Peter Gulia

While I express no suggestion, the hyperlink below leads to one publisher's description of the problem. http://www.businessofbenefits.com/2016/07/articles/uncategorized/403b-policy-loans-continued-form-5500-reporting-problem/

If the plan states a broad power to amend the plan without restricting the way the sponsor does it, almost any writing (perhaps even a series or set of e-mails) might be an amendment. If the plan was not amended, I can't offer a suggestion about corrections because I haven't experienced the situation you describe.

Has either the employer or the plan's administrator evaluated whether the plan sponsor's resolution amended the plan? What does the plan state about what the sponsor must or may do to amend the plan?

You’re right that the EFAST2 FAQs (not only in Q&A 31 but also others) are ambiguous. For example, the third paragraph of Q33a does not describe what submission would be required or permitted if the employer wants to make a submission that is not the same as the administrator’s submission. But if one has the more typical situation in which the employer approves filing the same Form 5500 return and report that the administrator approves, the regulation and the Form 5500 instructions align in saying that the administrator’s signature is enough. In that situation, one might not worry about anything in off-rule guidance that might leave one in doubt about whether a second signature is needed to show the employer’s assent. It would be at least unseemly, if not improper, for the Internal Revenue Service to assess a penalty if the employer followed the Treasury department’s regulation.

Consider too that an administrator's Form 5500 financial-statements Schedule may report a contract on fair value even if the administrator's other financial statements (that are the subject of the independent qualified public accountant's report) report the same contract on contract value. The AICPA's Audit & Accounting Guide for Employee Benefits Plans tells an IQPA to include in its report a reconciliation between the Form 5500 amounts and the other financial statements' amounts.

Could the provision you're reading be about a year of participation and an accrual computation period? If so, 29 C.F.R. 2530.204-2 shows examples of how a plan may require 2,000 hours of accrual service for a full year of participation.

jpod and My 2 cents, thank you for the helpful ideas.

Thanks for the help. "I don't know" is a good response if that statement is true. My inquirer, a nonlawyer practitioner, is evaluating whether she should accept an engagement to act as the representative on a Form 5300 application. If she were asked about the employer/administrator's operational compliance, she would not say she doesn't know (if she does know), and she fears that declining to respond to a question might indirectly suggest that a response would reveal non-compliance. My guess was that a 401(a)-determination procedure looks only at the plan document, not whether the employer/administrator obeys it. Anyone with a different experience?

For those plan administrators (and practitioners who advise them) who take seriously the idea that the plan administrator is the maker of a retirement plan's financial statements and is responsible to decide the accounting methods and policies, one can retrieve Accounting Standards Update 2015-12 (July 2015) at: http://www.fasb.org/cs/ContentServer?c=Document_C&pagename=FASB%2FDocument_C%2FDocumentPage&cid=1176166228978 This Update is effective for years that begin after December 15, 2015, but early application is permitted.

I'm interested in learning from BenefitsLink mavens' practical experiences. In handling a Form 5300 application for the IRS's written determination that an individually-designed retirement plan document states provisions that, in form, state a 401(a)-qualified plan (I'm thinking about the cycle that ends this winter), does an IRS employee ever ask about operational compliance?

Both Internal Revenue Code section 6058 and the first of the two regulations that interpret and implement it allow the return to be filed by the employer or the IRC section 414(g) plan administrator. ERISA commands that a plan's administrator file an annual report. The Form 5500 instructions seem designed under an assumption that the administrator can act for both the administrator and the employer. It is unclear what to do if the employer wants to make a return that is different than the administrator's report (for the same year or period).

To get a sense of how the proposed reporting changes relate to a software revision, search the .pdf for the document's five uses of the word "recompete" and read the text surrounding those uses.

Among other changes some of us are beginning to spot, the revised instructions would state: The statute of limitations under [internal Revenue] Code section 6501(a) for any trust described in section 401(a) . . . will not start to run until you timely file with the appropriate trust information on this Form. See pages 518 and 700.

Don't we think the instruction draws a line between participant-directed transactions and fiduciary-decided transactions, limiting a reportable transaction to one that was a fiduciary-decided transaction?

