Belgarath

There isn't necessarily any "problem" - this used to be quite common in the "old days" but not so much any longer. Is the DC plan self-directed or trustee directed? One big issue is fiduciary prudence, and whether the life insurance is a "good" or "prudent" investment, particularly in a DC plan. You are likely to find some strong opinions on this subject on these boards. Personally, I'm not a fan of insurance in DC plans, and that's putting it mildly. In a DB plan that doesn't require employee contributions, where the employer has to fund the full plan benefit, then to me it is less of an issue, although in a 412(e)(3) plan, a participant's benefit is usually lower at all ages until NRD if life insurance is used, rather than all annuity. The other problem is the taxable term cost, which is currently payable by the participants. Particularly as they get older, they may not enjoy getting currently taxed on life insurance that they might not want or need. Other folks may have other opinions.

Agree with the Cat. I didn't actually read the original post (careless of me) so didn't realize deferrals were to two different plans.

Can be corrected (including self correction) under EPCRS. See Appendix A, .04 of RP 2019-19.

There's no "indication" - you just apply. This should get you started. https://www.dol.gov/agencies/ebsa/employers-and-advisers/plan-administration-and-compliance/correction-programs/vfcp/model-application-form This link gets you to more of the nuts and bolts. https://www.dol.gov/agencies/ebsa/employers-and-advisers/plan-administration-and-compliance/correction-programs

https://www.pbgc.gov/prac/missing-p-defined-contribution P.S. - this is only for terminated plans at this time. But there are things in the works to extend this to active plans, I recall seeing something on it, but didn't investigate further yet... P.S. - here's what I was remembering...https://www.asppa.org/news/browse-topics/what’s-plan-sponsor-do-about-missing-participants

Seems like I recall that in the distant past, that some prototype documents automatically included any member of a controlled group/ASG? Is this still a possibility, and if so, does this document have any such provisions? I may be misremembering this - haven't used a standardized prototype for at least 15 years, I think...

https://benefitslink.com/boards/index.php?/topic/64080-vcp-processing-grinding-to-a-halt/&tab=comments#comment-292040

These audits are ridiculous. After the initial document/information request, the answers to which were properly and timely submitted to the DOL, they then came back some months later with a list of over 70 different requests - and any many of those questions have several sub-parts. All this for a nice, clean little non-audited 401(k) plan. Our tax dollars at work... Edited for typo.

Thanks for the discussion. We already referred them to ERISA counsel, so we'll see where it goes. Probably nowhere...

This area is constantly evolving (for us, anyway) largely due to fraud/privacy concerns. We used to have more direct dealings with the participants, but in many situations we now won't talk to the participants without first checking with the client. In a couple of these situations recently, the "participant" turned out NOT to be the participant, even though they somehow had all the right information/identifiers at their fingertips. This added caution is particularly true when we are talking about account balances/distributions. As I said, this is evolving, and we are sometimes forced to provide service that is less immediately prompt and helpful to a legitimate participant. This is difficult, as with a lifetime of providing fast and helpful answers, it goes against our conditioning to not provide an answer immediately - but that's the world we live in. The crooks are always getting more sophisticated, and we have to protect our clients, even when it means the speed of the service sometimes suffers.

First time I've run into this. At first glance, it appears to be a form of business structure that allows "sub-LLC's" underneath the overall umbrella of the registered LLC. Specific legal requirements, only in certain states, apparently many unresolved or untested tax/administrative issues, blah, blah, blah. Wondered if anyone had encountered this in the retirement plan arena? Seems like it would be handled rather like a controlled group - that is, everyone in the multiple "sub" LLC's included for coverage/testing, and one or more groups could be excluded assuming you pass. We would, of course, have them discuss with tax/legal counsel before setting up any type of plan... Anyone had any dealings with a "Series LLC" in the retirement plan world?

No - a non-profit organization isn't limited by 404, which deals with deductions. Since the non-profit doesn't have deductions, they aren't limited to the 25% of payroll - they are just limited by 415 limits. So, theoretically, if everyone gets paid less than 56,000, the employer could contribute 100%. (Not saying I've ever seen this)!!! But I have seen a contribution in excess of 25% in one plan.

There are other folks on these boards who are ESOP experts - I am not one of them! However, perhaps(???) one of the following methods might be a possibility? Ask the experts!　 Use excess company funds to repurchase shares; sell newly issued shares of company stock to meet an ESOP repurchase obligation; or leverage or re-leverage the ESOP by borrowing money to fund the obligation.

Really splitting hairs here, but... When looking at Appendix A, .05(9) and (10), let's suppose that everyone has been having deferrals withheld correctly, and all of a sudden, for ONE payroll, everyone who is deferring doesn't have anything withheld on a small piece of irregular (but not excluded) compensation. If corrected immediately, does this qualify for the "no QNEC" correction? (Assume no match anyway) While it seems reasonable, I suppose one could interpret the language in (10) that this isn't a "failure to implement" - in other words, it seems like that might be designed more for an INITIAL "failure to implement." Has anyone seen/heard of the IRS addressing this issue?

