RatherBeGolfing

Filing VFCP doesn't excuse your excise tax under 4975, so you still have to file your 5330 and pay the tax. Under limited circumstances, you can file VFCP and deposit what would have been the tax to the participants instead. But outside the PTE it really isn't an either/or situation...

I guess my question is why would you NOT keep records of benefit payments?

That makes more since than how I read it

Why did the participant give a check to the sponsor for a deferral?

I agree 100%. I only offered an explanation of the issue and the objection as I understand them. The plan and its admins are under no obligation to act on it. I disagree to a degree. I don't think the Sharia issue is all that different. Some Muslims see any vehicle that earns interest or dividends as haram, even if a so called sharia compliant mutual fund is available. Others don't care about the usury aspect as long as the underlying investments are "sharia compliant", and others don't care at all. But just like the Amish example, the plan is under no obligation to make special considerations such as a sharia compliant fund that may appease a subset of believers. They may make the decision to do so if it is otherwise prudent and reasonable, but I don't think it is any different from the Amish exclusion. EDIT: There is an excellent article on Sharia and ERISA in the JPB that was written by Asrar Ahmed at the DOL (at least at the DOL at the time of the article). It goes into many more issues than I noted above. JPB Vol 20 Number 4 if you have access to it. At least I found it very interesting as a non-Muslim pension geek :)

When it comes to religious objections, I think you can always make counter arguments like "how can you object to X but not Y?" The old "would you pull an ox out of a pit on the Sabbath" comes to mind as a perfect example. What it comes down to is that religious interpretation is an individual thing.

I will start by saying that this simply my understanding (right or wrong) of the issue. investment options are not necessarily disconnected from the issue of a retirement plan in general. The objection on religious grounds isn't a one size fits all. Some may object because there are no investments that meets their needs, like a sharia compliant fund. Some may object because no matter what the fund options are, investments are designed earn dividends or interest which some interpret as running afoul of prohibitions of usury. Some (including some Amish apparently) may object because their religion requires them to be self sufficient which means that they may not object to savings but would object to ER contributions.

I haven't seen any Amish examples before but I have heard several examples of Muslim participants who refuse participation and/or refuse to accept contributions based on the theory that the plan itself or the investment options are not halal. In each of those cases the problem was not discovered until the employee was already a participant. I agree with the comments above. Absent a timely executed waiver, you have to follow the terms of the plan. If you can exclude them from the allocation and pass, great. If not, you follow the terms of the plan and contribute to a participant who will most likely refuse to accept it when it is time to distribute the benefits.

You would need to be a bit more creative and draft the exclusion in a way that excludes the people you need to exclude while not being discriminatory. You could probably exclude a class of employees who in writing disclaimed to the employer that their religious beliefs would preclude them from accepting employer contributions. You still have to pass testing though.

Its clear that the annual additions is X. The fact that you can get MORE than the annual additions doesn't change what the annual additions is. What OP quoted is an explanation of annual additions, not an explanation of the the most a participant can possibly be allocated in a plan year. It really isn't ambiguous, just different (yet related) concepts.

That was part of the proposal. My understanding is that the proposal has stalled because it isn't that high on the list of priorities and there is no funding to push forward at this time. It is possible that we will get a new proposal at some time though... Yea if you can't nail down the mailing date it is hard to use it. Is there a difference between when the money left the ERs account and when it was credited at the recordkeeper? Sometimes the RK will deposit one day and credit it in the following days. if so, you can use the earlier date since we are looking at when it was segregated from the ER assets. It might not be much per transaction but over the years the savings can really add up.

You are incorrect. As Lou has pointed out catch-up contributions are NOT subject to IRC §415. See IRC §414(v)(3)(A)(i). Therefore, when you are determining whether an employee's annual addition exceeds the limit in §415(c), you should NOT include catch-up contributions

Not OP obviously, but that was my interpretation. Wouldn't help the past years but would keep employers with lots of employees but little participation from being large plans if the count is by P's with a balance.

