Belgarath

I've talked with several practitioners who are concerned that whatever pre-approved documents ultimately become available won't have sufficient flexibility to allow some of the customization that is often necessary. Of course, that's all speculation, as no one knows. And to echo previous comments, it is entirely possible that this DL situation will be modified again in some form. Since ESOP's seem to be subject to greater scrutiny than most other plan types, both from the IRS and the DOL, I would say that getting a DL is unlikely to be successfully challenged as an imprudent use of plan funds, and entirely consistent with the fiduciary duty to act in the interests of plan participants and beneficiaries. Preserving the tax-qualified status of the plan should certainly be considered of value, as long as your fees are reasonable.

Cause that's what the Commerce Department forms say. Unless the Commerce Dept. is lying...

Ok, client provided us with more information. This is, in fact, a survey from the US Commerce Department, Census Bureau. If is sent to some employers (whether a random survey, or some other method I couldn't say) and it asks them a ton of questions about all of the costs/expenses to run their business. And one of the costs is employee fringe benefits, hence the question. I don't know how many employers ever receive this, but I expect most of them just complete it without ever contacting the TPA, which is probably why we've never heard of it. Evidently, response is legally required, so it isn't a voluntary survey. You learn something new every day...

I read, or heard, somewhere - can't remember, that the DOL is making people revise these when they audit a plan if they are incorrect. I don't know if they were imposing any penalties if they were incorrect. Does anyone recall hearing about this, or have you encountered it, and if so, were any penalties imposed? Seems to me that this wouldn't normally result in any penalty.

In my experience, many documents either automatically allow a participant to postpone distributions, or in the Adoption Agreement allow the employer to choose whether or not to require the mandatory forced distribution. The mandatory forced distribution isn't a popular option, (in our plans, anyway) as the people who generally want to delay it the longest seem to be the higher paid owners.

Agree with the comments, but I"M curious now as to what it is all about. Hopefully they will be more forthcoming with the source of this "request" for information. If I find out anything interesting, that isn't confidential, I'll post it.

We have what I shall euphemistically refer to as a "difficult" client who doesn't like to provide any information that we ask for. They recently sent us an e-mail with a section that had been cut and pasted from somewhere unknown, asking for information on costs of any Defined Benefit and Defined Contribution plans. Client referred to this as a "us census data request." Although we are trying to get additional details, as I said, client is difficult and may not provide. I was just curious if anyone had ever seen any type of similar request, or could fathom a reason? I doubt it is a scam, although of course it could be, but I'm having trouble imagining what, if any, government agency would be asking for this and why. Don't think there is anything connected with the ACA that would request this... Anyway, any thoughts appreciated.

Generally, yes. See 414(v)(3)(B). But if you are using an accrued to date method (which probably isn't what you are asking about) then catch ups for prior years that are included in the applicable measurement period ARE included.

We don't use the FT William document, but I've seen others that are similar. We always prepare a specimen resolution - whether they choose to use it (or need to) is up to them. We also do a SMM - even though no amendment is required, it would generally, depending upon the detail in the SPD, require a modification to the SPD language.

And assuming the POA is acceptable and the plan otherwise permits (which I expect it does) the hardship distribution still can't be made if the medical bills can reasonably be paid from other sources, etc. - the usual...

Step two - go ahead and have the existing trustee-who-isn't-really-a-Trustee removed, and he can appoint himself as Trustee. Does the Plan document have "failsafe" language where if no Trustee is appointed that the Employer/Plan Sponsor is the Trustee? If so, I think you probably don't have any worries. If not, then if the Employer/Sponsor performed any Trustee duties, you might want to check with an ERISA attorney about some sort of resolution formally ratifying any acts performed as a Trustee while not officially being named a Trustee - that's getting out of my league.

With no research, I'd say probably yes - I assume the AB plan has at least one employee participating? If so, both plans are part of the required aggregation group for TH purposes, since at least one key employee participates in both. But I'd have to do a little checking to be sure...although I should probably remember this off the top of my head, I don't...

I think you misunderstood. My real point (which I didn't make very clear) was that NOT all pre-approved documents allow the option. As to nondiscriminatory or not, that's a separate issue, and I can certainly see why you wouldn't worry about it when you have a pre-approved document that permits it. I'm very likely overly paranoid, but as I said, it doesn't really matter to me in real life! Just as a matter of curiosity only - have you ever actually had this request? I haven't, thankfully...

