Belgarath

No, VCP is not required. But Gary's advice is good!

Thanks Lois.

In the absence of specific language to the contrary, based on the information given, I'd say it should be allowed.

Anyone have a "contact" at the IRS to know, first, IF they are planning to release any additional guidance on this subject, and if so, WHEN might it be expected?

Also kills the automatic top heavy exemption, which is not a big deal for lots of plans, as they either aren't top heavy, or are making other contributions so that the automatic exemption isn't applicable anyway. But sometimes is an issue.

I know this is over 2 years later, but I happened to be looking at the 8950 instructions earlier today, and they have been updated to address these questions for current Anonymous VCP submissions.

Question - asking from sheer ignorance on the details of this issue. If the plan fiduciary allows investment in brokerage accounts/investments where the fiduciary is not allowed access to the information necessary to properly carry out fiduciary responsibilities, might this be considered a breach of fiduciary duty?

You are probably right - I think I botched my initial thoughts. After my last post, I started thinking along these lines myself.

Let's agree to disagree, of course assuming the fees are "reasonable." I would classify this (not the interest itself) under routine administration, rather than a Settlor expense. AO 2001-01A doesn't seem to prohibit this. Perhaps I'm a lone voice crying in the wilderness.

IMHO? Yes - that's a normal plan administration function.

Since most DC plans, at least, these days use pre-approved plans, and most that I've noticed incorporate 401(a)(9) by reference, (although they then add in a lot of specifics) I'd assume that they would follow SECURE and SECURE 2.0 ages UNLESS they chose or instructed otherwise.

Doesn't change - it's a no-no. Take a look at IRS QAB FY-2006-3, and Treasury Regulation 1.410(a)(3)(e).

We just had a very obnoxious lawyer *(and no, I'm not lumping all lawyers together!) insist that the client had to immediately amend the plan for SECURE 2.0 RMD provisions. We politely told him to go pound sand.

Well, again, it depends. As Bri said, can't match on deferrals in excess of 6%, and the maximum discretionary match is 4% of compensation, so unless what they want fits into this, it might not suit what they want. Of course, if you want go beyond this and want to ACP test, then that's perhaps a different story.

Depends upon what they are really trying to do, and how they want to structure it, coupled with how much they want to spend. They could, for example, have an enhanced safe harbor match of, say, 200%, or even more, of the first 6%. Something like that would, to me, seem like a pretty powerful incentive. But it might not suit the employer's needs/budget. A cross tested PS formula, depending upon census, can work wonders, although in this case, a nonelective safe harbor (regular or enhanced) might be a better option, as the safe harbor nonelective can be used toward satisfying Gateway, whereas the SH match cannot.

Thank you both for your thoughts on this subject.

Thanks Paul - yeah, I had read that. My question isn't whether the SH Notice is valid when it refers to the SPD for employer contributions other than safe harbor (it's valid) but I'm questioning whether it could also serve as the annual Unenrolled Participant Notice. I don't think it can.

Seeking opinions on this, and whether the Safe Harbor Notice (depending upon content) suffices. The Notice must be furnished in connection with the annual open election period, or if there is no such special period, within a “reasonable time” before the beginning of each plan year; it notifies the Unenrolled Participant of their eligibility to participate in the plan, and the key benefits and rights under the plan, with a focus on employer contributions and vesting provisions, and provides such information in a prominent manner calculated to be understood by the average participant. So, if your normal Safe Harbor Notice merely directs the employee to the Summary Plan Description for Employer contributions other than the safe harbor contributions, then absent further IRS guidance specifying otherwise, it appears that the safe harbor notice couldn't satisfy the requirement. On the other hand, if the safe harbor notice either includes the employer contribution already, or is modified to do so, then it would seem the safe harbor notice could qualify, perhaps with a few other alterations as well. Any other thoughts/opinions? Are you planning to consolidate these two Notices, or keep them separate? I'm leaning toward separate as ultimately being cleaner and easier in the long run, not to mention that lots of plans aren't safe harbor, so would need a separate Notice anyway...

Possible that Noo Joisy changed between when you first encountered this, and now? Although it does seem odd that they would allow a deduction for S/E deferrals, and yet not allow a deduction for other contributions. But hey, truth is stranger than fiction... Here's a link - can't vouch for its accuracy - showing that whenever this was done, Noo Joisy had state and federal decoupled, so anything possible... https://taxfoundation.org/state-conformity-federal-tax-reform/#4 I remember WAY back in the day when I think Minnesota didn't allow a state deduction for federally deductible IRA contributions. Probably lots of strange examples out there. Good luck figuring it out!

Thanks Paul.

Gosh I'm glad I don't do ESOP's. But we do get some questions now and then from referral sources where we try to provide some general guidance on what a client might want to discuss with their ESOP legal counsel or TPA, etc. Along those lines - now that pre-approved ESOP documents are available, I have a question about the timing of adopting one. An employer has an ESOP, which did receive a determination letter several years ago. The CPA wants to know if a pre-approved ESOP document has an IRS approval date in 2020, is it a "late" adoption if adopted currently? In other words, does the normal 2-year window apply? I'm thinking that as long as timely interim amendments were adopted, they should be ok - relying on the prior determination letter until they adopt the new pre-approved plan at whatever date. Pardon my ignorance on this issue, as I've frankly paid no attention to such ESOP questions - they don't apply to our business except tangentially for questions such as this that sometimes come across my desk. Thanks in advance.

Thanks!

Now that new pre-approved 403(b) documents have been submitted to the IRS for new Cycle (or maybe Sickle?) does anyone have contacts at the IRS as to how the discretionary matches might work? With the Cycle 3 401(k), they allowed the "flexible discretionary match" provision due to the late decision that previously "normal" flexibility shouldn't be allowed, but word on the street was that they would NOT permit this approach on the 403(b) plans. I don't know about the rest of you, but some of our non-profits have some of the most ridiculously complicated flexible match scenarios, which likely won't be allowed. Anyone have IRS contacts/feedback, at this early stage, as to what parameters might be imposed on match formula provisions? Never too early to start preparing them that they might have to think about other possibilities... Thanks.

You don't say if elective deferrals are part of the plan. You can't have 2 year eligibility for the deferral piece.

You might look into this - they do have a document library including checklists, etc. - I don't know how much membership is, but I'll bet it is less than you'd charge for one hour of your time. Might be very worthwhile. https://www.nceo.org/member-resources