Belgarath

They are still appointed by the employer - this still blows your safe harbor. Mind you, this is a safe harbor we are talking about, so it might be POSSIBLE (although I don't necessarily see how) for an employer to perform this function and successfully argue that it is still exempt from Title I. Wouldn't want to attempt this argument myself...but if it is important enough, (and there is enough money involved) it might be worth the employer's expense to bring this before ERISA counsel. While this might be just responsible review, it seems to usually have the impetus from someone who stands to collect a commission from the asset change...

Suppose a DB plan only offers an annuity form of benefit. However, under some sort of "de-risking" strategy, they decide to offer a lump-sum distribution option for a limited period. This is available to anyone who has not started receiving benefits yet, regardless of when they terminated employment. You DB'ers probably know this like the back of your hand - for someone less than NRA, when calculating the current lump sum benefit, do they have to take the lump sum at NRA, then discount it back to whatever current age might be using the interest rate that would produce the higher lump sum (plan rates or 417(e), or only do that for the lump sum at NRA, but then discount it back using current rates (and not 417(e) if higher) or something else altogether? Thanks. P.S. when valuing the present value of the future expected annuity, for someone who is less than NRA, then is it going to be a blend of the applicable "segment rates" or just the segment rate at the time of NRA? Somehow seems like it may be the former rather than the latter. I appreciate any responses. Also, if it matters, let's assume this would be an ERISA plan.

I don't agree. Take a look at FAB 2010-01, Q&A-18. P.S. here's the question: Q18: May a safe harbor non-Title I arrangement authorize the employer to change 403(b) providers and unilaterally move employee funds from one provider to contracts or accounts of another provider? No. Although an employer can decide, within the terms of 29 CFR 2510.3-2(f), to limit the providers in a safe harbor arrangement to which it will forward employee salary reduction contributions, discretionary authority to exchange or move employee funds would be inconsistent with the safe harbor requirements.

Agreed. That's why I wondered if anyone had seen a real live case, and whether the IRS bought the argument that based on the form, they would let it go.

Any chance the deferral form contains some sort of language similar to the following - common type of language found in deferral forms. Might help you bolster your argument with a VCP filing. Depending upon the auditor and plan's legal counsel, they might even determine that there is no "error" requiring a VCP filing or self-correction. Has anyone ever actually experienced an IRS audit in such a situation, and did the IRS accept that argument? Duty to review pay records. I understand I have a duty to review my pay records (pay stub, direct deposit receipt, etc.) to confirm the Employer has properly implemented my salary deferral election. Furthermore, I have a duty to inform the Administrator if I discover any discrepancy between my pay records and this salary deferral agreement. I understand the Administrator will treat my failure to report any withholding errors for any payroll to which my salary deferral agreement applies, by the cut off date for the next following payroll, as my affirmative election to defer the amount actually withheld (including zero). However, I thereafter may modify my deferral election prospectively, consistent with the Plan terms.

Sure, why not?

MoJo - do you have a cite for that? My understanding, which may of course be faulty, is that the deemed CODA doesn't automatically result in disqualification of the entire PLAN. (unless of course it is a pension plan) It would, however, result in a non-qualified cash or deferred arrangement, which subjects the employee's contributions - which in this case would include "employer" contributions, such as profit sharing contributions, to immediate inclusion in income. See 1.402(a)-1(d). Thoughts? P.S. - and I may have been misreading your post - you may not be saying the PLAN is disqualified, only that the contribution(s) in question or "disqualified" and therefore taxable.

Mike can certainly correct me, but I think what he meant, as Kevin also mentions, is that the opt-out/waiver does NOT have to be irrevocable (unless of course that's all the document permits) If it isn't irrevocable, then it may be a deemed CODA, which has various implications for testing/limitations. Like Kevin, I haven't seen a pre-approved document (which is mostly what I see these days) for a long time that allows anything other than the irrevocable waiver/election.

Hey Austin - I love the idea of pooled plans, for the sake of simplicity, etc. - but I wonder how many employers, having been sold on the benefits of 404© relief from liability (such as it is) and the benefits of current "standard" daily val recordkeeping, etc. will want to switch back to pooled plans? Let us hope that some of the more egregious foolishness in this proposal can be eliminated - everyone write your Congressperson! Anyone know if ASPPA is going to come up with one of those canned e-mail things, once all this is digested? And I think I saw that the comment period is only 75 days? That's not really much time for stuff of this magnitude. Fun times ahead.

Thanks. But let's return again to the assumption, for purposes of this question, that there is no amendment. Let's say there isn't even a resolution - just an operational failure. Anyone have any other thoughts on the "correction?"

And I'm just not quite old enough (or wealthy enough - age would be immaterial if I were loaded) to retire!! This is pure horse pucky...

Has either the employer or the plan's administrator evaluated whether the plan sponsor's resolution amended the plan? No. Let's assume, for the sake of the discussion at this point, that the plan's legal counsel determines that a corporate resolution does not constitute an amendment to a pre-approved Volume Submitter document in an Adoption Agreement format. What does the plan state about what the sponsor must or may do to amend the plan? Very little. It says that the employer shall have the right to amend the plan.

Don't have all the facts yet, so certain assumptions are being made. A new one to me - plan restated for PPA, and included a provision for Roth deferrals. SPD's, etc., apparently were properly distributed to employees. The Employer, without telling the TPA or anyone as far as known at this point, decided, a couple of months after adopting the document, that they didn't want to offer Roth after all. So they apparently did a corporate resolution to this effect, but didn't amend plan, nor did they inform participants. Not known yet if the deferral election forms said Roth was permitted - haven't seen one yet. Assuming the deferral election forms DID offer Roth, and no one elected Roth, then no worries, just amend the plan currently. If the election forms did NOT offer Roth, how does one correct? I don't see any reasonable option other than to submit a VCP application with a retroactive amendment to conform the document to actual plan operation. Any other thoughts? Anyone run into this before? Thanks.

