WCC

Please see the below link. Is this the law you are referring to? If so, it does not apply to employer sponsored plans as noted in the link. https://www.irs.gov/uac/Newsroom/Tax-Free-Transfers-to-Charity-Renewed-For-IRA-Owners-70-and-One-Half-or-Older-Rollovers-This-Month-Can-Still-Count-For-2014

Will a TPA be involved or is it going bundled? If it is going bundled, the new recordkeeper may have issues with reporting if they don't have all the assets. Just something to be aware of.

I did not see John's response before I posted this but I agree with him: Below is from Relius: http://www.relius.net/news/TechnicalUpdates.aspx?ID=1004 See the comment from 2012 national conference, as well as the disclaimer. Announcement 2007-59. The IRS announced that a plan sponsor could amend a safe harbor 401(k) plan to: · Add a Roth deferral feature · Change the hardship provision to add an option to make a hardship distribution on account of medical expenses, college expenses and funeral expenses for a plan beneficiary. Notice 2010-84. The IRS announced that a plan sponsor could amend a safe harbor 401(k) plan to add an in-plan Roth rollover mid-year as long as the amendment was adopted by December 31, 2011 (the In-plan Roth rollover was effective September 27, 2010). ASPPA National Conference. In the 2012 National Conference, the IRS verbally confirmed some additional mid-year amendments with which they would feel comfortable: · Change of plan year, so long as the following plan year the plan followed the safe harbor rules · Expand coverage to include employees previously not included (so long as existing participants are not affected) · Change of investment vendor · A retroactive corrective amendment to address a coverage failure · Change of trustee Although a practitioner may not rely on the IRS statements, some practitioners have used the statements to justify at least some mid-year amendments.

Please help I posted the OP a year ago and am now having the same issue again with a different auditor. I have provided the auditor with the 415 regs preamble as stated above byTom Poje. I have given an example from EOB and the auditor does not agree. The question is: I make $300,000 per year ($25,000 per month). I elect to defer 5% of pay (for the example $ amount elections are not allowed). I say the participant's deferral is $15,000 (300000*5%) The auditor says no, it can only be $13,000 (260000*5%). Regardless of when compensation is paid the total cannot exceed the % based on the annual limit. I provided the 415 preamble again and the auditor says that is not why he disagrees. He is claiming that the 401a17 limit clearly states that when a % election is choosen, it can only apply to the annual compensation limit. Is there any other documentation that can be provided? Thank you

I believe this is your answer from the Rev Proc: (3) Availability of safe harbor correction method. The safe harbor correction method under section 3.02(1) of this revenue procedure is available only for plans with respect to failures that begin on or before December 31, 2020. At a later date, the Service will consider whether to extend the safe harbor correction method for failures that begin in later years. In deciding whether to extend the safe harbor correction method, the Service will take into account, among other relevant factors, the extent to which there is an increase in the number of plans implemented with automatic contribution features. (d)Sunset of safe harbor correction method. The safe harbor correction method described in this section .05(8) of this Appendix A is available for plans only with respect to failures that begin on or before December 31, 2020.

They just think this is the way things should be done since that is the way it has always been done. I have not approached them on this yet, but just wanted to bounce this around here to make sure I don't over look anything. I just find it troubling that participants have to take the time to do something that is not required. Thanks for all the fast responses.

yes, they do. Only because the recordkeeper says it is "standard" to do so.

