Belgarath

I know that whenever a website is changed, there is a learning curve, so initially I usually dislike it but end up liking it better, but honestly, I can't warm up to this new and improved IRS website. Seems more difficult to me. Oh well...

Thank you!!

Pardon my ignorance, as I'm not a DB person. I'm trying find if there is a relatively straight answer (hah!) to this: For plan terminations, one would normally use 417 rates, yes? If so, under MAP-21, must you still use 417 rates, or are you allowed to use the "annuity substitution" rates, and therefore possibly reduce the lump-sum payout? I'm under the impression that it is the former rather than the latter. Thanks! P.S. - as I look over my question, I think perhaps there is a defference for plan terminations and for normal plan FUNDING. So, for example, when calculating funding for lump sums for a non-terminating plan, you can use annuity substitution rates, even though the lump sum benefit itself does not change? Maybe I'm just confusing the issue more...

Unfortunately, your consistent failure to (provide us with complete, timely, and accurate data; implement our recommendations, etc. etc...) makes it impossible for us to perform administrative services in an appropriate manner. Therefore, we are exercising our right under our (Administrative Services Contract, Engagement Agreement, whatever...) to terminate our services for the Plan Year beginning 1/1/2012. As per our (Contract, Engagement Agreement, whatever) enclosed is a bill for $$$ for (services performed to date for the Plan Year beginning 1/1/2012, outstanding fees, etc. )Any further services such as data transfer, document requests, etc., will be quoted upon request, and subject to full advance payment. It was a pleasure to be of service to you. If you have any questions, please don't hesitate to contact us.

Thanks Kevin - not the reply I was hoping for, of course, but pretty much what I expected. I can tell you this - there are a ton of safe harbor plans out there that get amended for provisions other than those directly, or even indirectly, relating to the specific safe harbor provisions. I simply don't understand the apparent IRS position on this, not do I understand why they refuse to issue additional clarification/guidance. Oh well, just another little pothole in the drive down administration lane.

Situation - employer has safe harbor nonelective 3% formula, with a discretionary PS contribution, currently allocated on a proportional basis. Wants to amend, for 2012, to a rate group tested allocation. I know the IRS has taken a rather (in my opinion) asinine view of this at some past ASPPA conferences, essentially opining that mid-year amendments aren't permissible, other than those already specifically granted, for example, in IRS Announcement 2007-59. While I won't bore you with why I think they are being unreasonable on this, I just wondered if anyone actually heard the 2011 discussion from the podium? If so, did they just reiterate their tired old "logic" as to why mid-year amendments aren't permissible, or did they provide any substantive discussion? To use an extreme example, if the plan currently excludes fork lift operators, and they want to amend to include fork lift operators, they should be able to do so. And amending the PS allocation method shouldn't matter, as they will get their safe harbor nonelective 3% regardless. (I could perhaps see a convoluted devil's advocate argument for safe harbor matching issues) Thanks.

FWIW I think it should be fine. See the following from 75 FR 2070. Since the safe harbor is available on a deposit by deposit basis, then the VFC excise tax relief should be similarly available on a deposit by deposit basis with all other requirements being met as you have stipulated. Deposit-by-Deposit Basis One commenter asked whether a failure to meet the safe harbor during one payroll period will result in application of the general rule for determining when participant contributions are plan assets for an entire plan year. The safe harbor is available on a deposit-by-deposit basis, such that a failure to satisfy the safe harbor for any deposit of participant contribution amounts to a plan will not result in the unavailability of the safe harbor for any other deposit to the plan.

I'm just curious as to whether anyone knows the answer to this. I checked the IRS LRM language for 415, and I do find the language that I'm seeing in current prototypes. But for Volume Submitter/IDP plans, I've just seen two with exactly the same following language, and I wondered if anyone knows whether this is sample language the IRS released somewhere, or if perhaps one person copied language from another VS provider. Rather than specifying that one plan or the other reduces, it seems to get you to each plan reducing proportionately. (h)(1) DC Plans with same/different Anniversary Dates. If a Participant participates in more than one defined contribution plan maintained by the Employer that have different Anniversary Dates, then the maximum permissible amount under this Plan shall equal the maximum permissible amount for the Limitation Year minus any Annual Additions previously credited to such Participant's Accounts during the Limitation Year. (2) If a Participant participates in both a defined contribution plan subject to Code Section 412 and a defined contribution plan not subject to Code Section 412 maintained by the Employer which have the same Anniversary Date, then Annual Additions will be credited to the Participant's Accounts under the defined contribution plan subject to Code Section 412 prior to crediting Annual Additions to the Participant's Accounts under the defined contribution plan not subject to Code Section 412. (3) If a Participant participates in more than one defined contribution plan not subject to Code Section 412 maintained by the Employer which have the same Anniversary Date, then the maximum permissible amount under this Plan shall equal the product of (A) the maximum permissible amount for the Limitation Year minus any Annual Additions previously credited under subparagraphs (1) or (2) above, multiplied by (B) a fraction (i) the numerator of which is the Annual Additions which would be credited to such Participant's Accounts under this Plan without regard to the limitations of Code Section 415 and (ii) the denominator of which is such Annual Additions for all plans described in this subparagraph.

