RatherBeGolfing

If an RMD is required from the plan, that RMD must be completed first, and the rest rolled to the IRA. The PLAN is required to make the RMD. Its a qualification issue if it does not. Thats why you cant satisfy the total RMD from both IRA and QP by taking a RMD for the full amount from the IRA and leaving the QP assets alone. The IRS may have said he does not have to take an RMD from the plan because he is not an owner and is still employed. But that goes out the window if you want to take a distribution, then the RMD has to be satisfied first.

@ERISAAPPLE This case did not seek a remedy against the spouse, it sought a remedy against the plan.

@ESOP Guy My comment wasn't the literal reading of the badly worded sentence, it was to your question. I do, because I don't think that sentence accurately describes the plan's eligibility requirements. and the law does require the plan to operate by the terms of the document. And there is no way this sentence alone is an accurate description of the eligibility requirements, as it only talks about the first 12 months of employment. That alone means that there is more to it since it clearly is not legal to only consider the first 12 months of employment. If the question is, is there a legal problem with a document actually designed to let people in as soon as they hit 1,000 hours within a 12 month eligibility computation period? No, I would agree that as long as it is more liberal than the statutory requirement, it is fine.

The plan must be administered per the terms of the plan document, not by how a participant interprets a badly worded sentence. Just reading the plan document's definition section will probably clear up any confusion. This sounds like something from an SPD, and I would bet the document itself does not word it this way. Either way, if the document (other than the badly worded sentence provided) clearly provides for a year of service as a 12 month period during which an employee works at least 1,000 hours, it would be a failure to follow the terms of the document by letting them in early. And if we really want to be picky, this would only allow an employee to become a participant if they worked a 1,000 hours in the first 12 months of employment, so no dice if you get 1,000 any year after that. And do they have to be consecutive months? Or can I quit after 2 months and still count them if Im rehired down the line?

It is a problem only if you have to use average benefits tests to pass. § 1.410(b)-4. The IRS considers criteria having the same effect as exclusion by name to NOT be a reasonable classification. Can you pass without ABT? Then no problem.

My VS document provides that the Plan Admin can determine the ordering rule as long as it is nondiscriminatory, and that such determination may be to allow the participant to select the order. Like @Kevin C, we can also override that in the AA and/or limit certain types of distributions to certain fund sources.

a bit of a misleading title as she was not a surviving spouse when the distribution was made... She was simply a spouse with no claim to the assets. What if it was a $10,000 account balance. Anyone want to argue that the participant shouldn't be able to take a distribution even though no QDRO had been issued and they were still married?

Most likely yes. We are not a 3(16) TPA, but we have some language in our service agreement regarding truthful representations from the sponsor. Most TPAs probably have similar language in their agreements. Is it enough to fend off a member of the plaintiffs bar if they have a juicy case on their hands? Probably not. We ask for information on prior plans of the sponsor. The level of detail we get varies. If someone wanted to hide it they probably could. Error-checking or post filing review? I highly doubt it would flag all John Doe's because one John Doe was enjoined from serving as a fiduciary. What might be able to catch it is EFAST. I would assume that they ban or suspend the credentials of the person enjoined from serving as a fiduciary in the future, and if they tried to register again it might catch that. I really don't remember the steps and information they require in the registration process, but I would be surprised if they didn't throw in a "have you ever been convicted of XXX or have your XYZ suspended yada yada yada".

If you want to be 100% sure that your correction is reasonable and appropriate, use the correction method spelled out in EPCRS as "deemed reasonable". But any method is allowed as long as it is reasonable and appropriate.

Whether a certain correction is reasonable and appropriate is a case of facts and circumstances (2016-51 6.02 (2)) so I don't think it is correct to say that a certain correction "may not be used if...". To simplify things, certain corrections are deemed reasonable. FWIW, I have never experienced (or even heard of) the IRS disallowing the use of the calculator when it was also corrected under VFCP. In other words, I have never heard of anyone having to do a different correction for EPCRS if they also filed VFCP using the calculator. I think your interpretation is reasonable if VFCP is not filed, but again, facts and circumstances.

I agree with booth Larry and QDROphile. I'll add that I'm not even sure if a QDRO could be contingent on future marital status of the AP. I certainly would never let a client agree to such a stipulation, and I doubt a judge would issue such an order.

Agree 100%

Sorry.... Couldn't resist...

Good question. My document uses the language "exclude compensation before participation" AND "limit the definition of Compensation to only that compensation paid to an employee while (s)he is a Plan Participant" for the same exclusion. To me, the its pretty clear that the intention is to only count comp while eligible, so a newly ineligible participant would only count comp while eligible as well.

