Belgarath

Amendment just came in. The adopting resolution language says it was "duly adopted" on August 25th. However, it was SIGNED on August 31. Is it still valid, or do those dates need to match? Does it depend on state law? P.S. I'm talking about the corporate resolution. The amendment itself, while being signed on August 31, isn't effective until November 1, so no worries there.

link to form 4506 that EBE refers to. https://www.irs.gov/pub/irs-pdf/f4506.pdf

FIS has posted a SECURE Act amendment that can be used for tax-exempt 457(b) Plans. I believe it was posted back in May or early June.

So I have a question: what if you have a new plan, effective 1/1/2022? They utilize individual brokerage investment accounts. First annual valuation/reconciliation will not be until the 12/31/2022 valuation, but they are not pooled accounts - they are participant directed. How in the world would you do a lifetime illustration on such a plan, by mid-September?

Thanks Lois! P.S. - for me, at least, the slides link isn't working. Doesn't matter, because I'm sure they will be posting them shortly for anyone who attended the webcast. But the webcast recording itself is working, so when I have time, I'll be able to go back and listen to the part in question. Thanks again.

For anyone who watched it (good webcast if you didn't) - at one point my attention got diverted for a couple of minutes by an e-mail popping up. When I dragged my attention back to the webcast, I THOUGHT I heard them say that for a tax-exempt 457(b), a SECURE amendment was due by 12/31/2022. Did they say that?

I recall seeing some debate on this in the distant past, but I don't recall any consensus. Say an employer does a corporate resolution to make a discretionary match, or PS, then doesn't make it. Are they now legally required to make it? If not, shouldn't be a plan qualification issue, just revising valuation(s). (And let's assume there's no employment contract that dictates an employer contribution.) Many employers never end up doing a resolution. If they never did the resolution, then I presume the "failure" to make the contribution isn't a problem anyway? There may be a potential bankruptcy looming...

It seems to me that it isn't, as the "Retiree" arrangement allows participant voluntary after-tax contributions, whereas the HRA's are, as far as I know, employer-funded only. I don't work with Health Insurance plans at all, and I'm finding the available information pretty fragmented and confusing. Is there a source that anyone knows of that gives a good, solid explanation of what these plans are, and the "rules" in relatively succinct form? Thanks.

Yes, assuming your document permits it, you're fine. (I'm obviously assuming there are no other contributions than deferrals/SH match)

Both spouses (business owners) were taking RMD's. Husband dies. Wife dies 8 days later. No 2022 RMD's taken yet. Both spouses had each other as primary beneficiaries, 2 adult children as 50/50 secondary beneficiaries. These questions are more difficult than pre-SECURE Act, which is why I'm double-checking myself. Since there are multiple "Other Designated Beneficiaries" - the 2022 RMD is calculated as usual - using the deceased participant's age to calculate the 2022 RMD. 1099-R's , since neither spouse is alive to receive the RMD, will go to the beneficiaries (children)? For future years (although I expect children will roll over entire remaining accounts to inherited IRA's) the RMD's would be calculated on the older child's age, unless separate shares, etc. Have I got that right?

Well, you may get different opinions from different folks. I would say you are ok for accepting employee self-certification that the employee lacks other resources to satisfy the need. As to approving the AMOUNT/NATURE of the need, yes, it is possible to accept employee certification, but the procedural requirements are fairly rigid. Many employers/TPA's find it easier and "safer" to continue to request source documents for substantiation of the nature and amount of the hardship need. The IRS audit guidelines give guidelines for acceptable substantiation for either source documents, or a "summary" of information, etc. FWIW, we still have our clients obtain source documents. (bills, eviction/foreclosure notices, etc., etc.)

I believe it depends upon the company. I've seen "packages" where price is locked in for 2 or 3 years, even if bonding amount increases, etc., etc. - but I really don't have any direct contact with actual insurance companies for ERISA bonds - we just tell the employer to get the bond, and to contact their insurance broker. Here's the list of approved vendors: https://www.fiscal.treasury.gov/surety-bonds/list-certified-companies.html

If you are working on the 2021 plan year, then the bond is generally based on the prior year value - while most folks use the prior year 12/31 value, it technically is the highest amount handled during that prior year. If the value increases during 2022, you don't need to increase the bond. Most of them that I see now have an automatic increase rider on the bond as assets increase.

Without any research, I'd say that technically it is not a "valid" contribution to a qualified plan, and all the consequences that flow from that. In practical terms, I haven't ever encountered this, and I don't know if an IRS auditor would necessarily put the hammer down if the plan effective date was 1/1/21.

FWIW, I note that in the Erisa Outline Book, there is a comment that "apparently" - since IRC 414(n) does not cross-reference IRC 409(I), the IRS is apparently of the view that leased employees may not participate in an ESOP maintained by the recipient organization. It then refers to Q&A-26 of the American Bar Association's Q&A session with the IRS on May 7, 2004, which is available at the ABA website. Don't know if this helps at all...

FWIW, I don't read it as allowing the SCP fix for a significant error. If you take it in a vacuum, yes. But given the language/info in earlier sections of the RP, and the chart as you mentioned, it seems like pushing a tenuous position.

Assuming the document is drafted appropriately (and this is in at least some IRS pre-approved documents) you can exclude "part time" or "temporary" or "seasonal" employees, BUT, if any such employee actually completes 1 YOS (1,000 hours) they will no longer be a member of such excluded class.

Hi Bird - it just occurred to me - take a look at Appendix B, .01(2). Do you read that as allowing a SCP fix for the SEP? P.S. - also Appendix A, .01 - similar language.

I think (and I say think, cause I'm not sure - the SECURE Act confused this stuff, and I've been fortunate enough not to have a real case yet) that there is no RMD. Assuming the spouse is the 100% beneficiary, I believe the surviving spouse can roll over the entire amount, and does not have to take RMD's until 12/31 of the year the participant would have attained age 72, even though in this case that means no RMD's until the surviving spouse is about 87. Seems like a crazy result, but that's my "memory" on this. But, as I said, that's based on memory and I haven't specifically researched it. Probably wrong...Good luck!

I assume you mean SCP for significant failure? Yes, you are correct - let me get some bearnaise sauce to improve the taste of the crow I must eat. Odd that a SEP is carved out on SCP for significant failures.

Bird - what's the timeframe on this? A significant operational failure can be corrected by the end of the third plan year following the plan year for which the failure occurred. I agree, I don't see any basis for a correction other than making up the contribution, with earnings, at the same percentage level, although if it does go to VCP, you could try a fix without giving anything to the partner - don't know if that would fly. Any possibility that this wasn't initially a controlled group, but became one, so that transition rules might apply?

Hi Luke - yes, this is LTD.

Got it. Thanks!

We administer a 401(k) where the ESOP is administered elsewhere. Please don't waste any time on this if you don't know off the top of your head. This is an academic question only, as it is the ESOP's problem (if there is any problem) but I'm curious, as I had to look through the ESOP document for some items. I'll spare you the details, (involved and confusing) but for 409(p) testing (this is an S-corp) the ESOP document refers to Code sections that don't exist, etc. so I'm unable to verify this via the Code sections referenced in the document, but here's the gist: The plan document refers to "disqualified persons" as including family members. "Family members" include, for these purposes, "a brother or sister of the individual or the individual's spouse and any lineal descendant of the brother or sister." So, this creates attribution between siblings. Is this correct? Different from "normal" 318 attribution rules.

Thanks.