IhrtERISA

Greetings, I am in the process of preparing a VCP for the below described errors. Where I'm at a loss (despite extensive review of the forums) is (a) Can the correction for the use of the incorrect match be limited to just those participants making deferral (those with "account balances") by using a QMAC instead of a QNEC correction; and (b) If a prohibited transaction occurred as a result of the incorrect match % and the loss earnings, thus requiring a VFCP. FAILURES: 1. Failure to correctly apply the Plan's matching contribution provisions to employees during 2012 and 2013 (Plan Sponsor applied lower matching % to all new employees, despite the Plan language limiting this to only acquired Company A employees) 2. Corrections necessary to pass the non-discrimination tests for 2013 and 2014 due to the three tier matching contribution formula (Plan Sponsor used the wrong matching % in performing tests) Proposed Correction under VCP A. For those participants that received the smaller incorrect match AND that had "account balances" (i.e., limiting the correction only to those participants making elective deferrals). a QMAC (as opposed to a QNEC) could be made under VCP. [i know there's a strong argument this correction should go to all eligible participants - even those not deferring - but such a correction would be astronomically higher] B. Since the incorrect employer match was used, resulting in lost earnings, I believe this would be a prohibited transaction (outstanding match % became plan assets when PS filed tax return) and thus I would propose a VFCP be filed with the DOL (meaning no filing of Form 5330 Return of Excise Taxes). However, looking at the VFCP Application, there is no box to check for "missed employer matching contributions/earnings" Any insight would be most appreciated. Thank you...

Belgaarath - I agree with your assessment. A VCP with a retroactive amendment would be appropriate. The only other option would be self-correction (SCP), which would only be permissible if the operational failure is deemed "insignificant." In this situation, I would advise a client to go with VCP.

Thanks 401_noob. I've read theis Field Assistance Bulletin backwards and forwards My inquiry touches on the aspect of the "monies" being collected from the employer group by the TPA (into its general account) and then remitted to the carrier, who is providing the benefit. My poisition is that these monies are not plan funds being "handlked" by the TPA and thus requiring ERISA bonding. It is not until they are received by the insurance carrier (in essence, the "plan") that they become plan assets whose handling requires bonding. Anyone else have any experience on this matter?

Greetings, Does anyone have a good contact at the DOL that they could share? I have been looking into the question of when ERISA bonding is required under Section 412 with respect to a TPA that collects premiums from plan sponsor and remits to the carrier (note: TPA does not pay claims). My feeling is that these monies are not "plan funds" that trigger the bonding requirement until they are in the hands of the carrier, and thus the TPA does not need to have an ERISA bond in place. I base this mostly on Section 2580.412-5 "Determining when 'funds or other property" belong to a plan. https://www.law.cornell.edu/cfr/text/29/2580.412-5 Any information, whether it be a contact # or experience relating to the above issue, would be most appreciated. Thank you.

Greetings, Does anyone have a good contact at the DOL that they could share? I have been looking into the question of when ERISA bonding is required under Section 412 with respect to a TPA that collects premiums from plan sponsor and remit to the carrier. My feeling is that these monies are not "plan funds" that trigger the bonding requirement until they are in the hands of the carrier, and thus the TPA does not need to have an ERISA bond in place. Any information, whether it be a contact # or experience relating to the above issue, would be most appreciated.

Can anyone point me in the right direction for authority that states there is no requirement for plans to be merged after a company merger (i.e., continue to operate them independently and not merger or terminate either plan). It seems like a no brainer, but I've been having trouble finding any regulations that address. Thanks!

Thank you. MoJo and QDROphile for your helpful responses. Company A's plan has a number of operational errors that were discovered after the merger that require a VCP submission and cannot be corrected via Self-Correction. Client wanted to terminate this plan (Company A Plan), but since the merger has already taken place, it is our understanding that the same desk rule prohibits termination of the plan (or rather, the ensuing distribution to participants that remain employees of the merged company).

Company A and Company B merge on July 1, 2015 under the common ownership of a management company. Company A and Company B each of a 401(k) plan. Since the merger has already taken place, it is my understanding that under the same desk rule, one of the 401(k) plans cannot be terminated and thus the plans must be merged. To date, the plans have been run separately. My question relates to the interplay between the transition period and the submitting a VCP submission prior to applying for a plan merger 1. Transition Period My understanding is that the plans must be merged by December 31, 2016 (a full plan year after the company merger). Is this correct, even if the plans have been operating independently (as they were before the merger) all along? 2. VCP Company A's plan has errors requiring correction under the VCP program. We want to complete the VCP before merging the plan to avoid tainting the Company B plan. However, if the Transition Period applies, what would happen if the DOL does not rule on the VCP submission before the end of the Transition period? Thank you!

Greetings: Employer has never filed any 500 for their component benefit plans (life, health, vision, dental) because they are under 100 participants (nor do they have an assigned plan number). The insurer gave their FSA plan number 501 (which has also never filed a 5500). Employer now has a wrap plan document. We believe that the Wrap Plan should be plan number 501 (along with all component benefit plans under the wrap). Another vendor believe that the wrap plan document should have a unique number from the component plan documents. Is there any reason why a wrap plan document should not have the same plan number as the component benefits? Thank you

Just the opinion of the Plan Sponsor's legal counsel, who is requesting that my client (TPA) pay for the bond.

Plan is a self-insured plan that contracts with a Non-traditional Third Party Administrator. The TPA does not collect any premiums or pay out any claims (claims are handled by Care First). Carefirst adjudicates all claims, and debits an account belonging to Plan Sponsor. Role of the TPA is to process enrollment, provide other administrative services(billing, prepare 5500s, PPACA reporting, consulting, etc), for which it receives a "fee for service." Additionally, TPA collects and remits to CareFirst the fees paid by Plan Sponsor. Since TPA does not "handle" plan assets and does not exercise any discretion or control over the Plan, it is our belief that the TPA does not fall under the ERISA definition of Fiduciary. Would you agree? If TPA is arguably not a fiduciary, would an argument exist that the TPA is not required to fulfill the ERISA bonding requirements under Section 412? A review of Field Assistance Bulletin No. 2008-04 leads me to conclude that since TPA does not "handle funds or other property" of the plan (merely collects ans remits a fee to Carefirst) and does not adjudicate Claims, it would not be deemed a "Plan Official." Thoughts? Thank you...

Defined Benefit pension plan permits Lump Sum benefit upon retirement (Normal or Early at Age 55). Participant just turned 55, wants to "retire" and take his large Lump Sum payment, and return to covered employment immediately after. He has expressed to the plan administrator and his employer that he has no intention of retiring, but wants to take his lump sump payment now. The Plan defines Retirement as follows: Retirement - The term "Retirement" shall mean termination of employment for reasons other than by death after a Participant has fulfilled all of the requirements for entitlement to a Normal, Early, Normal at Age Sixty (60), Normal at Age Fifty-Five (55), or Disability Retirement Pension. Retirement shall be considered as commencing on the day immediately following a Participant's last day of employment, as determined in the sole and absolute discretion of the Trustees. Thoughts on whether this is permissible?

Hello everyone, I am aware that an actuarial adjustment is done for retirement after normal retirement age. However, is an actuarial adjustment required/allowed if participant has not reached normal retirement age but is entitled to receive his service pension (e.g., before age 65 but after 25 years of service)? I have not been able to locate anything in the code discussing this issue. Thanks