NKOTB

That's an interesting thought, BG5150. Maybe I'll do some digging to see if I can find another preapproved document out there without this language. I can see that it won't be a Ft William document (thanks, Tom). I really appreciate the help!

Thank you, that thread is very helpful. It still seems like I shouldn't be able to remove active participants just because I want to add a 1,000 hour requirement now, but I simply can't find anything that prohibits it, and it appears from that thread that there's simply nothing on point out there. In answer to BG5150, the current document specifically states that if the plan's eligibility requirements are changed, an active participant who is still an eligible employee on the effective date of the amendment will remain a participant and his entry date will not change.

I have pretty much this exact same situation. The employer would like to add a 1,000 hour requirement to their plan for eligibility, which would effectively remove part-time employees who were previously participating but who have never actually worked 1,000 hours in any year. The preapproved plan document says that amendments to eligibility can't affect participants who are already participating in the plan, but I can't find anything indicating that this restriction is legally required. Does anyone have any citations for the conclusions above before I agree with the employer that they can remove this restriction from the preapproved document?

I'm wondering the same thing - have you had any responses? If an employer believes that it has reasonable cause to avoid the penalty, should it try to file a $0 return, or is this likely to actually cause an audit?

I see nobody answered your post, but what did you decide to do? I have the same question, and I'm thinking that it should be attached to the Form 990, but I think it's strange that I can't find any guidance on this.

Thanks for the comments. Andy, fortunately, the plan already allows for retroactive annuity starting dates even though it doesn't otherwise allow delayed starting dates (not very clean drafting, but this is an old individually designed plan). If the employer can contact the participants now and give them the option of a retroactive annuity starting date, are you thinking that there's no error that would require VCP? It's easy enough to include this issue in the VCP application that we're already filing, but there's obviously no reason to do so if there's no error. You mentioned the QJSA, and I'm wondering whether the failure to send the QJSA notice prior to NRD might have been the error ... something just doesn't seem right about the employer not being required to notify DVs at the time when they're eligible for retirement benefits.

The client's plan document provides that deferred vested participants will begin receiving their pensions on their normal retirement date, and no deferred starting dates are permitted by the plan. However, neither the client nor their TPA has any set procedure for notifying deferred vested participants that they're nearing their normal retirement date and should apply to start their benefits. There are a number of DV participants in the plan who are between 65 and 85 and have never been contacted to start payment of their benefits. We are going to file a VCP application with regard to the over-70-1/2 participants, but I'm wondering whether the failure to notify the over-65 participants is also a failure that needs to be included in the VCP application? Is anyone familiar enough with plan administration to tell me what sort of process should have been followed with respect to these participants who were nearing/over age 65? For some reason, I'm having a difficult time finding any legally prescribed process. Thanks in advance for any leads.

Thanks, Kevin! I don't normally do these calculations, and that language was really frustrating me.

Employer didn't implement employees' deferral elections for one of its locations from January - May 2011. We know we have to make a QNEC to correct the missed deferral, but I'm trying to decipher the Rev. Proc. 2008-50 instructions for calculating the QNEC where the employees might still reach or come close to the 402(g) limit over the remainder of the year. I thought I understood the calculation until I read Example 6 of Appendix B. Example 6 reads as follows: Employer D sponsors a § 401(k) plan. The plan has a one year of service eligibility requirement and provides for January 1 and July 1 entry dates. Employee Y, who should have been provided the opportunity to elect and make elective deferrals on January 1, 2006, was not provided the opportunity to elect and make elective deferrals until July 1, 2006. The employee made $5,000 in elective deferrals to the plan in 2006. The employee was a highly compensated employee with compensation for 2006 of $200,000. Employee Y’s compensation from January 1 through June 30, 2006 was $130,000. The ADP for highly compensated employees for 2006 was 10%. The ADP for nonhighly compensated employees for 2006 was 8%. The § 402(g) limit for deferrals made in 2006 was $15,000. Correction: Corrective contribution for missed deferral: Employee W’s missed deferral is equal to the 10% ADP for highly compensated employees multiplied by $130,000 (compensation earned for the portion of the year in which Employee W was erroneously excluded, i.e., January 1 through June 30, 2006). The missed deferral amount, based on this calculation is $13,000. However, the sum of this amount ($13,000) and the previously made elective contribution ($5,000) is $18,000. The 2006 § 402(g) limit for elective deferrals is $15,000. In accordance with the provisions of section 2.02(1)(a)(ii)(B), the missed deferral needs to be reduced by $3,000, to ensure that the total elective contribution complies with the applicable § 402(g) limit. Accordingly, the missed deferral is $7,000 ($10,000 minus $3,000) and the required corrective contribution is $3,500 (i.e., 50% multiplied by the missed deferral of $7,000). The corrective contribution is adjusted for earnings. Can anyone tell me where the IRS is getting the $10,000 here? It seems to me that they subtracted the $3,000 twice, and I'm not sure whether this was a mistake or if I'm missing something. Help!