Madison71

PS - you're more than welcome

Good question. I don't know - the IRS has not defined mistake of fact although typos have been found to generally be included in this category in PLRs. If it came up in audit, I think you could argue this or that it was an administrative error when preparing the forms to not change the date and that the notice was sent out and most are deferring. If you can also show that each participant was made aware of the match and ability to defer (education/enrollment meetings), no one was harmed and that procedures were tightened up to ensure this didn't happen again, then I think you should be ok.

Assume it is a safe harbor match as you included elective deferrals at the end. Given that nothing changed from 2016 to 2017 and a notice was issued with the wrong year, that issuing another one mid-year (assuming calendar year plan) just to change the plan year is more confusing to participants because it appears you are making a mid-year change to the plan. You may consider revising the year and sending to the employer for their file in case it is needed in the future and making note in your records.

I believe you treat it as an overpayment under EPCRS. I think the conservative approach is to return the funds (including earnings) to the plan whether by the participant or the employer (assuming that it is a recovery of more than a small amount). I believe a reasonable attempt needs to first be made to recover from the participant. If by participant, then it goes back into their account. If by the employer, then it goes into suspense to reduce future employer contributions. I recall reading informal comments from the IRS that they do not believe the employer has to return the funds in a case like this, but I have never came across anything formal and it is counter to the approach in EPCRS. I've also read comments that the IRS needs to clarify in EPCRS that a return of funds by the employer is not needed in this case because it is too punitive for the employer who does not otherwise make employer contributions to the plan and is meaningless to the ones that do as it just reduces future amounts. I know they made some clarifications to overpayments in 2016-51, but I don't believe anything was clarified with this particular issue. Whether or not it would be filed under VCP would depend if it is outside the window to self-correct if so, an analysis of the facts and circumstances as the whether or not it is a significant issue.

I know there have been debates back and forth on here in the past about whether it is needed or not (with more leaning on not sending). The question of whether "to each participant of such plan" means a participant at any time during the year or only at the EOY (or upon plan termination). We generate and send to employer to distribute, but I know the question will then be who does the employer send it to since there are no participants. I think the one thing that is universally agreed upon is the pointless nature of the SAR.

Yes - a final SAR should be distributed

As to BRF, I would think that would fall under other rights and features that would need to be tested for current availability and either pass ratio or reasonable classification. Effective availability should not be an issue

What are you doing with the forfeiture balance? If reallocated to participants than it should have already been done, but I guess you could count those as former entitled to future. If for reasonable admin. expenses, then typically try to apply by year end if participants are paid out to avoid this issue. With that said, the instructions say do not mark final return/report if you are reporting participants and/or assets at the end of the year, so you should be ok reporting 0.

Making note of that right now - King Solomon - got it. Thanks.

I guess I'm confused (not surprising). This modification was to encourage early correction of elective deferral failures. I thought the rolling period (from 2015-28) was for each affected employee that had an operational failure. So, someone who has an elective deferral failure that began back in 2014 would have the entire period corrected at 50% because it goes beyond the 2 years following the year of the failure. I'm sure I am misunderstanding how it is being corrected. Is it that the employee deferral failure goes back to 2014 for some affected employees and for others it started, for example in say 2017? So, the correction for failure to the affected employee(s) that began in 2014 is 50% of the entire missed deferral amount to the date of correction and the 2017 missed deferral amount through now is corrected at 25%?

My recollection is because it goes back so far that you use 50% to correct the whole enchilada. I recall it being similar to the SCP correction window for significant operational failures to go 25% correction option

I’m certain there are a varying opinions on count, but our plan document treated terminated participants that are 0% vested as deemed distributed and would not have to wait for 5year BIS before forfeiting. Therefore, in our plans I would not count on 5b or c. I don’t have a cite

You’re welcome - now think about taking that trip to Tahiti

May be a good excuse to chase them down - nice vacation to Tahiti. I would say it is the PA authorized to file at the time it is filed

I'm not sure how they are a former key employee where you can exclude their balance since they can never be treated as a non-key. They are still a 5% owner and are considered a participant since they have a balance in the plan.

ERISA requires the Plan Admin. to sign and file although authorized rep can file in their behalf.

I believe you do not complete unless there are persons receiving direct or indirect compensation of $5,000 or more. There are other instances where may have to report if terminated accountant or a formula instead of a dollar amt is provided.

I do not believe there is a restriction to 10/1 for a new 401(k) safe harbor as the 457(b) Plan is a non qualified top hat plan.

The transfer of an HSA interest to a former spouse pursuant to a divorce decree is not considered a taxable transfer. After the transfer, the interest is treated as the former spouses. Since in this case it was not directly transferred to her newly established account, then like a retirement plan distribution (or IRA), she has 60 days to rollover that amount. However, unlike a retirement plan distribution, there is no concern of the automatic 20% withholding upon distribution of an HSA.

Plan Sponsor could utilize the overpayment rules under EPCRS. Since this is not a small amount, the Plan Sponsor would be required to seek return of the overpayment (adjusted for earnings) from the AP. The overpayment is required to be returned to the Plan regardless. Either the Plan Sponsor (or the rules say another person) can contribute the money if not returned from the AP. At that point, a decision can be made what next steps should be taken to recoup the money from AP

Thanks Bird. I guess "mapping" isn't the correct term. These are fund mergers or termination initiated by the investment company. They are alerting the sponsor to these changes and the question is whether they should alert the affected participants.

This reminds me of an issue I had - MP and PS plan was established. The story was the plan documents were destroyed in a fire. They had fired their provider at some point along the way and were handling the administration internally. Their old provider had no plan document on file when I called due to their record retention policy. However, the Forms 5500 were being timely filed and everything else looked ok. The big issue is the fire destroying the documents happened years ago and there was no attempt to restate the documents over the years. It was filed under VCP (although not anonymously). I believe the plans were merged prior to filing. It was approved after a lot of back and forth. I remember an IRS agent contacting me asking what exactly I was trying to do. They weren't following the narrative of the fire, etc. It was interesting. In thinking about it, anonymous may have been the better way to go, but it worked out in this case.

RBG - thank you. If I am understanding this correctly then, a description of the brokerage window must be provided annually or 30 to 90 days before if there is a change based on the disclosure requirement of plan-related information. However, the disclosure of investment related information inside the brokerage window would not be required under 404(a)(5) because it is not a DIA. Is it also correct that disclosure of the liquidation and mapping of a fund held inside a brokerage window is not a regulatory requirement? It may make sense for the plan sponsor to provide as a courtesy, but is not a requirement.

Thank you. I don’t know the percentage just that there are participants who will be mapped to the new fund. I think it is appropriate to provide notice in this case to the affected participants. However, I don’t know if this is a 404a5 requirement in this case.

Good morning - It is a pain, but I attempt to get the information. I can't recall if we put "yes" failed to provide or leave blank. I think it creates an error on our system if leave blank if you answer "no." Its been awhile since I looked at that part of the instructions, but I thought you were supposed to make a good faith attempt to get the information before putting failure to provide.