Patricia Neal Jensen

Are there any provision(s) required in a FICA Alternative 401(a) plan which would prevent the addition of a CARES Act distribution provision? Thanks Patricia Neal Jensen QBI/Ascensus

davebaker@benefitslink.com Dave.... It is a problem to permit participants and/ or their spouses on this discussion board. Could you please inform Participants and their relatives that this is not an appropriate place for resolving their problems? Thank you! Patricia Neal Jensen QBI/Ascensus

This is a professional blog for other professionals. I don't understand why the spouse of an employee got on this blog. And now he is insulting us. He (the spouse) needs to get out his wallet and hire an ERISA attorney.

I always try to provide a Board Resolution for such an action. And an accompanying notice to the Eligible Participants. I have had a plan sponsor refuse to do a Resolution. They chose to rely on a general resolution included in the one adopted when the plan was adopted which permits an officer, etc. of the Corporation to take whatever actions are necessary and appropriate.

IRS: Deadlines Extended for 403(b) Plans and Pre-Approved Defined Benefit Plans Extension of Initial Remedial Amendment Period for 403(b) Plans The IRS is extending the last day of the initial remedial amendment period for Section 403(b) plans from March 31, 2020, to June 30, 2020. Plan sponsors now have until June 30, 2020, to update their pre-approved and individually designed 403(b) plan documents. Revenue Procedure 2019-39 (PDF) provides a system of recurring remedial amendment periods for correcting form defects for both individually designed and pre-approved 403(b) plans. Future guidance - The IRS intends to issue guidance to modify Rev. Proc. 2019-39 to replace applicable references to March 31, 2020, with June 30, 2020. For example, the rules for the recurring remedial amendment periods for 403(b) individually designed plans now will apply to form defects first occurring after June 30, 2020, and the second cycle for 403(b) pre‑approved plans will begin on July 1, 2020.

IRS Provides Additional COVID-19 Relief: Plan Adoption Deadlines Extended By Diane Dygert & Richard G. Schwartz on March 28, 2020 POSTED IN RETIREMENT PLANS Seyfarth Synopsis: Several deadlines established by the IRS to adopt amendments or restatements to employer-sponsored retirement plans, and in this instance specifically, to 403(b) plans maintained by tax-exempt entities and pre-approved defined benefit pension plans maintained by any employer, were fast approaching. On March 27, the IRS extended these upcoming deadlines giving employers who sponsor these plans additional time to adopt necessary amendments to, or restatements of, 403(b) plans and defined benefit pension plans. This gives impacted employers much needed breathing room in a point in time where employer-resources are being focused on COVID-19 issues. These extensions were widely expected, but at least in the case of the deadline applicable to 403(b) plans, the IRS waited until just four days before the deadline to let us know. Pre-Approved Defined Benefit Pension Plans Several years back, in order to control the flow of determination letter applications that were being sent to the IRS, the IRS established fixed remedial amendment cycles during which plans could be amended or restated to address recent legislation or regulatory guidance. The six-year remedial amendment cycle applicable to pre-approved defined benefit pension plans was scheduled to end on April 30, 2020. Late yesterday, the IRS announced that this deadline was being extended three months to July 31, 2020. Thus, if an employer adopts a defined benefit pension plan that the IRS “pre-approved” based on the 2012 Cumulative List of required amendments no later than July 31, 2020, the IRS will consider the plan timely amended. Employers eligible to submit an application for a favorable determination letter also have until July 31, 2020 to submit that application. Note: While not an immediate concern, the start of the next remedial amendment cycle for pre-approved defined benefit pension plans also will be delayed to August 1, 2020, but will still end as previously scheduled on January 31, 2025. 403(b) Plans Sponsored by Tax-Exempt Employers Of even more immediate impact, the IRS also granted a three month extension of the remedial amendment period applicable to 403(b) plans that was due to close on March 31, 2020. The deadline for making these amendments to or restatements of 403(b) plans, or the adoption of an IRS pre-approved 403(b) plan document is now June 30, 2020. The upcoming end of this particular remedial amendment period was of great interest to tax-exempt employers who sponsored 403(b) plans (a 401(k)-like tax-preferred retirement plan available only to tax-exempt and governmental employers akin to a 401(k) plan). Under this remedial amendment period, tax-exempt and governmental employers had the opportunity to amend or restate their 403(b) plans retroactive to January 1, 2010 (the date that having a written 403(b) plan document was finally effective pursuant to regulations issued by the IRS in 2007). This means that a 403(b) plan sponsor has the ability to fix “document failures” (the failure of a 403(b) plan document to include a Code- or regulatory-required provision) retroactive to 2010. Note: This ability to retroactively fix a 403(b) document failure did not extend to “operational failures” – a failure to have followed a provision of the plan document, or a required rule that was not properly included in the plan document. For these operational failures, 403(b) plan sponsors would need to look to the IRS voluntary correction program. As such, this particular remedial amendment period was a significant issue for sponsors of 403(b) plans. For certain, impacted employers and employee benefit practitioners welcome the extension of these upcoming deadlines. Note that the failure to timely adopt amendments to or restatements of defined benefit pension plans or 403(b) plans by the now-extended deadlines outlined above, does not preclude the plan sponsor from fixing a plan document failure that is not addressed until after the applicable deadline. In those cases, the plan sponsors would need to apply to the IRS voluntary correction program for an individual Compliance Statement, a process that can take time and will incur costs that are not necessary if the deadlines are adhered to. Additional information and details of these extension will be provided by the IRS in future guidance. Of course, we are happy to help if you need any assistance in this regard. Stay safe.

