rocknrolls2

In addition to what everyone else has been saying, before beginning to do any work for them, I would also ask for as much of your anticipated fee for this to be paid up front. If this goes South, the doc will be looking to point the finger at you and developing a convenient memory of what was said and by whom, and use that as a basis for not paying you. In addition, as the sole fiduciary, he may well end up being personally liable for any shortfall resulting from a massive loss, in which case, you would need to get in line with everyone else who wants to get paid. If the doc does not agree, do not do the work, dismiss the client and sit back and watch the fireworks! You will be glad you followed these steps and possibly financially ahead of the game.

Unless your client's plan has fewer than 100 participants as of the beginning of the plan year, the Labor Department will treat your off-cycle deposit of deferrals to be delinquent and require that you credit the amount with plan earnings from the date of the payroll run date. See 29 CFR Section 2510.3-102(a). If, however, your client's plan has fewer than 100 participants as of the beginning of the plan year, there is a safe harbor for the deferrals to be deposited by no later than the 7th business day after the pay date. If your contributions are considered to be delinquent, you should file under the VFC Program and check yes on the appropriate box of the Form 5500.

The IRS has an ESOP :Listing of Required Modifications on its website. It is accessible via this link. https://www.irs.gov/pub/irs-tege/esop_lrm1017.pdf It might shed some light to help you resolve your question.

Building on what Peter said, depending upon the profession of the advisor, there may be strict ethical considerations -- essentially, if you merely tell the advisee to ignore it and it will not get picked up by the IRS, you are aiding and abetting the advisee in breaking the law and could have your license to practice suspended or revoked. In addition, the risk of getting caught should never be the basis for providing professional advice. Perhaps a better way to handle this is, tell the advisee, "As your [name of your profession], fed eral tax law specifically prohibits you from having the HSA if your spouse has a general purpose health FSA. As a business person, however, given the circumstances that there is no reporting of the amount of health FSA contributions or distributions, it is unlikely, unless the IRS conducted an audit of your tax return, that the IRS would detect this. My advice to you is that either you or your spouse needs to either stop contributing to the HSA or stop contributing to the health FSA as soon as possible. What you ultimately decide to do is up to you, but I have provided you the benefit of my advice. If you decide to follow my advice, I will be glad to be of any assistance you need to help you implement that advice." This will not necessarily sit well with your client, but it will help keep you out of trouble, and maybe, the client will decide to listen.

At the end of the day, no matter what label you slap onto them, they will still be considered by the IRS to be LTPTs. Since they are only allowed to defer, so let them! They will not be getting employer match or nonelective contributions. Make eligibility for deferrals date of hire and be done with wrangling over whether they met the hours requirement. But keep the age 21 and 1,000 hours requirement for employer contributions. If you think about it this way, you avoid a lot of gnashing of teeth and splitting of hairs over this issue.

I am more than a bit surprised that there is no message board devoted primarily to ERISA fiduciary and/or prohibited transaction issues. Our client, a multiemployer 401(k) profit sharing plan (Plan A) is contemplating a merger with another multiemployer 401(k) plan (Plan B). Under Plan A, legal services have been provided to and invoiced by the firm providing them. However, the firm has foregone any efforts to enforce their collection. Isn't the law firm's forebearance in collecting its billed fees an extension of credit and therefore a prohibited transaction? If so, is there an applicable class exemption that might exempt it from constituting a prohibited transaction? Thanks!

Building on jsample's response, if it is a 401(k) plan and the definition is amended to correct an operational error or to treat tipped employees more equitably vis a vis other employees, the employer could contribute a QNEC to make up for the fact that such employees did not have the opportunity to make elective deferrals from tips.

Building on Peter's excellent point, a plan document can include a provision dealing with a particular aspect of plan administration, including paying the money to a guardian, trustee, parent, grandparent or an UTMA custodian, to name a few. To the extent the plan document contains a provision which is not contrary to ERISA and is meant to facilitate plan administration, it can be accorded status similar to that of ERISA in the sense that it could preempt state law. While the typical plan document allows a responsible person to act for the minor beneficiary, an atypical plan provision can do more to facilitate the administration of a benefit in such case.

Regarding the prohibition of rolling over a Roth IRA into a Roth 401(k), I think that rule existed because under the Roth 401(k) rules, lifetime RMDs were required. Now that the requirement for lifetime RMDs for Roth 401(k) balances has been repealed, that prohibition has outlived its initial usefulness. This is something that should be included in SECURE 3.0. (House Way & Means Committee Members: take note!) If you go through VCP, based on the current state of the law, I stongly doubt that the IRS would let you keep the money in the plan.

Thank you, Peter, for the lead. Thanks Bill for providing the answer that I would have given to Effen's question.

I have learned that most insurers will not quote, let alone issue, annuity contracts to ongoing defined benefit plans covering individual participants. Does anyone have at least a few names of any insurers that will quote and issue annuity contracts in this context? Thanks in advance.

Thank you, everyone, for your thoughtful insights and suggestions. To answer everyone's questions: (1) the RBD for all types of qualified plans, other than church or governmental plans, is the later of attainment of the applicable age or retirement (except for 5% owners). (2) the plan has a separate missing participant and beneficiary procedure and it requires verification that the recipient remains alive, and requires that such items as benefit enrollment, beneficiary designation and other documents be checked to attempt to ascertain the recipient's marital status and date of birth. The problem, for any intended recipient, is whether such marital status has changed as well as whether beneficiary designations have changed in the interim. Since the terms of the policy apply only to terminated employees, attainment of the applicable age is what will likely trigger the RBD for that individual.

