Peter Gulia

The paragraph I quoted above is from the model ERISA-rights notice in the Labor department's SPD-contents rule. https://www.ecfr.gov/current/title-29/subtitle-B/chapter-XXV/subchapter-C/part-2520/subpart-B/section-2520.102-3 That rule shows the amount as $110. Thank you for confirming it is not inflation-adjusted.

A summary plan description's ERISA-rights notice includes this: If you request materials from the Plan and don’t receive them within 30 days, you may file suit in a Federal court. In such a case, the court may require the Plan administrator to provide the materials, and pay you up to $nnn a day until you receive the materials, unless the materials were not sent because of reasons beyond our control. What is the current amount?

Some sources of relevant Federal tax law are: I.R.C. § 72(e)(5)(D) (“Any dividend described in section 404(k) which is received by a participant or beneficiary shall, for purposes of this subparagraph, be treated as paid under a separate contract to which clause [72(e)(5)(D)](ii)(I) [referring to a § 401(a) trust] applies.”); I.R.C. § 72(t)(2)(A)(vi) (“dividends paid with respect to stock of a corporation which are described in section 404(k)” excepted from the additional income tax on a too-early distribution). https://irc.bloombergtax.com/public/uscode/doc/irc/section_72 I.R.C. § 404(k) (employer’s deduction for a dividend paid out, rather than into the plan’s trust). https://irc.bloombergtax.com/public/uscode/doc/irc/section_404 I.R.C. § 3405(e)(1)(B)(iv) (section 404(k)(2) distribution not a designated distribution). https://irc.bloombergtax.com/public/uscode/doc/irc/section_3405 26 C.F.R. § 1.402(c)-2/Q&A-4(e) (“Dividends paid on employer securities as described in section 404(k)” not an eligible rollover distribution). https://www.ecfr.gov/current/title-26/chapter-I/subchapter-A/part-1/section-1.402(c)-2 26 C.F.R. § 1.404(k)-1T/Q&A-3 (treating a dividend paid out, rather than into the plan’s trust, as a separate contract for I.R.C. § 72 income ordering). https://www.ecfr.gov/current/title-26/chapter-I/subchapter-A/part-1/section-1.404(k)-1T

If the mistake is not ratified: Consider that the employer might owe the employee her past-due wages with interest. That interest might be at a rate State law specifies for late payments of wages, a rate for obligations, or some other measure of interest.

Just curious, if the plan's sponsor does not change the plan, what correction should the plan's administrator (even if both sponsor and administrator are the employer) implement?

Yes, we're agreeing; we can help only those who are alert, competent, and want to be helped.

Some law firms keep an employee-benefits lawyer busy working on the deals the business lawyers work on. For firms that lack an eb lawyer, good lawyers sometimes won’t work a deal unless the client engages (or authorizes the deal firm to engage at the client’s expense) a suitable employee-benefits lawyer.

If the employer’s cost for a health benefit can’t be fairly estimated from the employer’s experience alone, could one extrapolate from other employers’ experiences with similar benefits? And would a firm of actuaries have enough information to do that study?

If, following a qualified domestic relations order, the participant’s spouse or former spouse is treated as an alternate payee and distributee, that distributee may make a rollover (including a direct rollover) to an eligible retirement plan. I.R.C. § 402(c)(1), 402(e)(1) https://irc.bloombergtax.com/public/uscode/doc/irc/section_402.

Recognizing MoJo’s guidance, there sometimes might be a deliberate variation from the mainstream approach of setting a plans’ merger’s effect for a year-turn. A receiving plan’s sponsor/administrator might prefer that a merger not happen by midnight December 31 because that might increase the receiving plan’s beginning-of-year count of participants to require engaging an independent qualified public accountant when the receiving plan’s administrator otherwise would not engage an IQPA. Instead, one might set the plans’ merger for the first business day of January.

