CuseFan

Also, 401(a)(26) has some prior benefit structure requirements, but if you don't increase benefits (including excess assets) when it's only the owner left then you should be OK.

I don't that is accurate - I think it is based on applicable state bankruptcy laws which I know over the years that many have become more sympathetic to IRAs and rollovers from qualified plans. However, ERISA protections are national/federal so there is no question. If creditor protection is important to an individual they should research their particular state laws before executing a rollover (if remaining in qualified plan is an option).

Had a similar situation in 2008, a company with 2 or 3 owners and 40+/- employees put in a CBP just before the economy crashed in the great recession. They could not afford their first year funding or likely near future years as well and survive in business. It was definitely PBGC-covered, and I think their premium/filing was the only filing with any governmental entity at the time we approached PBGC to explain the situation (no IRS submission of plan and no 5500 filed yet, if I remember). They were allowed to rescind the plan and were refunded their premiums. I do not recall if benefit statements went out to employees in addition to SPDs. If PBGC-covered, then you could try that route. PBGC gets off the hook for under funded plan. Employees - the message is we can afford to keep you employed or we can fund the CBP, we would prefer to do the former and rescind the plan, any problems with that? BUT - if tax returns were filed claiming deductions for contributions that were never made, the first order of business is to file amended returns.

One word - lawyers.

Thanks Luke

Sorry - not all 100% up on EPCRS because I don't make mistakes needing it - LOL - Friday humor! Thanks for pointing out. Apologies to IRS, but until we routinely see timely EPCRS/VCP resolutions on the model corrections I'm not holding out hope for faster closing of custom situations. I'm curious to hear from our community on their VCP timing experience over the last few years, although maybe that's not fair given the COVID variable.

That depends on the wording of the amendment or the document. Some will say that existing participants (entered plan, whether deferring or not) continue participating but those who are not participants are subject to the (new) eligibility requirements. Some documents are silent in that regard, which then leaves it up to Plan Administrator interpretation. I do not recall seeing a document (preapproved version anyway) that specifically said the (restated) eligibility requirements applied to everyone, including those currently in the plan, but without the aforementioned grandfathering, I think that is a reasonable interpretation.

Correct, and it's not up to participant to close the account, upon plan termination it is the Plan Administrator. Tell this person that the account will be closed and distributed in X days and that 20% will automatically be withheld for taxes unless she elects differently pursuant to distribution forms already provided - that should get her at act. If it doesn't, then complete the distribution to complete the plan termination.

In addition to a slim chance for your desired outcome, you're likely waiting 18-24 months to find out.

If the 2020 5500 has been filed I would be very scared that the 2019 late letter would be imminent and suggest biting the bullet to incur the cost and file DFVC ASAP. Otherwise you risk a much larger penalty, which you've already copped to, that no manufactured excuse is likely to abate.

Heck, years ago when I was church treasurer I generated "payroll" for 2-3 employees on a spreadsheet, sent the w/h in quarterly, then generates W-2s and 941 at year-end using Social Security Business on-line. It was very easy, no cost, and did not take a lot of time. Add it to the spouse's job responsibilities and do things the right way.

Sorry, it was clearly stated in the heading - document not drafted correctly. I think your stuck with what's been done, unless it's an auto enroll where the employees can opt out after the fact, and they do so.

First - just another example of why using a payroll company as your 401(k) provider is a BAD IDEA. Second - although not clearly stated, it sounds as if the plan document was drafted with the incorrect undesired provisions and then would have to have been signed by the plan sponsor, so they have culpability as well if that is indeed the case. If so, there is only correction going forward. There is no operational defect following plan provisions, only poor judgment and poor service from all the responsible parties in not executing the intended plan. If the document was not followed, then making corrections by returning improper withholdings and forfeiting unentitled employer contributions is a proper correction.

seconded w/o a doubt

The only way they could be excluded is if the plan had the provision for and they signed an irrevocable election not to participate in the employer's qualified plans before becoming eligible to participate. Such is a very rare occurrence and this does not exclude electing employees from coverage and nondiscrimination testing populations. Note this is NOT the same as declining to make salary reduction contributions.

The plan should have provisions for how to proceed if no beneficiary is designated or a designated beneficiary predeceases the participant. It is also required to say how and when to pay benefits upon death, including minimum required distributions (timing and amount), as referenced by Peter. As gets stated over and over in this forum - read the document, it has all (or nearly all) the answers.

Yes, as well as subtotals in asset statements not flowing. I was not preparer, only the top-level reviewer of the drafted info that was input. Upon submission, line 3 apparently went in correctly (once fixed on subsequent log in), don't recall hearing any line 16 issues. We included an attachment explanation on asset subtotals, stating the on-line form inaccuracies and the correct amounts. I don't know about the checklist but thought it came up. The more technology is supposed to make everyone's life easier the more it seems to have the opposite effect! Good luck.

Some plans allow changes to the extent permitted by the regs - I believe there are some exceptions in the 401(a)(9) rules. If the owner is still "working" then upon actual retirement he may be able to make a new election. Another possibility, purchase an annuity contract for the benefit, will cost more than remaining PVAB but will provide longevity protection for the recipient. And/or, if not at the 415 maximum benefit, amend to increase the benefit.

Agreed, that's one of the correction actions that you can do via amendment.

Yes, deferrals should have been taken from vacation buy back pay. Maybe not a resolution but at least a memo from the employer to the plan administrator (yes, likely the same entity) that authorizes PS contributions "as attached" and then include your PS report. On audit, IRS will ask for it - at least from my experience.

Not unless the form of the plan and contribution allocation formula are specifically referenced to the CBA and thereby automatically change in unison therewith.

As far as PBGC is concerned it's a reversion of excess assets to the plan sponsor. The transfer to the QRP to avoid taxation/excise tax is an IRS concern and not relevant to the 501.

Yes, the amendment must be adopted prior to the effective date to avoid an impermissible cutback. Issuing a 204(h) notice does not relieve of that requirement. I believe the 204(h) rules say amendment reducing the rate of future accruals becomes effective as of the latest of: (1) the effective date (as shown in amendment), (2) the adoption date, or (3) the date that is 45 days after the 204(h) notice is provided (15 days for small plans).

Great point! I know that on a DB termination PBGC considers an unresponsive participant as missing, I don't know if consideration extends to DC plans or the participant must be truly missing.

MPP source is subject to QJSA rules, so w/o participant waiver/consent and spousal consent, if applicable, you must purchase an annuity. That's why clear communication, forms and follow up are so important. If you tell someone, hey, if you don't return your properly completed forms, then instead of getting that $20,000 portion of your account you'll get $25/month 10 years from now when you're 65, they'll likely respond.