Record keeper requires spousal consent for all distributions. However the plan is not subject to J&S, there is no old money subject to J&S and this has been confirmed. Plan document does not require spousal consent, this has been confirmed. The record keeper has agreed that spousal consent is not required but it is "industry standard" to ask for spousal consent. Questions: By requiring spousal consent, isn't the sponsor not following the terms of the plan document by requiring a participant to do something that is not necessary? Would a DOL or IRS auditor take issue with this in a similar manner as any other operational failure (maybe not as severe)? thank you

Based on the information provided in the post, the current TPA is correct, the plan is deemed not top heavy because of the safe harbor contribution. CHAPTER 11 401(k) AND 401(m) TESTING Part H of the EOB is quite long but a portion is as follows. Safe harbor 401(k) plans generally are subject to the top heavy rules like any other plan. However, for plan years beginning on or after January 1, 2002, a 401(k)(12) safe harbor plan is deemed to be a non-top-heavy plan if the conditions of IRC §416(g)(4)(H) are satisfied 2. Certain safe harbor 401(k) plans are deemed not to be top heavy. A safe harbor plan is deemed not to be a top heavy plan (even if the top heavy ratio, if calculated, would exceed 60%) if: (1) the plan consists solely of a safe harbor 401(k) arrangement, either under the 401(k)(12) safe harbor or, in post-2007 plan years, the QACA safe harbor, and, (2) to the extent there are matching contributions made to the plan, all of the matching contributions satisfy the ACP safe harbor prescribed by IRC §401(m)(11) or, in the case of a QACA safe harbor plan, the ACP safe harbor prescribed by IRC §401(m)(12) (which cross-references the requirements of IRC §401(m)(11)(B)). See IRC §416(g)(4)(H), as added by EGTRRA §613.

From the EOB: (3) payments for tuition, related educational fees, and room and board expenses, for the next 12 months of post-secondary education36 for the employee, the employee's spouse, the employee's children, or the employee's dependents (see 4.b.1)a) below), footnote 36 says: There is no definition in the regulations of "post-secondary" education. In the absence of guidance, it should be reasonable to interpret this term to mean that a high school degree (or its equivalent) is required for such education.

Also review Rev Proc 2015-28 for correction guidance.

Update - I spoke with the DOL at the number listed on the DFVC FAQ page for the EBSA's Office of the Chief Accountant. I was told DFVC is not available in this scenario and any DFVC filing fee would be returned with an explanation that the sponsor is not delinquent but deficient. The agent told me that as long as the sponsor amends and files with the audit before receipt of a letter from the DOL then no penalties will be applied (I hope he is correct). Thanks for the responses.

That was my thought as well, but their legal counsel and auditor are recommending DFVCP. I just wanted to make sure I was not missing something. They are worried with how late their audit is and are thinking they can somehow hedge the penalties if they can file under DFVCP. No, they have not received any correspondence from the DOL.

Large plan filer files the 2013 Form 5500 on October 15, 2014 without the audit. Filing is "filing error" but still considered a filing. The auditor now has the 2013 audit ready (many problems which I won't discuss). The auditor is recommending they file an amended return under DFVCP? Can you file under DFVCP if you have already filed a return (even though the return is incomplete)? They have not received any correspondence from the DOL so that part is not eliminating them yet. I don't believe they can, but cannot find an answer on the DOL website. Thank you

Is that benchmark report from your recordkeeper or your advisory/consulting firm? If you are using a specialized qualified plan advisor, he/she should have access to benchmark tools that would compare your plan data and demographics to other plans similar in size. For example, there are reporting tools that would show what quartile your fees sit in for the costs you listed above. I think it will be hard to get a good comparison unless a data reporting tool is used. Do any of your funds pay revenue sharing? That will also impact the fee comparison.

Sponsor provides an annual Christmas bonus to all employees. The plan document includes bonus pay in the definition of compensation. The plan sponsor has never withheld deferrals (and therefore never matched) on bonus compensation. This has been going on for more than 10 years. What is the correction method? If I remember correctly a statute of limitations does not apply to benefit calculations. Is filing a VCP submission asking for relief by retroactive/corrective amendment to exclude bonuses reasonable or even possible? The error applied to all employees HCE and NHCE alike. There was no separate communication given to employees that said bonuses would be excluded. Employees were only given the SPD which said bonuses were included. Thank you