That might not be about what the IRS allows because self-correction means the employer doesn’t ask the IRS. Among the burdens of self-correction (even before SECURE 2.0 § 305) is that it puts responsibility on the employer and, practically, its adviser. If, after a self-correction, the plan’s tax-qualified treatment is challenged, the burdens of proof and persuasion are on the employer to show that the failure was eligible for self-correction and that the correction was appropriate. When a professional is asked for advice, whether written or oral, that a failure is eligible for self-correction, the professional evaluates the liability exposures and other risks of that advice. About the example you set up, ask yourself this rhetorical question: Could Belgarath, knowing that States’ laws hold a nonlawyer to the same standard of care that would be used by a prudent lawyer (with the same exposures for liability to one’s advisee and third persons), write something to confirm the failure is eligible for self-correction?

Consider: 5 C.F.R. § 1631.35 Certification (authentication) of copies of records. The [Federal Retirement Thrift Investment] Board may certify that copies of records are true copies in order to facilitate their use as evidence. The records custodian or other qualified individual shall certify copies of books, records, papers, writings, and documents by attaching a written declaration that complies with current Federal Rules of Evidence. No seal or notarization shall be required. https://www.ecfr.gov/current/title-5/chapter-VI/part-1631/subpart-B/section-1631.35 Perhaps the State’s domestic-relations court would be satisfied if a record is so certified. Here are addresses for the TSP Legal Processing Unit: https://www.opm.gov/retirement-center/my-annuity-and-benefits/thrift-savings-plan/ Likely, you and your fellow practitioners already know those procedures.

Is it 3.5% for a matching contribution, or 3% for a nonelective contribution?

If a charity’s § 403(b) plan provides a qualified automatic contribution arrangement with auto-escalation, to get coverage and nondiscrimination safe harbors: how much must the employer provide as a matching contribution? how much must the employer provide as a nonelective contribution?

Before adjusting any tax-information reporting, are there other issues to sort out? Considering the plan’s provisions: Did the participant have a right to payments that continue after the participant’s death? If so, is the participant’s spouse the participant’s beneficiary? If the after-death payments did not belong to the person who deposited or negotiated the checks, should the employer pursue its remedies against a bank that processed the checks? If the after-death payments did not belong to the person who deposited or negotiated the checks, should the employer pursue its remedies against the person who made false statements?

Beyond reading a retirement plan’s governing documents and a plan’s agreement with a recordkeeper or other service provider, the employer/administrator should read the particular prevailing-wage statute and implementing rules (these can vary by State and political subdivision, place of work, and other factors) and the particular labor agreement (which might specify prevailing-wage provisions less flexible than those the prevailing-wage law permits).

While I’m good on fiduciary law, I’m no more than a novice on qualified-plan rules. But using your expertise, consider these points: Elapsed time doesn’t measure service; it measures time that elapses between a beginning moment and an ending moment. The ending moment is “[t]he date the employee severs from service[.]” 26 C.F.R. § 1.410(a)-7(a)(2)(ii) https://www.ecfr.gov/current/title-26/chapter-I/subchapter-A/part-1/subject-group-ECFR686e4ad80b3ad70/section-1.410(a)-7#p-1.410(a)-7(a)(2)(ii) A perhaps related point of tax law treats someone who has been a self-employed individual as continuing to be a self-employed individual even if a year’s earned income is zero or negative. The term “self-employed individual” means, with respect to any taxable year, an individual who has earned income . . . for such taxable year. To the extent provided in regulations prescribed by the Secretary, such term also includes, for any taxable year— (i) an individual who would be a self-employed individual within the meaning of the preceding sentence but for the fact that the trade or business carried on by such individual did not have net profits for the taxable year, and (ii) an individual who has been a self-employed individual within the meaning of the preceding sentence for any prior taxable year. I.R.C. (26 U.S.C.) § 401(c)(1)(B) http://uscode.house.gov/view.xhtml?req=(title:26%20section:401%20edition:prelim)%20OR%20(granuleid:USC-prelim-title26-section401)&f=treesort&edition=prelim&num=0&jumpTo=true. A regulation the statute calls for, and delegates to, provides: For purposes of section 401, a self-employed individual who receives earned income from an employer during a taxable year of such employer beginning after December 31, 1962, shall be considered an employee of such employer for such taxable year. Moreover, such an individual will be considered an employee for a taxable year if he would otherwise be treated as an employee but for the fact that the employer did not have net profits for that taxable year. . . . . 26 C.F.R. § 1.401-10(b)(1) https://www.ecfr.gov/current/title-26/chapter-I/subchapter-A/part-1/subject-group-ECFR6f8c3724b50e44d/section-1.401-10#p-1.401-10(b)(1). If the self-employed business has not ended and the self-employed individual remains available to perform services if her deemed employer gets an engagement, the individual might not have severed from service. If that’s the administrator’s interpretation of the plan’s governing documents, the self-employed individual and her deemed employer might be careful to file tax returns so they’re consistent with not having closed the business. For example, a sole proprietor’s Schedule C might show a zero revenue, a little expense (for a business-privilege tax, or something else needed to keep the business available), and a slight loss.

