justanotheradmin

Madison71, yes, that's exactly what that means. Full fees apply except in very narrow circumstances (such as an orphan plan that is terminating).

https://www.irs.gov/retirement-plans/voluntary-correction-program-fees

I just noticed this! It stinks. For simple things like a 403(b) failing to have a document, or a 401(k) plan missing a restatement, etc, small plans are out of the loop. Plus, anything we sent to plans in the last month or two is now wrong! Plus submissions sent in over the last week probably require additional fees! I noticed a portion of the fee section isn't effective until February 2, 2018. But the main schedule (on the website) appears to be effective immediately . I even went back through my IRS Employee Plans News to see if I missed an announcement. It feels like the IRS didn't want plans to know such a big change was coming - or I just missed some announcement, which is possible too.

Has anyone tried using the IRS website to request a trust identification number recently? What should be listed for line 7a, and 7b? I would think the "Name of responsible party" would be the Plan Sponsor as the trust grantor, and then the EIN of the Plan Sponsor would be used, but the instructions say to use EIN only if the Name of the responsible party is a government entity. The website will not accept an EIN, and that screen cannot be by passed? Should the instructions for listing a responsible person for the business entity (principal officer, etc) be followed instead? but we aren't applying for an EIN for the business, its for the trust. what have folks been doing?

Just to confirm how frustrating this continues to be - the financial institution has confirmed unequivocally that they will not put someone into pay status - not even to process an RMD - without the participant's consent. So even for participants whose whereabouts are known, if they haven't returned the consent forms, there has been no RMD.

I have read the recent memorandum on missing participants, it doesn't help much because the lost participants isn't the primary issue. The actuary won't even calculate the RMD based on the single life annuity without confirmation from the plan one way or the other that a participant is married, and if so, what their spouse's date of birth it. I agree that participant consent is not needed for RMD - so the fact that the financial institution is insisting on it is a problem. For ones that the actuary will calculate, where marital status is known along with SDOB if applicable, the financial institution should take direction from the plan about RMD payout without regard to participant consent. I also agree that it is the plan's responsibility to comply with the RMD rules, or at least attempt to, even though the failure to do so is borne by the participant. the plan is trying to comply, but at present the actuary (and secondarily the financial institution) seem to be hampering that process. Specifically I'm looking to see if there is any guidance, even if informal, that we can use to push back against the actuary's assertion that martial status and SDOB must be KNOWN to calculate RMD.

I apologize, I don't have as much familiarity with DB plans as I do with DC plans, so if there is another thread that answers my questions, or website, or reference material somewhere, please point me in that direction. Plan Information Traditional DB plan, does not allow distribution prior to NRA, nor does it appear to allow for single lump sums( don't ask me why, its a convoluted individually designed document, I had nothing to do with it, it came to me that way). Normal benefit is regular single life, with 50% JS for married participants. Plan has several participants that need RMD - they can't locate them, or in some instances the participants won't respond. I suspect for some of the participants, if they received their RMD check in the mail, they would just cash it. The question is - the plan does not know the participant's marital status - on what basis do they calculate the annuity, and thus the RMD amount? And before you tell me to check the document, it appears to be silent. As I said it is individually drafted and not a typical one at that. We are getting less than clear answers from the actuaries and financial institution. The actuary isn't willing to calculate any sort of RMD without knowing marital status and Date of birth. The financial institution isn't willing to process any sort of RMD without participant consent, which I think is actually a separate issue that we are addressing, but certainly doesn't help matters. If it was a 401(k) plan and I didn't know the spouse date of birth (or even if there was one) I would just calculate and have the plan payout based solely on the participant's DOB. But the actuary doesn't want to calculate the RMD based on a single life annuity without actually knowing, so I'm a bit at a loss. Surely someone else has figured out a way to handle this?

Thanks My 2 Cents and RatherBeGolfing. I agree its better to try to address now. We are working on contacting the IRS and seeing if we can get something proactively. I am an ASPPA member, so I will pass along to Craig what happened. I'm thinking it was just a fluke, but its hard to tell, especially with the IRS.

Has anyone else had this problem this year? We sent a batch of Form 5558 to the IRS - timely, properly addressed, via certified mail. The IRS signed, and opened the envelope. They then resealed the envelope, and included a letter stating that the extensions weren't properly addressed and that they were being returned. I can't find any error. The other batches we sent have not been returned. I'm hoping they were processed just fine. As with other occasional issues, we've documented everything and have a letter drafted to resubmit the extensions, as well as one to use when the IRS says the 5500s are filed late. But it is just a pain. In case this was part of some larger widespread issue this year I wanted to check.

