Christine Roberts

I was curious about ChatGPT and threw it a few EB questions, below. With further prompts it would probably have gotten me closer to what I was looking for, which was a discussion of fundedness and the DOL trust non-enforcement policy. I haven't sorted out how I feel about this device. I do know that my mom won't use ATMs, and I think that the uptake of legal information from AI will be rapider with each generation. Whether it will ever fully replace legal advice and strategy remains to be seen.

I wonder if employers who have a liquidity event on their horizon and the prospect of ERISA due diligence may have concerns about SCP versus VCP due to the lack of IRS imprimatur. (I wonder the same thing about the proposed self-correction under VFCP.) Also there is the issue of eligibility for SCP based on the established practices and procedures requirement. Imagine a newly adopted 401(k) plan that mis-applies the plan definition of compensation from day one. Does it have established practices and procedures? If so what are they and how are they described/evidenced for purposes of SCP eligibility.

Just received a query re paying out based on a small estate affidavit and this thread was a gold mine. Peter, thanks for kicking it off and for furthering the conversation.

They are working on this amendment but it is not available as of the date of this writing.

Thanks.

Has anyone seen language from FIS Relius? (Yes, I posted on that board as well.) Or any other source? I believe FTWilliam has a SECURE Amendment for its NQ plans but have not seen it; am also wondering if there is other amendment language available out there. The amendment is due to be adopted by year end.

Has anyone received from FIS Relius a SECURE amendment for required minimum distributions for use with their 457(b) plan document? The amendment is due to be adopted by 12/31/2022. Thanks.

I posted on this topic at my blog https://bit.ly/3SHfRmD and thanked Peter and "other colleagues at the Benefitslink Message Boards" for sharing their thoughts about the new enforcement budget. I appreciate your input (both on these boards, and on the post, if you have any).

Thanks Peter. Also for us practitioners, the IRS funding is a thumb on the scale against clients tempted to play audit roulette (to mix my metaphors gratuitously).

Has anyone had any information as to the degree the IRS budget increase under the Inflation Reduction Act will flow down to TE/GE division and possibly impact plan audit activity? I read Chuck Rettig's letter about not focusing on small taxpayers but do we know anything about allocation of these funds and the degree to which it will impact plan enforcement? Any comments and surmises welcome.

I've had EBSA confirm that the 7-business day safe harbor is not used for earnings calculation purposes, the date the amounts normally would have been deposited is instead. Or, 1/6 as C.B. Zeller suggests.

Peter's comments are on point with my experience. Investing in real property with tax-qualified funds - retirement plans or IRAs - raises a host of issues in addition to the PT issue, some of which are touched on in this thread. https://eforerisa.com/2012/04/29/reality-check-on-ira-investments-in-real-estate/

Participant submitted the paperwork for a Coronavirus Related Distribution on December 24, 2020. The assets were transferred out of the participant account and plan trust account on December 26th. They were transferred to a paying agent. The paying agent didn’t send out the distribution until January 4, 2021. The paying agent is refusing to treat this as a coronavirus related distribution because the check wasn’t sent until January 4, 2021. (Past the 12/31 CRD deadline.) They will be issuing a 2021 1099 distribution for the full $100,000. Thus the participant will have to incur immediate tax consequences and penalty for taking this money out. Has anyone else had any issues like this? We are trying to build a case that because the money left the participant account and the plan’s trust account on December 26th that this should be credited as a 2020 Coronavirus Related Distribution and the paying agent should treat it as such.

I agree Luke.

NQDC Plan provides for payment of benefits in annual installments each March. Termination of employment generally results in a forfeiture of further payments. However, under certain conditions, such as, termination by company other than for cause, payments are to continue when otherwise due under the plan, but conditioned upon the participant signing a release of claims (no deadline specified). Where the release is not a payment trigger (rather, failure to sign a release apparently results in a forfeiture) is it necessary to set a deadline for the release to be returned/and for the revocation period to expire?

Related question - can Federal Credit Union employees use the age 50 catch up contribution or does that conflict with the "non-governmental" benefit status that is required in order to sponsor a 457(b) plan, under the IRS Notice??

Brian, thanks for the comments and the link, and yes, like the Maple Leafs and poutine, LSAs originated in Canada. ESOP Guy - I understand your viewpoint. The roster of reimbursables for LSAs is long, so the pet-free employee can use their budget to purchase some $100 Lululemon yoga togs or get cosmetic dentistry. FWIW.