When contributions are mailed, use the date it was mailed rather than the date it cleared. The mailing date is when the contributions were separated from the employers assets. That will take a few extra days off your count.

1 - 95% 2 - 5%

A few thoughts: Are they just not going to do have the audit done for the years it was a large plan? That is a compliance issue I couldn't ignore. Either do it or move on. How many years to review? You know of issues going back to 2011. Same theory as above applies. You can't ignore known compliance issues. And these are pretty bad. A 35 day average for a large plan is a BIG deal to the DOL. You need to go back to 2011 and fix it. You can apply the 7 day safe harbor for the small plan years, but not the large. Unless you extraordinarily complex payroll system, 6 days isn't going to fly for a large plan. This is one of those "the rules are the rules" situations. 35 days 15th of the month following are non starters. An auditor will probably apply 2 days but sometimes a few more in rare cases, if reasonable. Here is what it comes down to to me: Don't make the clients problems your problems. They have serious compliance issues. Those issues need to be fixed properly. You are a professional. You know how to fix those issues properly. Don't create problems for yourself by not doing it right just because you want the business. It isn't worth it. Hopefully the client will realize that you are looking out for them and do the right thing.

What is their justification? It is much easier to tell them they are wrong if we know what basis they think they have for their solution.

While my Latin is limited, I have always found it surprisingly useful.

Even worse, they will read (and read into) anything they can get their hands on. For example, John Hancock's annual 404a-5 disclosure includes default language regarding what adjustments are made to the market value formula in their guaranteed interest accounts when there is a plan discontinuance, in-service, withdrawal, pre-retirement withdrawal, etc. I have a plan that does not allow in-service withdrawals, and a participant was repeatedly told under what circumstances she could have a distribution. She turns out to be one of the 0.0001 % of participants who actually read the 404a-5 disclosure and zero's in on the default language from JH regarding their guaranteed income accounts. From this she extrapolates that since the disclosure mentions in-service and pre-retirement withdrawals, that must mean that she has a right to them and that we (the sponsor, the PA, and the TPA) are illegally keeping her from accessing money that she entitled to.

Well I limited my response to the distribution options as I'm not convinced that it is a DRO qualification issue. That said, even with a QDRO, they can't refuse to submit the plans required paperwork for a distribution. The QDRO is how we get around the anti-alienation clause, by "creating" a right to receive a distribution of a participants benefits in a plan. So you could have a valid QDRO, but still have whatever forms, notices, and procedures you require for the actual distribution. Edit: I agree that the attorney can't demand that nothing is sent to or required from the AP, but I also don't see that as a DRO qualification issue unless they included in the actual DRO (which seems unlikely)

What is the actual wording in the plan document? Depending on how it is written, you could reasonably interpret that as the PLAN cannot refuse to honor an election by the AP that would have been available to the participant (or honor one that is not available to the participant) It is not uncommon to see a QDRO where the manner of distribution has already been "determined".

You may have to do some digging (or key word searching ) to find it. In my document, it is located in the section that details the authority and responsibility of the Plan Administrator.

I use FTW for documents, 5500/1099, and admin. I used to use Relius for everything. To me it comes down to two things, cost and need. On cost, FTW wins hands down. Do you need a lot of flexibility? Relius, while sometimes tedious to work with because of all the settings and options, is a lot more detailed than FTW (and any other system I have looked at). You have to know the system pretty well to use all the bells and whistles, but if you do, you can make it do pretty much anything you want. At least this was my experience 5+ years ago. I am happy with FTW. It does what I need it to do 99% of the time. The other 1% can be a pain and requires some creativity, but so far I haven't come across a problem I couldn't solve. Since FTW is less detailed/quirky, it is also easier to learn and use on the more basic and moderate levels. The one thing I really miss is being able to make the reports just the way I want them, like you can with Relius. With FTW you are pretty much stuck with their formatting options (although they are working on giving us more options to customize). If you really need to change the look of the reports, you can customize it on the user end in Word, Excel or Acrobat, but you need to be creative and it helps if you have a good understanding of macros.

Happy to help