Consider, but in the context of everything else, the following sentence from 29 C.F.R. 2550.404a-5(b)(1): "A plan administrator will not be liable for the completeness and accuracy of the information used to satisfy these disclosure requirements when the plan administrator reasonably and in good faith relies on information received from or provided by a plan service provider or the issuer of a designated investment alternative." Following ERISA section 404(a)(1)(B), a correction should be grounded on no less care, skill, prudence, and diligence than would be used by an experienced and prudent plan administrator facing the same facts and circumstances.

jpod, depending on what your client has asked of you and other circumstances, you might consider whether an agreed-to contribution is within or beyond the employer's powers. Under some States' laws (and sometimes depending on exactly which kind or class of State or local government entity the employer is), a governmental employer might lack power to provide a nonelective contribution. I have seen an employer, after a financial-statements auditor detected the employer's payment of agreed-upon but unauthorized contributions, take back the improperly paid amounts with interest or investment value.

What do the plan documents say? Does the plan state any provision that precludes an eligible employee, without waiting for an automatic-contribution regime, to submit his or her "affirmative" cash-or-deferred election?

Revenue Procedure 2016-37 states that the next submission period for preapproved documents is August 1, 2017 through July 31, 2018. Should we revise estimates about 403(b) preapproved documents?

If a fee does not meet all conditions of ERISA section 408(b)(2) (or some other statutory, class, or individual exemption), it would be a nonexempt prohibited transaction, and a plan's fiduciary should not use plan assets to pay such a fee. Although an employer may pay a fee from the employer's assets, a service provider that did not sufficiently disclose a fee for 408(b)(2) purposes might also have failed to get a binding obligation of the employer. Some employers persuade a service provider to abate a fee that had not been sufficiently documented.

A plan's fiduciary might consider whether the data-exporting fee had been sufficiently disclosed to, and approved by, the fiduciary.

For an individual-account plan, a plan's normal retirement age based on ERISA section 3(24) might have little or no effect on when people "retire" or begin a drawdown of the retirement-savings account. I'm aware of one employer/fiduciary that, for a non-instructing participant, sets the default target-year fund as the one labeled to "mature" when the participant would attain age 70. The employer's evidence shows a trend of its people not leaving work until 75 or 76 (and many of those then working elsewhere), but the fiduciary set the target so the fund would mature before a participant might be required to begin a minimum distribution.

The American Academy of Actuaries Code of Professional Conduct [http://www.actuary.org/files/code_of_conduct.8_1.pdf],in Annotation 10-5 under Precept 10, seems to say an actuary "need not provide any items of a proprietary nature, such as internal communications or computer programs", and may require "reasonable compensation for the work required to assemble and transmit pertinent data and documents."

If, after considering advice (which might include advice similar to Andy the Actuary's observations), your client tries an effort at persuasion based on the Circular 230 rule, some of the potential counter-arguments might be about whether the preceding actuary is a practitioner and whether the data sought is the actuary's work product (rather than the client's original records). 31 C.F.R. § 10.28 Return of client’s records. (a) In general, a practitioner must, at the request of a client, promptly return any and all records of the client that are necessary for the client to comply with his or her Federal tax obligations. The practitioner may retain copies of the records returned to a client. The existence of a dispute over fees generally does not relieve the practitioner of his or her responsibility under this section. Nevertheless, if applicable State law allows or permits the retention of a client’s records by a practitioner in the case of a dispute over fees for services rendered, the practitioner need only return those records that must be attached to the taxpayer’s return. The practitioner, however, must provide the client with reasonable access to review and copy any additional records of the client retained by the practitioner under State law that are necessary for the client to comply with his or her Federal tax obligations. (b) For purposes of this section, Records of the client include all documents or written or electronic materials provided to the practitioner, or obtained by the practitioner in the course of the practitioner’s representation of the client, that preexisted the retention of the practitioner by the client. The term also includes materials that were prepared by the client or a third party (not including an employee or agent of the practitioner) at any time and provided to the practitioner with respect to the subject matter of the representation. The term also includes any return, claim for refund, schedule, affidavit, appraisal or any other document prepared by the practitioner, or his or her employee or agent, that was presented to the client with respect to a prior representation if such document is necessary for the taxpayer to comply with his or her current Federal tax obligations. The term does not include any return, claim for refund, schedule, affidavit, appraisal or any other document prepared by the practitioner or the practitioner’s firm, employees or agents if the practitioner is withholding such document pending the client’s performance of its contractual obligation to pay fees with respect to such document. I'm curious: What are the provisions in the actuaries' professional-conduct rules?

Before considering your query about applying an automatic-enrollment provision only to match-eligible employees rather than all elective-deferral-eligible employees, the church might want its lawyers' advice about whether the plan is a church plan and, if ERISA does not govern the plan, about the effect of each State's wage-payment law that might apply.

If Merrill Lynch is only a custodian (or directed trustee), how does it have or get authority to transfer the plan's assets?