RatherBeGolfing

Second plan name has double quotation marks ""

Excerpted from https://www.asppa-net.org/news/irs-whistleblower-informs-ara-change-could-doom-voluntary-corrections "Word of the dramatic shift in focus was brought to the attention of the American Retirement Association by an anonymous IRS whistleblower. The existence of the forthcoming shift in procedure was confirmed independently. * * * "Information indicates that in the next couple of weeks procedures in the VCP program will be updated in a manner that will subject substantially more cases to the Examination function within IRS. "Essentially, if information requested by the IRS is not sent in by practitioners within a 21-day window, the case will be automatically referred to Examination. What’s more, if the taxpayer withdraws a VCP case, it will be referred to Examination. "Moreover, if the taxpayer misses the 21-day window and the case is referred to Examination, the taxpayer will not be allowed to re-submit the case for consideration under the VCP. If the taxpayer disagrees with how the compliance failure should be corrected, the case will be referred to Examination." Full text at: https://www.asppa-net.org/news/irs-whistleblower-informs-ara-change-could-doom-voluntary-corrections

Rev. Rul. 2012 –3

Absolutely. Allocating and mailing is not the same thing. I think you are looking at it backwards though. The allocation or investment of the contribution would come after the deposit. If I deposit a contribution today, and the recordkeeper allocates that contribution to 10 participants tomorrow (or 10 investments of the same participant), the deposit date is still today. I think that is clearly distinguishable from when you mail a check, which also gives the employer another day or two with the participant contributions since it will not actually leave the employers assets until cashed. Lets also remember that the due date is not 7 business days. The due date is the earliest date on which such contributions or repayments can reasonably be segregated from the employer’s general assets. The safe harbor simply gives you the benefit of the deposit being deemed to be made on the earliest date on which such contributions or repayments can reasonably be segregated from the employer’s general assets if deposited no later than 7 business days following.

Was it? Clearly you don't meet the general rule of "the earliest date on which such contributions or repayments can reasonably be segregated from the employer’s general assets." If this is a plan with fewer than 100 participants at the beginning of the plan year, the safe harbor would be: So, it is deemed contributed on the earliest date on which such contributions or participant loan repayments can reasonably be segregated from the employer’s general assets if deposited no later than the 7th business day. Does mailed on a the 7th business day mean deposited on the 7th business day? I don't think so. Lets look at the final rule published on 1/14/2010. I think it is pretty clear that deposit means deposit. In your example, the deposit takes place on the 23rd, which is outside of the safe harbor window. Since the employer in your example fails to satisfy the general rule, it is their responsibility to deposit the contributions no later than the 7th business day following. The contributions are late.

Correct. The short answer is that if a DC plan meets certain conditions, it does not have to offer an annuity as the normal form of benefit. In that case, spousal consent is not required for loans or distributions, but it IS required in order to designate someone other than the spouse as the beneficiary. Plans that do not have to be subject to QJSA rules can still be drafted to be subject to them, so the document still rules. I know @Larry Starr is a big fan of drafting his documents using QJSA requirement even if they are not required, but I will let him jump in and explain why if he wants to. Look at 1.401(a)-20 and 401(a)(11) for more technical information

The possibility of a payout in a form other than lump sum was there before SECURE. It just isnt used by very many plans. DC plans will have to provide a lifetime income illustration, they will not have to offer lifetime income as a benefit. The illustration and the benefit are completely separate issues.

I dont believe Sec 109 will upend the DC (or QDRO) landscape. As I understand it, it deals with lifetime income options as an investment, not a benefit. The portability issue has been that if you hold an annuity as an investment you are tied to that record keeper or pay substantial surrender fees. What 109 does is allow you to move that investment if it can no longer be offered by the plan. It does not add an annuity as a benefit, which is what I think your concerns would require.

Is there a specific section of SECURE that you are referring to, or was it meant as a question?

I know I guy who works on PR plans, but he is a DB guy so not sure if he does PR DC work. At least I assume its a DC plan since this is under 401k plans... I'll reach out and see if I can get an answer.

Agreed, I think it matters for people well outside of the 1%. Top 10-20% sounds about right.

Even without submitting for a det letter on termination, I dont see the IRS going after a plan with a good faith amendment to include provisions of SECURE that had no actual impact on the plan or the benefits paid. Of course I probably just jinxed everyone here...

Hi Bethany, this is going to be the answer in most if not all states. Outside counsel pointed to California law because it was a California employee. We have had this discussion many times on here, and I dont think anyone has ever provided an example of state law that WOULD permit it.

This would make some attorney out there VERY happy.

With the 10 year payout requirement for non-designated beneficiaries, what are your thoughts on using a charitable remainder trust to facilitate a lifetime (or 20 year) income stream? Obviously, it does not have all the advantages of the stretch, but it does provide for tax deferred growth and income stream beyond the 10 years. Thoughts?

I'm not 100% sure. Safe harbor changes in Section 103 maybe? I know FT Williams will be coming out with a "termination amendment" fairly soon (a few months), and it sounds like FIS is doing the same.

Derrin was talking about the deadline to amend plans for changes made by SECURE being the last day of the plan year beginning on or after 1/1/22, but if you terminate the plan before that, the deadline to adopt any required amendments would be the termination date.

I just had this conversation with a doctor who was upset that she couldn't do this in the practice she just joined. The numbers don't work at all for them. "well my brother works for Facebook and they can do it, do we just have to get a plan from the same place they do and then I can do it?" ?

The ability to pay it back is pretty significant. Not only are you allowing assets to leave the plan, you are also allowing them to flow back in, either as pre-tax or post-tax dollars .

Marking the 5500 as filing under "special extension" is the only thing I can think of that would not trigger IRS love letters... We have plenty of time for guidance though.

Obviously I agree with Larry that guidance is needed, but if you are desperate to implement it now, you should be ok as long as you can show that the steps you took were in good faith. I would probably go with requiring documentation during the good faith period and then possibly changing it after guidance comes out if it is more lenient. I think the repayment is the trickier part, the limits and events are fairly straight forward, and even where there is a question you can argue reasonable interpretation while we wait for guidance.

What area are you in? You can probably find someone who will do it over phone and email, but if you prefer face to face contact the people here may be able to recommend or at least provide you with local firms to contact.

Yes. Its one of the issues that has been identified as needing further guidance.

Since they are your document provider, I would ask again, and request it in writing, backed up by some kind of authority. I would also make sure that this comes from the people who actually draft their documents. This isn't the type of explanation you should get from customer service.

Which isn't a legal opinion (at least very unlikely), and I would be very careful about making operations decisions based on that. Did cite any type of authority for it, or did they just say "Joe TPA did not mess up"? That is not an uncommon feature, I know Relius/FIS has or had it as well. FTW does not, but I believe that is intentional to avoid mistakes. For balance forward plans, you would typically "exclude" a participant from earnings because otherwise the software would allocate earnings based on beginning year balance and you would end up with an ending balance of just earnings.