rocknrolls2

In addition to what was discussed above, other than an obligation on the employer's part to make sure that the transferee plan is qualified and getting it to make covenants to preserve optional forms of benefit under Code Section 411(d)(6) (except to the extent the plan administrator eliminates one or more of them pursuant to regulations specifically authorizing such elimination) and getting the transferee plan's commitment to comply with any applicable reporting and disclosure requirements under the Code and/or ERISA, , I do not see any potential liabilities on the part of the employer of the transferor plan.

CNB Consulting: Please note that the American Jobs Creation Act of 2004, which amended Code Section 1563(a)(2) in thie way you describe also added a paragraph (5) to Section 1563(f). The change essentially means that for purposes of any provision of law (other than the part relating to consolidated returns), including for qualified plan purposes, the two-part test (i.e., at least 80% and more than 50%) for purposes of determining a brother-sister controlled group is retained.

I am not in disagreement with any of the previous responses. However, I wanted to make the following point. The QJSA was elected by the participant's own free will whether or not the plan provided for one with respect to an unmarried participant. The Plan had no reason to believe that the facts were false at the time the election was made and therefore there was no duty on the part of the plan's fiduciaries to do an investigation. Since the participant and not the plan made the misrepresentation, why not leave the participant where he lies? I have seen a court case on somewhat similar facts that was decided by a federal trial court in the 1980s. Posthumously providing the participant with the difference between the QJSA and the SLA would amount to unjustly enriching the fraudster. Leave things where they lie!

I am firmly behind Peter's position on this and I would NOT inform the DOL. However, if your client is a fiduciary with respect to the plan with potential knowledge of a fiduciary breach, then either work with your lawyer to write a letter to the allegedly breaching fiduciary threatening suit unless s/he makes any deferrals up to the plan with earnings as soon as possible but no later than a short period of sending the letter or sue the breaching fiduciary for fiduciary breach, in which case you would have to furnish a copy of the complaint to the DOL.

The IRS position on this is crystal clear. They regard it as a violation of Code Section 410 (a) which permits a maximum eligibility condition due to plan eligibility of one year. There are a lot IRS Revenue Rulings from the 1970s and 1980s clariifyng how this rule works.

Nate S, In addition to the points you have raised about what has to be preserved, you also have to preserve the optional forms of distribution available under B's plan (which can be limited to the amounts being spun off into A's plan). The IRS regs do provide plenty of options for validly eliminating some of these via amendment without running afoul of the anti-cutback rule.

It was my understanding that the SECURE Act change regarding long-term part-time employees was not directly a vesting change. The requirement is merely to make them eligible to make elective deferrals to the plan. Elective deferrals have always been required to be 100% vested at all times. The employer is not required to make a matching contribution with respect to elective deferrals for such employees. However, if it does, it is not required to provide any more vesting than that which is provided to matching contributions made on behalf of full-time employees.

Since no RMD was required to be paid to the participant for 2021, no RMD would be payable to a beneficiary attributable to the 2021 distribution calendar year. The post-death RMDs must begin by 12/31 of the year following the year of the participant's death. Based on your facts, the beneficiary would need to commence RMDs by no later than 12/31/2022 with respect to the 2022 account balance.

Building on Peter's latest response, another factor worth considering is whether the church or association or convention of churches made the election described in Code Section 410(d)(1). If it did, then the nondiscrimination provisions would nevertheless apply. Please note that, once made, the election is irrevocable.

Building on Peter's last post, in addition, legal separation might not exist under local law, in which case, the judge would properly refuse to issue the order.

