John Feldt ERPA CPC QPA

Yes, I have seen that (slide 27). But again, you may sometimes be surprised what special circumstances or arguments will be accepted by the IRS. edit: typo

If you file VCP you could try various options to fix, such as (quietly now, sh . . . . ) doing nothing regarding the extra deferrals. If you have a good argument and if they're NHCEs, I've heard that some plans have been successful in arguing that position.

I'm sure you know, but keep in mind that she does not have to have any ownership to be key IF she is an officer (or has executive authority) and is being paid wages over the 416(i)(1)(A)(i) threshold ($160,000 for 2012).

Like (NOT). dislike? unlike?

The IRS has not issued guidance regarding interim amendment requirements for 403(b) plans. The only IRS guidance for 403(b) plan language is that employers have a good faith attempt to comply with the final 403(b) regulations. Perhaps when this remedial amendment guidance is released soon, they will let us know about the interim amendment deadline issue that you ask.

Like.

Yes they can. If the participant dies and the death benefit is to be paid to this foreign individual, I think the beneficiary will need to obtain a taxpayer ID (if they don't already have one).

They could adopt an amendment now that reflects their current operation as it relates to HEART, or they can wait until the IRS truly defines an actual remedial amendment period for the 403(b) world and amend/restate by that deadline. I think it was three years ago that we were told guidance would be issued soon for this, so don't hold your breath!

Or if they are HCEs.

You're right, it was Tech Value Electronic Superstore, so "by" is more likely. To me it's a classic like The Princess Bride.

Maybe it should be "Buy" instead of "By" since he was doing a gig for a hardware store when he said that. Gotta love Mr. Rickman.

Six or seven years ago when I first started here, a very small terminated plan had been sent in for a D letter request - I worked on the response, not the submission. The IRS requested a copy of the signed 401(a)(9) amendment (I think). The plan was not on a prototype document since it was cross-tested, and back in those days volume submitter plans had to have their interim amendments signed by each plan sponsor/employer. We showed the IRS our records that we had sent a 401(a)(9) amendment for the employer to sign, but the employer could not find a signed copy (nor could we). The IRS explained they had no choice but to go to audit cap without that signed amendment, and the sanction would be $2,000. Then they explained something to me that sounded like a limited time sale opportunity where a 50% discount applied, and they only charged $1,000. Some deal. By Grabthar's hammer, what a savings.

The time and effort to file under VFCP will far exceed the $50. When you say you calculated the lost earnings - did you calculate the lost earnings based on the plan's rate (or best returning fund)? Or, did you use the DOL interest rates and their calculator? If you used the DOL rate, then you've satisfied the IRS, strangely enough. But unless you file the VFC thing with the DOL, you aren't technically eligible to use the DOL interest rate. From DOL investigations we've seen where VFCP was not filed, there have been 2 results, differing only because of the difference in the auditor (as far as we could tell): Investigation #1) Agent: You are not eligible to use the DOL rate, you must recalculate using the non-DOL interest rate (plan rate). Plan spends several hours of time to calculate and puts in an extra $67 into the plan. Case closed. Cost benefit analysis? Irrelevant. Investigation #2) Agent: You used the DOL interest rate, we're alright with that. Case closed.

Just remember, there's no such thing as a DOL "audit". These are known as DOL "investigations", a term you might associate with a crime. With the IRS, it's an "examination", a term that you might consider as uncomfortable or annoying, depending on the type of exam you're thinking about, but these exams are generally not a result of perceived criminal activity.

ERISA Section 204(h) does not apply.

If the gateway requirement is triggered, the gateway does not have a last day requirement nor a 1000 hour requirement. Does the DC plan say that it will provide the top heavy minimum and is it top heavy? If so, you may have a trigger there (look at the plan document however). Also, you may want to look at 1.401(a)(4)-9(b)(2)(v)(D)(3), which essentially allows the full DC gateway to be offset by the average equivalent normal allocation rate of all the NHCEs benefitting in the plan. If the DC plan had each person in their own rate class, and no allocation conditions, you would have more flexibility here. If the DC plan has a 3% safe harbor, that would trigger the gateway.

Since the EGTRRA restatememt window closed for DC plans, I've been surprised that we've already stumbled across 3 separate prospects that had old money purchase plans that had never been restated for TRA 86, GUST, or EGTRRA. In each case we put together TRA 86, GUST, and EGTRRA documents, plus a lengthy list of compliance (how did you operrate) questions. One compliance statement came back from its VCP submission, another is waiting for the IRS to reply, and the most recent one is answering the long list of questions now, but is expected to be submitted soon. The most recent case was when the plan sponsor asked the bank holding the plan assets to pay an age 70.5 RMD. The bank wanted a copy of something official that named the trustees so the payment could be properly authorized. The document that designated the trustee was from 1987, so the bank let them in on a little secret about keeping a document up-to-date.

Agree.

Has anyone here used the accrued-to-date testing method on a non-safe harbor 401(k) plan?

Yeah, right after I posted I reread and figured that's probably the case - sorry 'bout that!

Or prehaps your situation is fortunate that the stock was not all purchased in 2008. Assuming it has declined in value since that time. Cash earning very little may be better than an investment that is declining in value.

Unless you are in the OEE group. Those in the Otherwise Excludable Employee group are not required to get the gateway unless the benefits in the OEE group also need to be cross-tested (which is highly unlikely). Think of it as a separate plan.

Suppose a cash balance plan defined its crediting rate as the 3rd segment rate, which was added as a safe harbor rate in the hybrid plan regulations. MAP21 now adds 430(h)(2)©(iv) which modifies all 3 segment rates, as necessary, to be this new 25 year average, with the "as necessary" referring to the corridor. If the plan document's language directly referred to Internal Revenue Code Section 430(h)(2)©(iii) for the 3rd segment rate, does the presence of this new rule under ©(iv) now indirectly change the plan's crediting rate to the MAP21 rate? In order to preserve the old actual 3rd segment rate as the plan's crediting rate, would an amendment be necessary?

I would prefer to interpret that as any 12 month period, such as calendar year or plan year. However, and maybe I heard it wrong, but I thought a DOL official made some statement that it needs to be no more than 12 months after the prior disclosure. That could present issues when taking over a plan. Part of the takeover process needs to determine when the last 404(a)(5) notices were given out.

Under 1.401(a)(4)-8(b)(2)(ii)(A), the account balance includes an adjustment for amounts that were previously distributed. I understand this to include any prior distributions, including any hardship or in-service withdrawals, but what about "refunds" due to ADP/ACP testing failures in prior years? Would those be added back as well? Also, I assume the balance would/should exclude any unrelated rollovers that might have come into the plan although I don't see anything that explicitly says that. Agree?