Belgarath

The interpretation (a) that you are a platform recordkeeper with regard to the disclosure requirements, or (b) that you are not a platform recordkeeper. Not everyone agrees on this. Changing the subject a bit, has there been anything definitive from the IRS about the actual penalty under 4975 if a 408(b) disclosure is late? Say your fees are $2,000, and you don't send the disclosure until July 2. Is the "amount involved" the full $2,000, hence an excise tax of $300? That seems the most likely interpretation to me, and the one that I'd take in the absence of something concrete to the contrary.

Well, as a TPA, you work with whatever investment platform the client wants, or maybe more accurately, whatever platform the broker works with, right? So some clients choose Hancock, some TD Ameritrade, some Transamerica, some Hartford, whatever...but it isn't "your" platform on your website - it isn't offered "in connection with" your contract or arrangement. Depending upon what interpretation you prefer.

Austin - as an example, let's say the investments are on a Hancock platform, but you do normal third-party TPA work with quarterly valuations, etc. There are varying interpretations out there. One is that under the regulations you are a platform recordkeeper. Another is that you aren't. These types of questions, while very clear-cut to some people, are not so clear-cut to others. What I'm going to find particulalrly annoying is when, if my expectations are correct, the DOL decides that the disclosures themselves aren't enough, but that a "roadmap" has to be included. I wish some of these nitwits had to come do our job for a while...but I need to avoid getting into my ranting mode, or I'll be bummed out for the rest of the day. I wonder if the DOL would be less demanding if we told them they are "harshing our mellow?"

We decided to disclose on all plans. In the long run, safer and, arguably, easier than explaining to clients why you DON'T have to disclose. The issue of whether a TPA falls under the category 2 "platform recordkeeper" for example, can sometimes be murky at best. And I wouldn't count on the DOL giving the benefit of the doubt. Additionally, I think it could be a competitive issue. If you aren't doing the disclosure, even if it is not required, for an ERISA plan potentially subject to disclosure, then you open the door for someone to go in and scare your client, "Your current TPA isn't disclosing? That's terrible. You should move your administration to us - look at the package we prepare. We believe in full disclosure and not hiding anything." etc., etc... However, believe me, I'm not faulting anyone who doesn't do a disclosure if they are not required to!

I think they had one prior to PPA, which doesn't help much. I haven't seen a new one, although I haven't looked. The following is from an IRS presentation 2/17/10, may have been Marty Pippins, but I never saw that it happened. Maybe someone else knows of where it may be found, if they ever actually produced one. "Last thing I want to mention on this 402(f) Notice, generally, is that we do intend to have a Spanish translation available at some point. The reason we didn’t do a Spanish translation of this 402(f) Notice at the same time that we issued the guidance is that we were working on the guidance language up until the last point. So we’re not really locked down on the language in the notices until it’s actually published. Now that’s it’s published it has been turned over to another office in the IRS that does Spanish translations."

Why wouldn't Q&A-13 apply to your situation, rather than Q&A-30? So althought there is disclosure, there's no "comparative chart" requirement. I think even the DOL recognizes that no comparative chart is possible in these situations.

Bird stated it perfectly. Re your examples - Participant A - no, there isn't a deemed distribution. Participant B, yes, there is a deemed distribution. If I understand your Participant C scenario correctly, then you would have a deemed distribution on October 1. At that point, there should have been a minimum of 6 payments by September 31 (January through June payments, with the maximum cure period extending to the end of the calendar quarter following the calendar quarter of the late payments) but instead only 4 were made by September 31. So the February, April, and June payments can be counted for the 3 first quarter payments that should have been made - no deemed distribution on any of the first quarter payments. In the second quarter, however, only the August payment can be counted toward the April-June payments, so you are two short, and these weren't made up my any other payments by the end of the third quarter.

Thanks!

This is from another person in my office. Anyone know the answer? Has anyone heard that ERPA’s with SSN ending in 7,8,or 9 have to renew by June 30, 2012? I haven’t gotten anything official from the IRS but I’ve seen comments posted on online groups I belong to. My ERPA card says it expires 9/30/2012 but I think that may be wrong.

