Belgarath

So for a "normal" 401(k) multiemployer plan, is there really much in the way of any required "special" language? I assume there isn't any of that withdrawal liability stuff that pertains to multiemployer DB plans, etc. - actually seems like the document would mostly be fairly standard language. Obviously it needs to refer to the collective bargaining agreement for certain provisions, but that isn't anything startling. Thanks for any input.

Yesterday... Income tax was due, I had to pay... All the funds I tried to hide away... I don't believe, I'll eat 'till May. Suddenly... I'm not sure that I am fiscally... Ready for responsibility... Oh yesterday, came suddenly. Why, I Owed so much, I don't know, I couldn't say May be Forms were wrong, how I long, for yesterday. Yesterday... Seemed like prison time was on its way... Now I need a place to hide away... While keeping IRS at bay. Why, I Owed so much, I don't know, I couldn't say May be Forms were wrong, how I long, for yesterday. Yesterday... Taxes due, I filed come what may... Losing all deductions that's my way... Of giving IRS my pay. mm - mm - mm - mm - mm - mm - mm.

I know that Larry knows this, but for some folks out there who don't know the details, be careful on this. If there are ROTH deferrals, since they are after-tax, they already show up in Box 1. Too many times I have seen people who were taught to "add back in the deferrals" to Box 1, and consequently overstate the Plan compensation.

What I SHOULD start it with is, "Give me your wallet."

IMHO, that's sort of unanswerable. Entirely dependent upon facts and circumstances. But maybe I'm misunderstanding your question. If it is a "plan design" meeting purely for purposes of getting an illustration(s), then I wouldn't necessarily worry about distribution options, rollovers, bonding, whatever...

Thanks all. This confirms my thinking - the logical process just wasn't crystalizing well that morning. One of those days when you question what you know (or think you know)... It is a big help to have these boards to have people either agree, or inform you that you are crazy, and more importantly, to explain WHY you are or are not crazy. Is tax season ever going to end??? I'm ready for a break!!!

Right, so they get 3% SH, but no gateway. That's what I was thinking, but this is a confusing subject...

Brain cramp - PS has 1 YOS/1,000 eligibility. SH nonelective is provided to anyone eligible to defer, which is everyone. If someone has never worked 1,000 hours, does the fact that they receive 3% nonelective require that they receive gateway? I'm saying no, but second-guessing myself... P.S. - my thinking for "no" is that they can be disaggregated as statutorily excludable.

Update - Received a document. It appears to be Volume Submitter language with VERY minor modifications - I just did a 5 minute skim, and don't see anything referring to "multiemployer" status, etc. Again, this is a 401(k) plan, with a bunch of small employers in the same industry who employ members of the YYYY union in their shops. Here's how "Employer" is defined: Employer shall mean the XXXX Insurance Trust and any Employer who is required to contribute to the Plan pursuant to the terms of the Collective Bargaining Agreement and who has agreed to the terms and conditions of the Plan and Trust. The term "Employer" as used herein shall also mean the Union with respect to its Employees for whom the required contribution is made pursuant to an agreement with the Trustee. If, under state law, an Employer at any time is not governed by directors but instead by its stockholders, or if the Employer is an unincorporated business and is governed by its owners, reference herein to the Board of Directors shall be deemed to refer to the individual(s) empowered to vote on the Employer's affairs. I'm still not sure if this is truly a multiemployer plan, or a multiple employer plan, although it seems more like the latter... Still don't have any resolutions, amendments, addendums, determination/advisory/opinion letters., etc., etc....

Mike - as sure as I can be without actually seeing a document. It was explained to me that it is a multiemployer plan, it is for a bunch of union employers (small employers but several of them) and the 5500 says it is a multiemployer plan. But I don't actually KNOW...

I don't really know beans about these. Had a question about such a plan that supposedly utilizes a standardized prototype - haven't seen a document so I can't say. I was able to look up the 5500 form, and the Plan Characteristics Codes do not indicate a pre-approved document is being used. My general question is this: (I haven't looked at LRMS on this, by the way) - do you know, offhand, if a "normal - whatever that is" multiemployer 401(k) plan would require special multiemployer language, or can it use "regular" plan language? Seems like there would have to be some sort of special multiemployer language.

Right, but knowing the specific investments and trying to get the information to calculate multiple deposits to multiple investments, for almost no money, can be an "unreasonable" expense if the time involved is excessive, which it can be. Again, we've never had the IRS question the use of the DOL calculator, but we also haven't used it "unreasonably" (yet, apparently). This could change...

