Bill Presson

We've done it this way numerous times.

If I see anything in print, I'll let you know. So far it's all been hearsay.

The biggest issue for our plans is the grace period exception. So now we're having to spend a lot of time explaining to participants why we really don't recommend doing this for 2013; too many participants might have planned for the grace period to use the rest of their money. Then we'll have to decide what to do for 2014. Also hearing about a potential legal challenge that the IRS has unilaterally created deferred compensation where they weren't allowed. For anyone making this change for 2013, how are the software changes getting done?

I haven't seen anything indicating an change in filing requirements.

Here's the notice. http://www.irs.gov/pub/irs-drop/n-13-71.pdf Why can't the Service issue anything without complicating other things? Participants can now roll over up to $500 to a new year, but the exceptions and restrictions make it almost useless.

That's the way we see it as well. Our legal counsel confirmed and a webinar by Ft William last week said the same thing.

I definitely wouldn't do it if there was any leveraging in the ESOP. But we've got a few KSOPs where the employer stock was more of a stock bonus component and it's worked pretty well.

You would still make the amendment effective 1/1/13. But you can't do it on a standardized plan and if they have a last day rule currently, it's already on a nonstandardized or VS.

I've seen this a couple of times and, frankly, it's an issue if the union plan document doesn't exclude the non union employees. We've had to get legal counsel involved in both situations. Naturally they were takeover plans.

You still have to test. I'm betting the reason is actually because it is easier on payroll to exclude those items and no one ever told them that it was a compliance issue.

ASPPA GAC just announced that the IRS has acknowledged this issue for 5558s filed close to 7/31 and the 5500 filed soon thereafter. The 5558 wasn't processed yet.

It depends on how frequently they can make deferral changes. Is it each pay period? Then your golden. Is it quarterly? Then, not so much.

Not sure this helps, but we're telling our corporate clients to go ahead and provide the notice to comply with the regulation. But rely on the recent FAQ in case they miss someone or the notice somehow doesn't 100% comply.

Plus the 401(k) deferral will allow a difference in contributions as well. All good comments above.

The biggest issue is whether the DOL would agree that it was a single plan if there wasn't a wrap doucument in existence during those years. I've heard rumors of people creating retroactive wrap documents that were accepted by the DOL but I've actually seen as many of those as I have seen Loch Ness monsters.

But a life insurance policy is not an eligible rollover distribution, correct?

Since he didn't receive a distribution of cash, only property, withholding is not required.

Other than enforcement when something shows up on audit, I'm not aware of any ongoing activity.

TPApril, I would recommend approach 3 to the client, but let them make the choice.

I think it depends. But based on your description, I don't think you would be required to file.

Yes, the DOL is actively doing this. http://www.cshco.com/News/Articles/DOL_begins_campaign_for_missed_welfare_benefit_plan_filings/

Okay with me bill.presson@warrenaverett.com

Just to give you another option, we do lots of welfare 5500s as well. The firm is Warren Averett; we're the 27th largest CPA firm in the country and I work specifically for our benefit affiliate.

Bravo!

Do they have liability, yes. But most of the impact of the liability can be addressed in the purchase agreement assuming both parties want that hanging out there for a number of years. We've merged only a handful of plans in my 30 years in this business because of this issue. 99% of the plans in this same situation will terminate prior to the sale.