Nick Saakvitne did this work when he was alive. I think he was appointed by a federal court judge. I suspect Fred Reish would know who is doing it now: fred.reish@faegredrinker.com None of these attorneys doing this will be cheap but I had to have one once for a plan whose sponsor had stolen plan assets and could only have another plan if a Court Appointed Trustee was the Trustee for distributions, etc. Nick did a superb job for us and for the plan. (I am a TPA now but was a sales person for a large insurance company when this happened. I cannot imagine an insurance company or any other vendor being willing to do this. There is a lot of potential liability and it is just not the business they are in.) Good luck! PNJ

Thanks, Carol. I have seen some old charts for 401(k) restatements which show sliding scales of cost for the VCP submission depending on how far after the deadline the correction occurs. It is probably too soon to hope for such a thing for 403(b) but we are still getting plans which need to meet the deadline which now is only 2 weeks away! I am anticipating plans coming for help after the deadline and hoping to be able to give them as much information as possible. I will review the information in the Rev. Proc. and also speak with some attorneys we use in such situations. Thank you again. Hope this finds you well and that you stay that way! Patricia

Anyone have information on the consequences of a plan sponsor failing to get the 403(b) plan restated by March 31? Thanks! PNJ

Larry Starr is correct (of course!). Use the date the loan documents were signed, etc. PNJ

Agree with Larry Starr. C. B. Zeller: The Successor rule does not apply to a "terminate 401(k) and start 403(b)" situation.

Assuming both plans permit such transfers, I do not think so. You could have problems with the vendor(s) on the Non-ERISA side. I have had them refuse to transfer the account or asset without a distribution event. (Document language is, of course, critical.) More frequently lately, we have been asked to merge the Non-ERISA plan into the ERISA plan (same provider (TIAA)). (I am assuming your "newly established" plan is ERISA.) Your idea would be cleaner if the Non-ERISA plan has several different investments funding it. You would avoid having assets with recordkeeping in various and sundry places with the records not easily available for administration. Most of mine involve 2 TIAA plans where the asset records are easily available and TIAA is very cooperative. Hope this helps! PNJ

In my opinion, a classic problem for a pooled account plan. If this was allocated, I would argue for payment without delay. To wait and have the market go down more is to invite a lawsuit. As several above have articulated, what is the point? This plan should have an established "business" practice for acting on distribution paperwork and should follow it regardless of what the market is doing. PNJ

All good answers already, but my comment would be that there is little (no?) excuse for mailing checks in today's world. The "vendor made me do it" excuse does not work. If the vendor does not make electronic deposit possible, the plan sponsor should choose a vendor who does support this. PNJ

The plan you describe is ERISA unless it is a church or a QCCO (Qualified Church Controlled Organization). The employer match (are they actually making a match or have made a match?) is the "nail in the coffin," again, unless this is somehow a church organization. It is not a good idea to have the other activities in the document because, as you correctly suggest, such activities by the employer would arguably make this plan ERISA, but if this was the only thing and it was just written in the document and never acted on, you might argue that this was a drafting error (although not the DOL's favorite excuse any more). I would agree that an ERISA attorney should advise on the procedure from this point. This is a significant, expensive problem. (See the new SECURE Act fees for failing to file a 5500.) Wonder why they thought they were "ERISA Exempt?" The document and other aspects of this problem should have been disclosed during the "bidding" process. This plan is required to be restated onto a pre-approved document by the end of March (whether or not it is ERISA) so that requires action right away. The attorney may have an idea he or she would like put into action on this point, but if this was my client and they had made employer matching contributions, etc., I would get them on a pre-approved ERISA 403(b) document immediately. (If you are unfamiliar with this, send me a note and I will send you a piece I wrote for our clients and advisors on this topic. patricia.jensen@ascensus.com) If this was presented to me and we did not do any ERISA work, I would consider declining the business. It will be a challenge to charge enough to recover your billable costs in this situation. Good luck! PNJ

