Belgarath

IMHO, this is completely in the judgment of the Plan Administrator. Realistically, this will mostly be the judgment of the TPA/Form preparer, because the Plan Administrator is likely to follow the recommendation of the preparer. Some preparers won't even bring a "trivial" error to the attention of the Administrator. And everyone will have their own standards. For example, if I did a filing for a Welfare plan, and the participant count on one of the Schedule A's was filed as 778, and when preparing the next year's forms, I find it should have been 779, will I prepare an amended filing? He** No!! On the other hand, if the "Plan Characteristics" codes were incorrect, I'd file an amended return.

Can't think of a good reason offhand. Perhaps if NOBODY is contributing the ACA minimum? Could it be that there are recordkeeping platforms out there that require this option, so one or more TPA's requested this option from Sungard? Less confusing for a new plan, or for some clients? (I'm grasping at straws) You should send a query to Sungard. Perhaps they can tell you a good reason that we haven't considered.

Muchas Gracias!

Just want to see if I'm off base here. Suppose you have a plan for a business, say a construction company or something like that, that is subject to Davis Bacon for certain projects. So, they elect to satisfy Davis Bacon obligations, or part of them anyway, by making contributions to their PS plan - let's assume for these purposes that plan permits, or is amended to permit this. For compensation testing, am I correct that there is no special dispensation/exclusion for 414(s) purposes for Davis Bacon wages, so that you couldn't exclude Davis Bacon wages without passing compensation testing? So for elective deferral purposes, you couldn't exclude the Davis Bacon wages without passing compensation testing? This applies to other coverage/nondiscrimination testing as well, right - no special exclusions? However, the Davis Bacon contributions can offset other employer contributions, such as PS, Safe Harbor, Gateway, etc. I believe.

You are. I'll also guess that the plan doesn't really provide for such distributions - somewhere in the plan it'll probably say "notwithstanding the in-service distribution provisions" or something that makes it clear that such distributions aren't permissible.

Hmmm... mud is right! I guess I'd hope for better instructions or some IRS clarification. If none is forthcoming, I'd probably use the Plan Name and Trust id#.

Don't confuse me with facts! Since it is optional, I suspect it is usually ignored (except for the crazies...) I see your point. And it seems to also be mixing apples and oranges - it mentions different custodial accounts but then asks for the Trust's id #. I suppose if you had 70% of your assets with Fidelity, and 30% with Merrill Lynch, then you would enter Fidelity. But then, what do you use for the "Trust's EIN?" I say, don't fill out the blasted line until it is mandatory, and perhaps at that time, they will issue better instructions. But, hopefully someone who actually knows the answer to this will respond, 'cause I'm quite puzzled by this as well. Part III – Trust Information (Optional) Line 6a. (Optional) You may use this line to enter the “Name of trust.” If a plan uses more than one trust or custodial account for its fund, you should enter the primary trust or custodial account in which the greatest dollar amount or largest percentage of the plan assets as of the end of the plan year is held on this Line. For example, if a plan uses three different trusts, X, Y, Z, with the percentages of plan assets, 35%, 45%, and 20%, respectively, trust Y that held the 45% of plan assets would be entered in Line 6a.

Are you crazy? You must be - you are a TPA! I don't recall anywhere on the 5500 form that asks for the name of the Trust? What line/form/schedule are you referring to? Just asks for the name of the Plan, I thought. At any rate, I agree you would use the plan name, unless I'm missing something.

Certainly not a stupid question, but I think a difficult one since it seems the majority of us on these boards have more expertise in qualified plans. I'm not aware of any IRS mandate for covering all "eligible" employees - therefore my mention of non-ERISA nondiscrimination rules, etc. At a guess, this ruling was written with the specific facts in mind, and it is possible/likely that the plan itself specified that that all "eligible" employees would be covered? Again, I'm not sure I'm even remotely correct in my thoughts here. Good luck!

Yeah, it strains the boundaries of what is reasonable to think that by including part-time union folks while excluding an otherwise excludable "less than 20 hour class" that you would fail universal availability, yet that's where the regs (and the specific reference to 410(b)(4)) seem to lead. I'm hoping I'm missing something obvious, or not so obvious. P.S. Perhaps they could just set up two plans - one for the non-union, which would exclude all union employees; and one for the union employees, which would exclude all non-union employees. Would this solve the problem?

Oddball question - a 403(b) plan proposes to use the 20-hour exclusion. It is a 501©(3) plan subject to ERISA, and the plan has the appropriate "fail-safe" language if they ever go over 1,000 hours. Now, they have a small collective bargaining unit agreement in place for a few employees, where the collective bargaining unit employees can participate regardless of hours. 1.403(b)-5((b)(4)(i) generally provides that if any employee in (4)(E) is included, then NO employee under (4)(E) may be excluded. Does this preclude allowing the part-time union employees to participate, or does the general "you can do pretty much anything you want with unions where the agreement is subject to good-faith collective bargaining) override this? I'm inclined toward saying it is ok, but I'm not sure I'm specifically getting there based upon the regs. I don't really read 410(b)(4) as specifically supporting where the client wants to be. Any thoughts?

Big caveat - I'm not at all sure I know what I'm talking about! With that in mind, I did look into a similar question some years ago, and from memory... Although the situation you describe shouldn't fall under the nondiscrimination testing for Section 125, I do believe that this is a fringe benefit subject to ADEA and EEOC. Also, I believe a state's disability insurance laws are not preempted by ERISA, so you may have to check the state laws re nondiscrimination requirements for such a plan, if any.

