ETA Consulting LLC

When it's something that clear cut, where the document is there but unsigned, the IRS should issue a closing agreement right there (it may run about $3,000), and close the issue and issue the letter. They shouldn't require a separate filing since it is a determination letter process and they know what the issue is. I had one before where it was a prior interim amendment that did not exist when we filed for a determination letter. They just executed a closing agreement (hit the employer for around $750) and called it a day. Good Luck!

This leaves us with nothing You have the right approach; clearly identifying each failure. There really isn't a clear precedent for some cases, but your judgement appears to remain intact; which is the best thing you can have with these types of issues. The only thing is that you would not be able to make significant movements with any approach until the IRS actually agrees; given that this isn't your routine correction. Good Luck!

Not necessarily. A purchase of life insurance is similiar to an investment election in the plan. The issue, here, is that the employees may purchase any type of life insurance policy they choose (either whole, variable, or term). They are likely being offered what they could afford, but not being precluded from purchasing anything. Each participant has his own election. Good Luck!

Typically, there is no value. The plan must pass non-discrimination each year (regardless of how the document is drafted). That's not saying that the language shouldn't be written in the document, but merely saying that the purpose of the determination letter is to get a ruling on the "form qualification" of the plan. The annual non-discrimination testing would appear to lie within the operation. Now, if you are performing some special testing that goes beyond your regular ratio percentage test, then you may want the IRS to rule on your technique (where the language written within the plan and you're providing a example of how you intend to calculate the test). I imagine an example would be "rate banding" or testing on an accrual basis as opposed to an annual basis. Even then, it's debatable. I've never found any value. Good Luck!

Not an RMD. The issue, however, is that if the participant is still employed, then no part of the distribution may be "an RMD" unless the participant is a 5% owner. Fact patterns are important. Good Luck!

The recordkeeper, in this instance, should position themselves to lose this client. In too many instances, the recordkeeper who is mis-informed speaks as an authority without being open to a discussion on why their position appears unreasonable. The "MOST" valid point is the one made by MHopkins saying "I am having difficulty wrapping my mind around the idea that essentially the employer is benefitting from their own mistake." This says it all. Explain to me how you can have a late deposit (and then actually deposit less than the amounts withheld). At the very least, be open to depositing the amounts actually withheld. When a recordkeeper rejects that notion, then they should lose the client. If an employee of the recordkeeping firm rejects that notion, then they should be fired; and then the recordkeeper should lose the client. Obviously, there are some items that clearly do not make sense but have valid explanations. For example, explain to me how an employee deferral is an employer contribution. Answer, as unreasonble as it appears, it's an employer contribution made pursuant to the employee's election. <-- Just making a point. For a recordkeeper to fail to engage in this discussion goes beyond incompetence; but that unique combination of arrogance and ignorance that represents the lowest level of service our clients rely on us to provide. Thanks for allowing me to vent. Good Luck!

The DOL website has a calculator the does this for you. The idea is that even if the plan's earnings are negative, the earnings on the late deposit should be positive (as the late deposit is treated similiar to a loan that bears a reasonable rate of interest). Hence, it's treated like a prohibited transaction in that the employer took a loan from the plan (in the amount of the late deposits). That's just a way of looking at it. Good Luck!

Gaham, When working with the IRS, you're always going to get one of three types of umpires. Umpire 1 will tell you: I'll call it as I see it. Umpire 2 will tell you: I'll call it as it is. Umpire 3 will tell you: It's nothing... until I call it. You're possible dealing with Umpire 3 who'll quickly explain to you that when you bowl the ball across home plate (clearly hitting dirt before the reaching the batter), if he calls it a strike, then it's a strike. It is a purely arbitrary situation. Unfortuately, there's like nothing anyone can advise that would help. All roads leads to engaging with that auditor and their supervisor. Be open, however, to the possibility that the supervisor already knows his desired outcome. You'll have to quickly find what that is and attempt to negotiate it down; keeping your arguments for why the defect was insignificant. Remember, significant failures doesn't automatically mean VCP, it merely prescribes a correction period (so that may be an angle to use). Good Luck!

You are correct, but remember to incorporate the definition of "LEASED EMPLOYEE" into your first sentence. So, your asking: FWIW I thought that the time an "individual who has performed services for a recipient on substantially a full time basis for a year" would count toward eligibility at the employer. Until you actually become a leased employee, there's nothing to count. We agree, but it's a moot point until the individual actually meets the definition of "leased employee". Good Luck!

Some things are driven by the Code and Regulations while others are driven by the plan's written terms. I believe your issue is one that is purely driven by plan terms. The code does define a forfeiture break while allowing flexibility for when actual forfeitures are made. I believe your timing issue should be address in the document. Good Luck!

