Randy Watson

Good to know. Thank you.

If a TPA's distribution fees exceed a participant's account balance, is there any justification for simply eliminating the account upon termination of employment? For example, assume a participant's account is valued at $55 and the distribution fee is $65. Can you apply the distribution fee against the account and zero out the account? The TPA is suggesting that this is permissible. How can you apply a distirbution fee to an account if the distribution is never made?

This is probably going to sound like a crazy question. If a 403(b) plan sponsor adopted a written plan document in 1999, but hasn't adopted any amendments since the plan was adopted in 1999, can they submit under the new EPCRS for failing "to adopt a 403(b) Plan in accordance with the final regulations", or is the availability of that correction procedure limited to those who NEVER adopted a written 403(b) plan document until after 12/31/2009? See, told you it was crazy.

I can find no guidance or disussion on changing the plan year of an ERISA 403(b) arrangement. Can someone please point me in the right direction? Thanks.

Nope, doesn't past the smell test at all...which is why I am here. Which PT would you consider this to be? The use of plan assets to benefit the employer/fiduciary? And how would we unwind this? Is it correct to assume that the Plan's interest or the LLC's interest in the partnership would have to be sold to a third party?

1. Company A sponsors Plan. 2. Father is 100% owner of Company A. 3. Son is member of LLC. 4. LLC and Plan become limited and general partners of Partnership. Son is a disqualified person by virtue of his relationship to Father (who is the "fiduciary" and the "employer"), but is LLC a disqualified person? It doesn't appear to fall under any of the definitions. If LLC is not a disqualified person, how sound is the argument that this transaction was solely between LLC and Plan and Son was not part of that transaction (despite being a member of LLC)? HELP!

That's how we were approacing this and we are considering sending out the annual disclosure on December 1 along with the safe harbor and QDIA notices. I hadn't even considered the possibility that we would have to provide the notice a day sooner during the next 12 month period (i.e., November 30, 2013). That seems as ridiculous to me as once a calendar year.

In addition to the initial participant-level fee disclosure, a disclosure must be made "annually thereafter". That is defined to mean at least once every 12 month period without regard to whether the plan operates on a calendar or fiscal year basis. Does this mean that the annual disclosure must be made within 12 months of the initial disclosure or just once every calendar year or something else? If it doesn't mean that the annual dislosure must be made within 12 months of the initial disclosure then you can go almost 2 years between disclosures. For example, if a plan makes it's annual disclosure on January 1, 2013 then it wouldn't have to make another annual disclosure until December 31, 2014. How is everyone interpreting this?

A defined benefit plan was terminated. The plan sponsor conducted a diligent search for the safest available annuity (actually engaged an expert to assist in the search). The sponsor narrowed the candidates down to 3 finalists and made a selection based on the factors in Interpretive Bulletin 95-1. The entire process was well documented. Once the assets are out and individual annuity certificates are issued, what ongoing obligations, if any, does the plan sponsor have? Are they completely discharged off all liability going forward or is there a duty to at least monitor the annuity provider to make sure payments are made in accordance with the contract?

Is there a violation of the anti-alienation rule if a distribution is made to an agent authorized to request and receive a distribtion under a POA but the check is made payable to the participant?

Yup....I was informed it's going to be $5,000.

Excellent. Thanks.

I understand and will definitely look into the state law issues. But from a IRC perspective, would paying those fees out of plan expenses violate Code Section 401(a)?

What "rules" govern the payment of plan expenses from governmental plan assets? Do governments use plan assets to pay expenses? If so, on what basis do they pay those expenses? The "exclusive benefit" rule under the Code and Regs don't specifically address expenses. I'd like to think that this rule would work similar to ERISA's "exclusive purpose" rule, which obviously doesn't apply to governmental plans. I'm not very familiar with gov't plans and don't want to assume anything. Any help would be appreciated. Thanks.

I'm wondering the same thing. Bump.

Could have sworn it was an electronics store. Either way, good quote and under rated movie.

Ugh. 50% off of the fees set forth in 2008-50 certainly helps, but is still way too high for the violation (IMHO). BTW, I've never seen a Galaxy Quest quote before. Nice!

A plan was submitted for a favorable determination letter (not part of a VCP submission). The reviewing agent discovered that an interim amendment was missing from the submission and suggested that we would have to go to closing agreement if the amendment is not located. I believe the "fee" for the failure to adopt this interim amendment (which for the record is literally a 4 sentence amendment) would be based on Section 14.04 of Rev. Proc 2008-50. Has anyone ever been through this before? Are they really going to impose this ridiculously high fee or are they generally willing to negotiate based on mitigating factors?

An employer adopted a pre-approved EGTRRA prototype document by the deadline. However, it later materially modified that document to the extent it would be considered to be individually designed. Since the employer was technically an adopter of a pre-approved plan, it submitted that indivudally designed document for an EGTRAA letter by April 30, 2010 (the 6 year cycle deadline). Now that the EGTRRA deadline has passed, is the plan on the 6 year pre-approved cycle or 5 year individual cycle?

A 403(b) plan failed to follow participant salary deferral agreements. Is this eligible for a VCP submission? I assume this would fall under the 5.02(2)(ii)(a)(xii) of 2008-50 as a "failure to satisfy the applicable requirements under 403(b)". Do you think I'm wrong about that? What about the corresponding matching contribution that should have been made? I'm concerned that the IRS won't rule on the matching contribution element since it doesn't appear as though the failure to make the full match in accordance with the plan's terms is eligible for VCP for a 403(b) plan. Would the IRS rule only on the "missed deferral opportunity" correction?

A one man DB plan wants to invest in a race horse. I've never dealt with anything as odd as this. Since it's not an ERISA plan there wouldn't be any prudence issues, but what else do I need to consider? Would there be UBIT on winnings? How does this get reported on a 5500? I don't even know where to start!

We learned that a plan made errors in calculating matching contributions over a 3 year period. For two of the years, the matching contribution exceeded the amount that should have been contributed under the terms of the plan, and not enough of a match was made in the 3rd year. However, the participants received more than they should have if you add all three years together. Do we have to make a corrective contribution for the one year that participants did not receive enough or can we simply say that they received more than they should have over the course of the 3 years and not have to make a contribution for that 3rd year?

Very helpful. Thank you.

The date the wire transfer shows up on the trust statement not usually the date the funds are received by the trust. Most banks, mutual funds, etc, do not post a transfer to the client's account until the following day or even later due internal systems, operations or investment procedures. Need to check trust rules for posting deposits. If the funds were received by the custodian on the 15th the funds will show up on the records of the trust on the 16th b/c posting usually takes 24 hours. It could take more. In one fund co. IRA contributions wired on April 15th are not posted to the account until Apr 16 for investment purposes but for record purposes the funds are received on the 15h. Does the employer have documentation of the date the funds were sent? Yes they do. Nevertheless, the DOL agent is making an issue of the delay. Perhaps this is an inexperienced agent.

I think they're one in the same, but I'm wondering if the DOL still takes the view set forth in the footnote of the 1996 regulations.