luissaha

Well, the plan is a multiemployer plan. We talked with various 401(k) recordkeepers and apparently there are no prototype 401(k) plans out there. So, you suggestion does not seem to be an option for us. I'm wondering if in our cover letter to the IRS requesting the letter we explained the situation, would they expedite the review? If not, does anyone have an estimate as to how long it is taking for the IRS to review apllications and issue letters for new plans?

Does anyone have experience requesting an expedited review of a determination letter request due to an "urgent business need"? I have a client that needs to establish a new 401(k)/ profit sharing plan for collectively bargained employees. Employers are currently contributing to another plan on behalf of these employees, but the other plan is essentially kicking these employees out. We need to set up the new plan to receive new contributions for the employees, and also to transfer the accounts from the other plan. The problem is that the other plan will not transfer the accounts until the new plan obtains a favorable determination letter. Also, employers are reluctant to make contributions to the new plan until we get the letter. Without the letter, employers will have nowhere to remit contribtuions required under the collective bargaining agreements. Also, fees would by very hugh for participants if we need to maintain 2 plans before obtaining the letter. Any help would be appreciated.

I'm setting up a new 401(k) plan for a client and applied for an EIN using the IRS's on-line system. When applying, you are asked the type of legal structure that is requesting the number. I checked the box for "Employer Plan." As a result, the EIN I received is in the name of the retirement plan, not the trust. When I sent the EIN letter to the recordkeeper and custodial bank, and they told me they would not accept it because it was not for the plan's trust or in the name plan sponsor. Does it make sense as to why the recordkeeper and bank won't accept the EIN for the plan? Any help would be appreciated.

Plan A is a multiemployer money purchase plan. Plan B is a multiemployer 401(k)/profit sharing plan. The assets of Plan A are to be transferred to Plan B. Plan A will now longer exist after the transfer. My question is whether a Form 5310-A should be filed as a result of the transaction? It seems as though this is not required because the transaction would satisfy the 4 requirements of the exception described in the instructions, but I'm wondering if it is good practice to file the form regardless. Also, should Plan A file Form 5310 after the transaction is completed? Again, I'm not sure this is required, but is it good practice? Any help on this would be appreciated.

I have a plan where an employer failed to make required contributions under a Rehabilitation Plan. IRC Section 4971(g)(2) imposes an excise tax on the employer equal to the amount of contributions owed. We are filing a lawsuit to collect the Rehabilitation Plan contributions owed and were wondering if the plan has any obligation to add a cause of action to collect the excise tax. It appears it is the employer's responsibility to report the tax on IRS Form 5330 and pay that to the IRS, so we're not sure if we have an obligation to attempt to enforce that requirement. Any help would be appreciated.

Yes, that is the problem. We're not sure at this point if we can implement the correction. We would like the employers to go along with our proposed correction, but they may not agree. There are over 60 employers in the plan and we need to reach out to all of them on the proposed correction. We also need to correct the problem now. We can't let it continue. I guess what I'm asking is can we go ahead and file the VCP submission if the correction has not been made? We would just say in the submission that here is how we propose to correct, and if the employers refuse, the plan would terminate their participation and/or freeze the plan.

I have a case involving a multiemployer plan where we have identified an operational failure and have come up with a proposed correction and changes to the plan's administrative procedures. We need to make a VCP submission to get the matter corrected, but the problem I'm having with the multiemployer plan is that the correction method involves the cooperation of the participating employers, which we have not yet been able to secure. The employers may say they don't want to correct the problem, and may just stop contributing to the plan. Before we make the submission, do we have to have all of the employers "on board" with the proposed correction, or can we just say that if the employer's don't cooperate, their participation in the plan will be terminated? Any help would be appreciated.

I have a multiemployer defined contribution plan that needs to be corrected for a few violations. The plan itself is not under investigation; however, the labor union that established the plan is currently under investigation by the DOL for issues unrelated to the plan. Rev. Proc, 2013-12, section 5.09, defines the term "under investigation" to mean a plan sponsor that is under an "Exempt Organizations examination." If the plan sponsor is "under investigation," the EPCRS is not available to the plan. I have 2 questions. First, in a multiemployer plan the "plan sponsor" is the plan's board of trustees. The board is not under investigation, but the labor union who established the plan and where all of the union-side trustees come from, is under DOL investigation. Would this be considered an investigation of the "plan sponsor." Second, the union is being investigated by the DOL, bot the IRS (as far as I know). Would the DOL investigation make the plan ineligible for the EPCRS? Any help would be appreciated.