Lifestyle spending accounts are a trending after-tax benefit consisting of employer after-tax reimbursement of lifestyle products and services such as personal coaching, fitness wear and gear, pet boarding, personal training, etc. Employers choose a yearly maximum and only pay out documented reimbursement requests, up to the maximum limit. Employer deducts reimbursed amounts as taxable compensation to employees. Just wondering if anyone out there has formally classified this "benefit" as either a payroll practice, benefit plan, or addressed potential constructive receipt issues.

This relates to health FSAs. Notice 2020-29 allows employers to treat the dollar amount of year-to-date reimbursed claims as a floor, below which participants may not reduce deferrals. However does the uniform coverage rule still apply to claims incurred before the change in coverage? This would seem to result in rewarding participants who delay submitting requests for reimbursements? Example 1 - Late Reimbursement Request • For the 2020 plan year, Lucy elected to contribute $1,200 to a health FSA, or $100 per month. She has contributed $600 for Jan-June 2020. On May 1, Lucy incurs a claim for $1,200. • On July 1st, Lucy reduces her 2020 election to $10 per month for the remainder of the plan year. She expects to contribute $60 for July-Dec 2020 ($660 in total). • The employer can limit Lucy’s ability to reduce her annual election if she had received more than $660 in total reimbursements before July 1, under Notice 2020-29. • But the uniform coverage rule in the section 125 regulations arguably still allows Lucy to submit her May-incurred claim for $1,200 for reimbursement. Example 2 - Prompt Reimbursement Request. Same facts as above, but Lucy submits her claim for reimbursement in June 2020. On July 1, Notice 2020-29 allows the employer to prevent Lucy from reducing her deferrals because her May claim was $1,200, her full deferral budget. This discussion suggests scenario 1 can be avoided "by carefully defining the period of coverage for 2020." I am not sure how that would work but would welcome comments.

Peter, thanks for the helpful comments. The purpose for which the question exists is really the ability to submit claims incurred during the plan year - does dialling deferrals down to zero mean that you have a stated claims run-out period, or do you remain a participant for claims submission purposes throughout the plan year. As you mentioned in our offline communication, that raises the issue of a "coverage period" and when it might end. From what I can gather from quick review, the 125 regulations generally refer to the coverage period as the plan year. Changes in employment status may result in a termination of participation, but at first look I am not seeing anything that says that ceasing deferrals brings the coverage period to a close for a given participant. I understand "coverage period" to be a plan-wide concept and not an individual participant status.

Cafeteria plan permits all changes in election addressed in Notice 2020-29 including dropping deferrals towards premiums under employer sponsored group health plan (pursuant to affidavit of other coverage), and dialing health FSA deferrals down to zero. Question - an individual who is no longer deferring under the plan in any way still a participant in the plan or does participation terminate? Regulations re: FMLA leave are as close as existing guidance gets, but does not provide a clear answer. Comments appreciated.

Thanks for these comments. 4 months would be nice...!

FWIW, I just received two compliance statements for VCP applications filed in early August and early September 2019, respectively. Not sure what others are experiencing in that regard. Given recent confusion about referral to audit which was all a misunderstanding but which was rooted in how overloaded the program is, I am trying to calibrate clients' expectations about the program going forward. Would be interested to hear of other experiences with turnaround times.

I have see Fidelity quote this section of their Trust Agreement/BPD as questioning whether FFCRA mandated payments are the proper basis for plan contributions. I think the reference is misguided - the employer payroll tax credit does not impact the 404 deduction - but just thought you would be interested. 20.23. Permitted Reversion of Funds to Employer. If it is determined by the Internal Revenue Service that the Plan does not initially qualify under Code Section 401, all assets then held under the Plan shall be returned by the Trustee, as directed by the Administrator, to the Employer, but only if the application for determination is made by the time prescribed by law for filing the Employer's return for the taxable year in which the Plan was adopted or such later date as may be prescribed by regulations. Such distribution shall be made within one year after the date the initial qualification is denied. Upon such distribution the Plan shall be considered to be rescinded and to be of no force or effect. Contributions under the Plan are conditioned upon their deductibility under Code Section 404. In the event the deduction of a contribution made by the Employer is disallowed under Code Section 404, such contribution (to the extent disallowed) must be returned to the Employer within one year of the disallowance of the deduction. Any contribution made by the Employer because of a mistake of fact must be returned to the Employer within one year of the contribution.

I have left several messages with no response, in the past few months. Line seems to have gone dark since they switched to electronic submissions.