Belgarath

Pardon my ignorance, but who is "Robert?" Sounds like he took over for Sal?

Not trying to be a jerk, but I'm not going to describe it over the internet in any form, lest it be viewed/intercepted by people who would then say, "Hey, what a great idea - here's a way to illegally obtain funds."

Even if using safe harbor definition, I would say "no" if it has been 2 years. IMHO...

This type of question surfaces a lot, and there are differing opinions. But it may be instructive to take a look at 1.401(k)-1(d)(3)(iv)(C), which states that it isn't an immediate and heavy financial need if it can be reasonably relieved by borrowing from "commercial sources on reasonable commercial terms in an amount sufficient to satisfy the need." Something to consider, anyway. P.S. - note that this is referring to a non-safe harbor definition of immediate and heavy financial need.

Batman.

Question - under PPA (or anything else for that matter) must a distribution notice to a participant, for a DC Plan (non-QJSA) provide the dollar amount of the total account balance and the vested account balance? Now, this seems like a ridiculous question, I know, but in response to some fraudulent distribution requests, we are considering what possible options might be available to combat this. Among the questions/ideas floated was not putting these amounts on the distribution statement that is initially/automatically sent to the "participant," and somehow adjusting procedures to require the participants to contact the Plan Administrator/Trustee to obtain this specific information. Not saying whether this is good, bad, or indifferent, because we haven't yet begun to explore the ramifications - risk/reward, expense, quality/timeliness of service, what various platforms will/won't do/handle, etc. - only starting to determine if it is even possible. And not looking into any other changes (at this point anyway) so all other PPA requirements are NOT open to discussion right now. It appears to me that this information would be required for a DB plan - (accrued and vested benefit) but I'm not necessarily finding anything requiring it for DC plan. Of course, the statement must provide the verbiage re the effects of delaying distribution, QOSA if applicable, etc., but that's another matter. Anyone have any thoughts on this?

Ah, the light dawns in dark places. Thanks!

Question - Sal has a blurb about the options for elective deferrals if a successor plan exists, and I don't quite understand what he's saying. He gives option (1) as "Transfer the deferrals to the successor plan (most commonly used option)." If a plan is terminated, participants must be given the option to have their funds distributed, either taxable or as a rollover to another plan. But a rollover is still a distribution. So what does this really mean? I'm sure I'm missing something completely obvious, and it is probably a late-week brain cramp... thanks.

There are two separate issues - the "normal" bonding requirement, and the "small plan audit exception" bonding requirement. Assuming all of the children are not partners in this as business as an unincorporated partnership, then bonding is required. In order to claim the small plan audit exemption, then if the "nonqualifying assets" are more than 5% of the assets, the bond must be no less than the value of the nonqualifying assets. Cheaper to get the increased bonding than to do the audit!

Not disagreeing with Lou - just mentioning that the terminology of the Notice is different for different for different people. Many people refer to the "maybe" notice as the notice one gives when a plan utilizes the "maybe" election - that is, the plan is NOT a safe harbor UNLESS the plan is amended into safe harbor status for the year. In your situation with a 3% SH contribution, we would refer to this as a "maybe not" notice, which as discussed previously allows you to amend out of SH status. Sample wording contained in the annual Safe Harbor Notice - we use the FIS/Relius document system. IV. Suspension or reduction of safe harbor nonelective contribution. The Employer retains the right to reduce or suspend the safe harbor nonelective contribution under the Plan. If the Employer chooses to do so, you will receive a supplemental notice explaining the reduction or suspension of the safe harbor nonelective contribution at least 30 days before the change is effective. The Employer will contribute any safe harbor nonelective contribution you have earned up to that point. At this time, the Employer has no such intention to suspend or reduce the safe harbor nonelective contribution.

Too funny! At least it didn't provide that she got the half bottle of Scotch after it was filtered through his kidneys...

Yes. The IRS recognizes that they can't possibly list every possible failure/correction that could happen or be reasonable. The corrections listed in Appendix A and B are deemed to be "reasonable and appropriate" and I would generally use them for those failures specifically listed, if those corrections are appropriate for the situation. Nevertheless, see the following from RP 2018-52, Appendix A: (3) Other reasonable correction methods permitted. As provided in section 6.02(2), there may be more than one reasonable and appropriate correction of a failure. Any correction method used that is not described in Appendix A or Appendix B would need to satisfy the correction principles of section 6.02. For example, the sponsor of a 403(b) Plan that failed to satisfy the universal availability requirement of § 403(b)(12)(A)(ii) might propose to determine the missed deferral for an excluded employee using a percentage based on the average deferrals for all employees in the plan instead of using the rule for calculating missed deferrals set out in .05(6)(b). In doing so, the proposed correction method would fall outside Appendix A, and the Plan Sponsor would need to satisfy the general correction principles of section 6.02 and other applicable rules in this revenue procedure.

I've seen a whole bunch of SIMPLE's that were operated incorrectly due to this, and I agree that it is very poorly communicated. And yes, I agree that it is stupid. A landmine for any "average" client who thinks a "SIMPLE" plan is actually "simple."

Agreed. Or perhaps more accurately, it doesn't fall under one of the "pre-approved" fixes under RP 2018-52, but still an operational error. The correct amount of deferral was withheld - just misclassified, so given that it was only for one participant, certainly an "insignificant" error IMHO, and eligible for self-correction.

Ugh. How much money is involved? Does this help? https://www.irs.gov/retirement-plans/fixing-common-mistakes-correcting-a-roth-contribution-failure

Perhaps something along these lines, in the "other" option, or whatever you have available in your particular Adoption Agreement. Tailored, of course, to your specific situation. And just for safety, I'd have similar language in the Resolution adopting the amendment. Effective (date), the normal service and entry date requirements are waived for (name(s)) ONLY, for all contribution types. This special retroactive amendment is for correction under Revenue Procedure 2018-52.

Get it from the client. Otherwise, you incur the liability for any error that occurs due to using incorrect compensation.

Thanks for the confirmation. I didn't think I was missing anything, but I've been wrong a time or two...

My apologies. It was a sole prop originally, but had previously changed to an unincorporated partnership. Then just changed to the LLC. We were informed that the EIN did not change when this change to the LLC took place.

EIN does NOT change. Plan name changes, and name of plan sponsor changes, but no change in EIN, nor is there any change to the Trust id#. This doesn't call for filing an 8822-B, since neither the address nor the "responsible party" is changing. No SS-4, since Trust id # doesn't change. The name change will be reflected on the 5500 form when filed. Am I missing anything here? Client's attorney is telling client IRS needs to be notified of this. If so, how? Maybe when they file their tax return?

I find that the term "excess annual additions" often means different things to different people. Do you mean there was a 415 violation, or that under the terms of the plan they received more than the maximum allowed by plan formula, (e.g. comp used was $100,000, and they received a 3% SH of $3,000, when their comp was really $90,000, so the SH 3% would have been only $2,700), etc., or something else?

Thanks for the responses.

Gracias.

Larry - this is related to a different question I had asked, re the timing of employer matching deposits. Is the TIMING of such deposits considered an "other right or feature" and therefore just has to pass normal BRF testing, or is it something else? Was the IRS discussion in a BRF context, or nothing quite so formal? Thanks.

Thanks. And of course, amending plan to add this provision would be really popular with those less than 20 hour employees who have been deferring all along, and now you tell them they can't...