John Feldt ERPA CPC QPA

http://benefitslink.com/taxregs/final_403b.pdf

Man, I missed the good stuff over the weekend before the edits. fender, if you look at Austin's link and Mike Preston's comments, you'll see that we are not to discuss actual fees. However, I think a discussion of how we package our fees is probably okay (without disclosing any real amounts). Internally, we have been tossing around the idea for almost 2 years of how to better package our amendments and restatement fees. We are soon to offer clients the option of paying a "small" annual or quarterly amount to cover all IRS-required amendments. An additional option will likely be an option to pay an annual or quarterly amount that covers the next restatement as well (we're still working on those details). For example, you know the restatements are supposed to be like clockwork every 6 years for most plans, so you could take the risk to set your price now for the next restatement. Suppose you decide to charge $120 for the EGTRRA restatement (obviously, this amount is for illustration purposes only). Then the client could choose to pay you $120 / 6 = $20 per year or $5 per quarter - a small easy to handle fee. Psychologically easier to swallow for some. Easier for budgeting for others. Steadier cash flow for the receiver. All good so far! Or the client could opt for both the amendment package and the restatement package - perhaps a discount would be included . . . still working through that. Thanks Mike for directing me here! edited for the letter "i"

Man, I missed the good stuff over the weekend before the edits. fender, if you look at Austin's link and Mike Preston's comments, you'll see that we are not to discuss actual fees. However, I think a discussion of how we package our fees is probably okay (without disclosing any real amounts). Internally, we have been tossing around the idea for almost 2 years of how to better package our amendments and restatement fees. We are soon to offer clients the option of paying a "small" annual or quarterly amount to cover all IRS-required amendments. An additional option will likely be an option to pay an annual or quarterly amount that covers the next restatement as well (we're still working on those details). For example, you know the restatements are supposed to be like clockwork every 6 years for most plans, so you could take the risk to set your price now for the next restatement. Suppose you decide to charge $120 for the EGTRRA restatement (obviously, this amount is for illustration purposes only). Then the client could choose to pay you $120 / 6 = $20 per year or $5 per quarter - a small easy to handle fee. Psychologically easier to swallow for some. Easier for budgeting for others. Steadier cash flow for the receiver. All good so far! Or the client could opt for both the amendment package and the restatement package - perhaps a discount would be included . . . still working through that. Edited for the letter "e"

Easy now.

Point to the plan's D-letter and state that this letter should cover your operations at least until the plan is restated for EGTRRA. Ellen's (Sungard's) comment would indicate that such a position may be on thin ice. You never can know until the auditor accepts or rejects your argument, assuming they see the issue at all. Another way might be to amend the plan or add an addendum or something to fully disclose that the plan really is (or is not) safe harbor, which safe harbor provisions are in place, and then operate accordingly. If doing 3% nonelective "maybe" notices, then you'll amend in and out 30 days before the plan year end for which the 3% safe harbor contribution will be made.

Does your plan contain participants with account balances that were required to be subject to the QJSA requirements, such as a money purchase plan account? Back in 2002, or thereabouts, a lot of money purchase plans were merged into 401(k) plans or profit sharing plans because of the change in the deduction limits. So, if a money purchase plan was merged into this plan, then at least those accounts are still subject to the spousal consent requirements. You could remove the spousal consent requirements from the rest of the plan. There might be something else to consider, like whether or not the plan defaults 100% of the account to the spouse or just 50% - but let's see what others might say from this board about that.