In general, I agree that it will fail ACP. But there are plans with no HC (certain non-profits, for example) or plans ONLY with HC, such as only family, or sole props, whatever. So it can work in very limited situations. Problem is that most of the "buzz" out there neglects to mention the ACP problem.

I'm doing restatements as of 1/1/15. If I'm changing any provisions, (other than permissible changes) those changes are effective 1/1/16, and are specifically listed/designated as effective 1/1/16 in the Appendix.

Without knowing facts and circumstances, and assuming plan year is calendar: Yes, I agree - typically the restatement is effective either 1/1/15, or 1/1/16, or effective 1/1/15 with some provisions not to take effect until 1/1/16, etc... It may well be that the employer is OBLIGATED to pay for the restatement work already done, under the terms of their contract with prior TPA. I have no opinion on that. If it is optional, then certainly it makes no sense to restate twice in a few weeks.

Thanks. Every answer seems to bring up another question, and I may be completely misunderstanding what you are saying. I thought that to remain qualified, a plan has to be administered according to its terms - even a governmental plan. So if the terms of the plan are that there is a vesting schedule - (not because ERISA requires it, but because the employer has chosen to have a vesting schedule) say 6-year graded, for the sake of argument - can't the IRS disqualify the plan even if such a provision isn't legally required, if the plan operationally ignores its own terms? As far as participant enforcement against the plan if the plan operationally violates its own terms, then I assume you are back to State law? (contract law, employment law, etc. - whatever might apply?) Thanks again.

On the surface, I agree this isn't a controlled group. But make sure you explore other issues - is this potentially an affiliated service group, which used different (IRC 318) attribution rules? Even on the basic ownership level of stock ownership - ownership can be based on either voting power or stock ownership, and you also have to consider stock value, so if you have different share classes, be careful. Are there stock options? This could create additional attribution. A wonderful minefield. Clients rarely give all the information necessary to make these determinations, so they should run this by legal counsel if there is any doubt. Of course, when you tell them to, they rarely do...

Yes. See Section 6 .07(3) of Rev. Proc. 2013-12, and update in Rev. Proc. 2015-27 as applicable.

Remember that "The Service reserves the right to limit the use of the correction methods...to situations that it considers appropriate; for example, where the loan failure is caused by employer action." Unusual for an employer to take this step, or give a damn about the employee, unless it was the fault of the employer. Was it? I'm not saying the correction can be used ONLY due to employer action, but the IRS may reject it depending upon facts and circumstances. Was this person, by chance, the owner/a Key Employee, or a self-employed? If so, you can't use the new 14568-E, Schedule 5 under Rev. Proc. 2015-27.

Yeah, but unless your clients are different than ours, regardless of the fact we tell them to seek legal counsel, abut 1 in 100 actually does. And really, for your run-of-the-mill plan, most provisions are pretty well established, and it rarely matters that much. It seems to me that governmental plans are less standardized in that ERISA does not apply, so you can be all over the place with State law, and the likelihood of noncompliance seems greater. That may just be 'cause I've seen very few governmental plans.

Thank you Carol. This raises another question - even if you have a pre-approved governmental plan document from a document provider, some of those items you mentioned are unlikely to be specifically addressed - for example, if you have a Sungard "governmental" document, I doubt it will take into account specific State provisions? If that's the case, does the language have something generic incorporating any State law provisions by reference? If generic, sounds like attorney involvement would be far more crucial for governmental plans than ERISA plans?

Hi Kevin - it is just a Profit Sharing plan. But it was completed based upon a "tax exempt corporation" rather than as a governmental plan - consequently, it contains all the ERISA stuff, which doesn't really matter. I'm more concerned with reliance, but they haven't had that anyway, and wouldn't without filing for a d-letter. Operationally, it looks like everything ok - unnecessarily rigid, as the document is requiring provisions that aren't LEGALLY required (coverage, nondiscrimination, etc.)

This probably isn't that uncommon, but... Found a governmental plan using a normal ERISA VS document. The document has all the normal provisions and specifications including that it is an ERISA plan, etc... Now, as far as I know there is nothing preventing a governmental plan from adopting provisions that aren't legally required - nondiscrimination testing, whatever, whatever. The employer, being governmental, isn't subject to ERISA, so doesn't file 5500 forms, but otherwise operates the plan according to its provisions, even though it doesn't have to adopt a document containing many of the provisions it has. Only problem I see is that they have never filed for a d-letter (which of course isn't required either). So I suppose they could re-adopt a VS document, updated for PPA, by 1/31/2016 (going from memory, that's the Cycle E deadline) and continue to not file. Since they don't have reliance, because the VS isn't a governmental plan document, then I don't think they are in a position that is any worse than they are now. And probably better than not adopting anything, because it at least shows some efforts at good-faith compliance. Or, do you think they would be better off just waiting until someone like Sungard gets IRS approval for a prototype/VS governmental pre-approved plan, which I think is coming in the next year or two, and adopting that?

Thanks Kevin.

Re the correction for 415© violations under the new Section 4.04 in RP 2015-27. Is this limited to plans that do NOT provide matching contributions? The language could probably be read either way. I'm not sure if this is meant to act as an example, or if it is meant to limit it only to plans with no match. Any opinions? "A plan that provides for elective deferrals and nonelective employer contributions that are not matching contributions is not treated as failing to have established practices and procedures to prevent the occurrence of a 415© violation in the case of a plan under which excess annual additions under 415© are regularly corrected by return of excess deferrals to the affected employee within 9-1/2 months after the end of the plan's limitation year."