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justanotheradmin thanks I know where I was confusing the issue (I am not a TPA)

justanotheradmin I am familiar with the cite from EPCRS. I understand that if the plan also failed the tests, the plan needs to correct the ADP/ACP first and it may disregard the employees who were improperly excluded when running the tests. My question is after the ADP/ACP is corrected and we correct the excluded employees by making the corrective contributions, do we need to rerun the ADP/ACP? The IRS says that "Before correcting for the exclusion, however, the plan must evaluate whether, in the event that the employee had made the missed deferral, it would still pass the applicable ADP test. The ADP test should be corrected according to the plan’s terms before implementing any corrective contribution on behalf of the employee. In addition, the missed deferral amount should be reduced, if necessary, to ensure that the employee’s elective deferrals (the sum of deferrals actually made and the missed deferrals, for which a corrective contribution may be required) comply with all other applicable plan and legal limits."

Mike - it was 2009 - long standing error on misclassifying employees.

Any input is appreciated for the scenario below: Eligible employees were improperly excluded from plan participation in 2009. Plan was not SH but no ADP/ACP tests were run. We correct in 2020: first we run the ADP/ACP tests for 2009 if the tests fail, we correct the ADP/ACP we determine the correct contribution amounts based on EPCRS QUESTION: do we need to re-run the ADP/ACP tests before making the corrective QNECs Thanks

Need suggestions on how to distribute refund from a terminated self-insured group health plan (premiums were paid pre-tax by employees only, no employer contributions). Sponsor terminated the plan in 2015 and recently received substantial refund. The new plan is an insured plan. Sponsor is a temp agency with high turnover. In 2015, participants in the self-insured plan were 200-$300 but every month they had 40-50 participant turnover. Based on the number of participants the refund would be around $300/participant. Should they try to locate former participants based on a cost analysis? Participants in the new insured plan includes management employees who were not eligible to participate in the self-insured group health plan. Thanks

The answer depends if the employee is on STD/LTD that is not paid entirely on an after-tax basis by the employee and also on whether you use the look-back method to determine eligibility for your group health coverage. If you use the look-back method and the employee is on a stability period, you keep the coverage on until the end of the stability period (as long as the individual is still an employee). At the end of the stability period, you look back at the measuring period and determine if the employee had enough hours to be eligible again for coverage. Be careful of the special rules regarding FMLA leave, STD/LTD when measuring hours during the measuring period.

How do you correct a merger of a 403(b) plan with a 401(a) plan? Client mistakenly merged a 403(b) plan with a 401(a) plan last year. This year, the client moved the 401(a) plan assets out of the 403(b) plan and merged the 401(a) assets with another 401(a) plan. Do you need to file a correction with the IRS for the 403(b) plan? Thanks for any suggestions.

No, there were no resolutions. My question is really about the 403(b) plan. Do we need to do anything other than move the assets to the 401(a) plan? Any type of correction?

Employer merged a 401a plan into a 403b plan at the end of October. During March next year, employer removed the 401a assets from the 403b plan and merged the 401a assets into another 401a plan (this was part of an acquisition). There were no plan amendments/resolutions drafted. The TPA who helped them thought that they were working with two 403b plans. If the 401a plan merged into the 401a plan last year, as intended, we would have had a late amendment that could be corrected under VCP by adopting a retroactive amendment to memorialize the merger. Because the assets are merged during the current year, there is no late amendment issue for the 401a merger. There is an error but not sure how to correct. Any suggestions?

Facts: In 2010, forfeitures from Plan A were used to offset employer contributions to Plan B. In 2011, Plan Sponsor realized this was not allowed and repaid the funds back to Plan A but in the process some funds from Plan C were used to repay the funds from Plan A to Plan B. In 2015, the funds were returned to Plan C. I think there are two prohibited transactions: (1) forfeitures from Plan A to Plan B used as employer contributions and (2) funds from Plan C used to repay the forfeiture from Plan A to Plan B. Both transactions are considerate continuous transactions and need to file Forms 5330. Is this correct?

Thank you for the input. The plan by its terms was "frozen," so even if the employer contribution was discretionary, participants should have been vested when the plan was amended.

Participants will continue to accrue service for vesting purposes. Under 411(d)(3) a complete discontinuance of contributions results in 100% vesting.

No new participants allowed and no contributions made after December 31.

Do you need to vest everybody if you freeze a profit sharing plan? Thanks

Thank you.