Money purchase plan, going through Audit CAP. Plan Sponsor thought the plan was frozen, auditor says no, --> large make up contributions required. The plan sponsor doesn't mind putting the money in, just wants to know if it is deductible as a business expense. It far exceeds the regular deduction limit. All of the make up money is for 2014 and earlier. there is a bit of lost earnings as well that the auditor is requiring. I realize the lost earnings may not be deductible at all. this is all separate from the sanction, which is minimal and the employer isn't concerned amount. I'm not gleaning any special insight from Rev Proc 2012-13, Nor Treas. Reg 1.404. Perhaps I'm not reading them close enough. Rev. Proc 2012-13 "(b) A corrective allocation to a participant's account because of a failure to make a required allocation in prior limitation year is not considered an annual addition respect to the participant for the limitation year in which the correction is made,but is considered in an annual addition for the limitation year to which the corrective allocation relates. However, the normal rules for §404, regarding deductions, apply." I don't care about annual additions, those are fine. Just about the deduction. Since the deposit is occurring right now, and it is required under §412(a) I feel like it should be deductible but I have nothing specific on point? Can anyone help?

Please ignore my post! I answered my own question!

Assuming the plan document allows - can a 401(k) plan force out terminated participants, who have attained normal retirement age, and have a vested balance over $5,000 (no rollover) ? If it can be done, I'm sure it would be to an IRA (or annuity if that is the plan's default payout form), not as cash. Mind you - this would not be part of a plan termination in any way. It would strictly be due to age. I had never heard of such a thing outside the context of a plan with annuities. but today, as part of John Hancock's webinar series, Kimberly Martin's presentation on distributions seemed to have stated exactly that. From part of her slide: Terminated at age 65 (NRA) $100,000 Deferral $50,000 Match $150,000 Balance --> No consent required -->Default form Is she talking strictly about plans with an annuity as the default form of payment? Most of the 401(k) plans I work with have no annuity provisions. For a plan with no annuity provisions, and the force out would be to an IRA, is the force out still possible? (assuming of course all of this is in the plan's doc) Anyone have a regulation? other citation?

Extremely small plan sponsor (maybe a dozen participants) - with the owner going through a divorce. The TPA received a subpoena demanding copies of all information about the owner as an individual, as well as all information regarding the business, on paper no less. No mention of the retirement plan whatsoever. Of course all the TPA records on that plan relate to the owner and the business, how could they not? Overly broad, no? Thoughts?

I have this circumstance, and the plan did apply for and receive an EIN for the trust - anyone have a different answer?

I know this would probably be better under the continuing education board, but I think it will be seen more here. does anyone have any prior year DC-1 and DC-2 books for sale? These are the defined contribution textbooks for the first two ASPPA proctored exams. I have several friends who want to take the exams, but don't have a lot of money to spend. Considering the topics covered are fairly basic and haven't changed much using a book that is a year or two out of date really shouldn't be a problem. Even if they are marked up / highlighted etc. I'm interested if people are willing to sell. I'm looking for up to 4 of each. And if anyone has DC-3 as well, I think one of those might be good too.

Fiduciary Guidance Counsel and jpod, thanks for the insight, and jpod, I totally agree about the liability issues. I actually have no expectation that there will be any sort of correction, or that they will consult an attorney, even though we will tell them to. The advisor thinks the money is 100% the owner's (claims everyone else has been paid out) and now refuses to acknowledge it as plan assets. The advisor seems to be treating it as part of the owner's IRA. There may be a new trustee soon, so I wonder if that person will want to fix this. We don't do the investments, just some year end accounting. And when there were ginormous losses, it thought for sure there was a typo or unreported withdrawal. No such luck.

https://www.irs.gov/pub/irs-drop/rr02-45.pdf Found it. Or if not it, something exactly on point.

Can anyone point me to the IRS or DOL guidance on this subject? I saw something a few years ago, but can't remember where or even exactly when. Small profit sharing plan is trustee directed, picks a high risk asset that over the course of several years tanks, and becomes worthless. Trustee (is owner of plan sponsor) wants to make the plan whole for the losses. I think in 2008 or 2009 a colleague showed me a bulletin or something that had the above facts as a similar example and gave restoration of the losses by the plan sponsor as a permissible correction. I don't know how old the guidance was, I think it was from way before 2008 or 2009, but I think that's when I remember seeing it. Anyone know what I'm talking about? Are there other threads on Benefits Link that have clues?

thanks for the tip Fiduciary Guidance Counsel. When I looked online it gave me the option to pre-order the 2016 version which should be out at the end of April. I don't know that I need a 2015 edition as well, though it might be handy if someone else in the office doesn't mind an older version.

Oh never mind, the 4 volume set does have quite a bit more. It comes in at 4600 pages and the 2-volume set is around 2,100. I don't think I need 4,600 pages.

