C. B. Zeller

From the EBSA Fact Sheet on adjusting ERISA civil penalties for inflation https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/fact-sheets/adjusting-erisa-civil-monetary-penalties-for-inflation.pdf Since the $100/day penalty is under section 502(c)(1), it would appear that it is not adjusted for inflation. It does appear, however, that it was increased to $110 effective since 1997 under 29 CFR 2575.502c-1.

Getting back to this part of the question—particularly the word "should"—it may be worthwhile to request a sample of these statements and compare them to the requirements of ERISA 105(a)(2) (apart from the lifetime income disclosure, which has already been addressed in this thread). My guess is that the platform-generated statements likely meet all the requirements, but the brokerage-provided statements may be missing things like the amount of the participant's vested balance, the diversification statement and the link to the DOL's website. If the brokerage-provided statements are found to be lacking, you may wish to remind your clients of their obligations as the Plan Administrator, and see if that informs their decision as to whether or not they want to pay you to prepare statements.

Congress added the requirement for lifetime income disclosure to ERISA § 105 in the SECURE Act. You provide it because it's legally required, and because if you don't, there is a penalty of up to $100/day/participant.

By the way, a request for guidance on the LTPT rules was the very first item (actually the first two items) on ARA's recent letter to the IRS: https://araadvocacy.org/wp-content/uploads/2022/07/22.06.03-ARA-Comment-Letter-2022-2023-Priority-Guidance-Plan.pdf

The use of conditions other than age and service are still limited by the coverage test of §410(b). In effect the coverage test provides "guard rails" against the (ab)use of class exclusions. However, §401(k)(15)(B)(i)(II) provides that the employer may elect not to apply §410(b) to long-term part-time employees. Without the coverage test, I would want some other guidelines by which to determine that a particular exclusion is not abusive. Otherwise, an employer could come up with a classification that would allow them to exclude all, or nearly all, of their long-term part-time employees, which seems contrary to the intent of the law.

DFVCP is not available to EZ filers (it is a DOL program, and DOL rules do not apply to EZ filers). The IRS has a similar program, you can read about it here: https://www.irs.gov/retirement-plans/penalty-relief-program-for-form-5500-ez-late-filers Since you said $500 for a single filing and not $750, I'm guessing you are already aware of the IRS program, but were just referring to it by the wrong name. Strictly speaking, the IRS program is a penalty relief program; so if there is no penalty to relieve then I am not sure you are eligible for it. However, if you went ahead and filed under the program anyway for all years, I think it's likely that they will just cash your check, stick your returns in a box somewhere, and never think about it again.

The client is correct - you do not have to file 5500-EZ if the assets are below $250,000, even if you filed in the previous year (unless it's the final year of the plan). However, you are inviting a contact from the IRS by not filing. They won't be able to assess any penalties, since the filing was not required. But it's easy to file, so why not go ahead and do it anyway?

I can't see any basis for the IRS taking that position. The 100% up to 3% plus 50% up to 5% formula is an enhanced matching formula with respect to a QACA.

Did any participant receive less under the formula that was used in operation than they should have under the formula in the document? Presumably the answer is no - the 100% up to 3% plus 50% up to 5% formula is equally or more generous at all contribution levels than the 100% up to 1% plus 50% up to 6% formula. Assuming that's the case, then you don't owe anybody any money, but you still have an operational failure for failure to follow the terms of the plan document. This can be corrected in one of two ways: either pull the extra contributions, adjusted for earnings, back from the participants and put it in an unallocated account where it will be used to fund future employer contributions; or adopt a retroactive amendment to increase the matching formula to the formula that was used in operation. Whether either of these options can be done on a self-correction basis or whether it will have to go through VCP depends on how many years is "several" and whether the error is significant or insignificant.

I agree with Bri. I don't see any reason why the vesting granted by an -11(g) amendment would have to be equal to a percentage that would otherwise be available under the plan.

The 20% reduction in active participants only creates a presumption of a partial plan termination. Whether or not a partial plan termination has actually occurred, and whether a given participant is affected by the partial plan termination, is a facts and circumstances determination. If a partial plan termination has occurred, then all affected participants must become 100% vested. If the participant being brought in under the amendment was affected by the partial plan termination, then you could not give them lower vesting on a portion of their benefit merely because that benefit was granted under an -11(g) amendment.

Loans are not a protected benefit, and eliminating the availability of loans is not a prohibited cutback. 1.411(d)-4(d)(4)

What is ALC?