About promptness for participant contributions (and participant loan repayments), the 29 C.F.R. § 2510.3-102(a)(2) deemed-reasonable “safe harbor” is for “a plan with fewer than 100 participants at the beginning of the plan year[.]” https://www.ecfr.gov/current/title-29/subtitle-B/chapter-XXV/subchapter-B/part-2510/section-2510.3-102#p-2510.3-102(a)(2)(i) Changing that rule would require a notice-and-comment rulemaking.

If a contribution was not labeled as an elective deferral (whether Roth or non-Roth) or as an employee contribution (if the plan’s governing documents permit such a contribution), consider whether the contribution might have been a nonelective contribution. Unless the proprietor is confident he will have compensation (rather than a loss) for 2023, consider whether the contribution could exceed the § 415(c) annual-additions limit, a § 404 deduction limit, or some other relevant limit.

In the Internal Revenue Code of 1986, § 45E is under these divisions: Subtitle A—Income taxes Chapter 1—Normal taxes and surtaxes Subchapter A—Determination of tax liability Part IV—Credits Against Tax Subpart D—Business Related Credits (sections 38 to 45AA) I.R.C. § 45E. The § 45E credit is classed among the many that form § 38’s general business credit. (Refundable credits are in subpart C—sections 31-37.)

In 1985, few employment-based retirement plans provided the convenience of paying a distribution as a rollover contribution directly to another retirement plan or an Individual Retirement Account. About what happened or what was reported, the individual might request from the IRS a copy of her 1985 tax return (and of later years’ returns). Form 4506 https://www.irs.gov/pub/irs-pdf/f4506.pdf. Consider whether the individual’s tax returns over many years might have been filed under an assumption that the account was an IRA. If so, consistency might require a taxpayer not to assert a different treatment now. See, for example, Estate of Hilda Ashman v. Commissioner, Tax Court Docket No. 15578-96, T.C. Memo. 1998-14575 T.C.M. (CCH) 2160, T.C.M. (RIA) 98,145, 22 Empl. Benefits Cas. (BL) 1283, Pension Plan Guide (CCH) ¶ 23943M, 1998 Tax Ct. Memo LEXIS 146, 1998 WL 188936 (U.S. Tax Court Apr. 22, 1998) (In 1990, a distributee received a distribution from a qualified pension plan, and her tax return treated it as rolled over to another plan. For 1993, the taxpayer was estopped from asserting that the 1990 distribution was taxable in 1990.). See generally R. H. Stearns Co. v. United States, 291 U.S. 54 (1934) (by Cardozo, J.).