I've seen documents that provide for such a situation where the majority beneficiary automatically assumes those duties if the plan doesn't have a successor trustee. Can't remember the specific wording, but that was the gist of it. Of course, that person can refuse the appointment if they wish.

Gracias.

I'm not entirely certain exactly where this falls - I couldn't necessarily find where this is specifically addressed. Plan excludes certain compensation in the form of a fringe benefit or two. However, the employer didn't monitor this, and allowed deferrals on this compensation. Clearly this should be correctable under RP 2008-50. However, I'm not certain if it is specifically addressed. 5.01(3)(a)(i) might cover it, but I'm not sure if this counts as a deferral in excess of the "maximum" allowed in the plan. Alternatively, I suppose it could be considered an "excess allocation" under 5.01(3)(b), but that doesn't see to quite "fit." How would you correct this? Let's assume that ADP/ACP testing still passes if these amounts are refunded. Should they just be refunded with interest, or is the a better or more correct method? We are talking about trivial amounts, so I'd certainly think SCP is allowable, rather then using VCP.

Another somewhat related question came up - and I don't work with these plans! Suppose I buy the assets of your corporation, so no CG/ASG. I have a 125 plan, and your corporation whose assets I purchased also has one. I hire all of the former employees of your business as of the date of the sale. A. For purposes of eligibility/nondiscrimination testing in my plan, it would appear that I count your former employees in my plan only from their date that I hire them. Agree/disagree? (As an aside, CAN I credit prior service if I choose, similar to what I can do in a 401(a) plan?) B. Now, if I have immediate eligibility in my plan, and no 410(b)(6)© transition period is available, then I don't know what the heck I'd do. Theoretically, this should have been addressed through due diligence work wen I purchased the assets of your corporation. But if it wasn't, what does one do? C. With regard to your plan, where there are no longer employees other than you as owner - what happens? Is it terminated? Do you get a "pass" on testing for the rest of the year, for example, where there are no current employees - in other words, are former employees excluded from testing? I'm not sure if I'm even asking the right question. As long as you passed up to the time all employees were terminated, is everything ok? Thanks!

Darned if I can remember where I first saw this, but I pass it along with the caveat that I just can't remember the source. The IRS is promising that changes to the Employee Plans Compliance Resolution System program are coming soon, and those changes will provide a way to correct plan document errors. The IRS has also proposed a “remedial amendment period” for 403(b) plans, as part of its proposed 403(b) prototype program, which will allow employers to retroactively correct certain plan errors for employers that adopt a prototype plan in a timely manner. IRS regulations issued in 2007 imposed a written plan document requirement on 403(b) plans, making it for the first a condition of a plan obtaining and maintaining 403(b) status. This rule became effective, with some exceptions, Jan. 1, 2009. However, the 403(b) plan document rule was made effective after the IRS published its latest version of its corrections program, EPCRS. This program provides a systematic way for employers to cost-effectively fix many 401(a) plan document problems that may otherwise cause a plan to become disqualified. But the current version of the EPCRS program does not provide any process to fix 403(b) plan document problems. So there is no systemic way to currently correct 403(b) plan document errors. Monika Templeman, IRS’ director of employee plans examinations, has announced an interim program to address this problem until the EPCRS and prototype programs are in place. Though not provided in formal, published guidance, Templeman has announced that under the interim program, IRS examination staff will approach plan problems in an accommodating manner: 1. If an examining agent has discovered on audit that an employer has not adopted a formal plan document, the employer may (under non-abusive circumstances), enter into a type of closing agreement where the lesser “Voluntary Corrections Program” (VCP) sanctions will apply, rather than the more expensive “Closing Agreement Program” (CAP) sanctions (which will normally apply to errors found during an audit). 2. If a plan has been found to have a plan document error, the employer will be given the option of: (a) amending the plan prospectively while fixing the past error as an operational error (either as a self-correction, where applicable, or under the favorable VCP sanctions); or (b) committing instead to adopting a prototype program (when issued) and following the rules for the remedial amendment period under that program. If the employer chooses the second option, the IRS will put the employer on a “follow-up” list, where the agency will seek to verify that the prototype has been adopted, and the remedial amendment rules changed. P.S. it may have been some web posting from an attorney named Robert Toth - he does a lot of 403(b) stuff. But I honestly can't recall. When I pasted into e-mail, I lost the portion saying who it was from. P.P.S. - found it - here's a link. http://smarthr.blogs.thompson.com/2012/02/...ocument-relief/

Quick question - want to see if I'm off base. Say you have a change to the fee information that can be charged directly to participant - adding or increasing loan fees, distribution fees, etc. So you generally have a minimum 30 day notice period before the change can be implemented. Fine. Question: is the SMM an acceptable method of notification? It seems to me that it is - 2550.404a-5(e)(1) allows incorporation into other documents under ERISA 102. Any other thoughts?

