Peter Gulia

To apply the 60-63 variation, an employer/administrator might need plan-administration software and payroll-administration software that uses a record of each employee’s date-of-birth, relates it to a year, and does this for more than a binary selection. Before 2025, the software needs only two stages: not-yet-50, and 50-or-older. To apply the 60-63 variation, the software needs four stages: not-yet-50; 50-59; 60-63; and 64-or-older. (Some programmers might combine stages 2 and 4, but doing so might require at least one conditional expression.) Imagine 2025 is approaching and an employer/administrator has software that applies the binary selection between not-yet-50 and at-least-50, but does not (yet) apply the 60-63 and 64-or-older stages. An employer, as a plan’s sponsor, might decide not to provide the 60-63 variation.

Just curious, if the plan’s administrator (we presume it directs the bank trustee for distributions) considers any risk: What information did the plan’s administrator use to decide that the participant had no more than those six children?

I’ll start with two answers to my question 3: Some prefer VCP over self-correction if the plan’s sponsor is a business organization that anticipates a sale of its shares, member interests, or partner interests (rather than a sale of the business’s assets). In mergers-and-acquisitions due diligence and negotiations, producing an IRS letter is simpler, quicker, and less expensive than writing a law firm’s or accounting firm’s opinion letter. Some prefer VCP over self-correction if one doubts a self-correction memo will persuade an independent qualified public accountant that the correction is enough that the auditor may accept the plan administrator’s representation that the plan is tax-qualified.

BenefitsLink helpfully posted the IRS’s prepublication release of Notice 2023-43 https://www.irs.gov/pub/irs-drop/n-23-43.pdf. Here are my open questions for BenefitsLink neighbors’ observations: 1. What does this IRS guidance let us do tomorrow that we couldn’t do before December 29, 2022? 2. What were you hoping for that the IRS isn’t yet allowing? 3. If an Eligible Inadvertent Failure is one that may be self-corrected, under what circumstances might one prefer to submit a VCP application?

Everything about counting service—for any of many retirement plan purposes—is complex (and always was, at least since 1974). In my experience, all but the most fully computerized employers lack complete capabilities for service counting applied “in real time.” Those weaknesses might not matter if a plan provides immediate entry and immediate vesting. Or even if a plan’s administrator might count years of vesting service to determine the nonforfeitable portion of subaccounts for matching and other nonelective contributions, one might not need to count the service until after the participant is severed from employment (or has reached 59½ or another retirement age). austin3515 rightly observes that if a plan counts service to determine an employee’s eligibility, counting service to apply, distinctly, the § 401(k)(15) conditions is a further and different complexity. And austin3515 is right to have the information included in a plan-design conversation.

We see the row from someone's outline; but who is the author or publisher?

Here’s the whole text of that subparagraph C.B. Zeller mentions: Effective opportunity. An applicable employer plan that offers catch-up contributions and that is otherwise subject to section 401(a)(4) (including a plan that is subject to section 401(a)(4) pursuant to section 403(b)(12)) will not satisfy the requirements of section 401(a)(4) unless all catch-up eligible participants who participate under any applicable employer plan maintained by the employer are provided with an effective opportunity to make the same dollar amount of catch-up contributions. A plan fails to provide an effective opportunity to make catch-up contributions if it has an applicable limit ([for example], an employer-provided limit) that applies to a catch-up eligible participant and does not permit the participant to make elective deferrals in excess of that limit. An applicable employer plan does not fail to satisfy the universal availability requirement of this paragraph (e) solely because an employer-provided limit does not apply to all employees or different limits apply to different groups of employees under paragraph (b)(2)(i) of this section. However, a plan may not provide lower employer-provided limits for catch-up eligible participants. 26 C.F.R. § 1.414(v)-1(e)(1)(i) https://www.ecfr.gov/current/title-26/chapter-I/subchapter-A/part-1/subject-group-ECFR686e4ad80b3ad70/section-1.414(v)-1#p-1.414(v)-1(e)(1)(i). Further, the Treasury department’s rule was made 20 years ago, and interpreted the statute as it was in 2003. 68 Fed. Reg. 40510-40520 (July 8, 2003) https://www.govinfo.gov/content/pkg/FR-2003-07-08/pdf/03-17226.pdf. A taxpayer is unburdened by that rule to the extent the rule is inconsistent with the current statute as it now (or in the future) applies.

And if applying ERISA results in depriving the surviving spouse of some payments she ought to have received under the pension plan’s provisions, the spouse might have a claim against the decedent’s estate for the harm his false statement caused.