If an employer waits a few months to pay the contribution needed to meet the top-heavy minimum allocations, what is due to a participant who was a non-key employee at the relevant time who before the plan-wide top-heavy contribution has been paid severs from employment, is entitled to take a single-sum distribution of her whole account, and claims it? Must or should the employer “top up” such a participant’s account so it will have had its top-heavy minimum allocation before the participant exits the plan? If an employer does not do that, must or should the employer and administrator later credit the individual’s account with a “trailing” top-heavy minimum allocation?

That a direct rollover is available only when a distributee has a distribution to roll over is stated in the rule the requesting participant cited. In the Treasury department’s regulation to interpret and implement § 401(a)(31), the general rule’s first sentence states: “To satisfy section 401(a)(31), added by UCA, a plan must provide that if the distributee of any eligible rollover distribution elects to have the distribution paid directly to an eligible retirement plan, and specifies the eligible retirement plan to which the distribution is to be paid, then the distribution will be paid to that eligible retirement plan in a direct rollover described in Q&A-3 of this section.” 26 C.F.R. § 1.401(a)(31)-1/Q&A-1(a) (emphasis added). That rule follows the statute, which provides: “A trust shall not constitute a qualified trust under this section unless the plan of which such trust is a part provides that if the distributee of any eligible rollover distribution—(i) elects to have such distribution paid directly to an eligible retirement plan, and (ii) specifies the eligible retirement plan to which such distribution is to be paid (in such form and at such time as the plan administrator may prescribe), such distribution shall be made in the form of a direct trustee-to-trustee transfer to the eligible retirement plan so specified.” Internal Revenue Code of 1986 (26 U.S.C.) § 401(a)(31)(A) (emphasis added). If the employer’s plan is stated using an IRS-preapproved document, we’d be surprised to find a provision that allows an ostensible direct rollover in circumstances wider than those stated by the regulation. Further, the Internal Revenue Code, not an employer’s plan, governs whether a transaction is for Federal income tax purposes a rollover.

Internal Revenue Code of 1986 § 414A(c)(2)(A)(i) provides: “Subsection (a) [providing that an arrangement is not a § 401(k) arrangement unless it meets § 414A(b)’s automatic-enrollment requirements] shall not apply to—any qualified cash or deferred arrangement established before the date of the enactment of this section[.]” Whether an arrangement was established before December 29, 2022 is a mixed question of law and fact. To interpret what “established” means for § 414A(c)(2)(A)(i), there is no Treasury department rule or regulation, no IRS guidance, no court decision. If an employer wants a prediction about whether a plan with facts like those described above will become subject to § 414A(b), the employer might want its lawyer’s or other tax practitioner’s written advice. If 2025 arrives and there is yet no rule and no guidance, an employer’s good-faith reliance on an IRS-recognized practitioner’s written tax advice might support tax-return, information-return, and other reporting positions. “There may be substantial authority for the tax treatment of an item despite the absence of certain types of authority. Thus, a taxpayer may have substantial authority for a position that is supported only by a well-reasoned construction of the applicable statutory provision.” 26 C.F.R. § 1.6662-4(d)(3)(ii) https://www.ecfr.gov/current/title-26/chapter-I/subchapter-A/part-1/subject-group-ECFR1d0453abf9d86e0/section-1.6662-4#p-1.6662-4(d)(3)(ii).

CuseFan has the information right. I can think of two situations in which Internal Revenue Code § 404 might be relevant: A charitable organization has some activities that result in unrelated business taxable income. Such a charity might want a § 404 deduction for the portion of retirement plan contributions allocated to the business that produces the UBTI. An employer—considering everything that counts together as one employer under IRC § 414(b)-(c)-(m)-(n)-(o)—includes not only charities and other exempt organizations but also taxable organizations. Contributions for employees of a taxable organization would be to a plan other than a § 403(b) plan. There can be accounting and tax-allocation issues when compensation of executives or physicians who perform services used by several charitable, tax-exempt, and taxable organizations of an employer is allocated to the organizations.