Belgarath

Deleted.

I once heard, a long time ago, that there was such a thing. I only see it now with expletives.

Fascinating!

Thank you for the information!!

Thanks Peter. Assume this was a mistake by the employer/Plan Administrator. Aside from correcting, is this a Prohibited Transaction for a fiduciary breach, and the appropriate penalty tax should then be paid?

A somewhat simplistic example - Plan has a default investment - investment (A). Participant chooses to invest funds in (B) and (C). There is a failure on the part of the Employer/Plan Administrator to implement these investment choices, so for some period of time, Employer continues to deposit the Participant's funds into (A). What is the proper remedy here, IF the default investment underperforms the investment returns under (B) and (C)? I can't find that this falls under one of the fiduciary breach correction options under VFC. It does appear that the Participant can perhaps seek relief under IRC 502, as per the LaRue case, but I'm no lawyer, and the implications of various court cases can best be interpreted by those who are! Can the fiduciary simply compare the returns, and if the Participant "lost" higher investment returns, just deposit the lost gain? If they don't, then does the Participant then have to go through the steps for an ERISA claim and first exhaust the administrative remedies available, then bring suit? (And an ERISA suit for very small returns would cost far more than the potential gain...) I'm sure this can't be all that uncommon, yet I find very little discussion of specific remedies or options. Maybe just a "regular" PT - correct and pay the penalty? Thanks for any thoughts.

😁 Yes, it is a constant mystery to me why some clients PAY us (not nearly enough, of course) to do admin, then refuse to do what we tell them to do!

Thanks Paul. Yeah, we'd love it if the spinoff plan was to be maintained going forward, (we suggested that) but the withdrawing employer doesn't want a plan at all. So the spinoff plan will be established and immediately terminated. A Royal PIA, which is why I was hoping there was something easier. Ah well...

Maybe I'm just being stupid here - seems like an excessive amount of silly work when there's maybe a sensible workaround. Real situation, but first time I've encountered this particular situation. A MEP. Big "lead employer" (A) and a 3-person (no HCE's) participating employer (B) as a MEP. Participating employer (B) withdrawing, so will no longer be a MEP. Participating employer (B) does not want to maintain the plan, but the employees of (B) are not terminating employment with (B). As I understand it, there needs to be a spinoff plan with (B) as the sponsor. It is (B's) intention to have the assets transferred to the new spinoff plan, and immediately terminate. (B) does not want to allow any deferrals or contributions to the spinoff plan. Since the existing plan permits Roth deferrals, one of the participants has Roth deferral account. Trying to figure out if the new plan can accept this Roth deferral account if the spinoff plan doesn't allow deferrals at all, so that there is technically no "designated Roth account" - and/or is there another way around this that isn't penetrating my skull? Am I worrying about nothing?

Thanks. In this case, modesty is inappropriate, so a FULL fee would seem indicated!

Getting pushback from an advisor (CPA) on this, and while I'm always ready to consider that I'm wrong, I don't THINK I am on this. For a 1-person plan (sole prop, corp, whatever) the CPA is saying the lifetime income illustration is required. I say otherwise. SECURE amended ERISA 105(a) to add this requirement. ERISA 105(a)(1)(A) exempts the pension benefit statement requirement for one participant plans described in ERISA 101(i)(8)(B). The lifetime income disclosure under 105(a)(2)(B)(III)(iii) falls under 105(a)(2)(B) in general, which refers to statements required under clause (i) or (ii) of paragraph (1)(A) which as stated above, exempts the one-participant plans. Am, I missing anything?

Yes! Monday morning brain cramp - wasn't thinking clearly...the 401(k) feature isn't effective until the plan year beginning 11/1/2023 anyway. Duh. Sometimes I scare myself.

I've seen no formal guidance on this question. Grandfathering for the SECURE 2.0 auto-enrollment for plans established prior to 12/29/2022. If a plan with a plan year of 11/1/2022 to 10/31/2023 is signed prior to the end of the plan year, (i.e. prior 10 10/31/2023) is it considered "established" for purposes of the grandfathering, or must the document have been SIGNED prior to 12/29/2022? Any formal guidance that I've missed? Otherwise, I've seen differing opinions...