Thanks Kevin - we actually had one large plan that uses this exclusion get audited by the IRS. However, this one did it right in that they NEVER had a "less than 20 hour" person work over 1,000 hours. Can't count on that...

You've convinced me.

That's fascinating. So if I'm a bank, and I lend you 200,000 to buy a house, and you don't pay the HOA fees, the HOA can foreclose and my lien is subordinate to theirs? (I realize this is a non-qualified plan question - I just happen to live in a state where a very small percentage of the housing is in any sort of HOA, so this concept is alien to me).

Me too, but I'd allow it if they state that eviction WILL occur. If it is just saying "one of the remedies we could pursue is eviction" then I don't think it rises to the required level. As an aside, I assume foreclosure isn't necessarily an option, as most likely the condo association isn't the lender?

Seems like using the <20 hour exclusion would therefore realistically require using 12 month periods based on date of hire - otherwise you end up with most employers not properly tracking the hours to make an accurate and TIMELY determination for a 1/1 entry date, and now you have missed deferral opportunity corrections, etc., etc. - yuck. Theoretically reverting to plan year is fine, but in the real world of plan admin, that data is never given accurately and timely (really, for this, in advance). Ah, that's why we love our jobs... P.S. - lest anyone read this otherwise, I am absolutely NOT suggesting that Kevin doesn't understand the real world of plan administration! Just my musing/blathering on an unpleasant and difficult topic.

Thanks. As far as I could tell, the IRS person is just wrong. We'll push back and see what happens.

401(k) plan has designated Roth accounts. Participant receives a QUALIFIED distribution - over 59-1/2, over 5 years. Reported as a 7 B on 1099-R. IRS is saying it should be a code "Q." When you look at the 1099 codes, "Q" specifically states that it is for a Roth IRA. There is no letter code for a qualified distribution from a designated Roth account. Are we wrong? I can find nothing to indicate that this should have been reported as a code "Q." Thanks.

Plan has fairly standard language that the beneficiary, if other than the spouse, will be designated on a form satisfactory to the Administrator. Spousal consent is required. Anyway, it appears this subject has been beaten to death, and is unlikely to generate a solid consensus, so I thank you all for your comments. It is now officially Summer, so I will retreat to my survival mode (I hate hot weather) and try to think of more interesting subjects than this one! Thanks again. In such event, the designation of a Beneficiary shall be made on a form satisfactory to the Administrator.

Plan's definition of beneficiary doesn't seem to be very definitive in answering this question? Basic definition follows, and then you get referred to another section (excerpt below) and of course also refers to the standard "has to be the spouse in a J&S option unless the participant and spouse have validly waived, etc., etc..") "Beneficiary" means the person (or entity) to whom the share of a deceased Participant's interest in the Plan is payable. Section 5.4 contains a definition of "designated Beneficiary" for purposes of that Section. Excerpt from 5.4 - (b) Payment of other death benefits. Death benefits payable by reason of the death of a Participant or a Retired Participant shall be paid to such Participant's Beneficiary in accordance with the following provisions: (1) Upon the death of a Participant subsequent to the Annuity Starting Date, the Participant's Beneficiary shall be entitled to whatever death benefit may be available under the settlement arrangements pursuant to which the Participant's benefit is made payable.

Well, maybe you are right and I'm just complicating it too much. The plan language says the following, and I note that it for the "life" of the "designated beneficiary." Does that mean a J&S option is precluded here if the desired beneficiary is a trust? (b) Alternative forms of distribution. In the event a married Participant duly elects pursuant to paragraph (a)(2) above not to receive benefits in the form of a qualified joint and survivor annuity, or if such Participant is not married, in the form of a life annuity, the Administrator, pursuant to the election of the Participant, shall direct the Trustee to distribute to a Participant or such Participant's Beneficiary an amount which is the Actuarial Equivalent of the monthly retirement benefit provided in Section 5.1(c) in one or more of the following methods: (1) Monthly pension payable over the life of the Participant. (2) Monthly pension payable over the life of the Participant, with the provision that, if a Retired Participant dies prior to the completion of 120 monthly payments, such monthly payments shall be continued to the Retired Participant's designated Beneficiary until the monthly payments made to the Retired Participant and to the Beneficiary shall total 120. (3) Monthly pension payable over the life of the Participant and the life of the Participant's designated Beneficiary (50% joint and survivor annuity). (4) Monthly pension payable over the life of the Participant and the life of the Participant's designated Beneficiary (66 2/3% joint and survivor annuity). (5) Monthly pension payable over the life of the Participant and the life of the Participant's designated Beneficiary (100% joint and survivor annuity).

Ok, so I'm not being argumentative here, just having a difficult time with this whole concept. Let's say, for the moment, that it is ok to calculate the benefit based upon the joint life expectancy of the participant and spouse, and further suppose that the non-participant spouse signs off, so that the beneficiary is in fact the trust. How does this satisfy the RMD requirements, as in order to be considered a "designated beneficiary" for RMD purposes, the trust must be, among other things, irrevocable at death. Edit - just read above comment by FP - again, I don't know