. But, based on our experience with DOL audits over the last few years, I wouldn't count on being able to convince them that anything over 7 business days is really timely.

oldman, you are only quoting part of that reg section. There are other requirements listed. Consider a calendar year plan with quarterly entry. I'm hired on 10/18/2010 as a full time employee. The next quarterly entry date is 1/1/2011. If I am not allowed to defer until 1/1/2011, I do not have the opportunity to make a cash or deferred election for the 2010 plan year. And, I certainly do not have the right to defer up to the applicable limit for 2010. If this 403(b) gets an IRS audit, the plan sponsor will be in for an unpleasant surprise.

The rules for reliance on the opinion letter of a prototype or volume submitter document are in Rev. Proc. 2005-16, Section 19. Rev. Proc. 2007-44, Section 19 covers the effect of amendments on the 5 or 6 year amendment cycle. Rev. Proc. 2005-16, Section 5.02 covers amendments that cause a prototype or VS document to become individually designed. Unless the plan document says otherwise, I don't see how it would matter to the IRS who prepared the amendment. But, I wouldn't even consider amending someone else's document unless we are maintaining the document going forward.

If you are failing the 401(a)(4) general test with the allocation you want, the answer may vary depending on what the document says. Does your document say the allocation must satisfy 401(a)(4)? From a long discussion of this last year, I gather most documents to not require satisfaction of 401(a)(4). The document we use does require it. An -11(g) amendment can not reduce benefits. The terms of the plan will determine what those protected benefits are.

Defined benefit plans that use pre-approved (prototype or volume submitter) documents are required to be restated every six years. The deadline for EGTRRA restatement is April 30, 2012. http://www.irs.gov/irb/2010-15_IRB/ar10.html Individually designed documents are on a 5 year restatement cycle, with the timing of the cycle determined by the last digit of the sponsor's EIN. Cycle A, the first 5 year cycle, ended 1/31/2007. The last one, Cycle E ends 1/31/2011. Then it starts all over again with Cycle A due by 1/31/2012. Your DB service company can tell you which category you are in. It isn't surprising that the document fee is in addition to their normal annual fees. The document restatement is additional work that isn't part of the annual valuations they normally do for you.

The Form 5500 instructions are pretty clear. Fewer than 100 participants at the beginning of the year is a small plan. 100 or more at the beginning of the year is a large plan. If you are 80-120, you may elect to file the same category (small or large) as you filed last year. You are at 111 participants and filed as a large plan last year. Any way you look at it, you are a large plan filer this year, too.

We have used both RIA and CCH, mostly CCH. Their systems work a little different, but I didn't notice significant differences in how well they worked for me. Content is more of an issue for us. Some of the Pension Answer Books are pretty popular in our office and you can only get them on-line at one place. We've faced the fee increases, too. Over the years, we've pared down the content we have access to until we have the minimum package that will still do what we need. When the increases are large, we start looking at other options again. We usually end up with a renewal price that is close to what the other company offers for a similar package.

I think you have it right, but I would word part of it a little different. Passing the tests is the qualification requirement. Of course, you don't really know if you pass unless you run the tests. If they pass all the testing, it sounds like your EPCRS filing will just be a VCP nonamender filing. Testing isn't part of that, so I wouldn't mention it in the filing. I agree that they need to correct this even if they are terminating the plan. If they do fail testing for one or more years, make sure you fix it before doing your filing. You should also check for other problems. It's a lot more expensive to fix if it comes up later. We had a company come to us a couple of years ago after being found to be a nonamender in an IRS audit. It cost him $6,500 in penalties. It would have been a $375 filing fee if he had done it on his own before being selected for audit.

I think the agent you are dealing with is confused. Signing the amendment after the end of the remedial amendment period is what makes it a nonamender failure. The streamlined VCP filing is discussed in Rev. Proc. 2008-50, Section 11.02 However, I'll agree with the other response, that it's usually best to just do what they ask (unless what they ask for is completely unreasonable).

What does the plan document say? Our VS document limits hours credited for nonperformance of duties to a maximum of 501 for a continuous period. That section specifically mentions vacation, holidays, sick time, etc. It also incorporates 2530.200b-2.

Since the plan already contains a 401(k) component, the only way the plan can be 3% safe harbor for 2010 is if a "maybe" or conditional 3% safe harbor notice was sent to participants a reasonable period of time before the beginning of the 2010 plan year. Whether or not anyone previously deferred doesn't matter. Does this plan use prior year testing or current year testing for ADP/ACP? When I set up a 401(k) that only covers owners, I use prior year testing so you have time to find out about other participants before they become part of the ADP/ACP testing.

My opinion is that amended prior year filings are not required since it is not listed as a requirement under EPCRS. With a VCP filing, the IRS already knows about the correction, so I would hope they don't want to go to the expense of processing multiple years of amended returns over something they have already looked at.

That's what I would do. I think this approach might be slightly less hassle than the other way. We haven't had any luck in getting this sort of issue resolved until we get a letter where the response will go to a live person. You should get a letter asking about the prior filings. Then you can explain what happened. If you amend 2006-2008, I would expect you to get three years worth of late filing letters since they were not filed under the same EIN as the timely returns. Then you can explain what happened, three times. Both methods should get you to the same place eventually.

Key Lime, No, they have to get the match they are entitled to under the terms of the plan, then you do the ACP testing. If you short their match, you will create a failure to follow the terms of the plan.

Rev. Proc. 2008-50, Section 6.02 says a failure isn't corrected unless all taxable years, whether or not closed, are corrected.

Not exactly. I think it is clear that a correction via restatement using a pre-approved document doesn't require a determination letter submission. It isn't clear whether an amendment to a pre-approved plan is treated the same. Although, I have heard an ERISA attorney claim that with the new amendment procedure for pre-approved plans, every amendment is a restatement.

The other kicker is that if the exceptions don't apply, you have to do ADP/ACP testing. That is part of satisfying paragraph (g).