Some of Sal's comments from The ERISA Outline Book 2007 edition, TRI Pension Services: on page 11.491, in #6. he indicates now that the GUST period is over, the plan must be written either to reflect that it is ADP-tested or that it is a 401(k) safe harbor plan. If the plan document specifies that the plan is a 401(k)(12) safe harbor plan, and a notice is not given on a timely basis, the employer has failed to operate the plan in accordance with its terms. on page 11.542, in the footnote, he indicates that in spite of the document requirements expressed by the IRS in the 2004 regulations, many GUST documents were approved by the IRS with more flexible language. For example, some documents allow the employer to decide on an annual basis whether or not to provide the safe harbor notice to participants. The plan provisions are triggered by the safe harbor notice, providing that the absence of the notice triggers the ADP/ACP test. Then he says the 2004 regulations are a signal that the EGTRRA documents ain't gonna get to do it that way and they'll have to conform to the regs (okay, he didn't quite write it that way exactly, but that's the gist of it). added on edit: So nothing different really from the 2006 EOB here, no mention of the pre-ramble (as Derrin would call it).

Yes, VCP would have been $750 plus the cost to prepare. Because it was a typo, we debated internally if it was really necessary to go VCP. Would the IRS (in light of Joseph Grant's comments about fines being reasonable) really think a large fine for a typo is reasonable? Hmmm. We decided to just disclose the amendment in the D letter process instead. Thus, one tale of woe. You are correct, under VCP, it would have been stamped "ok". There is more to it than just our internal debate. As you see from a prior post in this thread, the error was a computer translation issue - so now use your imagination and take a guess regarding how many plans were affected. I'll just say it wasn't merely one, and I'll say that about 15 similar plans were sent for Form 5310 D-letters before I started here, and the IRS never saw the issue, so no problems there. Plus, since the problem was identified, about five or six were amended, making the issue visible when the 5310 D-letter application was processed, agents even asked for more detail on those, but only one so far has gone to audit cap. So, VCP for each would be $750 x 20 = $15,000. Or, so far only $2,250 under audit cap. I guess we're ahead so far on the ultimate cost.

I'm not sure I'm reading the question right. 2 possibilities perhaps. 1. Has the plan filed a VCP application for a plan correction under EPCRS? If so, the errors being submitted will be the only items that the plan can be "safe" about if the plan ever gets audited by the IRS, and it is only for the years that are disclosed in the VCP submission. If that was not what you are asking about, please rephrase. 2. If you are asking about an accountant's opinion audit to attach to a Form 5500, then the determining factor regarding the need for that audit (for a 401(k) plan) is the participant count, which is not related to VCP. Hope this helps.

I don't work for Prudential, but these has been helpful for us from time-to-time: http://www.prudential.com/media/managed/co...ng_statetax.pdf http://www.prudential.com/media/managed/St...Withholding.pdf and this: http://www.sisterstates.com/ Also, http://benefitslink.com/boards/index.php?showtopic=13240

As a follow-up to my earlier post (tale of woe) within this thread, the IRS agreed to a $2,250 sanction under audit cap for the typographical error. As background, when the typo was noticed, we did an amendment right away to correct (via retroactive amendment). Technically, the typo was a computerized translation error that occurred three years before starting at this job, when the old fields from the TRA86 document were transferred into the new fields of the GUST document - one field was incorrect, but at a glance it looked right (as long as you did not read it very carefully). It sure seemed ridiculous to submit such an amendment under VCP. Now in hindsight, we are quite convinced that no IRS agent would have ever noticed the issue if the correcting amendment was not there to point it out to them when the plan terminated and submitted a Form 5310. The enrolled actuary (and his staff) also had not noticed it over any of the previous 4 1/2 years. Also, the agent indicated that if our cover letter to the Form 5310 had gone into a lot more detail regarding the corrective amendment, instead of just pointing out that the amendment retroactively amended the plan formula to match the formula before the GUST document was adopted, then they might have allowed us to submit under VCP instead of going to sanctions under audit cap. That would have been nice to know ahead of time too.

If your plan document has a provision that allows for the return of the deferrals for these ineligibles (like the IRS-approved prototype that we use), then you could refund those amounts instead of doing an amendment and submitting for a D-letter in your cycle. Check your plan document - what does it say you can do?

