tuna524

All, Thanks in advance for your help. EPCRS has clear ordering rules for correcting excess allocations. See 6.06(2). When a 415 failure is attributable to both employer contributions and elective deferrals, unmatched after-tax employee contributions and unmatched elective deferrals are reduced first. However, these rules do not seem to apply to the correction of excess amounts. My question is does anyone know of any ordering rules when making corrective distributions of excess deferrals (i.e., Roth before Traditional or LIFO or unmatched before matched)> Neither EPCRS or Treas. Reg. 1.401(g)-1(e) seems to provide for anything other than making sure it is "reasonable." Thanks again!

The document only auto enrolls new employees. I am comfortable with saying that the plan may allow automatic enrollment of employees who have made an election of less than the default percentage. My question is if the plan allows that, will it still be an EACA based on the language I cited to in the original post.

Question: Can a plan "back-sweep" and automatically enroll participants at 3% if the participant is contributing at 2% and still qualify as an EACA? Proposed Answer: No. Treas. Reg. 1-414(w)-1(e)(2) defines an ACA as "an arrangement that provides for a cash or deferred election and which specifies that, in the absence of a covered employee's affirmative election, a default election applies under which the employee is treated as having elected to have default elective contributions made on his or her behalf under the plan." Because the participant has made an affirmative election, automatically enrolling him will result in the arrangement not being an EACA. What are your thoughts?

The only thing that is interesting is that IRC 402(a) states that a participant includes the distribution as income in in the year in which it was distributed. This is different than the general rule of when it was received.

I'm leaning because I don't know of any mechanism for this but it's hard to prove a negative.

Hi Everyone, Participant first distribution calendar year was 2015 and wanted the distribution to take place at the end of December for tax purposes. Because of improper information and service provider error, the participant requested the distribution in December and it was processed in January. Although this is permissible because it is before April 1, the participant would like for that distribution to be 2015 income. Does anyone have any experience with a situation like this? I'm leaning towards there being no remedy but wanted other opinions. Thanks!