I think that the order you found was probably a draft which was never finalized and was therefore never submitted to the court for entry as an order, followed by a plan administrator determination that it was qualified, because some of the terms changed, or negotiations broke down on the fine points of the order, or any other possibility under the sun that you can think up. Perhaps you could contact the attorney or law firm that was involved in drafting the order to find out what happened. At the end of the day, the best result may simply be to let sleeping (and dead) dogs lie.

Jakyasar, This is a non-owner participant who attained the applicable RMD age. It would be limited to deferred vesteds since the RBD for actives is delayed until after actual retirement.

A client maintains a defined benefit plan and has requested help in complying with RMD rules. If a plan participant cannot be located or fails to cooperate in completing and returning a distribution form, can the plan's administrator commence paying distributions in a default form based on file information as to marital status and date of birth? What can be done to correct the default RMD form if the date of birth and/or marital status turn out to be inaccurate after distributions commence? If the plan does not have marital status information about a participant to whom RMDs are payable, can the plan presume that the participant is married or single and commence RMDs based on a presumed marital status?

In addition to the excellent points raised above, how has the plan administrator previously interpreted the term "particiant" with respct to eligibility to take loans? If employees who have not yet satisified the year osf service and have rolled over balances fro other plans have been permitted to take loans fom their rollover accounts, that is the administrator's interpretation and would set a precedent for considering such an employee eligible to take a loan as to that amount.

when I started work in this area, the rule was that if no contribution was made by the due date of the corporate tax return plus extensions, there was no valid trust and therefore no plan byoperation of law. The IRS approved of that position. In spite of all the legislative and regulatory changes made since then, I am not aware of anything that would have changed this principle. Since there is no plan ortrust in existence, there is nothing to correct. That employer should simply adopt the 401(k) plan of one of its affiliates.

I am reviewing a health plan SPD. Has there been any official model NSA/TiC summary published by the Departments of Health and Human Services, Labor and Treasury of an approved summary notice that is suggested for this purpose? Alternatively, is there any summary language that anyone would be willing to share?

I share Gina's concern on this situation for the same reasons. You can correct the situation for the amounts that were not contributed in the past by filing under the Voluntary Fiduciary Correction Program and contributing the amount owed plus interest using the DOL's calculator. As far as the IRS is concerned, I am not aware that they have any program in place to address voluntary correction of tax exemption issues. Because of this, you should retain highly competent ERISA counsel to assist you in rectifying this problem. The DOL program would likely resolve any prohibited transactions and other fiduciary issues. The danger is, that you do not want the IRS to know about this and hit your client with a 100% excise tax on a reversion. Perhaps there is a closing agreement you could pursue to address any IRS issues. Regarding the overfunded status of the VEBA, you could, prospectively, collect lower premium amounts from employees or amend the VEBA going forward to add additional benefits to help soak up some of that excess amount. I hope these suggestions prove helpful to you.

If you want to save some trees, wait until tomorrow to print them out. At that time, they will be published in the Feferal Register in three-cplumn format.

Did the EOBs deny due to lack of coverage? If so, appeal the denial and call the former employer. Either the employer or insurer screwed up. if you don't get a satisfactory answer, sue the employer and the insurer.

Code section 402(g( prohibits an individual participant from making elective deferrals exceeding the annual dollar limit, except to the extent that the participant is eligible to make catch-up contributions. 402(g) applies determines compliance with the annual limit across all plans to which elective deferrals are made, regardless of whether the employers are related. 401(a)(30) is a qualification requirement prohibiting a plan from accepting elective deferrals in excess of the annual dollar limit except to the extent that the participant is eligible to make catch-up contributions and the total of such contributions do not exceed the sum of the regular limit on elective deferrals plus the annual limit on catch-up contributions. Reg. Section 1.402(g)-1(e)(8)(iii) provides: "If excess deferrals (and income) for aw taxable year are not distributes [by April 15th of the taxable year following the taxable year in which the excess deferrals were made] they may only be distributed when permitted under section 401(k)(2)(B)[except to the extent distributed in accordance with correction under EPCRS]."

Nothing specific. I agree that it would be not only fairer but consistent with the principal that you should not be taxed on amounts you contributed with after-tax dollars. Since the restored amount is an employer contribution that was previously distributied to the participant, then it might be argued that it should be treated and taxed as an employer contribution upon ultimate distribution.

CuseFan, I agree with your answer to (1). If we are dealing with a plain vanilla profit sharing plan with no deferrals or after-tax contributions, I believe that the amount is treated as if it were an employer contribution and subject to tax at distribution. Unfair? Definitely, but I believe it is one area where the recovery of tax basis rule falls apart. By contrast with qualified disaster distributions and qualified birth and adoption distributions, timely repayments effective wipe out the earlier taxation of the initial distribution. Not that restoration repayments may be made up to five years from the date that the employee is rehired. This might be one area for correction via a SECURE 3.0 or SECURE 2.5.

Following up on david rigby's response, your nonqualified deferred compensation plan payments are considered wages from your former employer, subject to wage withholding (Form W-4) and reported to you for tax purposes on Form W-2.