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Hello everyone! A client has a deferred compensation plan with grandfathered benefits. There are no haircut provisions in the plan. A participant in the plan has a lump sum deferral due to him on January 1, 2014 (his fixed retirement date), that he wants to accelerate to 2012, the year in which certain other deferrals are set to begin paying out in installments. As it stands, I don't see any way that this acceleration would be permissible. A formal amendment allowing haircuts would be a material modification for 409A and would lose grandfathered status for the benefits. However, what if the client just gave the participant a lump sum payment in 2012 with a 10-20 percent haircut? Is this allowed? Do we run afoul of 409A? If anyone can assist or perhaps point me to any IRS position on this subject, I would greatly appreciate it. Thank you!

Hello everyone! I've posted this same message in another section, but maybe it's appropriate here as well. We have a client that merged with another entity. It used the wrong valuation date when valuing that entity's plan assets, and the plan itself took losses. Certain excess distributions were made to some employees but not others as a result. The DOL told us that for purposes of calculating the reduction in plan assets attributable to the excess distribution and earnings reduction, the DOL interest rate had to be used. The plan intends to distribute to each participant their share of the earnings in the form of a supplemental distribution, IN THE SAME MANNER AS THEIR INITIAL DISTRIBUTION. So, if they took a lump sum before, the supplemental would also be lump sum, a rollover would also be a rollover, etc. I'm just looking to see if this is ok to do. Does anything in the Regulations prohibit it? Thanks so much for the help

Hello everyone! I've posted this same message in the Mergers section, but maybe it's appropriate here as well. We have a client that merged with another entity. It used the wrong valuation date when valuing that entity's plan assets, and the plan itself took losses. Certain excess distributions were made to some employees but not others as a result. The DOL told us that for purposes of calculating the reduction in plan assets attributable to the excess distribution and earnings reduction, the DOL interest rate had to be used. The plan intends to distribute to each participant their share of the earnings in the form of a supplemental distribution, IN THE SAME MANNER AS THEIR INITIAL DISTRIBUTION. So, if they took a lump sum before, the supplemental would also be lump sum, a rollover would also be a rollover, etc. I'm just looking to see if this is ok. Does anything in the Regulations prohibit it? Thanks so much for the help!

Thank you, that was very helpful! One quick follow-up. The calculation has to be adjusted for earnings. As the plan administrator, what do we tell Schwab with respect to this calculation? Is it in the EPCRS? Is it based on variable factors? Thank you again!

Here is a link to the IRS website: The Fix Is In: Correcting Plan Mistakes - Correcting a Failure to Implement the Plan’s Automatic Enrollment Provisions http://www.irs.gov/retirement/article/0,,id=212043,00.html Hope this helps. Yes, that was super helpful! One quick follow-up (forgive me if it's silly): do I need to submit a VCP of some sort, or will it suffice just to make the corrective contribution? In other words, do I need to mail paperwork confirming the correction to the IRS? It really is just one employee, and nothing in the link says that something needs to be sent in. Thank you again!

Hello everyone! I have a question that I hope someone might be able to assist with. We have a recently re-hired employee at our firm. Through no fault of our plan advisor (Schwab), he was not auto-enrolled in the 401(k) plan, which he should have been enrolled in since his re-hire date in June of 2010 through the present. Schwab recently sent him auto-enroll forms, and the employee will be auto enrolled by the next few paychecks. What steps should we take to fix this issue, specifically vis a vis the IRS? Is this something that requires correction under EPCRS Rev. Proc. 2008-50, or is it a simpler fix? Any assistance with this matter would be greatly appreciated. Thanks so much!