Yes, I believe you can adopt a resolution to rescind the prior termination. You are correct that any amendment that was made, such as making existing participants 100% vested, would still apply. You may want to make an effective date (or a special effective date) for deferrals to begin again. I don't think you'll get a free pass on ADP or ACP for the year since deferrals got stopped when the plan terminated. I'm sure there are other considerations that I have left off, let's see if anyone else has a comment.

To answer your original question: Yes it is possible, but I doubt many (if any) clients will do that. If your plan has automatic enrollment, the plan language (or the amendment language) must state whether or not the automatic deferrals will be pre-tax regular deferrals or post-tax Roth deferrals (or possibly the langauge could state that it is split up between them). I think it is probably best to adopt plan document language that has automatic deferrals being done on a pre-tax basis. However, some odd-duck client out there might want auto-enroll deferrals done as after-tax Roth. Deferrals are either done as Roth or pre-tax. If the plan matches your deferral, you get a match, pre-tax or Roth does not change that.

Your ERISA attorney is strong with the force.

Yeah, that's what we thought too. Many of our DB clients will have some planning time since we use plan years that start a month or so before the company's fiscal year-end and we make sure they plan to take the first year cost as a deduction on the tax return in which the that first plan year started. That way, the second set of benefit accruals have not yet happened for a few months after the first plan year ends, but that second fiscal year has ended already, which gives them a pretty good feel for what they can afford business-wise. Worst case, they can usually freeze the plan before the cost of that next accrual occurs. Thoughts on that? (sorry to kinda hijack the discussion Belgarath)

To clear that up, we place an extra clause in the amendment stating, in your example, "that for purposes of 412©(8) this amendment is effective 1/1/2007." Also using your example, the rest of the amendment has an effective of 2-15-2008 as does the 204(h) notice. I'm not a document attorney, so let's see what others have to say. On edit, this is added: Section 412©(8) goes away in 2008, is that replaced with something in section 430, or does the whole concept mostly disappear since the funding method must consider benefits that accrue during the year anyway?

Not a bad idea. But if your firm has 500 clients with December 31st year-ends and 375 of them have already filed their 5500, then the time-cost on those 375 could have been spend doing something else that produces actual revenue - just a thought.

http://benefitslink.com/boards/index.php?a...st&p=106181

ditto.

Sounds like the LLC is taxed like a partnership. If that's the case, then when is the true "earned income" known for the year from which a deferral may be made? If a written election to defer for the partner is on file on December 31, such as an election to defer $15,500 and the true earned income is calculated for the partner and finally known by the end of March, now what would you think?

Catchups do not count against the 415 limit. Young folks are limited to $45,000 for 2007. Old folks (50 and up) can get $50,000 for 2007 if $5,000 of that is a catchup deferral.

If the plan is a prototype and the prototype document sponsor has adopted all of these interim amendments on behalf of the clients, then when you restate on that prototype, I see no need to have the employer re-adopt all of those tack-on amendments. They are automatically part of the plan. If your client needs something different than what was adopted by the document sponsor, then they should sign that amendment. With a volume submitter plan, if you are using the same GUST volume submitter document again to restate, then in the resolution to restate you may be able to mention that the plan is being amended in full but that the EGTRRA, 401(a)(9), 401(a)(31)(B), etc. amendments are retained in their original form, but I am not 100% certain about this. Let's see what other commentators say too. Upon edit, I added this: Question #2: I don't think it would be self-correction. Either it was amended timely, or schedule F of Rev Proc 2006-27 under a VCP application should be filed.

We have also taken over a few plans that never filed 5500's (they had set up their own plans using the do-it-yourself approach via a website). We do not bother with the 5558 for the current return and we file all of the delinquent returns (including the current one) simultaneously so only one fee of $750 is required (small plan). That's our approach. So far that's worked just fine. P.S. Keep in mind that the IRS and/or DOL can audit any of those prior years to see if they operated in accordance to their terms, the 3-year statute starts when you file, so be sure to get good info for your filings. If anything is found that needs a correction, get started on a VCP application early if SCP is not available.

If they are a controlled group or an affiliated service group then they are considered a single employer.