Belgarath

What he said! Agree completely.

I'm struggling a bit with the proper use of the VCP submission forms. The 14568-B doesn't seem to quite "fit" a 403(b) plan that had a written plan document, yet failed to restate by the extended deadline this summer. https://www.irs.gov/pub/irs-pdf/f14568b.pdf Has anyone else submitted one of these yet, and if so, with any results? It appears to me that you'd have to check Section I(A) last option (other). "B" does not appear to apply, and Section II(B) doesn't appear to apply either. Looks like you'd check the Section 1(A), describe them as a nonamender, and include signed updated docs and any Amendments. Am I missing something obvious here? Thanks.

Also, be careful if you are using pre-approved plan. You may or may not be able to reconcile this language with the allowable options in the document.

Thanks to you both for the input. Very helpful. As I said, I have typically used payroll date (which I know is technically incorrect) because when the interest difference is literally a few cents to a few dollars, it hardly seems worth taking the time to have to look at the calendar to determine (x) business days by looking at weekends and holidays and subtracting those days for a bunch of deposits. Seems to me everyone is better served if the participants get a cumulative deposit of some amount, rather than paying us a few extra bucks to have to take the time to count weekend days and holidays and apply it to each late deposit.

I understand your point, although I think a pretty reasonable argument can be made that the 7th day should still be acceptable as a "loss date." I'll be interested to see how other folks handle these situations, as I'm not sure it is necessarily crystal clear. I do think that using an earlier "loss date" than the 7th day cannot be faulted in the event of a DOL audit, so your method seems essentially unassailable in terms of satisfying compliance requirements.

Austin - as far as I know, a for-profit and a tax exempt entity CAN be a CG. Or I guess it is "Common Control" but has the same effect. See, for example, 1.414(c)-5. But assuming they are not, I'm not aware of any reason they couldn't be a participating employer as a MEP, if your document allows it. This is just off the cuff, from memory, so caveat emptor. I'd definitely have to spend some time doing some research before I'd venture a solid opinion on this.

Thank you. Now another question re technical perfection and administrative convenience. When you have a bunch of entries, and piddling little amounts where the total interest correction for late deposits adds up to about 11 dollars. Do you, for each entry, actually get out the calendar and count 7 business days (taking into account weekends and holidays) and use that 7th day for your loss date, or do you just use the payroll date, and the employer pays an extra 17 cents in interest? I can't judge anyone on this, because I frankly have done the latter, but I'm wondering if I'm the only one...

Anyone have a pipeline to the DOL? The calculator is great, but it would be GREAT if they could allow you to input the final payment date just once. Frequently there are a gazillion entries that have the same final payment date, and having to enter it each time is a PIA. Or is there some way to do it already that I don't know about? If so, I'd greatly appreciate someone instructing me in the error of my ways!

Here's the thread. https://benefitslink.com/boards/index.php?/topic/66365-owner-comp-mid-year-plan-termination/

Got it. Thank you for the input.

Can you clarify what you mean by an "open enrollment date" - I'm not certain what you mean? Thanks.

Thanks Lou. They do NOT currently use elapsed time, so service spanning rules don't apply at this point.

Interesting question - suppose a plan has an eligibility requirement of (x) hours in the first 6 months of employment, and if not met in the first 6 months, the employee becomes subject to the 1 Year of Service requirement. Now assume the employee works 5 months, then due to Covid economic issues, the employer furloughs this employee (and others) for a period of time - let's say 3 months. What's your opinion on an employer granting eligibility service while furloughed due to Covid, operationally, and allowing them to enter as soon as reemployed? P.S. - my point in all this is to see if there is a way around amending plan to use elapsed time. I don't see that the pre-approved document language is flexible enough to handle an amendment to credit hours of service service while furloughed, other than sideways through elapsed time if they aren't furloughed too long. And FWIW, just doing it operationally without appropriate document language, while "nice" of the employer, doesn't seem like an acceptable option. I suppose it could be submitted under a 5307, and I'd be surprised if the IRS would reject it, but it's a pain, costs more money, and hard to know how long it would take.

Purely playing Devil's Advocate for the sheer heck of it, I could also have PLANNED to offer a lower price, but upon discovering that my competitor charges substantially more, I could raise my price accordingly...

So, is it a 501(c)(3) organization, or some governmental entity, or something else? I'm guessing it is a 501(c)(3), but obviously I don't know. If so, they should be able to establish a 401(k) plan. But your first step is to confirm the entity type. Your plan options will flow from that.

Starting restatements almost immediately. There exists an option to to do a "minor modification" and submit to the IRS on a from 5307, if necessary. Question for any of you who might have a contact at the IRS - is this form and/or instructions going to be revised any time soon? Current version is, I believe, 2014. If no revision contemplated, then I guess we use the current one! (Not that I'm planning to anyway, if it can be avoided...) https://www.irs.gov/forms-pubs/about-form-5307

We are not supposed to discuss our fees on these boards, just fyi.

We'll agree to disagree. I think the IRS has, over the years, made its position very clear - unofficially. Like Bird, I've been conditioned over the years from IRS comments, etc. - yes, I absolutely concede not official guidance - that once you have earned the right to an allocation under the current formula, that's it. Not saying it can't be challenged - just saying I wouldn't do it, and wouldn't recommend that a client do it, unless so advised by their legal counsel.

A lot of good points!

Infinite are the arguments of the mages... From my perspective, one thing seems very clear. The IRS believes you can't do it. Now, if they challenged it and you went to court, would you win? I leave that the the legal eagles. But who wants to fight the IRS on this? Unless it is a large plan with a great deal of money at stake, the court costs alone will outweigh the potential benefit to the owners, and they could lose anyway. I just couldn't, in good conscience, advise a client to pursue this approach. If their lawyer advises them it is ok, then great - go for it!

Hi Peter - maybe someone else could see the benefit in that, but off the top of my head, I can't see how having two plans is better than one in this situation. Maybe it is better and I'm just having a brain cramp...

I think you will really have to go Hmmm... The changes are to the Code. As far as I know, the SECURE Act didn't make any changes/exceptions to the ERISA reporting rules, etc., purely with regard to employees covered by the 'Long-term part time" rules. So not only would you have some "Solo" plans that fall out of solo status, but you might end up with more plans requiring an audit. Of course, if the DOL ever gets it together and changes the participant counting rules on 401k plans to not count as a participant someone who is merely eligible but doesn't defer or receive contributions, this might more than offset the participant count increase for the LTPT employees. Must....grind....out...few...more....years...before....retirement!!!

Thanks Peter! I'll order it.

Has anyone seen a good source or webcast that addresses specifically what changes from Bipartisan Budget Act, SECURE, and CARES apply to 457(b) plans, and what amendments are required, and when? For both Governmental and tax-exempt plans?

In addition to Bird's comment, (with which I agree, without doing any additional research) I can only offer the language under 1.401(a)(31)-1, Q&A-6. This allows the Plan Administrator to adopt "reasonable" procedures. If you read it, unless you determine A-6(b) to override A-6(a), I think you can make a case for this being reasonable, but not required. If the Plan Administrator determines that it is "reasonable" then you don't really have a leg to stand on, short of having the participant go through a formal complaint process/lawsuit/etc. - and good luck with all that! P.S,. - I was assuming that these payments were coming out of a qualified plan and going to an IRA, but as I look at the specific forum title (which I didn't previously) , perhaps that isn't the case. In which case, I don't really work with IRA's and haven't done any research on your question re IRA to IRA transfer, so you'll likely want to ignore my comments!