Thank you Tom Poje and Belgarath! I do like the ones listed. I was wondering what the difference between the 2-volume and 4 volume versions was. The descriptions appear to be the same, so maybe its just binding? The 4 volume version makes for slimmer volumes easier to handle? Belgarath, are the volumes in the 2 volume set really wide? I don't know that its worth paying extra just to get slimmer volumes, but I suppose if the 2-vol versions are super wide I might consider it.

Does anyone have any great suggestions for code books? I'm not looking for the ERISA outline book, the Grey books or anything else, but rather books of the actual internal revenue code, including ERISA, and the treas. regs. In this digital age, I know everything is available online, but I like have a printed book to highlight, mark-up , flag etc. For quite awhile I've used "Selected Sections Pension and Employee Benefit Statutes and Regulations" by Bruce A. Wolk http://www.gettextbooks.com/isbn/9781599415154/ The last version I have is from 2009, so other than for the basic 401(k) rules that I know i haven't changed, these days I usually use it just to figure out what code sections or regs might be relevant and then look up updates or the most recent versions online. But it doesn't have things like §4971 excise tax section, §412, etc. And the treasury reg portion of the book is a bit small for my liking. Does anyone have a great print version of the retirement plan code / Treas. regs that they would recommend?

A couple of thoughts: 1. I'm going with any changes that touch the SH aren't allowed, unless they are to INCREASE that specific type of SH. i.e. going from 3% NEC to 4% NEC 2. So the reduction in considered compensation, would NOT be allowed since it affects the SH Match 3. You could do the reduction, make sure to comply with the mid-year discontinuance of SH rules, but the plan would no long be SH for this year. Secondary Issues - to consider for making the compensation change effective NEXT YEAR A. What definition of compensation are you hoping to use? Is §414(s) compensation testing required? B. Would the §414(s) Test Pass? C. Who would be affected by the change? If only NHCE there likely is a discrimination issue

This is straight from the final regs. It actually says the plan fails to satisfy 1.401(k)-1(b). SH plans are not allowed to contain language that provides for ADP testing if there is a problem with the SH. So, an improper amendment means you fail to satisfy a qualification requirement. I've heard a number of speakers say an improper amendment ruins your SH status, but all along, the regs have said the consequence is plan disqualification. Other applicable law also may affect the permissibility of mid-year changes, including, for example, § 411(d)(6) (anti-cutback restrictions), § 401(a)(4) (nondiscrimination restrictions), and § 1.401(k)-1(b)(3) (anti-abuse provisions). I wasn't thinking of an improper amendment that pre-planned for a SH failure. Though that is a good reminder that they aren't allowed. I was curious about failure to comply with some other part of 1.401(k)-3(g). Say the notice requirement, or the original notice didn't have the supplemental language and the employer isn't operating at a loss. I guess I'm playing devil's advocate. I would hate to think disqualification would be on the table for something like imperfect notice. But I don't know.

I like the notice. I do have two things that I would want clarified, maybe the great minds here can shed some light. First Item "Example 2: The employer sponsoring Plan N, a traditional §401(k) safe harbor plan, makes a mid- year plan amendment to decrease safe harbor nonelective contributions from 4% to 3% for all eligible employees. If the reduction meets the requirements of §1.401(k)- 3(g), the plan is no longer a safe harbor plan and is required to satisfy ADP testing or other nondiscrimination standards. If the reduction does not meet the requirements of § 1.401(k)- 3(g), the plan as amended does not satisfy §401(k)(3)." The last two sentences seem oddly worded to me. So if the decrease complies with the regs, its subject to ADP etc. If the decrease doesn't comply with the regs, well the plan doesn't pass ADP? At all? I think it should have been more specific, and said §401(k)(3)©, Otherwise, if the entire section of §401(k)(3) isn't satisfied, it sounds like it is deeming the plan to fail ADP, regardless of deferral percentages. I think I am reading too much into that example, and being too technical. This is only guidance after all. It is not a new rule or regulation. Second Item I wish one of the examples had addressed a profit sharing method allocation change. One of the most regular requests I see is to change from pro-rata to individual groups (new comp / Xtest). For a non-safe harbor plan, if participant haven't met the allocation conditions, (last day employ, 1,000 hours etc) sure, we draft the amendment. For safe harbor plans, the conservative position was to make it apply only on a future plan year. All of the examples where the change was allowed seemed to involve minor changes, and clearly benefit the NHCE. an allocation change to New Comp (in the small plans I work with) is almost always done to benefit the HCE. It is not done to benefit the NHCE. The notice does not create (nor could it) a new requirement that mid-year changes benefit NHCE. Given that the profit sharing allocation method would be a significant change, I wonder if there might still be some practitioners hesitate to allow such a change mid-year. I think moving forward I will treat such a request similar to the same way I would treat it from a non-SH plan. check if participants will have met allocation conditions, if not, give 30 days notice, do the amendment. Thoughts?