Nitpick, it's the Average Benefits Test that may be used to pass coverage. The Average Benefits Percentage Test is a component of the Average Benefits Test, along with the Nondiscriminatory Classification Test. In my opinion, merely having an individual-groups allocation formula does not disqualify the plan from using the ABT to pass coverage. However the classification of employees who are benefiting and not benefiting under the plan must be still be reasonable, and not merely identifying employees by name. For example, a profit sharing plan is sponsored by company A, which has two divisions, X and Y. Under the terms of the plan, employees of division Y are excluded from participation. A makes a profit sharing allocation to all eligible employees of X under an individual-groups formula. The plan may use the ABT to satisfy coverage, since classification by company division is a reasonable classification. However, if an employee of X were considered non-benefiting because they were in a group that received a $0 allocation, then the classification would have the effect of classifying employees by name, and would not be reasonable. In that case the ABT could not be used.

Before becoming an enrolled actuary, I had a client whose plan was selected for audit. The IRS agent conducting the audit said I could be named on the 2848 as an unenrolled return preparer, since I had prepared the 5500 under examination.

The position expressed by Nate S is, in my experience, the most common position among practitioners. However, some practitioners may choose to incorporate discretionary plan design changes into their restatement; for example they may choose to change the plan's eligibility requirements or vesting schedule at the same time they are restating the document. If those changes are included in the fee for the restatement - or even if no changes are made, but if the TPA consults with the plan sponsor on possible plan design changes, and the charge for the consulting is included in the fee for the restatement - then you should think carefully about whether or not some part of the restatement fee might not actually be a settlor expense that may not be paid from plan assets.

What purposes does the sponsor want the amendment to be retroactively effective for? If for 401(a)(4) or 410(b), you can do it as a 1.401(a)(4)-11(g) amendment, although you indicated that there was no coverage or nondiscrimination failure that would need correcting. If for 401(a)(26), you can do it as a 1.401(a)(26)-7(c) amendment, which operates under similar rules to -11(g). If for minimum funding/maximum deduction purposes, too late. The deadline to adopt a 412(d)(2) amendment for 2021 was March 15, 2022. If none of the above: then just make the amendment effective in 2022, and give them credit for 2021 for accrual service.

You might be thinking of the flow chart on pages 45-46 here: https://www.irs.gov/pub/irs-tege/epchd704.pdf

I don't have a spreadsheet that I can share, but if I did, it would have these column headings: Attorney name Phone number Email address What I am saying is, there is not a deterministic formula for saying if an ASG exists or not. You need to make a number of factual determinations, including: Is a particular organization a service organization? What entity is the first service organization? Does one organization regularly perform services for another? Is a significant portion of the entity's income derived from providing services? Are the services performed by one entity of a type historically performed by another? There are no spreadsheet functions to answer these questions.

Distributions paid to a beneficiary of a deceased participant are exempt from the 10% early withdrawal tax. IRC 72(t)(2)(A)(ii)

I agree with Bri. You have to follow the formula in the document. Of course, the formula can be amended, but watch out for anti-cutback issues. Most likely you can amend it for the current year if there is a last day requirement, or for the next plan year if there is no last day requirement.

Yes, this is normal. The number that they need is the EIN of the trust, not the EIN of the employer.

If the intention of the plan sponsor is to have the employees of the Q-Sub participate in the plan, and if the plan document does not provide that all affiliated employers are deemed to have adopted the plan (i.e., it requires members of a controlled group, etc. to explicitly adopt the plan) then have the Q-Sub explicitly adopt the plan. It can't hurt and it can only help. If they don't want the employees of the Q-Sub to participate, then add them as an excluded class of employees in the plan document. Maybe it's not strictly necessary, but again it can't hurt and it can only help.

ERISA provides (and, although I readily admit my lack of expertise in this area, I have to guess that so do most states' laws provide) civil penalties for a participant to recover against a fiduciary in the event of a breach of their fiduciary duty. However in a plan that covers only the owner of a company, the fiduciary and the participant are typically the same person. I struggle to imagine any scenario in which a person would be inclined to sue themselves. In the case of a plan which covers, for example, two or more partners in a partnership (and no employees) then I could see a potential issue, but even then you have one partner suing another which is likely to involve much more than just the retirement plan. I am curious about what sorts of situations you had in mind when you posed this question. As I said, my knowledge of states' fiduciary and trust law is very limited so it's entirely possible there is some subtlety I am missing. Regarding prohibited transactions, a 401(a)-qualified plan is still subject to Code section 4975. For what it's worth, I have never had the sponsor of a plan which covers only owners ask me about fiduciary issues (although I have had a number ask me if a particular action would be a prohibited transaction...in those cases, if they have to ask, the answer is usually yes).

In general, any non-Key employee who is actively employed on the last day of the plan year must receive the top heavy minimum (assuming this is a DC plan), regardless of whether they are HCE or non-HCE. Exceptions include: If no Key employee received a contribution during the plan year If the plan consists solely of deferrals and safe harbor contributions, and the HCE are excluded from the safe harbor Do either of these apply?