I can't put my finger on the exact Q&A, but it was the last or second to last ASPPA Annual Conference where the IRS participated with a panel discussion (but not written answers). A similar question was asked and the opinion was that if you made a change that was not required SHN content because of a cross-reference to the SPD, a new SPD or SMM must be issued to the participant immediately. To my recollection, the did not discuss whether the 30-day advance notice rule would kick in but I think Austin is correct that because a new SHN is not required, the 30-day advance notice is not required either. It would follow that you could implement the change immediately after distributing the new SPD or SMM. Of course, this was only the opinion of that IRS employee and not that of the IRS and cannot be relied upon yada yada yada

I don't think there will be a huge drop off of advisers who accept fiduciary status because it will be in demand even without a rule. It think it comes down to the structure of the plan and plan sponsor rather than the assets. Are there checks and balances (committees or some sort of oversight) on how the adviser is selected? If yes, you are probably more likely to have a fiduciary adviser. This is certainly not limited to plans with $50 million in assets. I see this in plenty of plans with assets under $10 million. If the plan sponsor is smaller and the decision making is in the hand of just one or two business owners, the selection tends to lean more towards an adviser with a pre-existing relationship, or in other words "the guy/gal who does my personal investing". There will be plenty of fiduciary advisers out there even for small plans. Even before the rule I could point prospective clients to several advisers who were both fiduciaries and reasonably priced.

Oh I actually agree with you, it is absolutely our job to let the clients know what the consequences are, just like it is also our job to sometimes draw a line in the sand. My point was more that if a client does not want to file VFCP, you cant really force them to but you have to tell them what the consequences are (especially if you are also governed by Circular 230). The 5500 is a different matter altogether, because most of us actually prepare the form for the client, so preparing and helping a client file a form that does not answer the compliance questions truthfully impacts the professional just as much as it impacts the client. I can live with a client that is willing to play the audit lottery and not file VFCP, but I will not help a client conceal compliance issues on the annual return. That was all I meant by do not make the clients problems your problems. As for the frequency of follow ups, they follow up on both small and large amounts so there is no "less than X and your safe or more than Y and you will get a letter". What does matter a great deal is the region.

Whether you correct or not, you still have the list the transaction on the 5500. It is not filing VFCP that prompts the letter from DOL, not the fact that you accurately prepared the 5500. VFCP is "voluntary" because you voluntarily bring the item for correction without them findingand making you correct. Voluntary does not mean that the correction itself is discretionary. If a client refuses to sign a return because it is accurately prepared and brings the clients misdeeds to light, I drop the client. Never make their problems your problems.

Ok then it should be pretty straightforward. All the platform vendors we have clients with send us information type emails all the time. Same with our software vendors. Every now and then, these include free webcasts that you can register for. It might depend on who in your organization is set up as the contact with the vendor, but anyone in your org should be able to register for the webcast. For example, Voya sends out their emails as part of their TPA support. Their webcasts fall under "Voya Financial TPA NAtional Webinar" JH sends theirs out through the TPA Essentials program. Do you get these type of emails from them?

I think the CPC study guide oversimplifies the issue. Generally, a nonperiodic distribution is subject to the 10% withholding rule because it is taxed in the year of distribution. This is not necessarily the case with with a 402(g) corrective distribution. The 1099-R instructions clearly state that "Corrective distributions of excess deferrals are not subject to federal income tax withholding or social security and Medicare taxes." Presumably, this is because the distribution is taxable in the year of the contribution rather than distribution, as long as it is distributed by April 15 of the year following the contribution.

What part of the industry are you in? TPA? Investments? CPA?

Yes. You don't get a pass on the Form 5500 compliance questions just because you don't file VFCP. The only magic number that makes you less likely to have the DOL take an extra look is $0. However, some regional offices are more likely to take an extra look and send a love letter if they see late deferrals on the 5500 with no VFCP. I have heard that Philly, Kansas City, and San Fran are the regions that are the most likely to follow up.

Short answer, yes they are included. Edit: Longer answer IRC §1372 - for purposes of fringe benefits, 2% S Corp SH is treated as a partner of a partnership. IRC §106 - Employee gets to exclude employer provided health coverage form gross income. Since the 2%SH is NOT an employee (partner per §1372 above), the 2%SH does not get to exclude it from gross income. Employer provided health coverage is included in W-2 Box 1, but not Box 3 or Box 5. Premiums should be listed in Box 14 (but I have seen a lot of preparers not list it). For some reason I think auto is included in Box 3 and Box 5 as well, but not 100% sure and I don't think it matters for our purposes. as @ERISAAPPLE points out, make sure fringe benefits are not excluded in the definition of comp.

TPA? Just curious as most TPAs I know pretty much always use the calculator, while all the atty's I know never use the calculator unless VFCP (and they almost always file VFCP).

Yes, they are not subject to withholding. I believe the instructions for 1099-R states it as well.