Belgarath

Ok, why the difference? Let us assume, for the sake of simplicity, that the match is dollar for dollar up to 6% of pay. Let us further assume that the $150.00 extra deferral, plus the :normal" $50.00 for a total of $200.00 for one payroll only does not exceed 6% of pay. If you do it end of year, she gets her full match. If you do it payroll by payroll, she still gets the same match. Why should she be entitled to an additional $150.00 just because the match is calculated per payroll? You are doing self-correction of an error, so the fact that it is per payroll shouldn't preclude the same ultimate result as per year, I don't think... As you can see, I'm struggling with a proper interpretation in this issue. The conservative method would seem to be to take the Rev. Proc. language extremely literally, and give the extra $150.00 no matter what. And that's probably what we'll recommend. But I would be very interested in any thoughts from anyone.

Thanks. Anyone out there going to the ASPPA conference, and if so, is it too late to see if the IRS would address this from the podium? In this case, the amounts are so trivial it doesn't really matter much, but on a large plan with a larger number of participants, the difference could be significant. Of course, with a large number of participants, some of them would NOT do the "make up" contribution so this question wouldn't even apply to those participants.

Very doubtful that this is not addressed in the document, particularly since the 1,000-5,000 is addressed. It may just be a bit "hidden" or under some default, etc. - is it a pre-approved doc? If so, and after further research you still can't find it, you can probably contact your document provider to ask where the provision is. If you have the $1,000-$5,000 mandatory rollover, pretty likely that <$1,000 can just be distributed.

So, deferral election is signed, isn't implemented properly, and 3 payrolls are missed. No QNEC, but missed match plus interest must be contributed. Here's my question. Say the participant signed a deferral form doing a flat dollar amount of, say, $50 per paycheck. Since it wasn't withheld for three paychecks, that's $150.00 her account is missing. So she does a special one-time deferral election to have $200.00 withheld from her next paycheck, then it reverts back to the $50.00 thereafter. When it comes to calculating the make-up match, assuming the $200.00 amount doesn't cause it to hit any "cap" - am I correct in assuming that the only make-up will be interest on the match that should have been made each pay period? In other words, since she will receive her full match due to the special one-time deferral increase, there shouldn't be any additional match due, as she will already receive 100% of the match she would have received had the error not occurred. Or, is a make-up match required regardless of her special election? I lean toward the former, both from a common sense viewpoint, and the general overriding principle of self corrections which is to put the participant in the same position they would have been otherwise. The amounts involved are negligible, but I'm thinking more in procedural terms if something like this occurs on a larger scale.

Interesting question. Not directly on point, but I remember talking to a claims examiner at an insurance company, and if a policy owner validly signed a surrender form, but died prior to the request being received by the insurance company, the surrender form took precedence and only the surrender value would be paid, not the death benefit. (of course, the insurance company profits by finding reasons to deny claims, so possibly that might influence the stance...Nah, couldn't be...) I don't think most plans explicitly address the situation in the IP. In that situation, is it simply a determination by the Plan Administrator, or does State law govern?

Question for the ERISA attorneys - is it worse (from plan sponsor liability perspective) to have an investment policy statement and NOT FOLLOW IT (which is by no means uncommon) or to simply not have one, and rely on a sort of "Well, we tried to do a good job for the participants..." Or are they equally bad? Just curious.

Ah, sorry, now I get it. And I don't have a good answer!

IMHO, yes, these are protected benefits. Basically, any optional form of benefit is protected unless there is a specific exemption, and as far as I can recall, no such exception exists for these. As a purely personal editorial opinion, I can't imagine why an employer would want to take away such an option for someone who is engaging in qualified military service, but of course I don't know the specific situation. My general philosophy is to make things as easy for these folks as possible.

Almost seems to me like mixing apples and oranges? In other words, the Technical release 92-01 is only necessary in this context when determining whether or not the plan is exempt from filing the 5500 form as a small unfunded or fully insured welfare plan. Once you have determined that you are not exempt from filing, as in your situation 'cause you are way over the 100 participant number, then you just look to 2520.104-44(b) to determine if the audit is required. If you satisfy those requirements, no audit. Section (b)(1)(i) provides for the audit waiver if unfunded, (ii) provides for a waiver if paid through insurance contracts (either employer or employee contributions, with certain "hooks") and (iii) provides for a combination of (i) and (ii). Sounds to me like you are probably exempt from the audit requirement, but obviously I don't know if the plan/policy/funding provisions satisfy all the "hooks" in (ii).

