RatherBeGolfing

Pooled plan? Treat the distribution as distributed to the participant and a contribution to the plan.

Ive had this happen a few times. Once the IRS, in its infinite wisdom, decided to change the EIN of the sponsor for no apparent reason. Another time, they changed a plan number from 003 to 001 because they thought that it should be 001, even though plans 001 and 002 had been properly terminated 10+ years ago. I think I had the late filing with a penalty once before as well, and was able to take care of it with a 2848 and a call to the IRS. Im sure you can get it taken care of, but it is aggravating, especially if you have to sit on hold for an hour to talk to someone and then go through the new IRS POA screening procedure where they basically ask you for your first born in order to talk to you

I don't doubt that the folks at the IRS could be spending their time doing more important things than looking at loans and RMDs. In my opinion, this just makes our case for self correction stronger.

IRS response to ARA comment letter on VCP User Fees

You are wrong, plain and simple. This is why amendments have to be drafted very carefully in order to avoid unintended consequences.

No. The excess should be distributed to the participant. You cant leave it in the plan. Edit: I just re-read the comment. If this was an Employer contribution that was mistakenly deposited as a deferral, then yes, you could tell AF to make a transfer to the correct source.

Yep

Yes. She would get a 2017 SH contribution. I guess the amount would depend on whether the plan uses participation comp or full year comp. Yes. For 5500 purposes she is a participant at the end of the year because she has a balance. However, she is not an active participant for 5500 purposes since she is now ineligible. Yes. She is an ineligible participant with no balance at the end of the year. She is not a participant for 5500 purposes.

@BG5150 We discussed this here after the 2016 ASPPA Annual where when Brians presentation on 411d6 caused a bit of a stir. You do not have a cutback issue If someone who is currently eligible becomes ineligible because of a change in eligibility requirements. You may have discrimination issues if your amendment favors HCEs, but you don't have to protect someones status as eligible if the change is otherwise permissible. I don't have time to look it up at the moment but this was my citation in the EOB in last years thread

Sure, why not? Income for the month doesn't really matter, but you can't defer compensation you haven't received. All that matters is that you have compensation to cover the deferral. The actual deposit still has to be made as soon as you can segregate the deferrals from the Employers assets. Since you have a plan under 100 participants, you can use the 7 business day safe harbor.

Yup sounds familiar lol. Most clients care more for employee morale but when cashflow is an issue, anything goes

Yes, but I prefer option B as I think it is "cleaner".

But they sure can find a way to charge for it...

FWIW, we don't show the EIN on ours either.

In small plans / sponsors, I want as few accounts as possible attributable to participants who are not active employees. It is just one more opportunity to miss a notice or disclosure or for the participant to go "missing".

The IRS "knows" because that is what you told them. Investments are supposed to have earnings, so the fact that the value increased by more than the contribution is nothing out of the ordinary.

I don't think I would want to be on a list of advisors "certified" by this company in the art of sham divorces....

They could always compensate the employee outside of the plan and amend prospectively. Not quite the same but at least they would be able provide some sort of benefit to a loyal employee. Edit: I see jpod beat me to it

ASPPA/ARA filed a comment letter today on the VCP fee changes. The link to the comment letter should work even if you are not an ASPPA/ARA member, but if it doesn't just let me know. Since we might have lurkers who don't get ASPPA or ARA Newsletters, here is the article in todays ASPPA Connect

"They let me do it in my old plan, therefore I must be allowed to do it in this plan" - old participant proverb

@jimK please consider very carefully what @Mike Preston detailed in his answer, he knows what he is talking about. The last part is especially important, and I cannot highlight it enough:

ASPPA's "Retirement Plan Academy" is a little pricey, but I think it is well worth it. The books are well written and both the material and testing are put through a gauntlet of writers, editors, and reviewers to make sure that it is accurate, understandable, and most importantly that it makes sense to the reader and test taker. Make sure that they get real world hands-on experience along with their studies. There is no better way to get the studying to stick than to see it done with real world examples.

Yea many already do and this just makes it harder to successfully advocate doing the right thing

Thanks Mike! I figured they would be on top of it.

Can we maybe hope that this will lead to a self correction option without the need for VCP at least for loan corrections? I would imagine that ARA would push this very hard since it will hit small plans/employers pretty hard. @Larry Starr have you heard anything from GAC on this?