Austin - you might want to be a little careful with such a blanket statement. The pre-approved VS document from at least one major provider does not provide such an option. Now, the fact that many or most pre-approved docs permit it would indicate to me that the IRS doesn't seem to have a problem with it - however, I still wouldn't want to be forced to defend it. It is only an academic issue for me, as I would simply tell a potential client we can't do it. Some of these "Roth problems" are just holdovers from investment platform issues where they couldn't properly handle some Roth issues (and perhaps still can't, for that matter...)

I'm not convinced there isn't a potential nondiscrimination issue. You have both current and effective availability requirements, and depending upon the auditor, I can see an effective availability issue if you can't get a match on your Roth deferral. I wouldn't want to have to defend it...

Not yet! What error(s) did you encounter so we can be on the watch for them?

IRC 416(g)(4)© defines the determination date for a plan year to be the last day of the prior plan year. (except for the first plan year of a plan.) So you are looking for employees who satisfy one of the key employee tests for the plan year that includes the determination date. So, if you are doing a 2016 valuation, your key employees would be those who satisfied any of the key employee tests for 2015 (the plan year that includes the determination date.)

I think you are both saying (or meaning) the same thing - just saying it a little differently. At least that how I read your posts.

Interesting question. I'm going to vote for the $4,367. The taxable terms cost is not an actual distribution of plan assets - it is, rather, a taxable "economic benefit" to the participant.

If you'd like an additional source, look at 1.416-1, T-16 - again, it specifies the words MORE THAN. I'm not aware of any official guidance that states explicitly what you are looking for. I think the IRS probably assumed that the rather plan language was self-evident. My 2 cents - is that really true? Or is it just one of those enjoyable stories that have no basis?

Per IRC 416(i)(1)(B)(ii), it is more than 1%.

So, when reviewing the prior firm’s coverage testing, they ran the average benefits test for the safe harbor plan by showing zeros for all the hundreds of nonexcludables (those are the employees in the controlled group covered by other plans but not covered by the safe harbor plan), then averaging the results. The averaging takes into account all of those zeros. However, for the current year tested plan, they ran the average benefits test by including allocations for all employees in all plans, including the allocations made in the safe harbor plan, then they averaged those results. I agree with Mike. I think they did it incorrectly for the safe harbor plan. I think it all hinges upon the clause in 1.410(b)-7(e)(1) to which you already alluded, which says that the ABP testing group includes all plans that could be permissively aggregated if paragraph ©(1) of 1.410(b)(7) didn't apply. And as Mike states, there's no special exception for a safe harbor plan.

Thank you for your input. On my own personal level, I'm reluctant to adopt that interpretation, and I'll explain my logic, or perhaps lack thereof. (And I'm ignoring the potential practical ramifications of attempting to track these employees through (potentially and theoretically) several subsequent sales of the same corporation. Or to perhaps be more accurate, it is because of those practical considerations that I prefer to find a defensible interpretation that says otherwise!) As to 11.7, it says that in such situation, the assets shall be retained pursuant to the provisions of Article VII, which are basic Trustee responsibilities. If the Plan Administrator determines that there is a distributable event, distributions can be made. Seems to me that under Notice 2002-4, when combined with 1-401(k)-1(d)(2), there is a reasonable interpretation that in this specific situation there is a severance of employment and therefore distributable event. However, there's most certainly room for disagreement. Anyone else encountered this situation, and if so, what did you decide? Thanks again.

That's a tough question - I don't think the final regs under 1.414© address this - they specifically address two TAQX-EXEMPT organizations, but not an overlapping for-profit and tax exempt. First, I'd leave it up to counsel. But my own personal opinion is the same as yours - it smells like a CG/ASG, and I'd be inclined to consider it as such, but I'd merely present that opinion to counsel and let counsel and client make that determination!

Can you point to where it answers these questions? I'm looking at a Corbel/Sungard/FIS - whatever - VS document. In Article XI, specifically 11.7, I don't see where it addresses any such question. And Article XIV deals with Multiple Employer Plans, which this isn't, unless you take the interpretation that a plan automatically becomes a MEP the moment one of the affiliated employers becomes non-affiliated due to the sale...and I don't think that is a reasonable interpretation. Thanks.