Thank you. I'll take a look at Rev Proc 2013-12.

I have a multiemloyer plan where the non-bargaining unit group of a participating employer fails both the ratio percentage test and average benefit test. Unfortunately, the falure was not timely discovered and cannot be corrected by an amendment pursuant to Reg. 1.401(a)(4)-11(g)(3)(iv). Does anyone have any ideas how the plan can remedy this problem? I've seen some references that in a situation like this each HCE must include in income an amount equal to the employee's entire vested benefit not previoulsy included in income, but cannot find support for this in any regulations. Also, what about any penalties on the employer and/or the plan for noncompliance? Any help would be appreciated.

I work mainly with mutiemployer defined benefit and welfare plans, so this is probably a basic question. I noticed on a multiemployer 401(k) plan that some employers may not be paying FICA and FUTA on elective deferrals. It also appears there is no withholding for the employee portion of FICA and FUTA. It is my understanding that elective deferrals are subject to FICA and FUTA and the employer and employee must pay their respective shares. It appears that some employers contributing to the plan are paying FICA and FUTA on the adjusted gross income of their employees (i.e., the employers are not paying the FICA on FUTA on the deferrals) and the employee portion is not being withheld from the deferral amounts. Am I correct that employers must pay FICA and FUTA on the deferrals and that paying FICA and FUTA on on the adjusted gross income is wrong? What about the employee portion of FICA and FUTA? Should that be withheld from the deferral amount? Any help would be appreciated.

I have a multiemployer db plan that covers both collectively bargained and non-collectively bargained employees. One of the participating employers fails the ratio percentage test for its non-collectively bargained employees (for multiemployer plans, the test does not apply for collectively bargained employees). I have a couple of questions on this: The testing has been done on an employer by employer basis for this plan. Can we aggregate all the employers together that cover non-collectively bargained employees and then test? The plan might pass on a plan wide basis. It appears the employer may have failed this test for several years. If so, what is the proper correction procedure? Any help would be appreciated.

A retiree in a multiemployer pension plan returns to work with a participating employer in covered employment. Is there any reason why the employer would not be required to make contributions on behalf of this individual?

GMK - I agree. The plan at issue is making the argument that because it requires the entire interest be distributed prior to the RBD, the entire distribution can be rolled over. I think what they are saying is that the RMD rules don't apply because they require the entire interest to be distributed prior to the RBD. It's an interesting point, I'm note sure what the significance is that the plan requires the entire account be distributed in order to comply with IRC 401(a)(9). I'm not sure it makes any difference. I've just never heard this argument before.

The person left employment in August 2012. The distribution will be made in 2013, after the employee turned 70 1/2.

In order to comply with IRC 401(a)(9), a defined contribution plan has a provision which requires the entire interest of an employee's account to be distributed not later than the required beginning date. The plan does have language providing for payment of RMD's under IRC 401(a)(9)(A)(ii), but operationally the plan does not make RMD's (i.e., the enitre account balances are distributed prior to the required beginning date). I know this is strange. I've never encountered it before. An employee (non 5 % owner) in the plan described above turned age 70 in August 2012. He applied for a distribution in November 2012 and requested a direct rollover of his entire account balance. The employee reached age 70 1/2 in February 2013 before the distribution had been made (the reason for the delay was the participant's failure to properly complete some forms). Now there is an issue as to whether the employee can rollover the entire account balance. The plan is taking the position that the entire account balance can be rolled over because the entire account is being distributed prior to the employee's required beginning date in accordance with IRC 401(a)(9)(A)(i). The financial institution for the employee's IRA is saying that there is an RMD due because the participant reached age 70 1/2 this year. As such, they want the RMD amount calculated and distributed, and then they would accept a rollover of the remaining balance. Does anyone have an opinion on this?