So what does happen then, if one or more participants don't cash the checks (which I assume is not an uncommon occurrence)? Do you just go ahead and file the 501, with a copy of the check and a statement that the participant hasn't cashed it? Just curious - I'm not a DB person, but it seems like there must be some sort of acceptable solution to this problem.

So all the books would be considered an Andy WarHaul?

In my humble opinion, aside from the audit point that Mike raises: I take this to mean you ignore the transaction if it is merely more than 5% than the participant's own account balance. I agree. But what if a single transaction is greater than 5% of the plan assets as a whole? For example, an owner with 70% of the assets of the plan, all invested in one fund. Then he transfers 50% of his stake in that one fund to another fund. That is obviously more than 5% of plan assets. Does that get reported? No. Or, does the above mean that you ignore ALL transaction in participant directed accounts, but you include their assets to see if any transaction in a pooled portion of the plan is more than 5% in total? I'm a bit hesitant to say "all" - as perhaps there are questions/scenarios that might be envisioned where the fiduciary exercises their judgment to move everything out of 1 fund into another, in an emergency situation, for example. While the answer might ultimately be "all" I'd feel more comfortable with some wiggle room, like "generally." For example, plan has 50% of funds in participant directed deferral accounts and 50% in ER directed PS account. A transaction would have to be more than 5% of the combined assets in order to be reportable? Yes.

A little tricky to answer without having details. So, let me see if I understand this correctly: 1. Employees were in fact allowed to defer immediately upon hire, and this can be proven via a zero election form. 2. They "may not" have been notified they were eligible for match immediately? 3. Presumably, they were given an SPD as new participants. Does this SPD correctly show that eligibility for the match includes credit for service with prior employer? If so, then I'd say the employer is on firm ground, and does not need to provide a "missed match." If not, I'd still incline toward that conclusion, but recommend SPD be updated IMMEDIATELY to correctly reflect any prior service that is credited toward eligibility for the match.

Just at a very quick look without any analysis/cross checking, it seems like 1.414(v)-1(g)(2) defines an "elective deferral" as including "any" contribution to a section 457 eligible governmental plan.

Say a Non Profit has a 457(b) plan - only one participant. This participant is going to retire, or perhaps just has. I don't know. Question is: if employer decides to terminate the plan, as permitted in the document and regulations, (1.457-10(a)(1)) is there any way for the participant to avoid immediate taxation of all proceeds? There's no rollover option, and participant isn't transferring to another NP that has such a plan, so the transfer option isn't available... I don't see any way to avoid taxation of the entire amount, but maybe I'm missing something. Is there such a thing as, prior to termination, the employer purchases an irrevocable annuity with the payee being the participant, under an annuity/installment option otherwise available under the plan? Kind of a bummer for the one person who was counting on continued tax deferral - I realize they had the benefit of it while working, but still an unfortunate change in circumstances when he was planning based on something else... Thanks.

You've found one of the great mysteries of our time, and I'm not sure anything works in all situations. First, I'd say that excluding tips is very likely to cause a discriminatory definition of compensation, assuming you have any HC's eligible for the plan. Here's some prior discussion of the issue, which doesn't really offer any concrete solutions, but may nevertheless be helpful - or may just add to the confusion! http://benefitslink.com/boards/index.php/topic/56483-tips-w-2-comp-definition-safe-harbor-match-per-payroll/?hl=tips

Gracias.

Hmmm - what if the audit was already done and filed with the 2013 forms? Can the 2014 1-day plan year form be filed with the same audit re-attached? Again, this is idle curiosity as not our problem and not subject to audit anyway - so idle that I'm too lazy to look it up, so please don't waste any time on this!

Does anyone have any "inside" anonymous contacts where they have heard anything about how the process is moving along, tentative guesses as to approval, etc.? The silence has been deafening...

Thanks Kevin. Sigh..that was what I was coming around to after thinking about it following the posting. Truly, it doesn't matter to me in this case, since prior TPA is responsible for the filing, but I was thinking about it in case it ever comes up with us. What a ridiculous waste of effort. This plan wasn't subject to audit, but I haven't looked into whether an audit would be required for such a 1-day plan year in the event it ever comes up on a plan subject to audit. And I probably won't bother, since (hopefully) by the time such a real life situation occurs, I'll either be retired or they will have changed the rules! Thanks again.

I know there has been some discussion on this before, including David Rigby's reference to a gray book question, which was very helpful, but I'd just like to confirm something. So, Plan A merges into Plan B effective 1/1/2014 - that is the formal date on all merger documents. Question is, does Plan A have to file a final 5500 for the 2013 Plan Year, or for the 2014 Plan Year? It seems like one could argue that the assets don't transfer to Plan B until 1/1, and are there in Plan A on the last day of the Plan Year, so the "final" form would be filed based on a short Plan Year beginning on 1/1 and also ending on 1/1. And it would therefore be due in 7 months, rather than the otherwise normal filing date. Now, this seems ridiculous to me, and I'd argue that the filing for the prior 12/31 could be filed as a final form, showing zero assets on 12/31 (even though not "technically" true) and be done with it. But I've never seen this situation, and I wondered how the DOL might view this, since this is DOL and not IRS. I'm just taking the temperature of folks here to see what they would do, or what they have seen/heard? Thanks.