The exclusions are permissibly applied to eligibility for elective deferrals, as the law says, but they must be written into the document. $10 per week is less than "annual contributions ....of $200;" and 10 hours a week is less than 20 hours a week (the exclusion itself says that a lower number of hours can be selected). This seems pretty straight forward to me so I am concerned that I am missing the point of your question. The option of using such exclusions would be in a pre-approved 403(b) document (which this plan sponsor has to have by March 31 of this year... next month). They are old in their origin and application. They both were used more when individual annuities were the/ a dominate funding vehicle for 403(b) plans. I also discourage their use because plan sponsors err in application and that can create other problems. Please remind the client that these exclusions MUST be written into the document if they are to be used. Let me know if I missed the point here! PNJ

Pretty routine to have such a fee in the Service Agreement and I agree that that should be the first place to look. The plan sponsor did not "already pay" for the TPA to accumulate and copy documents. If the sponsor already paid, then surely they have the documents and don't need to bother the terminated TPA for another set!

Katiejoseph is correct. No such thing as a nongovernmental 457(b) rollover. Has to be a transfer.

I suggest that the plan sponsor use what I call a "normal form of business" procedure. What this means is that they should write out how and when SPD's are/ were given to Participants and to indicate that this is the procedure for use every time with this sponsor. I also always put a footnote on the SPD that reminds the Participant that he received this document when he was hired and that he may request and receive another copy at any time and that s/he may receive a copy of the plan document itself upon making a written request. Some clients like to have everyone attending an enrollment or education meeting sign that they were in attendance, but I worry that this is too subject to being faulted for omission for the one time that they forget to do this or the papers get "lost." PNJ

With respect for Luke (as he is undoubtedly more experienced with this than I am), I am worried by the "delay payment to any specific date" language. I would have to see the language in the document to be more certain that the document permits this. Also, many of my clients do not want to leave 457(b) money in the "custody" of a plan sponsor they no longer work for or in fact have any legal connection to. PNJ

We (TPA drafting plans)always allow deferral starts and changes any pay period. I agree with Larry and others who indicate that this is the "modern" way this is done. I also absolutely agree that opening it up like this has the effect of diminishing the concern an employee has on this topic and the plan sponsor will definitely get FEWER changes because of this. PNJ

I am interested in any ideas re this topic as well. If I create a multiple employer 457(b) (all sponsoring entities are NFP's), are all assets at risk if one of the sponsoring employers declares bankruptcy? Could I address that in a Rabbi Trust (I understand that the Rabbi Trust does not protect the assets from sponsor bankruptcy; my issue is whether or not the bankruptcy of one of the sponsors puts all assets at risk?) Thanks! PNJ

We are QBI,LLC in California, an Ascensus company. We prepare plan documents for 457(b) plans for NFP's and all the forms needed for enrollment elections, beneficiary selection, etc. Also monitor the required DOL filing to be sure it is done. Let me know if we can help or if you want a proposal. We do NOT do ongoing administration on these plans. I can explain or elaborate on this point if you wish. Patricia Neal Jensen, JD, VP QBI,LLC, an Ascensus Company patricia.jensen@ascensus.com 949-325-6727

As usual, Luke Bailey is correct! I know of no reason that a 501(c )(3) cannot have a 403(b) plan. You might ask for a copy of their 501(c)(3) exemption letter if you have some reason to doubt the 990. Also, just for fun, I googled "Boys and Girls Club 403(b)" and at least a dozen of these showed up. PNJ

I caveat my comments by telling you that I am not a VEBA consultant but I do file for 501(c )(3) exemptions and assist several organizations with the ongoing reporting and filing required. A VEBA is a 501(c )(9) organization. The heart of a successful 501(c )(3) exemption is a charitable purpose and substantiation of this activity (these activities) and purpose(s) are a required part of the filing. I do not see how a VEBA would qualify. PNJ