John Feldt ERPA CPC QPA

Yes, I agree that the EGTRRA document takes care of all of the GUST-to-EGTRRA interim amendments, so you don't need to adopt those as it could contradict the language that got approved in the EGTRRA document. The VCP submission should be sure to address any interim amendments not handled in the EGTRRA restatement (its cumulative list) that were not timely adopted. That is, unless you are submitting a PPA restatement as the plan's correction for those missed interim amendments, then just submit the PPA document in lieu of those interim amendments.

Okay, yes, it is "like" tax fraud because it "is" actual tax fraud, I agree. It's perhaps a more indirect method than what most folks would even consider.

Backdating is like tax fraud. That's definitely not protected by simply having a Determination Letter

If you timely adopted the interim amendments after EGTRRA, then your VCP statement does not need to mention them and there is no need to submit them. Your IRS stamp of approval from the VCP filing will only give reliance that the employer has finally adopted the items listed in the application, and thus the "oops, I'm late!" issue is resolved. The IRS does not review the amendment language submitted under VCP. So, if the PPA amendment, the 415 amendment, and the HEART/WRERA amendments were problems (not timely adopted), then I suggest they be submitted. However, I could be wrong. Perhaps the execution of a pre-approved EGTRRA document (albeit after 4/30/2010) also provides the employer with retroactive "reliance" for each good faith amendment executed by the document sponsor, making them somehow "timely", but I am not currently convinced of that.

If they never restated for GUST, then I would prepare a GUST document and an EGTRRA document and have them sign both now. Heck, why not add in a PPA document as well if it's a DC plan? Then submit both the GUST and EGTRRA documents to the IRS. Include the interim amendments that apply after the EGTRRA document.

Agree with Kevin C. Also, if on the other hand, the plan had investment losses after December 31, 2013, those losses will be attributed to the others, not to your account. That said, many plans are written such that the fiduciary can perform an "interim" valuation if they believe it would be prudent and/or necessary to do so. Your plan might or might not have that flexibility. This option can be very important in the situation where large investment losses occur and the prior year-end balances being paid now exceed the current market value of all the assets in the plan (October 1987?). The plan language could allow the fiduciary to value the plan during any interim date other than the last day of the plan year. In one such plan I recently came across, a fairly small plan, the plan fidcuiary does an interim valution every time a vested participant is paid out. The plan only has a handful of participants, so these interim valuations only occur once every few years. Very unusual, but seems okay.

Agreed. The lump sum restriction should end as you described, and the plan language should state that.

Check the document language for Code Section 436 (could be in an amendment). It may be possible the restriction continues to apply until amended. Same thing with the frozen benefit accruals.

If he wants that farm or was alreadying farming it, he should have used his pocket money, not the plan money. "Farms don't appreciate DRAMATICALLY (at least until they stop being farms)." Hmmm. Iowa farmland reached an average price of $8,716 per acre in 2013. Compare to the year 2000: Average was $1,857 per acre. Up 467% in 13 years. In Adair county, the average price per acre went from $1,189 per acre in 2000 to $6,884 per acre in 2013. Up 579% in 13 years. Not that I've been paying any attention to this. Seems a bit dramatic to me perhaps, but I'm no drama expert.

Fair enough

Correct, that is in Appendix A.05(5) (page 83 of my version). Are you suggesting there are no missed earnings then for not withholding when the wages were paid (especially for participant #1 above)?

Check the plan document first. Some have administrative provisions that say something like "regardless of the plan's definition of compensation, the plan aministrator can establish a uniform and nondiscriminatory policy regarding which types of irregular compensation employees can defer from." For the participant in item #1, maybe you could consider a correction that simply looks at the dates the deferrals should have been withheld and just add missed earnings (since the full deferral actually did get into the plan)? For participant #2, you have some missed deferrals that would not have exceeded the deferral limit, so the 50% QNEC certainly applies there, and perhaps the missed earnings concept could be considered for the remaining portion. Neither if the above ideas are strictly spelled out in Rev. Proc. 2013-12, so a self-correction could have some risk, but it seems reasonable to me.

Anyone can disclose that their plan documents are provided for free, as long as: the documents are handled entirely and exclusively by volunteers who bring their own computers and provide for the software, provide for the costs for their own training and creditials, pay for any space that they are using with the employer, pay for any costs related to the materials and the shipping of the documents, including the costs for storing such documents, etc. etc. etc.

The theory is that the plan fiduciary needs to receive the 408(b)(2) disclosure from the plan providers so they know what amounts to disclose to the participants on the 404(a)(5) disclosure. This assumes the plan fiduciaries know about this issue, wuilll review the fees you will receive from the plan for reasonableness, take those figures and generate such 404(a)(5) disclosure (ha ha). In reality, in addition to the 408(b)(2) disclosure that you provide to the employer (generally your fee agreement for your services), you likely need to provide something formatted for the participants to be included with their enrollment packets (if the platform enrollment packets do not or cannot disclose each of your fees that might be paid from the plan). Then you annually provide that same participant notice to the employer and explain they should hand it out with the annual fee and fund information disclosure notice they are getting or will be getting from the investment platform, but if they already handed that platform notice out to the participants without your information, then they have not satisifed the DOL, so they have to hand it out again with your fee information included since the DOL does not allow your fee info to be handed out separately from the annual investment notice.

right, same for top heavy.

