Flyboyjohn

I assume the payroll company/software cut them off at $18,000 since the participant hadn't made a separate "catch up" election. If the requirement to make a separate CU election was clearly communicated to participants (hopefully on the election form) I don't think you have a make a correction. We have the same problem with our payroll company (Ceridian) and it irritates the heck out of me. If I don't remember to go into the system and make my CU election after the $18,000 is withheld I won't get it.

Even in the old days (and continuing today) it was/is never correct to file a 5500 and Schedule I or H for the FSA part of a cafeteria plan unless someway/somehow the employer was silly enough to set up a Trust and segregate "plan" assets from the employer's general assets. What the agencies realized was it was pretty silly to require cafeteria plans (whether or not they included a FSA) to file a 5500 and Schedule F (I think it was). So I wouldn't amend or resurrect any prior year filings.

Two reasons the ADP test exemption is not important and worth giving up: 1. Charities usually have very few if any HCEs and if they do they can add a 457(b) to more than make up the reduced deferrals 2. Charities usually don't want a vesting schedule and have an employer contribution that easily meets safe harbor If a charity has an ERISA 403(b) but their contribution is less than safe harbor I tell them to increase salaries by the former employer contributions, encourage employees to increase their deferrals by similar amounts and switch to a non-ERISA 403(b)

This is addressed in the DOL VFCP and PTE 2002-51. You can only give the excise tax amount to the participants and not file a 5330 if: 1. The excise tax is $100 or less 2. You make a VFCP filing with DOL. 3. As part of the VFCP filing you provide the DOL a copy of the 5330 you would have filed with IRS but for this exception. IMHO I'd rather file the 5330 and pay the tax.

Agree with MoJo that 401k is clearly best for start up but going one step further I've been advocating since 2009 that existing ERISA 403b plans should change to 401k for a long list of reasons. IMHO the only reason to ever use 403b is if you can qualify as non-ERISA

IRS has started notifying employers it suspects were Applicable Large Employers for 2015 but who have not filed 2015 Forms 1094-C and 1095-C (see redacted letter 5699 attached). I'm wondering what "records" iRS used to make this determination, perhaps the filing of a threshold number of W-2s in 2014 that might indicate ALE status for 2015? IRS Letter 5699 Request for 2015 Forms 1095-C_15342356(1).PDF

My understanding is there are laws in many/most states that say an employer cannot take a non-governmentally required deduction from an employee's pay without their consent and by implication the consent can be revoked. These laws are probably not preempted by ERISA so we advise that employees can revoke their agreement to make loan repayments at any time. There's a recent thread discussing the issue of the consequences of the PAs actual knowledge at the time the loan is made that the participant intends to default.

While I agree with all the posts regarding the sham termination of employment vs. the sham loan I submit that there's a material difference in plan sponsor risk. The sham termination of employment requires knowing participation in the scheme and could result in plan disqualification. The "sham" loan does not necessarily involve the plan sponsor (don't some recordkeeping platforms issue plan loans without sponsor involvement?) and as long as the form of the loan is in order I don't see how the "intent" of the participant comes back to ding the employer.

We're a law firm and have a TRA '86 prototype we'd be willing to sell to your client

Why couldn't they take a loan and then immediately default? Avoids the winks and nods

Correct, for the years prior to 2009 you simply answer something like 6 items (name, address, EIN, etc.) and insert a code for a 403b plan and that's it).

Wasn't 2009 the first year for "real" 5500s (with numbers) and before that they were the "nothing" 5500s? If so can't you easily prepare 5500s back to 2001 and file under DFVC?

How do we calculate the RMD in the absence of an account balance?

My 2 Cents: Your understanding is the same as mine and is what happens in the DC world but I'm wondering if there are different rules in the DB world.

DB participant reaches age 70 1/2 in 2016. DB plan is terminating and making lump sum distribution 3/1/2017which participant intends to roll to IRA.. TPA firm is saying no 2016 RMD required since plan termination distribution occurs before required beginning date of 4/1/2017. Which means there will be no RMD with respect to this $$ for 2017 either since $$ not in IRA on 1/1/2017. Doesn't seem right so requesting thoughts of others more familiar with DB RMD rules. Thanks

Affordability is not a global, all or none, determination, but is determined on an employee by employee basis. So you'll have to compare the compensation of each employee to the lowest cost option available to that employee.

There is nothing prohibiting the practice but as you indicate it is highly problematic from a practical standpoint. A more common and somewhat easier structure is to say "the employee pays $300/month except where the $300 exceeds 9.66% of compensation in which case it becomes 9.66%"

I agree that the Regs for ACA 1557 non-discrim rules don't define whether a "Covered Entity" includes related entities under a controlled group analysis. I have advised clients to be conservative and assume that all related entities are covered for 2 reasons: 1. Compliance is not that onerous, particularly if you can piggy-back off the compliance efforts by the other member in your controlled group 2. The government (particularly the current administration) wants to extend the 1557 requirements to as large a population as they can and will likely find ways to extend it to the related client even if they don't currently receive any Federal financial assistance.

The penalty for violating PHSA 2714 (a "market reform") is the nasty $100/day/person 4980D penalty

Philly VFCP coordinator says she won't accept the "we already fixed it" letter and is insisting on the full VFCP package. But now I'm wondering if they have a different letter/approach for the under $30,000 transgressions where they'll accept something less than a full filing.

Maybe Boston doesn't have as many scofflaws as Philly so they have to set their sights lower to meet their quota. If your client is on their radar screenr I recommend they seriously consider filing, especially since its "free" (no user fee) other than your fee for preparing the filing.

The Philadelphia Region launched a similar initiative in April sending letters to 3,000 2014 5500 filers who reported at least $30,000 in late deposits. We helped several employers make VFCP filings under threat of "full blown" soup-to-nuts DOL investigation if they declined the invitation to file under VFCP. At least in the Philadelphia region I predict that it will become the norm that all (or substantially all) filings indicating "substantial" ($30,000?) late deposits will end up going through VFCP.

Just to be contrarian I'll take the opposite position and say that it looks like this "plan" may never have assets and was a mistake to begin with. Has the client paid your standard TPA fee for 2015 work? Did you file a 5558? If the answers are yes to both then you might as well go ahead and file a "no activity" 5500 otherwise I'd throw it back to the "client" and have them make the decision.

If you're going to file under Rev. Proc. 2015-32 and pay the $1,000 reduced penalty for 2 delinquent EZs you have to file on paper

In my shop we would not consider this change material enough to recommend filing amended returns (of course letting the client make the final decision)