One imagines the administrator of a multiemployer pension plan is the plan’s joint board of trustees. If you’re a nondiscretionary service provider, perhaps you want whatever instruction that fiduciary gives you, which might include a stop instruction. Consider that the trustees might instruct that all communications are from or to their counsel, to help preserve (as much as is possible, even recognizing the fiduciary exception) evidence-law privileges for lawyer-client communications made to help the lawyers form their advice or render their advice. If the plan’s administrator acted innocently and prudently in relying on the participant’s false statement, ERISA § 205(c)(6) might afford some relief. “If a plan fiduciary acts in accordance with part 4 of this subtitle [ERISA’s fiduciary-responsibility provisions] in . . . (B) making a determination under paragraph (2) [for example, about whether a consent was excused “because there is no spouse”], then such . . . determination shall be treated as valid for purposes of discharging the plan from liability to the extent of payments made pursuant to such Act [sic].” ERISA § 205(c)(6), 29 U.S.C. § 1055(c)(6) (emphasis added) http://uscode.house.gov/view.xhtml?req=(title:29%20section:1055%20edition:prelim)%20OR%20(granuleid:USC-prelim-title29-section1055)&f=treesort&edition=prelim&num=0&jumpTo=true At least one court construed the “to the extent” phrase to mean that a plan must pay the surviving spouse an amount or amounts based on what remains of the benefit that would have been provided in the absence of the participant’s false election after subtracting the amounts the plan paid. Hearn v. Western Conference of Teamsters Pension Trust Fund, 68 F.3d 301 (9th Cir. 1995).

Even if the credit might be correct, some might be reluctant, for such a small amount, to invite any IRS attention.

Even if one might find and get some records from CWM or a receiver, your client might consider whether it wants CWM’s records. Consider that those records might have little, no, or even adverse value. The linked-to news reporting suggests CWM might have been used for some frauds. How likely is it that your client would discern which of CWM’s records are true and correct, and which are false or incorrect? If it helps any, this hyperlink is to the Securities and Exchange Commission order that bars Mr. Couture from association with any securities-related business. https://www.sec.gov/files/litigation/admin/2022/34-96392.pdf With other information, the order shows the District of Massachusetts’ docket number for United States v. James Kenneth Couture—No. 21-cr-10172-NMG (D. Mass.).

As others say, a decision-maker might begin (and sometimes might finish) with RTFD—Read The Fabulous Document. Beyond questions about which person or artificial person (perhaps including an estate) might be the decedent’s plan beneficiary, consider also: Will a custodian seek some evidence that a person who submits the plan administrator’s or plan trustee’s instruction for a redemption or delivery of investments has a right or power under the custodianship agreement to instruct the custodian?

metsfan026, if your inquirer is a plan’s fiduciary and has responsibility for selecting, monitoring, or deselecting a service provider regarding the plan or its trust, she might insist on disclosures even if nothing in the 408b-2 rule requires a disclosure.

I’m with you. And my clients that have § 401(k) arrangements had many years ago switched to immediate eligibility with no service condition. (I recognize my clients have different circumstances than those many BenefitsLink neighbors remark on.)

Might the plan’s financial statements, including the notes, fully disclose the IRS’s examination and that the plan might have been tax-disqualified as at the financial-statements date and for the year then ended (and for preceding years too)? If so, might such a narrative let the independent qualified public accountant find that the plan’s financial statements are fairly stated?

I think austin3515 is onto something. My observation is perhaps not a fulsome Amen, but: If one presumes or assumes an employer won’t submit hours-of-service data with enough detail, frequency, promptness, and formatting to enable a third-party administrator’s or recordkeeper’s software to apply the plan’s § 401(k)(15) provisions (and the employer is unwilling or unable internally to apply those provisions), might such an employer make an informed choice to let go some relief from top-heavy provisions? Are there circumstances in which the incremental portion of a top-heavy contribution might be less expensive than the employer’s cost to apply a plan’s § 401(k)(15) provisions? (There are other choices I’m deliberately not remarking on or describing.)

Although the provision that became included in the Consolidated Appropriations Act was written in December (after the IRS’s October 21 release of inflation adjustments for 2023), it seems likely the text was based, as C.B. Zeller suggests, on other bills in the 117th Congress, perhaps with little editing. $6,500 [2022] x 150% = $9,750 < $10,000 If a curious person wants to test the idea that the $10,000 expression, even if inflation-adjusted, might never matter, one might read the full work that supports the Joint Committee on Taxation’s Estimated Revenue Effects of H.R. 2617, JCX-21-22 (Dec. 22, 2022). Those work papers might show the JCT’s assumptions about estimated inflation adjustments as they would affect fiscal years 2025 through 2032. I confess I’m not so curious.