Agreed.

Hey Tom - I'm guessing perhaps you didn't mean to attach a 408(b)(2) disclosure? Does it change your answer any?

Note the "any" - barring further "clarification" from the DOL, I'd say you can't go more than 12 months. (h) Definitions. For purposes of this section, the term— (1) At least annually thereafter means at least once in any 12-month period, without regard to whether the plan operates on a calendar or fiscal year basis. (2) At least quarterly means at least once in any 3-month period, without regard to whether the plan operates on a calendar or fiscal year basis.

Agreed. Just because all of our plans say a Notary OR Plan Representative doesn't mean all plans do.

Do you have a current address? If so, I'd assume the waiver can be signed in front of a Notary rather than a plan representative? Or are they just lost or "unresponsive?" If the latter, sometimes you can have some luck threatening to pay them the annuity if they don't make an election. When you quote an annuity payment of $17.00 per month, rather than the lump sum, sometimes they get off their duffs. To climb back on my soapbox, this is a problem all out of proportion to what it should be. After one certified letter, we should be able to forward the $$$ to the PBGC and be done with it!!! I keep hoping for legislation/regulation that will get us there.

Nope. You are right on. Presumably the plan document will also have language specifying this. I'm assuming that this was a MP plan that merged into a 401(k) plan, rather than terminating with actual rollovers/elective transfers to the 401(k)? Normally a sposue won't refuse to sign a waiver except where a divorce is in progress, or perhaps contemplated...

At least once in any 12 month period. So you can stagger them to smooth out the workflow, as long as you don't go more than 12 months between them. More often is fine!

Mr. Toth makes an interesting argument. The same preamble appears to show both approaches, and I suspect one might perhaps reasonably conclude to use one or the other. Given the confusion on this, and the lack of clarity from the DOL, as usual I lean towards conservatism. Give the #%#*&&@!! disclosure to everyone who is eligible, and don't wait until they elect to defer. I can see a valid argument that the decision on whether or not to defer might be based upon the attributes of the various DIA's available, and waiting until a participant actually elects to defer would seem to defeat some of the purpose of the regulation. Better safe than sorry, IMHO. Austin, did you happen to see Fidelity's statistics on these stupid things? I saw some blurb last week. They geared up for all this by hiring extra call center staff, etc., and got going on this early due to the volume. Since May, they have sent 17 MILLION (yup, million) participant fee disclosures. As of very recently, they had received 1,200 calls - and most of those were not on the disclosure itself, but questions on whether they needed to do anything with it, etc.. As we all knew it would be, mostly just a giant waste of time/effort/money, albeit with mostly good intentions.

I don't know how close this solar farm is to water, but there is a definite odor of fish in the air. I'm not going to say it is impossible. But a very complete analysis of all the details would be required. Hard to imagine that somehow, some way, this is not going to provide a benefit of some sort for him, or family members, or another party in interest/disqualified person. If in fact it passes on all aspects as not being a PT, then you would still have all normal fiduciary issues to consider.

I have so little contact with Governmental Plans that I'm unsure of what I think I know. I have very little information to go on here, other than a brief conversation. The new director of a governmental entity, which has a 457 plan and a 401(a) profit sharing plan, wants to make elective deferrals to the profit sharing plan. He said his prior governmental employer allowed him to do this. That's the sum of the information I have at this point. His prior plan may possibly have been a grandfathered 401(k) plan. Let's assume that the current 401(a) plan is post-TRA 86 and is not a "grandfathered" 401(k) plan. I think the current plan could allow employee voluntary after-tax contributions, and that these would count against the 415 limit. I think the current plan canot allow "deferrals" in the normal sense. I think a governmental plan may provide for mandatory employee contributions, and "pick up" the mandatory contribution under 414(h). Agree/disagree? Is there any basis for allowing "deferrals to a governmental 401(a) plan, including a money purchase plan, other than as I mentioned above? Thanks.

Thanks GMK - yes, that's an option that we've referred to an ERISA attorney. Of course, I don't believe that the "extra" price protection amount would then be an eligible rollover distribution, but that's a separate issue.