So that means if you add the deferral first, without adding safe harbor, then you can't add safe harbor until the beginning of the next plan year. But, if you add deferral and add safe habor to the plan both at the same time, the plan year-end cannot be more than 3 months away from the effective date of such provisions being added(October 1 is the deadline for a calendar year plan). Or are you talking about the old fashioned "CODA" where the company says: here's an amount we're contributing to the plan, but you can make an election to take some of that in cash"?

Is component plan #2 providing zero contribution? Normally, plan 2 would have some allocations, and that component plan's headcounts and contributions are ignored for purposes of testing component plan #1 to see if each HCE in plan #1 has enough NHCEs in plan #1 above the midpoint. If all the HCEs in both component plans have a 70% or higher ratio, the average benefits percentage test is not required. Otherwise, you run one average benefits percentage test for the whole plan including everyone, you do not run it for one component. There is only one concentration percentage also. You can run the AB%T on a benefits basis or on a contributions basis, and depending on whether or not the document constrains the plan, you can use any definition of 414(s) pay to test with, you can use pay from date of entry, you can use average pay of at least 3 years or longer, etc. etc.

When I see the response to this question at various conferences, the IRS normally has no written comment other than "this will be addressed from the podium". When the give their verbal response, they mention that each case is unique and this type of situation could certainly give them reason to consider such a plan as not qualified from its inception, but until they have considered all the facts and circumstances, they cannot provide an answer as to the plan's qualified status.

Good, so, when you see a plan where the safe harbor match is about 3% of their deferral amount, not approximately 3% (or more) of their compensation, you would mention this as a potential issue for the plan sponsor to look into. We've seen a couple of plans (much like the 3% example above) where the provider, big bundled provider, somehow disclaims all responsibility, and does not notify the sponsor of the reasonableness of the match amounts - because it's calculated per payroll and they disclaim all reponsibility. 3% of deferral is tiny compared to 3% of pay - come on!

If the plan has an SPD requirement, I think the disclosure to the participants has to identify the actual individual trustee(s) by name (unless a financial institution is the trustee, then the institution name is listed). The document and SPD may be able use titles or some other naming convention for convenience sake, but a signature is required to accept the role of trustee, and any time an individual gets removed or added as trustee, a notice to the participants with actual trustee names to satisfy the participant disclosure requirements. At least that's how I read the requirement, FWIW.

A new recordkeeper that won't accept deferral money until the big money transfers. Huh, that's certainly one way to do business. I think a 10-day extension from the reasonable segregation date might be available in limited situations. To obtain such relief, I think the employer must comply with some very specific requirements under the DOL regulations at 29 C.F.R. Section 2510.3-102(d). I think the requirements include a written notice to each employee and the employer obtaining a performance bond prior to the extension. Without looking this up again, I am not sure if this is still available after the January 2010 final regulations were issued. I know of no other exception. I would probably ask the Recordkeeper to provide a citation to back up their position, or that they find a way to accept these deposits. Absent their willingness to help out a new client, I would suggest they set up a local trust account in the name of the plan's trust. Deposit the deferrals timely into that trust. When the new recordkeeper is willing to accept those assets, run a valuation to allocate the earnings and send it in. You may have to consider the document, especially if the document spells out whether or not the participants get to direct their investments. Many plans merely make that an administrative decision for the Plan Administrator.

I don't see an amendment under 1.401(a)(4)-11(g) as a mid-year amendment. If they can't agree, then have them prepare and/or pay for cost to do a VCP submission to make the cash balance plan pass in order to remain qualified. Depending on the provider, it is possible they might see this issue as your problem, not theirs, since it's the cash balance plan that can't pass the testing on its own.

Was it a transfer of excess assets from a terminated DB plan? If so, it can be allocated just like an employer contribution over a period not exceeding seven years. you'll need to know when it got there.

When I was working with a former employer, one of our clients used pbi Reasearch Services (many years ago): web.pbinfo.com

Each individual partner in a partnership is generally taxed just like a sole proprietor, and their “compensation” for retirement plan purposes is equal to their net earnings from self-employment (NESE). This amount is generally equal to line 14a of the partner’s K-1 after making adjustments by subtracting: 1. the additional first year depreciation for Section 179 deductions (if any), 2. partnership expenses paid by the partner but not reimbursed by the partnership as shown on Schedule E attached to the partner’s Form 1040, 3. any oil and gas depletion (rare), and 4. one-half SE tax (164(f) deduction) related only to this partnership as found on the front of the partner’s Form 1040, meaning if there are other businesses producing NESE for the partner, an additional reasonable adjustment is needed. 5. After applying #1-4 above, this net amount is further reduced by the contributions allocated in the retirement plans for the partner, other than 401(k) salary deferrals.