If a would-be receiving plan persists in a refusal (and without any view about what is or is not prudent or reasonable for a receiving plan’s administrator or its agent to demand before the plan accepts a rollover contribution): A paying plan’s administrator might consider which persons are affected (and how) by a plan’s refusal to accept a rollover contribution. A would-be receiving plan takes on neither the to-be-rolled asset nor the related obligation. A distributee might be deprived of her first (and, perhaps, second) choice about which eligible retirement plan receives a rollover contribution. A paying plan might be burdened by a would-be receiving plan’s refusal if the would-be distribution is one that requires the distributee’s consent and the distributee withdraws her consent.

And a 2022 conversation. https://benefitslink.com/boards/index.php?/topic/69466-gross-pay-insufficient-to-deduct-401k-deferrals/

If a plan sponsor’s reason for a limit on either kind of elective deferrals is increasing the likelihood (not assuring) that a paycheck will have enough money to support not only tax withholding but also retirement, health, other welfare, and fringe benefits, one might consider this 2008 BenefitsLink discussion. https://benefitslink.com/boards/index.php?/topic/38395-401k-elective-deferral-hierarchy/

I only asked a question, hoping Brian Gilmore might guide us. And about the proposed rule mentioned, I have not thought about whatever interpretation it proposes.

Does that adoption agreement also limit non-Roth elective deferrals to 50% of compensation?

If it's not feasible to get all the years aligned, is aligning the cafeteria plan's and health flexible spending account's year with the health-coverage year more important than alignments about other benefits?

A person may get a notarial act (such as a notary’s certificate of having taken an acknowledgment of, or having witnessed, a spouse’s consent to support a participant’s qualified election) at the US consulate. And if there is no consular official, the Secretary of State may authorize others to do notarial acts. Such an act done by a consular official or other US-authorized person has the same effect as a notarial act done by a US State’s notary. 22 U.S.C. § 4215 http://uscode.house.gov/view.xhtml?req=(title:22%20section:4215%20edition:prelim)%20OR%20(granuleid:USC-prelim-title22-section4215)&f=treesort&edition=prelim&num=0&jumpTo=true 22 U.S.C. § 4221 http://uscode.house.gov/view.xhtml?req=(title:22%20section:4221%20edition:prelim)%20OR%20(granuleid:USC-prelim-title22-section4221)&f=treesort&edition=prelim&num=0&jumpTo=true

No one in this discussion suggests a plan’s administrator use “Can I get away with it?” as a way to form a discretionary finding. And no one here suggests an administrator form its finding by considering that IRS or EBSA might lack resources to examine or investigate the administrator’s decision-making. Everyone recognizes that a plan’s administrator decides in the first instance. A plan’s administrator must make its finding when needed to decide a participant’s claim, or to decide the amount of an involuntary distribution. If there is a claim to decide, an administrator must not wait for a government agency’s review. Paul I suggests a plan’s administrator use ERISA § 404(a)(1)(D) obedience in following the plan’s governing documents. And I suggest a plan’s administrator use ERISA § 404(a)(1)(B) prudence in recognizing that a fiduciary who lacks complete skills or experience might want the advice of someone specially trained in how to read and interpret an ambiguous text, and in how to apply law—public, private, or both—to ambiguous facts. A rule mentioned above expressly states that “whether a complete discontinuance of contributions under the plan has occurred” turns on “all the facts and circumstances in the particular case[.]” The rule describes three factors to be considered, but states those are not the only factors to be considered. 26 C.F.R. § 1.411(d)-2(d)(1) https://www.ecfr.gov/current/title-26/chapter-I/subchapter-A/part-1/subject-group-ECFR686e4ad80b3ad70/section-1.411(d)-2#p-1.411(d)-2(d)(1). A plan’s administrator decides its interpretation of the plan’s provisions, including those one interprets to follow an applicable or relevant statute or regulation. And after discerning the plan’s provisions, an administrator decides how to apply those provisions to the particular facts. Even fact-finding involves discretion. That an administrator recognizes that no bright-line test completely governs the finding and that one’s decision-making involves discretion does not mean anyone seeks to defeat the application of public law or a plan’s governing documents.