I tend to agree with Cuse Fan to the extent he says that the spouse at the annuity starting date is locked in regardless of what happens afterwards and david rigby when he points out the importance of the divorce decree. According to IRS Reg. Section 1.401(a)-20, Q&A-25(b)(3), "If the participant was married on the annuity starting date, the spouse to whom the participant was married on the annuity starting date is entitled to the QJSA protection under the plan. The spouse is entitled to this protection (unless waived and consented to by such spouse) even if the participant and spouse are not married on the date of the participant's death, except as provided in a QDRO." I wanted to point out two things in response to the cited regulation: (1) I have not seen a single court case that did not hold that the benefit could be paid to anyone other than the spouse as of the annuity starting date, even if there is a QDRO providing to the contrary; and (2) most defined benefit plans I have seen lock in the spouse at the time of the annuity starting date as the designated survivor annuitant and do not allow for it to be changed in any respect.

While not disagreeing with Bri's answer, another approach is to have the trust agreement provide that, to the extent a trustee is an employee of the plan sponsor, she or he shall be deemed to have automatically resigned his/her trusteeship upon terminating his/her employment with the plan sponsor.

One additional point to the earliest responses is that you have to provide for the money purchase portion only that the joint and survivor annuity and spousal consent requirements are satisfied. In response to your question on whether any post PPA amendments need to be added to the MP portion, look at the required amendment lists with respect to laws enacted since PPA. There may also be some optional provisions that the client might want to add, especially those that make the money purchase portion more readily available (such as the ability to take in-service distributions at age 59 1/2 (added by the same law containing the SECURE Act (but in a different division of that law).

Building on what Peter has said, in addition, you need to pay particular attention both to what the order says involving distribution as well as the terms of the plan document in determining whether and when an alternate payee may receive a plan distribution.

Further along the vein of what ESOP Guy was alluding to, never accept the label that your potential client slaps on a worker as being correct unless a more thorough inquiry is made by you or a legal professional on what the worker's true status (employee or independent contractor) is likely to be. Only after determining that a worker has been vetted through the worker classification test and determined to be either employee or independent contractor can one confidently say whether the label will or will not be accepted by the IRS or a court. Anyone can slap a label onto any workerr. Blindly accepting the label without more will subject yourself and your client to untold trouble and liability from which you may never recover. As David Rigby so aptly put it, RUN!!!!!

Another issue which no one seems to have picked up on is whether the art work were acquired by a participant's self-directed account. If it were, then the value of the art work is considered a distribution and taxable under Code Section 408(m). It appears to be taxable at least in the year in which the work of art is acquired. I know that there is a recent case decided by the US Tax Court on this. Perhaps the IRS takes the position that as long as the asset is retained by the plan, it is considered a taxxable distribution in each year in which it continues to be so held.

In addition to the excellent insights from Lou, I wanted to add that this is something that is also covered by the DOL's Voluntary Fiduciary Correction program ("VCP"). Although it is extremely dated and the DOL has it on its regulatory agenda to update it, the existing program is what it is. You have two routes to go here: (1) use the VCP program, do the filing, pay the amount of the excise tax to the participant's account balance and get a no-action letter from the DOL or file and pay the excise tax on a form 5330 and then self-correct the error under EPCRS. I recall that the Rev Proc for EPCRS provides, at least as applied to delinquent remittance of employee contributions, that the correction is made through VFC first. It may also be the case as applied to a loan that is not timely repaid primarily due to the error on the part of the recordkeeper to initiate loan repayments via payroll deduction.

I looked into this further and found the answer to my question. The answer is that the repayment cannot be taken as a deduction. According to IRS Notice 2020-50, 1.D, ""recontribution will be treated as having been made in a trustee-to-trustee transfer to that eligible retirement plan." Because of this treatment, it cannot be treated as an elective deferral to a 401(k) plan nor as an employer nonelective contribution to such plan.

Participant A was a participant in the C 401(k) Plan until she terminated employment in 2020. A takes a Coronavirus-related distribution during 2020 and elects to have the tax spread out over 3 years. During late 2021, A starts a business as a sole proprietor and sets up a solo 401(k) plan. If A repays the full amount of the one-third of the 2020 distribution that would otherwise be taxable to her in 2021, and contributes that amount to the solo 401(k) plan, can A deduct the amount of the 2021 repayment on her 2021 tax return? Assume that the total amount contributed to the solo 401(k) plan, including the amount repaid of the repaid Coronavirus-related distribution, does not exceed the 402(g) limit on elective deferrals or the deduction limit under Code Section 404(a).