The new reporting requirements under Schedule R of the Form 990 are creating problems for many multiemployer health and welfare funds with a significant number of contributing employers. As I undertstand the new requirements, a health and welfare fund established as a VEBA must now disclose certain information about all of its contributing employers such as the state of domicile, corporate structure, etc., on Schedule R. This requires funds to contact all employers to insure they are reporting correct information. The VEBA rules are becoming more complex and burdensome. Does anyone know if these trusts can be set up as tax exempt under another section of the code?

Thanks for the response.

Should a plan be recording an estimated receivable on its financial statements for withdrawal liability assessed in the plan year? I'm not sure how this would work. Plans assess withdrawal liability during the plan year, but often times it is uncollectible because of employer bankruptcies, closings, etc. Does anyone have any insight on this?

The errors in this case are serious. The plan was purported to be a money purchase plan where the employers made a "basic" contribution of 3% of salary for eligible employees. However, employees were apparently allowed to defer additional money into the plan based on their years of service. For example, if you had 5 years of service, you could defer an additional amount into the plan, if you had 10 years you could defer an increased amount, etc. The deferrals were not mandatory, employees could opt-in or out of deferring the additional amounts. As deferrals are not allowed in post-ERISA money purchase plans (which this plan is), we advised that the deferrals had to stop. The plan was set up years ago by the sponsoring labor union and they got bad advice on the plan design. It does not appear the employers were involved in the design, but they went along with it. I'm thinking they (the union and all employers) should all probably share in the costs with attemting to fix this.

I have a multiemployer defined contribution plan that will likely make a submission under VCP. My question is regarding payment of the fee. Of course, the fee is paid by the Plan Sponsor, but in the case of a multiemployer plan, I'm not sure exactly how this should be handled. Should the sponsoring labor organization and the participating employers pay the fee? Can plan assets be used for a multiemployer plan? Any insight would be appreciated.

I posted this topic under the "Correction of Plan Defects" section, but thought it might be more appropriate here. We have a multiemployer money purchase plan with a participating employer covering non-bargaining unit members, some of whom are HCEs. Apparently, it was believed by the administrator that all employees were covered by a cba, but it turns out this is not the case. The way this plan is designed, it does not look like it satisfies the safe harbor, so it is subject to the nondiscrimination rules. This is complicated, but it appears some of the HCEs were getting contributions of 15-20% of their salaries, while non-HCE were getting contributions in lower percentages. My questions are as follows: What type of discrimination testing needs to be done on a multiemployer money purchase pension plan? If the plan fails the testing, how can it be corrected? Also, one of the HCEs has retired and requested a distribution of his account balance. Can the plan delay the distribution until the nondescriminations problems are resolved? Any help would be appreciated.

I have a strange case involving a multiemployer money purchase plan. One of the participating employers covers non-bargaining unit employess, some of whom are highly-compensated. It appears that the employer will not satisfy the nondiscrimination requirements of IRC section 401(a)(4) due to certain highly compensated employees receiving excess contributions. It looks like this has been happening for several years. Two questions in this regard: 1) Does anyone have any insight into the appropriate correction method?; and, 2) 1 of the highly-comped individuals who has received the excess contributions has now retired and requsted a distribution. Can the plan deny the distribution request pending resolution of the problem? Any help would be appreciated.

I have a fund client whose payroll auditor is also the auditor for the sponsoring union. This seems like a conflict of interest to me. Is anyone aware of any ethical/professional guidelines for auditors so I can look into this? Has anyone dealt with this kind of matter previously?

A plan in critical status adopted a rehabilitation plan to forestall insolvency (i.e., the plan is not reasonably expected to emerge from critical status). It is likely the plan will have a funding deficiency next year. It appears under IRC 412(b)(3) that if a plan is in critical status, has adopted a rehab plan, and complies with the rehab plan, the minimum funding rules of IRC 412 do not apply. Nevertheless, I have heard some practitioners take the position that IRC 412(b)(3) is only applicable for critical plans that have adopted a rehab plan that will get them out of critical status within the rehab period. To my knowledge there is no guidance from the IRS yet on this issue, but I imagine many plans are in a similar situation. Has anyone heard anything on this? Any help would be appreciated.