A great joke! But in real life, any man who has been married for 30 years would NEVER be so stupid as to try that one...

Gracias. That's what I gave for an answer, but then I thought it might be prudent to see if I'm the only person on the plant who takes that interpretation!

So, employees who have otherwise satisfied eligibility requirements of 1 year/1,000 hours are in an excluded class. While they must be included for coverage testing, must you include them for ADP testing? 1.401(k)-6 isn't specific on this issue. I can see arguments for either side.

"Also, the $1,000 limit is total fees for the life of the plan, not annually." I might not necessarily agree with this across the board. If your contract is for one year only, and then must be extended or renewed, then I think you can base it on the one year contract period. Personally, I think it is wise to disclose whether required or not.

Yes, the IRA is subject to the RMD requirements. Refer the CPA and Borker to 1.408-8, Q&A-4. whether they actually took an RMD prior to the rollover is something they will need to confirm. This amount wasn't an "eligible rollover distribution."

This one is a 403(b), for which no prototypes are available! And it specifies no gateway whatsoever - just says, in essence, that you can use any method of testing which is permissible under "Applicable Law." Just to make it more interesting...

Yes, agree on the gateway, but I didn't see anything special on the broadly available. I've never actually seen a plan use the broadly available test, but the plan in question apparently will not pass gateway, hence the looking at possible alternatives.

Thanks Tom. Yes, the document allows discretion. So, for example, assuming that each definition of comp satisfies 414(s), you could test for broadly available allocations or ACP or whatever based upon a different definition of comp than what was actually used for plan allocation purposes. I'm not sure why this struck me as odd, but it just did. Maybe just Monday morning blues... As I said, this is all theoretical at this point, so I have no idea if such testing would even be beneficial. But it is good to know that we can do it, if it helps pass something that would otherwise fail.

This is actually, at this point, a theoretical question, that might become real depending upon what data we receive. Suppose a plan, for allocation purposes, excludes overtime and bonuses or whatever, and the plan is general tested. Further suppose that for the year in question, the compensation for allocation purposes passes the nondiscriminatory testing percentages. Now they decide what percentages to allocate to each group. And based upon those allocation percentages, they fail when testing based upon allocation compensation definition, but they would pass if using total compensation. Are they allowed to elect to use total compensation for the testing purposes only, even though their allocation is based upon a different defintion?

Well, it was a quick visit to your home planet, and I'm glad I'm quickly back here on Earth. And I hope to stay here. Thanks again!

So, just for my own edification, what the heck then happens? Plans are possibly out of compliance on the day the businesses become a controlled group? Does the IRS look the other way on this if they amend the plans to cover everyone under the same rules by, say, the next plan year, or is this just not an item currently on the radar,etc? Seems like it would be reasonable to extend this treatment to cafeteria plans, but since I don't work with them, maybe I'm all wet and it shouldn't apply for good reasons... Anyway, thanks for the response.

don't work with these, but the question came up - at a quick look through 125 and the regs/proposed regs, it wasn't apparent to me that this transition period would apply? Anyone know if it does or doesn't?

Hi Andy - no tug of war here - I often forget there are people out there who perform services other than as a DC recordkeeping TPA - which was what I was thinking about yesterday. I agree with you.

I think they are exempt under DOL reg. 2520.104-23 as a "top hat" plan if you you are talking about a tax-exempt entity.

Don't agree, or at least don't automatically agree. The disclosures apply if you "reasonably" expect to receive at least $1,000 of either "direct" compensation (compensation directly from the PLAN) or "indirect" compensation (for example, revenue sharing.) Sounds like you receive no indirect compensation, so the question is, do you reasonably expect to receive at least $1,000 in direct compensation? If so, then the disclosure rules apply (absent another exception, such as it being a one-person plan, for example.) Take a look at 2550.408b-2©(1)(iii) for a definition of a Covered Service Provider.

Thanks Sieve. I think your position is eminently intelligent and reasonable - but I'm less sure of IRS auditors. I've had a few conversations with folks with "contacts" at the IRS over the years, who indicated that unofficially, the IRS takes a pretty hard line on this. So just depositing based upon anticipated compensation in a DC plan, for example, might be pushing it.