Well, perhaps consider the following scenario. (Excerpt from OP below.) Let's assume, just for the heck of it, an April 15, 2013 DOH. First eligibility computation period is 4/15/2013 to 4/14/14. Less than 1,000 hours in that period. Second eligibility computation period is calendar year 2014, with 1,000+ hours. So entry date is 1/1/2015. Furthermore, if 1,000 hours in 2015, would have 2 years of vesting service, so under a 6-year graded, would be 20% vested. Seems possible, although not necessarily likely. Not enough information yet to tell. "A former employee who worked from April 2013 through October 2015 was rehired in 2021. We are currently trying to find out from the employer whether this participant - although they were eligible for the plan on January 1, 2015 - received an allocation for 2015"

FWIW - it seems like this is the operative phrase. So I agree, for your first example, the credit should apply. When you get into the weeds where some employees were covered and some weren't, then to my way of thinking, since this is a tax credit situation, it is the CPA's call - some of them are aggressive, some conservative - so who knows. I'm not aware of any firm guidance on this question.

That's a tough one. You pays your money and you takes your chances. The statutory language in IRC 410(a)(5)(D)(iii) defines a nonvested participant as one who does not have any nonforfeitable right to an "accrued benefit derived from employer contributions." 1.411(a)-7(2) defines an accrued benefit as "the balance of the employee's account held under the plan." It would seem pretty reasonable to argue that you could use the rule of parity here, even if "vested" assuming there is no account balance. I'm not sure there is any guidance directly on point for this question - and of course, document provisions rule...

So, aside from the fact that IRS guidance is badly needed (anyone heard any rumors of app. date?) I have the following item for general thoughts... If your employers are like many of ours, it is an absolute given that many will screw this up (no matter how much we try to tell them) and will NOT immediately allow deferral opportunities to some people who qualify under the LTPT rules. So, has anyone heard rumors of any special correction for some of these situations, or will it simply fall under the "normal" EPCRS correction procedures? We're not looking forward to the potential corrections for missed deferrals, some (many?) of which we won't find out about until sometime in 2025... I'm always more pessimistic on Mondays.

I've never seen it in a pooled DC plan. As Bird says, "back in the day" I did see it used occasionally in a DB plan, the theory being that it would provide plan assets in the event of a key person death, ensuring that the plan had sufficient funds to pay promised benefits if the business suffered losses due to the death of the key person. That was so long ago that I don't believe the lever or the inclined plane had been developed...

Thanks all.

So, suppose you have a safe harbor (match) plan where some newly eligible (eligible 9/1/2022) participants were inadvertently excluded for the last 3 months of 2022, but were then properly allowed to defer beginning 1/1/2023. Under 2021-30, Appendix B, .05(9), you have the reduced QNEC requirement if you satisfy certain conditions. One of those, in .05(9)(b)(ii) is that the Notice be given "not later than 45 days after the date on which correct deferrals begin" ... Well, we're past that date - they started deferring 1/1/2023. But it doesn't seem reasonable that you would be precluded from using the lower QNEC, particularly since the Safe Harbor correction method is otherwise allowed until the end of the SCP correction period. Now that SECURE has potentially loosened the EPCRS, it seems reasonable to use the reduced QNEC in this situation, other than for terminated participants (and even that piece is debatable, but I'd play it safe). Any thoughts?

Thanks Cuse.

See particularly (c)(iii) of the link. This is idle curiosity only. Does the extension to deposit retirement plan contributions extend to minimum funding deadlines for a DB or MP plan? Please don't spend any time on this on my account, as there's no live case situation. https://www.law.cornell.edu/cfr/text/26/301.7508A-1

Assuming it is not a 403(b) - the OP specified HR-10 prototype. But a good point to remember if a similar question comes up on a 403(b) plan.

If this is the case, then Equitable should be able to provide all (blank) documents and interim amendments since the original document that was adopted. Might be fees involved, but that's the least of the problems. The IRS is usually pretty reasonable on these one-person plans, (I once had an IRS auditor in one of these situations just make the client adopt a current document, and closed the audit!) but I'd also be prepared to prove compliance with incidental limits, etc. You could also try the pre-submission conference - see Section 10 in RP 2021-30. Might end up saving you and your client time and money. Good luck! "You never know where the wheel may go..."

The DB experts here will give you much better advice, but I'll toss in a thought, going from memory WAAAY back. I do seem to recall that it was possible to have a NRA earlier than age 62. I believe a determination letter is required for this, and there would obviously need to be pretty solid evidence that the age chosen was representative of the industry. Just for example, I think it is likely that the IRS would approve such an age if the plan was sponsored by a professional sports team. Probably a stupid example, but you get the idea. Likely this is not the case in your situation, but I think it is at least possible.