Belgarath

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.

Interesting. So, for 2014, if you had the situation that My 2 Cents mentions (lost participants who have not received otherwise required RMD's) how would you have answered that question? Can one reasonably interpret the question, based on the new instructions to the 5500, to still say that the plan hasn't "failed" - in other words, it is only a "failure" if the plan COULD make distribution, but didn't - and therefore, since it was not possible to make the distribution, there's no "failure" and therefore you can reasonably answer "no"?

Shouldn't be any problem. The plan termination creates a distributable event which would allow employees to roll their distributions to the 401(k) plan. The "successor plan" rule similar to 401(k) rules applies only if the employer makes contributions to another 403(b) plan during the "12 month period" beginning on the date of termination and ending 12 months after the distribution of all assets from the terminating 403(b). See 1.403(b)-10(a)(1).

It wouldn't. Assuming there is nothing to distribute other than basis (after tax employee contributions) then there is no pro-rata. I make no statement as to whether it is permissible to pay zero interest on the accumulated employee contributions - that's a separate question, which some of the DB experts can doubtless answer.

"Speaking as a non-lawyer: This is not an issue of an ERISA or IRC violation where a corrective filing can fix things. It is outright sex discrimination. This probably should be resolved under a class action lawsuit." So do you think that if not corrected there are no plan qualification implications? Or, would you say that it must be corrected to retain plan qualification, but there are additional issues unrelated to ERISA/IRC, as you said above? P.S. reviewed a synopsis of the Norris case, as David suggested.

Should have specified - DC plan. Thanks for the responses.

Checking my memory - is any of the following untrue? (I know there are additional details that I've left out, intentionally) Re nondiscrimination testing using rate groups. 1. Each rate group must pass either the ratio percentage test, or the average benefits test. 2. For any rate group (or groups) that fail the ratio test above, the average benefits test must be passed for that rate group. 3. Average benefits test consists of two parts, both of which must be passed. One is the nondiscriminatory classification test, (let's call this 4) and the other is the average benefits percentage test (let's call this 6). 4. The nondiscriminatory classification test is itself a 2 part test: (a)(i) determining the ratio percentage for each rate group (which you probably already did, unless you skipped the ratio percentage test and went right to the average benefits test) and checking to see if the percentage in (a)(i) is =>the testing percentage in 5 below. 5. Several steps, which I won't go into here. 6. Average benefits percentage test - this is performed at the PLAN level, not the individual rate group level. And this may require recalculation of benefits percentages used previously.

Thank you - that clears up a lot of questions (for me, at least) and allows the focus to be on the required corrective calculations/distributions/overpayment recovery/etc., whatever those might be.

Every day this week is a palindrome.

The following situation is of course purely hypothetical. In such hypothetical situation, the services of an actuary would be engaged, as would legal counsel if and as necessary. But in wandering through this exercise to educate myself, would appreciate any input from the DB experts. I could see this being a very difficult VCP filing just due to the potential volume of calculations/payouts that might need to be corrected. In this hypothetical situation, suppose there is a Governmental plan (state level, not federal, if that matters), currently using volume submitter document. Going back an as yet undetermined number of years, (could be a lot of years) the plan document specified actuarial equivalence assumptions using a sex-distinct table, rather than a unisex table. (As many of you may know, I'm not a DB person, so I'm very hazy on this - is it possible that a table that appears to be sex-distinct to the non-actuarial mind, such as GA ’51 project age 65 (male) is in fact acceptable, whereas the 1951 GAM is not - or are these really the same thing just with different title)? Also assume that regardless of the specified table, whether acceptable or not, all alternate benefit form calculations and payments have definitely been made on a sex-distinct rather than unisex basis. The plan never had an actuary review any of the calculations for alternate forms of payments - actuary only reviewed funding assumptions/contribution requirements. First, am I correct that the fact it is a governmental plan doesn't matter, and that unisex rates are required for all alternate forms of payment? (I seem to recall that is what the Norris decision was all about) Second, is there a choice amongst various acceptable actuarial equivalence rates/assumptions that may be allowed, or is there only one acceptable table/set of rates? Assuming that there is more than one acceptable rate/assumption(s) allowed, is it permissible, if submitting through VCP, to select rates/assumptions that minimize the additional cost to the employer to correct? Maybe there is no across the board answer to this one, but if sex-distinct rates were used, I'm under the impression that this would typically result in males getting a higher payout than females for the same accrued benefit at the same ages, due to the shorter life expectancy? But perhaps that isn't necessarily true in all situations? Also, is it possible that an allowable unisex table might produce higher payouts for ALL participants than a given sex-distinct table, but that the amount of the increase is just smaller for women than it is for men, or vice versa? Any off the cuff thoughts/observations are appreciated. Please don't take a lot of time, as this is hypothetical, and if such a situation were ever encountered in real life, the services of an actuary would be engaged immediately. Thanks!

As a non-lawyer, I tend to agree with MoJo in this. I note that in the first paragraph of 2510.3-102, says, (my emphasis) (a)(1) General rule. For purposes of subtitle A and parts 1 and 4 of subtitle B of title I of ERISA and section 4975 of the Internal Revenue Code only (but without any implication for and may not be relied upon to bar criminal prosecutions under 18 U.S.C. 664), the assets of the plan include amounts (other than union dues) that a participant or beneficiary pays to an employer, or amounts that a participant has withheld from his wages by an employer, for contribution or repayment of a participant loan to the plan, as of the earliest date on which such contributions or repayments can reasonably be segregated from the employer's general assets. Now, I don't know what that really means in real life circumstances, but it does seem to indicate that the exemption isn't "blanket" and may only be relied upon for specific purposes. But as I said, I'm not a lawyer, so this is nothing more than useless speculation on my part. It's fun to randomly talk about things I know nothing about, when I can't be held responsible for what I say. I think that qualifies me to run for President.