The thing about the TEFRA notice was that even though it granted the delayed payout, you and to prescribe when and how the distributions were ultimately going to be taken. It would appear as if this document should've been reviewed back when the good doctor first turned age 70 1/2. It's always easy to identify the issue; as I have just demonstrated. It "MAY" be helpful, however, if he can remember what his elections were; and use this information when reaching out to the IRS. They'll typically ask "how do you remember those were your elections?" It's good that he thought to ask for it prior to an IRS audit; the proactive measure will definitely count for something. Good Luck!

Your fact pattern isn't clear. Even though A and B are related, what does Company B's employees have to do with A's plan? Assuming A's plan does cover B's employees (all related employers are part of the plan), then the 10 employees would be treated as new hires as of 10/1/2011 and would be required to satisfy the age and service requirements. UNLESS, there is a predecessor service provision in the document crediting eligibility service for the time an individual worked at the leasing organization performing services for the sponsor. Without such provision, really not way you could; since those 10 employees were common law employees of the management company prior to 10/1/2011. Good Luck!

The key is the wording of the safe harbor notice given to employees before the beginning of the year. If your plan, as designed, did not include a PS feature, then the notice wouldn't have mentioned it. So, you would be precluded from amending the plan in a way that would change the language on the notice that was issued. There may be a few caveats to this, but it's the general approach. Good Luck!

Good question. I think you are a long way from that line (whereever it is). You can always state regulatory fact (i.e. the annual deferral limit for 2012 has been increased to $17K, the 415 limit has been increased to $50,000, the catch-up remains at $5,500, and you should consider these rules carefully as you make your decision). Advice would appear to be along the lines of saying given your situation, you should do this or that (this is just for starters). There is a grey area that establishes a difference between fiduciary advice and safe harbor advice. Merely stating fact doesn't come close to that area. Remember, you're not telling them what their deferrals "should be", but merely what the limits are. Good Luck!

You will not find it anywhere but within the plan's language (if it's there). The governing rule in play here is that the Plan Administrator (likely the employer) is responsible for interpreting the provisions of the plan. What must happen here is that the employer must make a reasonable interpretation of their provisions. I, personally, would make the determination as of the last day, but you could easily say "anyone who was an owner at any time during the year would be in the owner group." Purely an interpretion issue. It does "kind of" question the authenticity of the group being "definitely determinable"; doesn't it. Good Luck!

1st - I agree, wholeheartedly, with QDROphile. The basic definition of a matching contribuiton is that it is made contengent on the employee actually contributing to the plan. This is to say that there is no such thing as a non-elective given to only those employees who contribute. Hence, it is a match solely because an employee has to contribute to receive it. Beyond the defintion of match, the discretionary part is determined based on whether it "must" be given or "may" be given. The employer can easily base their "may" as being contingent on whether a division meets a certain standard. As long as it's not hardcoded in the document saying a match "WILL" be given "IF" something happens, then it is discretionary. You will not likely find the exact verbage in the regulations as it's a composite of different rules. Good Luck!

You may still start the SIMPLE. The exclusive plan rule pertains to "contributions or forfeiture allocations"; not loan repayments. Just think of it, you don't have to test loan repayments under 410(b). Good Luck!

There's just soooooooo many things wrong with the fact pattern. We can spend years identifying what should've and shouldn't have happened. At the end of the day, that won't solve the "what next" part of your question. I'd push it through an orphan plan arrangement (which is, admittedly, like shoving a square peg into a round hole). Good Luck.

True. Why even use a match. Just contribute a full non-elective contribution. Just make a 25% non-elective. No issue. Good Luck!

Good one. It really doesn't seem like an expense to the plan, but instead an additional investment in an asset (even though the additional investment was made to maintain a higher market value). Just a thought.

It does. Good Luck!

Austin, I'm with you on this one. They really should change it. I see where the rules would say the employer must limit deferrals to preclude exceeding 415 and 402(g) limits; but appear silent on the ability to arbitrarily limit employees to lesser amounts. The question becomes on what authority would the employer have to arbitrarily limit employees to amounts significantly below the 415 and 402(g) limit. It's just a bad provision; regardless of it's legality. Good Luck!

The principal repayments would've, effectively, become basis in the plan. Remember, even when a loan becomes a deemed distribution, the participant is allowed to continue to repay the loan; creating after-tax basis on the principal repayment. You don't need to create an after-tax source, but merely track the fact that there is a non-taxable portion in the plan subject to the same withdrawal restrictions for the source the loan was taken from. Administratively burdensome, but how the rules are written. Good Luck!

From a plan perspective, I'd leave it alone. If the employee terminates and is entitled to a distribution under the terms of the plan, then that's what will be done when the employer substantiates that he is terminated. This is not really a plan issue, but an employment issue. What does it mean sever employment with a company? I do not believe it is right and would easily argue that the employee has never terminated, but would not take that position from a pension administrator (TPA) perspective; you just can't hold yourself out to be the company's HR department. Good Luck!

There's nothing to preclude it; as long as the required language is clear. Good Luck!