So, just a follow-up - I relayed this to the attorney who originally asked the question. He said that he understands the response, but is faced with this specific problem: Whatever state he and the plan sponsor are located in does not provide for non-residents (turns out that they are both citizens of Great Britain, who worked in or for a U.S. Company and participated in the 401(k)) to be able to "file" under state domestic relations law. So there is apparently this twilight zone where a divorce decree can't be enforced as a QDRO, and it can't ever become a QDRO because the State domestic court won't permit a non-resident to "file." And please understand that I'm not an attorney, so I may be getting the appropriate terminology wrong! But you get the gist. Seems like there has to be a way around this, but that's ultimately the attorney's problem. I'm just interested. He said he's seen many instances where the Plan Administrator just approved the payout as a "QDRO" without ever questioning it, but in this case, the Plan Administrator, reasonably, is saying they cannot approve it 'cause it isn't even a DRO. Good stuff!

I assume you mean it is neither an "EACA" or a "QACA" but just what I'd call a "regular" ACA? If so, it can be done any time, BUT you still have a 30 day advance notice requirement. So realistically, "any time" means at least 30 days in the future.

Thanks SoCal. So just to make sure I understand - 1. How was the original tax return filed, and how was the retirement plan calculation done? 2. After audit, what exactly had to change? Sounds like the IRS said, "no dice" on W-2, and said it all had to be converted to earned income, and the net was negative, so no contribution was permissible? Thanks!

Thanks!

Interesting question. The 403(b) exclusion is for ..."employees who are students performing services described in section 3121(b)(10)." 3121(b)(10) provides: (10) service performed in the employ of— (A) a school, college, or university, or (B) an organization described in section 509(a)(3) if the organization is organized, and at all times thereafter is operated, exclusively for the benefit of, to perform the functions of, or to carry out the purposes of a school, college, or university and is operated, supervised, or controlled by or in connection with such school, college, or university, unless it is a school, college, or university of a State or a political subdivision thereof and the services performed in its employ by a student referred to in section 218©(5) of the Social Security Act are covered under the agreement between the Commissioner of Social Security and such State entered into pursuant to section 218 of such Act; if such service is performed by a student who is enrolled and regularly attending classes at such school, college, or university;... So, basically, if I'm sponsoring a 403(b) plan, it makes no sense to me to assert that my Employee can be excluded from my plan under the 403(b) nondiscrimination rules, based upon service (and being a student) with another, completely unrelated employer.

Perhaps, once you get this straightened out, Fidelity (or the Plan Administrator) will allow your sister to provide her SSN directly to them, so you won't see it? Maybe, for whatever reason, she just doesn't want you to see it...

Hi Carol - the list you linked to shows ALL of them with a status of "not issued yet." If the IRS had "approved" them, why wouldn't they announce it? Am I missing something? Thanks!

You wanna make enough money so that Bill Gates looks like a pauper? Invent a remote control with a mute button that works on PEOPLE.

Carol - you say the IRS has already approved quite a lot of them - have you heard something from the IRS, or sources close to the IRS? We've heard nothing about any approvals, status, expected approval date, etc... Thanks.

deleting post - information provided to me was faulty.

Just curious as to how things are handled in real life, and if theory and reality match. Suppose you have a 401(k) with PS component. Non safe harbor, new comparability allocation formula. Let's say the plan definition of compensation INCLUDES applicable post-severance compensation. Calendar year plan. Assume for this poll purposes that participant is NOT highly compensated or key. Participant terminates employment on December 15, 2014. In February of 2015, some post-severance vacation pay is paid. Participant never did any election to cease deferrals. Employer never reports this post-severance comp to TPA or plan auditor, but it naturally shows up on the 2015 census. 1. Do you: (a) treat it as a "missed deferral" and correct under SCP, or (b) handle in some other fashion? 2. With regard to profit sharing contribution, do you (a) (make the contribution under SCP that the participant should have received, and leave it at that, or (b) something else? 3. Now assume the participant was HC - any changes in your answer to #2 above? Just curious. Don't have this situation, but another related question brought it to mind.

I would feel comfortable about accepting the Plan Administrator's instruction to use the FAB method.

Agree with Kevin. But to add to it, if you want to determine the "business hardship" requirements to see if the client qualifies, take a look at IRC 412©(2).

Thanks. So taking it one step further, do you know (in a general way) what the process would be to take the Canada divorce decree and get it acknowledged or reorderd/reissued/approved or whatever the terminology might be, as a DRO sanctioned by the state of New York? Is that a process that would typically require an ERISA attorney, or could any good divorce attorney handle it?

re-upping this very old post, as we have had a question (thankfully not on a plan we administer) with this precise question. How would a Plan Administrator normally be expected to handle a divorce decree from, say, Canada? Let's say the plan sponsor and the business is located in New York, for example. Non-resident alien gets divorce in Canada. Can a Plan Administrator typically choose to allow the Canada divorce decree as a QDRO if it otherwise satisfies normal requirements as to information/form/timing, or must the PA require something from a New York court?

Just for informational/discussion purposes - and I offer no opinion on any of it, as to either accuracy or content! http://rsmus.com/what-we-do/services/tax/lead-tax/irs-rules-on-llc-sponsorship-of-an-esop.html