Belgarath

Nope, non-profits can have them too.

The standard beneficiary instruction form says, "NOTE: if you name a trust as beneficiary, you must also provide additional information to the Administrator. The Administrator will notify you as to what additional information is needed." The standard designation of beneficiary form itself says, "Trust beneficiary. If you name a trust as beneficiary, the trustee must satisfy additional documentation requirements no later than October 31 of the calendar year following the calendar year of your death. The Administrator will provide you or the trustee with the additional forms you must complete." (My emphasis) Now, spousal consent, if applicable, would require an additional form. The Administrator would need a copy of the Trust. What else might be required, other than the Trust and spousal consent mentioned above - and for RMD purposes, you have the requirements that the Trust must be irrevocable, must be valid under state law, beneficiaries must be identifiable under the trust, and Plan Administrator needs either a copy of the trust, or a certified list of beneficiaries under the trust. Do you normally direct all this to the Plan Sponsor's attorney do determine what "additional forms" might be needed, if any? I'm a little foggy here.

That's beautiful!!!

shERPA - the cynic in me says the IRS will say that such publications can't be relied on as official guidance, and they will stick it to you anyway!

Thanks Cuse. FYI, the valuation is EOY, so the EOY 2020 valuation was done based on calendar year 2019 census data. Clearly an operational violation of the terms of the document. But as I said, less concerned with that for the moment than trying to get things clean going forward...

Looking at a takeover plan here, and something seems so strange that I'm questioning if there really is a problem, or if I'm cracked for thinking there is! Plan document specifies plan year is calendar year. Fiscal year is 4/1 - 3/31. Compensation period selected in the document is plan year (calendar). Prior TPA (and probably in conjunction with CPA, I don't know) has been doing things as follows - we'll use the 2020 plan year valuation to illustrate, and same procedure was followed for prior years as well. 2020 valuation was based on PLAN year (calendar) compensation and hours for 2019. The 2020 valuation was run in December of 2020, (based on 2019 calendar year compensation/census) so client could deduct 2020 plan year valuation on their 3/31/2020 fiscal year tax return. Ignoring for the moment correcting the past operational violations, what might you think is the best way forward? The plan year could be amended to coincide with the fiscal year - run a short plan year for 1/1/2022 - 3/31/2022, then full year thereafter. It seems to me that this is the cleanest way forward, although they could also, for example, amend the plan to use the fiscal year ending in the plan year as the compensation period. Am I nuts?

Great, thanks.

If A & B are the Trustees of a plan, and the plan is restated naming C & D as Trustees, does that have the legal effect of removing A & B as Trustees? Or is a separate formal removal required? I don't see that the document directly addresses this issue.

Depends upon your document. Most of them that I see now allow the match for Highly Compensated Employees to be discretionary. If so, no worries.

I agree with ESOP. The plan must permit it. That was my assumption on the initial response, but that assumption may have been incorrect.

They need to give employees the Notice of the SIMPLE termination no later than November 2. So you are already are technically too late to terminate it for 2022.

Trying to fight through Monday morning brain fog - must... get... coffee!...but my recollection is that the restriction applies to employer contributions, so I'd say no.

Also, for example, are all or most of the LLC employees union employees covered by a good faith collective bargaining agreement? Are you using 1 year eligibility (or potentially 2 years if not a 401(k)) where none of the LLC employees will ever meet eligibility? Etc... Granted it is dubious that things will work out so that you can exclude everyone in the LLC's, it isn't automatically (by statute or regulation) impossible as everyone has pointed out.

Luke's position seems reasonable to me. The participant voluntarily took the distribution, and then invested it in highly speculative stocks. If they hit a home run and the stocks quadruple in value, they get to keep the gain. If they lose, why should the Plan Fiduciary be liable? (This is my general thought, NOT a valid legal argument - I leave that to the attorneys!)

To be more precise, correct on the withholding. Since the RMD amount is not an eligible rollover distribution, no 20% withholding, but 10% withholding applies unless participant elects out of it. For the "overage" it is an eligible rollover distribution, and mandatory 20% withholding applies. Generally all this is on one form, but recordkeeper could certainly require separate forms.

Take a look at Rev. Proc. 2021-30, Section 6(.06)(4).

Many documents restrict the deferral amount to 92% of pay for just this reason. But my answer is that you can't defer money that you can't receive, and since the SS is mandatory, there's no option to receive $5,000, hence you can't defer it. For me, what passes as common sense. Doesn't mean I'm right...

Hey MoJo - we had a client that was "audited" by the DOL, yet the DOL "investigator" was actually rather huffy when we committed what was evidently an unpardonable sin, and referred to it as an audit. We were told in no uncertain terms that it was an investigation. Probably someone new with a chip on their shoulder...

I know this has been discussed in the past, but I'd like to see what, if any, experience you've had. And if so, has it been different for 401(k) and 403(b). We just had a 403(b) client receive a letter from the DOL, inviting them to use the VFC program. First one we've seen. This was generated from the 2019 5500 form, which showed late deposit of deferrals. Total interest correction was something like 30 dollars, it was corrected promptly, and excise tax was paid. The DOL calculator was used to determine the lost interest, but VFC program was NOT utilized. I know that the Philadelphia region was saying that the DOL could consider it not "fully corrected" if the DOL calculator was used but not VFC filing was done. This letter was out of the Boston region, not Philadelphia. So, first, is everyone getting these letters, and in other regions? Or maybe this was just random. Second, has anyone yet contacted the DOL person listed on the letter in such a situation with extremely minor amounts involved, and if so, with what result? Third, has anyone heard of/experienced an audit that was initiated because, after receiving this letter, they did not utilize the VFC program? It just goes against the grain to have to do a whole VFC filing on some of these plans where the lost interest is $1.18. But if an audit is triggered absent a VFC filing... Thank you for any thoughts or actual experience on this.

Thanks - I don't suppose there's any dispensation if it is a multiemployer money purchase plan where the formula is dictated by the collective bargaining agreement, and the collective bargaining agreement is modified as of July 1? I don't see that it helps any...

Brain cramp! Assume calendar year MP plan. Client wants to convert to a PS plan mid-year. Let's say July 1. 204(h) notice is done timely. Mus the AMENDMENT be signed by July 1, or can it be signed by December 31, as long as the 204(h) notice was provided timely?

I assume your plan document is an IRS pre-approved document? If so, it should already have this language. Admittedly, sometimes rather convoluted to wade through it....

Thanks all.

FWIW, we did informally run this by an ERISA attorney, who agreed.

Just want to see if you agree with my interpretation. Plan with many operational violations. The plan does NOT provide for the 20 hour exclusion, but they have been operating as if it did. Now, since employees were incorrectly excluded form deferring, there will have to be make-up contributions, etc. My question is this - under 1.403(b)-5(b)(4)(i), if any employee in the "less than 20 hour" exclusion category is permitted to participate, then no one in that category may be excluded. So, in this case, since some of the "under 20 hour" folks are going to have to participate since they weren't previously excluded, then this precludes amending the document for future years to institute this exclusion? Or have I got that wrong?