Belgarath

First, although they are sometimes helpful, you must always remember that IRS comments from the podium are not official guidance. If you do some searches here, you will find many opinions and threads on timing of safe harbor amendments. If you want iron-clad, unassailable safety, then you don't do any mid-year amendments other than those that the IRS has OFFICIALLY sanctioned. Beyond that, in the situation you describe, even though I'm generally pretty conservative on this whole issue, I'd allow it.

Try EBIA - they do all kinds of seminars, including intermediate and advanced. I haven't attended one, so I can't give you any feedback on how good they are. http://www.ebia.com/Seminars/InPerson

No way to tell from the information given. Deferrals only is a good start, but so much depends upon also satisfying the "limited employer involvement" - such as hardship determinations, QDRO determination, and all the rest. You'd need to look very carefully at your document and vendor agreements. It shouldn't be this difficult!!! I wish the DOL would be more reasonable (i.e. loosen up) on some of this foolishness.

I have an entirely different approach, and perhaps this is impossible if you want to keep the client on your books...but I would make the client CERTIFY on the census 1,000 hour, 500-1,000 hours, or less than 500 hours. Exact number not needed. Put the onus on them, where it belongs. If a client is unwilling to make that decision and certify data, I'd politely show them the door. I certainly wouldn't make myself crazy trying to use an estimate that may or may not be accurate. I caveat this by freely admitting that there may be other intricacies in your particular document/administration/situation that would make my approach impractical or impossible.

What I'm asking about is something along these lines: Yes, the plan is "unfunded" but the Plan states that the Participant's "account" will be credited with earnings or losses. The employer invests the money in an "employer" account - not a trust, and not a Rabbi Trust. Although part of the general assets of the employer and subject to creditors, etc., nevertheless, if after 15 years, the participant has lost 30% because the "account" was invested foolishly, there may be a problem. IF the ERISA preemption shield is intact and precludes any recovery, breach of contract, promise, whatever (I'm not a lawyer) than all should be fine. If there is room for something else to override the ERISA preemption, then it should be a cause for concern for whoever does the "investing" of the funds. In essence, does the ERISA preemption allow for unlimited stupidity or neglect, or is it not so clear-cut. I use this absurd example just to illustrate why I'm even asking the question. Thanks.

Yeah, I was just wondering if there had been mandatory "interim" amendments for 457(f) plans, or other mandatory changes, etc... So, thank you for the response.

Well, my answer would be that ERISA preemption should apply. But it seems to me that the issue of ERISA preemption is constantly being litigated, which is why I'm interested in the opinions (general opinions, obviously not case-specific!) of you experts in this arena.

Potential client apparently wants to adopt 401(k) in 2015, but already mistakenly allowed deferrals into their SIMPLE-IRA plan. I don't have any dollar amounts available, but I believe they are small, as only one payroll deduction for January in a small company. Now, RP 2013-12 says this can be corrected under VCP - filing fee of $250, plus the 10% if the assets are retained rather than distributed. I'm interested in any thoughts on the following: 1. Any thought on retain vs. distribute? 2. It isn't clear from the instructions - is the employer still required to make the match? I would presume so - and if so, is it deductible? I would presume not, as this would be an "excess" contribution? (I changed my mind - if the correction is approved, it should be deductible, I think) 3. Is it necessary to request a waiver of excise tax under 4972? If the entire amount of the match, if required, is a nondeductible contribution, then it would seem like requesting the waiver would be routine? (if I'm correct on 2 above, this is N/A) 4. Tax consequences, if any, to the participants, if the deferrals are retained rather than distributed? (none, if 2 above is correct) 5. New edit - does anyone consider the SIMPLE as Plan #001, 002, etc.? For example, if someone previously had a SIMPLE, and properly terminated it, then establishes a 401(k), do you count the 401(k) plan as Plan #001, or 002? Reason I ask is that the Revenue Procedure asks for the Plan # of the SIMPLE, and I would not normally have assigned it a Plan #. Any other thoughts? I've not actually seen one of these until now... P.S. another thought that occurs to me - how does all this tie in with the "requirement" where the IRS says that in order to terminate a SIMPLE, you must notify the employees prior to November 2. I would say that the existence of the "fixes" in this Revenue Procedure override the IRS information on their website - otherwise, an employer that fails to provide the SIMPLE notice can't establish a 401(k) for the following year, and has no recourse if they do! But it does seem to bring up a strange inconsistency - if you have a SIMPLE, and don't give the advance notice of the termination, you are theoretically stuck with it for all of the next year. If, on the other hand, you just establish the 401(k), then you can fix this with IRS blessing under RP 2013-12. ???

Some interesting insight into the whole issue in general. http://www.ca5.uscourts.gov/opinions/pub/12/12-20294-CV0.wpd.pdf

Let's say you have a non-governmental 457(b) plan that qualifies as a "top hat" plan. There is no Rabbi Trust. 457 plans are subject to ERISA, except to the extent that a specific exemption applies. ERISA 401(a)(1) exempts the plan from ERISA fiduciary responsibility. So, is there potentially State law fiduciary liability? Or, does the fact that the plan is subject to ERISA mean that ERISA preempts any State fiduciary laws, in spite of the fact that ERISA fiduciary rules do not apply? Or, is this one of those dreaded "gray" areas?

