CuseFan

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.

Generally, related employers are those that are in a control group or affiliated service group of employers. You consider the related employers as a single employer when applying the qualified plan rules for such things as coverage and nondiscrimination. Example, A is parent company that owns 100% of subsidiaries B & C and sponsors a 401(k) in which employees of A, B & C are all eligible to participate. This is considered a single employer plan. A multiple employer plan is a plan in which more than one unrelated employer participates. Example, companies A, B & C are each owned 100% by three separate unrelated individuals who are friends from college and decide to adopt the same 401(k) plan for their employees to gain economies of scale. This would be a multiple employer plan.

Correct, whereas a W-2 comp definition includes GTL, a 3401(a) comp definition does not.

Great point Luke

https://www.irs.gov/retirement-plans/self-correction-program-scp-faqs Two-year SCP window. IRS website actually gives an example of 415 failure for 2016 that would eligible for self correction by 2018.

Odd question because 3-year cliff is quite common and basic - you weren't asked to set up 3-year class-year vesting, where each year's contribution vests after three subsequent years? Because class year vesting is definitely no longer allowed in qualified plans.

Exactly - whether a US citizen, resident or not, your spouse must be primary beneficiary. In order for her to get a payout from the plan, if it ever came to that, she would need either an SSN or an individual TIN. The tax treatment, withholding, etc. depends on tax treaties with the country of residence/citizenship and can be complicated as the king noted. It is not a legal requirement, that I know of, that SSN/TIN be provided at the naming of a beneficiary but it is certainly a best practice.

Agreed. It's an interesting premise. I'm curious that you say "discrimination" but don't specifically say what kind(s), as there are all sorts and successful litigation often results in damages that may or may not be considered retroactive pay. And the assertion of hundreds of thousands of employees sounds more to me like misclassification of employees as independent contractors, which is entirely different. Many retirement plans that (mis)classify EEs as ICs are still able to legally exclude them from participation if subsequently determined to be common law employees, subject to compliance with other requirements on coverage and nondiscrimination. Regardless, I'm sure Peter can steer you in the proper direction.

If I had a nickel for every $.05 check I received over the years ...... Have the brokerage close the account, tape a nickel to a letter and send to the participant, like various charities do. They've already spent far more in accounting for this already. As an old acquaintance used to say all the time, "there ought to be a law..." - and in this case that any amounts under $5 left in closed out accounts may be forfeited to the custodian and used to defray expenses.

Using Paychex as your 401k provider is problematic regardless and it's likely well worth the $1500 to get the heck out, from wherever it's paid. A transfer/de-conversion fee paid from plan assets is probably OK. Whether some other action taken by the sponsor triggers such, I don't think matters. Clearly not an issue for someone not using them for payroll.

Yes, that is the potential issue. I do not think there is definitive guidance/prohibition and I do recall getting a D-letter years back for such a design, but before all the hybrid regs were finalized. I would just suggest treading carefully and researching thoroughly before going that route. But if 0% for all, or a subset that satisfies coverage/BRFs, then not an issue. Or, consider using actual ROR as the ICR.

Yes, you can have 0% CB ICR but may have issues satisfying 401(a)(26) meaningful benefits if plan-wide and other issues if only for HCE(s). We have DBP and CBP with Sharia-compliant investments (and an internal investment group that does it), and traditional DBs have an assumed investment return within funding, which is essentially the same as a CB ICR. These are usually exclusively Muslim-owned practices rather than one or two within an otherwise non-Muslim group.