With Appreciation....

Lois, I attended the NAPA webcast and thought it very interesting. Thank you for sharing the link.

We have a distribution problem too. We are trustee to a governmental 457(b) plan. For a full distribution to a participant, must the FICA and Medicare taxes be removed from a distribution prior to issuing the distribution check to a participant? Or, can the participant receive the full amount of the distribution and then have the responsibility of paying the appropriate taxes. (A prior service provider would do the calculations and submit the taxes to the employer (school district) prior to the distribution to the employee, but the current service provider will not do this.) Thank you

Any guidance will be appreciated w/re how a bank's RIA should respond when it is an investment manager to an ERISA plan and is asked at a participant's meeting (but asked privately) by a participant to review an individual's entire asset portfolio and provide financial advice and planning. The retirement account is, of course, a part of the individual's asset portfolio, but may also include brokerage accounts and non-IRA assets. Can the investment advisor who provides training at the participant's meeting provide contact information to the individual and potentially take the person on as an individual client? If the investment advisor provides general contact information for the bank and is contacted by a participant in a plan to which the bank is a fiduciary for individual financial guidance, including the retirement assets, is that a conflict in interest? It seems as though that will be a conflict of interest. Thank you!

The US DOL is auditing one employer that is participating in a PEP. The DOL has requested a copy of the trust agreement for 2022, which provides disbursement information for all participants in all the participating employers in the PEP. The DOL refuses a consolidated/summary version and wishes to see all approx. 4000 pages. Is information on distributions to participants not employed by the company being audited private? Should any redaction be made?

Thank you for your response. As a follow-up question: Because of the failure to properly report the distributions the participants paid an excess of taxes and are entitled to a refund. Because, however, the 3 year period for filing amended returns has passed, and the participants can no longer receive refunds from the IRS, the plan sponsor will make the participants whole. Can this, then, be done as lump sums by the plan sponsor to participants, because 1) distributions have already been made from the trust assets and 2) the corrective amounts are reimbursements for incorrect taxation, rather than incorrect distributions. I think so, but would be grateful for any thoughts or guidance on the best way to make this type of correction.

We are the TPA. Just discovered that for several years retired participants have received incorrect 1099Rs. Specifically, the 1099Rs have included non-taxable contributions in the amounts reported. For some, the 1099Rs have been incorrect for at least 10 years. There are at least two immediate concerns: How far back is necessary for providing corrected 1099Rs for amended tax purposes? What is the EPCRS VCP-correction method which would be acceptable to return after-tax credits to the affected participants? (I’ve scrutinized EPCRS but can’t locate the applicable section) With thanks,

Kevin C and chc93, The authorities you've cited are perfect. Thank you both so very much,

Right now 12b-1 fees are returned to participants by the institutional trustee. After a plan is terminated and liquidated what can the trustee do with 12b-1 fees it receives in arrears? This is further complicated when a plan sponsor has dissolved and there is no entity to which 12b-1 fees in arrears can be returned. Can the trustee/former trustee feel comfortable that this is no longer a prohibited transaction because the plan and/or the plan sponsor no longer exist?

Thank you very much. Your help really is greatly appreciated.

Thank you Madison71. Because the participants received a notice in a timely manner, and the information other than the year was correct, you don't think any further correction is necessary? I was leaning that way, and appreciate your confirmation. Would you think this fits into the category of mistake of fact?

Scenario: The safe harbor notice went out at the correct time prior to 2017 (November 2016). The information in the safe harbor notice was correct within the notice EXCEPT the notice was to apply to 2017, but the notice stated that it "applies to the plan year beginning 1/1/2016." In all other ways, other than the Plan Year identification, the information was correct. The questions are: 1) Can this be considered a typo/mistake of fact so that 2017 can be tested as a safe harbor plan? 2) Should this be self-corrected by providing all the participants who should have received the notice stating for plan year beginning 1/1/2017 with a corrective employer contribution? Most of the employees are already making elective deferrals. Thank you,