This might help somewhat, but doesn't directly answer your question. https://www.law.cornell.edu/cfr/text/26/301.7701-7

I've never heard that the IRS cares whether you filed under VFCP or not. At the very least, I can say that we have never had an IRS problem, and most of ours are NOT filed under VFCP. That's a DOL issue, not an IRS issue. While we usually use the DOL calculator for lost interest unless the amounts are substantial, we sometimes use plan rates if available and possible to calculate without an undue expense. Last week we did one using the S&P 500 return, because the amount was substantial, but getting the vendor to calculate plan rates for multiple late deposits would have been time-consuming and expensive, so we used the S&P as "reasonable." We always use the DOL calculator in a fairly typical situation like one payroll deposit was 6 days late, and the total amount of interest using the DOL calculator is $1.72, or something similarly absurd. No way in heck are we messing with trying to figure out plan rates, nor are we filing under VFCP, for foolishness like that. Unless, of course, the regulatory authorities force us to.

I don't have time to look it up now, but I think if it is a safe harbor matching contribution, it is a QNEC, otherwise, it is just an employer nonelective. But don't trust my memory - I don't!

Just ran across an interesting situation. Employer missed withholding a deferral here and there on several employees. They understand they have to make full missed match plus earnings. However, their correction on the missed deferral piece has been as follows: They have simply withheld the missed deferral at a later date (anywhere from next paycheck to several months later). I think in "real life" this is acceptable IF the employee does a separate written election to permit it. However, I don't think it is acceptable to do it 6 months later without a written election. Don't know if they have even gotten VERBAL approval, but apparently no one has ever complained. How do y'all see this situation handled (if you ever do see this correction method) when the correction falls outside the "normal" SCP corrections? Just curious.

Employer must contribute full missed match, plus earnings on that match.

I respectfully disagree. The employer has the OPTION to deduct a contribution deposited in 2018 and ALLOCATED for 2017, as a 2017 deduction (if made within the allowable timeframe) but may choose to deduct it in 2018 if so desired. Although this may not be supported by a strict reading of the statutory language, the IRS interprets it as optional, at least unofficially. I've seen plans get audited where this wasn't even questioned. The following from the IRS should prove helpful. Seems pretty clearly stated. https://www.irs.gov/pub/irs-tege/epche903.pdf

Austin - I'm not clear on how you avoid the 30 day advance notice? It is still "required content" in the SH notice, albeit via a reference to the SPD. OK, Tom beat me to it.

I like this solution. Larry, Can you let us know what you find out from your friend? I'm always cautious about something that seems to good to be true, but I can't see any landmines, at least in a deferral only plan. Let's assume there are matching and/or nonelective contributions, and that there are one or more HCE's. Are there any special coverage or nondiscrimination issues I'm missing here, assuming the plan provisions are identical in all other respects - other than normal coverage/nondiscrimination testing on each plan?

In a situation where there is TRULY no CG or ASG, how is it abusive? I'm not sure I quite understand the question.

Thanks, Peter, for the citation. I fully support the "spouse as automatic beneficiary unless spouse waives" law/concept, but when you see the actual statutory language and the whole QJSA/QPSA stuff, with numerous amendments, one may be tempted to agree with Mr. Bumble, "The law is a ass..." As a layman, seems like it could have been made more sensible and streamlined. For example, it never made any sense to me why a profit sharing plan should be treated differently, for these purposes, than a pension plan. On the other hand, if ERISA, the IRC, and all associated regulations/guidance were as simple as they ought to be, we'd all be out selling matchsticks or something, so I should keep my yap shut and not gripe!

Participant is at Blinky's house?

I don't see how 20% withholding could apply - maybe this is an error? It isn't an eligible rollover distribution. Consequences of a late distribution Under IRC Section 401(a)(30), if the excess deferrals aren't withdrawn by April 15, each affected plan of the employer is subject to disqualification and would need to go through EPCRS. Under EPCRS, these excess deferrals are still subject to double taxation; that is, they're taxed both in the year contributed to and in the year distributed from the plan. For any distributions, attributable to elective deferrals designated as Roth Contributions, all distributions will be reported as taxable in the year distributed. Designated Roth contributions will have already been included in income in the year of deferral. These late distributions could also be subject to the 10% early distribution tax, 20% withholding and spousal consent requirements.

If you have access to the EOB, the 2017 version on pages 7.302 and 7.303 addresses this question. Generally subject to 10% withholding rules if taxable in the year of distribution.