Let me start by stating that I've never had anything to do with 457(f) plans, so I'm asking this question from a position of almost complete ignorance. (I guess that qualifies me to run for Congress...) A client (501©(3) if it matters) has a 457(f) document that was drafted in 2008 or very early 2009. My question is this: Have there been updates in the laws (409) or otherwise) that would automatically require this document to be updated? In other words, if no updates since original drafting, are they automatically out of compliance, or might they still be ok? I realize this will ultimately need to be resolved by the client's legal counsel, but I thought I'd like to just have some idea of potential issues. Thanks.

If you can get access to the ERISA Outline Book, Sal has a good write-up about it, in far more detail than would ever interest me unless I were absolutely forced to look it up!

Take a look at Revenue Ruling 2002-27. Deemed 125 compensation has to do with when an employer gives an employee a choice of cash if the employee opts out of health care coverage due to having other coverage and the employer requires proof of such other coverage. I've never actually seen this come up as an issue, and someone once warned me that I'd find I wasted my time by even looking at this issue....

I wonder - could they possibly have meant that they are in a Community Property State, for whatever that is worth? (just a thought that passed across the vast, empty spaces that formerly housed a sometimes working brain)

Minimum 30 days. But remember, it is now 2015, so the elimination of the SH match requires the "economic loss" parameters, or that the "maybe not" language was in your 2015 Safe Harbor Notice.

From the DFVCP FAQ's on the DOL website: Q13: Does a plan administrator waive any rights upon filing under the DFVCP? Yes. Payment of the penalty amount under the terms of the DFVCP constitutes, with regard to the filings submitted under the Program, a waiver of the right both to receive notice of the penalty assessment from the Department and to contest the Department’s assessment of the DFVCP penalty amount.

I think yes in your "normal" distribution situations. But there could be others - for example, a "2" if the person terminated employment at 55.

ASSUMING the document allows complete discretion as to the amount, timing, and computation period for the match, I don't see anything inherently wrong with this. Since excluding a HC, probably will help with ACP testing results. I'm also assuming document previously allowed the match, but the employer simply didn't do it - which is fine if it was totally discretionary. As mentioned by previous posters, having all plan documents is a must to accurately determine what you can and can't do.

I actually started to put that suggestion in my previous post, then removed it as I wasn't sure if that opens up another can of worms. Actually advising participants to move the money isn't really the same thing as telling them that they may wish to consider moving the money. So I didn't go down that road intentionally...

Austin - FWIW, here are my general thoughts: I think the fiduciary of an ERISA plan has the duty to review these contracts for any new money. If they determine that they are inappropriate, don't allow any new deferrals/employer contributions to flow into them. As part of their normal fiduciary duty, they must provide appropriate investments to be available to plan participants, so they can select whatever investment options they deem appropriate for new money. If they can't do anything about the old contracts, then why worry about it? If they are screwed for an "original sin" then they will remain screwed. But, I do believe that "prudence" standards are judged based upon the reasonable standard of prudence at the time of the investment. I find it hard to imagine that the DOL would attempt to assert that these were imprudent, based upon standards at the time. I leave it to the lawyers for opinions as to whether a lawsuit by participants has any reasonable chance of success. These days, there are a lot of class action lawsuits, and I literally have no opinion as to whether such a suit might be successful or not. Bottom line - I don't think I'd lose any sleep over it, because other than for new money, there isn't anything the fiduciaries can do about it anyway.

That's a whole different Pandora's Box, and I agree. This would seem, to me at least, to clearly be self-dealing by a fiduciary. All the more reason to involve ERISA counsel!

Just curious - what is it that EPCRS can do for you? I don't think there is any fix under EPCRS, although my memory may well be off. I believe that EPCRS will require that it be placed in an unallocated account to be used later as appropriate or required, which ultimately leaves you still stuck with an unallocable amount subject to reversion tax. I agree that simple nondeductibility is not, on its own, a mistake of fact. If you can't find a way to legitimately consider it a mistake of fact as Jim suggested (potentially difficult) then I think you are stuck. I'd love to hear any other solutions.

I tend to agree with jpod. I think you may have a problem unless, under your exclusion, you have "fail-safe" override language that moves them out of the excluded category if they ever work 1,000 hours.

While it does seem odd, I agree - I think that a transaction such as you propose is not a PT (my initial gut feeling was just the opposite). Now, on the other hand, there would be the usual issues involved in lending money to anyone in terms of prudence, due diligence, diversification, etc., etc., and such a transaction might be scrutinized more rigorously than if the funds were lent to an "outsider" - but I really don't know. I certainly would advise them to run this by ERISA counsel prior to such a transaction.

Taking an informal poll. Assume a safe harbor nonelective, utilizing the "maybe" provision. The plan currently uses a non-integrated profit sharing formula, with a last day/1,000 hour provision. If the client wishes to amend to a new comparability formula, for example, can they: A. do it at any time prior to the plan formally electing/adopting the SH contribution for 2015, or B. must they wait until 2016 to have it effective?