Another possible thought is that because the match was discretionary, the employer's announcement to the employees for 2021 did not constitute a plan amendment but a guarantee that the minimum discretionary match for 2021 would be equal to at least 2%. I agree that a true-up would be advisable for 2021 which could be made up to the due date of the sponsor of Plan B's tax return. While it would be belt and suspenders to amend Plan B to provide for a minimum 2% match with discretion to make a higher percentage match, I do not think it is strictly necessary in this context. Think of this in this manner: what if the plans had not merged and B's sponsor did not do as well economically for 2022? B's sponsor could decide not to continue the 2% approach in 2022 and make a match (or not) at the end of 2022. Why tie the employer's hands if it is not strictly necessary?

My recollection was that Section 457 was initially intended to permit a non-qualified retirement plan for governmental entities. The reason for this was because private employers can immediately deduct contributions to qualified plans but cannot deduct contributions to non-qualified plans until the participant has to include the contribution into his/her income. For governments, there is no deduction permitted because they are tax-exempt. The 1986 Tax Reform Act extended 457s to non-governmental tax-exempt entities. Because only rabbi trusts, the assets of which must be subject to the claims of the employer's general creditors, were then allowed. In the 1990s, the bankruptcy or insolvency of a governmental entity prompted Congress to enact legislation providing for the imposition of a trust requirement for governmental eligible employers (I think it might have been the City of Long Branch, CA). See Public Law 104-188, Section 1448(a)

There are a few things that are involved in order to be able to handle this question with a correct response. First of all, if we were referencing a new plan that became effective during 2021, the plan document would need to be signed, as a result of the SECURE Act amendment, by the due date of the employer's tax return for the 2021 tax year. This overrides the previous rule that a new plan document had to be adopted by the end of the plan year in which it was made effective for it to be a valid plan. Since the question is dealing with amendments and restatements, we reference the remedial amendment period of Code Section 401(b) and any further extension provided by legislation making revisions to the qualification requirements. Remember, that for the SECURE Act, to the extent we are discussing mandatory provisions versus discretionary provisions, the rule is that the plan document needs to be adopted by the close of the 2022 as a general rule (with exceptions for collectively bargained plans and as otherwise provided in the SECURE Act). To the extent that the client has amended the plan to make a provision concerning a discretionary change that was made by legislation, the rule is that it has to be adopted by the close of the plan year in which the change has been made effective. To provide you with the correct answer, I would need to know whether the amendment and the restatement involve discretionary changes to the qualification rules or mandatory changes, based on the rules outlined above.

I did want to make one clarification that might make this easier to swallow. Remember, we are talking about a plan that either has immediate eligibility or requires that the employee have attained an age lower than 21 and/or have completed less than one year of service to participate. All participants who have not attained age 21 and who have less than one year of service are tested separately from the group of those who have attained at least age 21 and/or completed at least one year of service. For non-owners who are HCEs, remember that the determination of whether an employee has exceeded the HCE compensation threshold is determined on a look-back basis. Therefore, there will be very few HCEs of this type who have less than one year of service with the employer.

For the most part, this is not an issue because there is an exception for a participant's election of a later date. Many plans deem the participant to have elected a later date which is not later than the required beginning date for RMD purposes unless the participant affirmatively elects to commence benefits sooner. See IRS Reg. Section 1.401(a)-14(a) and (b). Alternatively, subsection (d) allows for a retroactive payment to be made if the amount of the payment required to commence on the date cannot be ascertained by such date, if the payment to be made retroactively to the date it was required to be paid is made no later than 50 days after the earliest date on which the amount of such payment can be ascertained under the plan.