An employer currently is part of a PEO. Employer has made the decision to exit the PEO for all benefit purposes. The employer currently participates in the PEO 401k plan. As part of the exiting documents, the TPA and PEO state that all employees of client/employer organization will incur a distributable event. The employer will maintain their own 401k plan. I am having a hard time finding an answer to the following in the EOB Question: Is it accurate that all participants of the client organization/employer will incur a distributable event when a 401k plan will be sponsored by the employer? As an adopting employer of the PEO plan, wouldn't you have successor plan issues if the assets are distributed? My thought was to have the assets transferred directly to new plan without the option for participants to elect a distribution. Thank you

As to the investment performance, let's assume that the new broker is very comfortable in the 401k market. Therefore, they would have selected the new fund prudently with the involvement of the investment committee according to the investment policy statement. If the decision to add the new fund was a prudent choice, then in my opinion you have no claim (ignoring the dissimilar question for just a moment). Funds are not placed in 401k plans using one months worth of return data. Have you compared the returns for 3, 5 and 10 yrs? The prudence standard refers to long term performance, suitability for the entire group, fund structure, etc. The committee should have documentation as to why the fund line up was chosen along with historical data to show it was a prudent decision. If the fund under performs the benchmarks by 25% for the next year or so and the committee does not at least investigate the reasons for the under performance then you may possibly have a complaint. Was the dissimilar fund a target date fund with a year attached (i.e. Example Fund 2040)?

Payroll clerk accidentally input a deferral change for the last pay period in 2014 as 100% rather than 10%. The final payroll was run and paid in 2014. Employee is surprised and questions HR. The correction is in process with the record keeper who will send the excess to the sponsor. Plan sponsor will then make the employee whole via payroll in 2015. Question: is there any reason we need to correct the 2014 W2? Or does it fix itself with the 2015 correction? Thank you

Hello, Is the correction for failure to implement a deferral election in a 457b plan the same as the correction in a 401k or 403b? I am familiar with the correction within the 401k and 403b but not sure about the 457. I cannot find anything to answer that question. Thank you

The answer to the first question comes from the EOB: 5.a. Successor plan defined. A successor plan is any alternative defined contribution plan, other than an ESOP, that exists at any time during the period beginning on the date of the 401(k) plan's termination and ending 12 months after distribution of all the 401(k) plan's assets. See Treas. Reg. §1.401(k)-1(d)(4). The plan is not a successor plan unless it is maintained by the same employer that maintained the terminated 401(k) plan. "How else do you rectify it?" possibly an amendment to credit predecessor service with Co. B (for eligibility). However, I am not sure about the timing of a retroactive amendment if the employees of Co. B are already participating. Company B then does what it wants with their plan (i.e. termination or continuation), Co. B participants have a distributable event due to termination of employment with Co B. Assuming the sponsors are not related; therefore, no successor plan issues. Bullet point #2 is interesting I won't speak to that point because I am not sure how deferrals from pay with Co A go into Co B's plan.

No, EGTRRA was signed timely. They are taking the stance that if there were any discretionary amendments made during the 7/1 restatement, that those cannot take effect until the date the document was signed. Nothing was changed, the restatement was due to a provider change.

The new service provider that took over the plan in 2011? Or a new service provider that's getting the plan now in 2014? If the first one, why are they now saying it's an issue 3 years later? There is a new service provider now in 2014. This new provider is questioning the signature date.

new service provider says the provided document was not signed timely.

Plan changes service providers (bundled) on July 1, 2011. Plan was originally effective 1/1/2005. The plan documents were all up to date on July 1, 2011. New service provider restates the plan into their document. Effective date of the restatement was July 1, 2011. None of the plan provisions changed in the restatement. Question: The plan sponsor signs the restated document on July 15, 2011. Is that a a problem? I am being told it is and told to file under VCP as a doc failure. What if there was a change to the plan provisions (i.e. not a safe harbor plan and they add eligibility requirements)? Would a signature date two weeks later cause a problem? thank you