Alonzo Church

Auditors will demand you report contributions delayed during a blackout as late. I believe the AICPA guidance that governs benefit plan audits would require that. Without DoL guidance to contrary, you will lose this battle every time.

The question I have is "why are you asking"? To most of us practitioners, the idea of employer vs plan cost matters when you have a trust. If you don't have one -- it's an academic question.

Don't wait until 12-31 to do the contribution. Have your nondiscrimnatory amount calculated and your plan doc changed before 12-31.

First -- employees should be able to get distribution because they terminated employment. Second -- Change the definition of the contribution to something approximating actual compensation that won't be discriminatory. (Base it on the greater of 50% of PY base compensation, or comp accrued as of 6-30, for example) If you end up violating 415 on the owner-employee, immediately refund the money at year end. Trust has to survive until 12-31.

And I thought I covered myself with the "Unless your plan [document] provides otherwise..."

Thoughts -- 1. Unless your plan provides otherwise, there is no particular time limit for the deposit of matching contributions. You could deposit them after the close of the plan year, and not run afoul of the Internal Revenue Code or ERISA. There is only a problem if the plan document establishes a time limit. 2. The participant contribution rules that require the swift deposit of employee 401k contributions only concern themselves with amounts that are actually withheld from pay. Given the restrictive DoL rules in this area, everything you withhold really needs to be deposited. Don't hold the money. You should make any required adjustments later. 3. Plan documents often use a loose definition of pay with respect to deferral elections to get around issues with amounts accrued but not actually paid. Is yours one of them?

Just Me -- If your open MEP covers employers from the same area or employers untied through a single PEO, you might be able to file it that way, but my instinct is to be rally careful about this. I don't know how your 2019 program has been communicated and what the plan documents say. Your potential 2020 plan sounds like it could qualify as a MEP without too much trouble. My one piece of advice would be to make sure each separate employer physically makes the contributions for its employees.

JustMe -- It's not that simple. You can establish an open MEP that can be filed on a single 5500, but transitioning whatever current arrangement you may have to the single 5500 will require some actions that would be difficult to take retroactively. There's also a question that your current arrangement could be easily shoehorned into the DoL's currently effective guidance. Note also that the PEP Plan rules, which allow for a completely open MEP provided certain requirements are met, do not go into effect until 2021.

The count is all employees who would receive severance on the measurement date if they were involuntarily terminated. Per the Form 5500 instruction, an employee is a participant in a welfare benefit plan: "the date on which the individual becomes eligible under the plan for a benefit subject only to occurrence of the contingency for which the benefit is provided".

My experience with voluntary benefits intended to be non-ERISA is pretty similar. The DoL has very restrictive rules on what makes a program non-ERISA, but I have never seen an enforcement initiative in this area.

Does the ministry have an opinion? Initial reaction is that they would be subject to ERISA, but the program may be part of broader health plan.

No, though I would flip the question -- is there any reason why the Notice can't also be an SMM? Beyond making sure you designate the communication as an SMM, I can't think of any change to the notice you would do to make it do double duty as the SMM.

Not knowing the nature of the issues or the size of the plan, it's hard to come up with an estimate of sanction amounts. Here is the IRS description on how they arrive at sanction amounts. https://www.irs.gov/retirement-plans/audit-closing-agreement-program-general-description Using this and the links, you can come up with a minimum and a maximum sanction. Other posters here can probably help where your case will likely fall in the spectrum, provided you supply more detail on the failures. In the case of the RMD failure, it will make a difference if the participant was just an average rank and file employee or one of the executives or owners.

If you are going to disgorge the remaining funds and take a no harm, no foul approach, you should give the money back to the third party, not the plan sponsor. A payment from the fund to the plan sponsor will raise questions if there is any audit. (Either a CPA or a government agency).

I am convinced you have a situation that you can't just self-correct. There will be filings to the government involved. You need to talk to counsel. You can't solve this yourself. Your plan sponsor, for whatever reason, never took steps to fully correct the situation, raising additional red flags. You probably have prohibited transactions involving the pension and 401(k). These are subject to an excise tax and an excise tax filing. You have an additional factor with the stock only going to the owner in the 401k plan. Maybe that makes it easier to disgorge the assets without creating problems, but it raises plan qualification issues.

There are some facts missing: 1. Did the client make the deposit into the 401(k)/pension, or did the plan sponsor do it? 2. Did the client include the deposit as part of its IRC 404 deduction for the year? 3. How quickly were the funds withdrawn? 1 year? 6 months? A few days?` 4. In the case of the 401(k) plan, was the stock allocated to participants accounts? How was the loss handled? There are a whole range of answers possible, which are fact specific. The return of funds to the employer is going to cause you more trouble than the initial mistaken contribution. unless that return was made very quickly after the initial error and, somehow, this can be considered the return of a "mistake in fact" contribution. I assume this plan is under the threshold for an ERISA audit, as this issue should have been picked up in an audit. It sounds like you need legal counsel to breathe on this.

If contribution to the profit sharing, per the plan document, was voluntary, then there is probably no disqualification event that could be corrected through EPCRS. If the Plan is worded in a way that the employer is mandated to make a certain level of contribution, then EPCRS might be available to make it retroactive. You haven't put enough facts out there to make a clear determination. Note that I doubt that you could amend prior tax returns to take the 404 deduction in a prior year. I am sorry to hedge, but you will need to get legal counsel involved with this kind of EPCRS correction.

TriNet advertises their services in a way suggesting that they do sponsor an open MEP. Under the pre-2021 rules for such pans, I don't see how you can move prior benefits to another provider without an actual spinoff of assets into a new plan (requiring a separate 5500). My guess is that TriNet has a process to arrange that easily enough. I don't think they want to be administering remnant accounts of a former client.

Several thoughts -- 1. Since the Florida Retirement System is a state pension, it is not subject to any national regulation. If anyone mentions the word ERISA to you, ignore them. Any rights you have are a creature of Florida Law. 2. What kind of notice did you receive initially about applying for DROP? If you weren't told when you became DROP eligible, there may be something worth investigating there. Also, was your initial contact date (March 2020) inside or outside your DROP window? There is a concept called promissory estoppel that may apply, but probably only if you missed the deadline because of bad information. If your deadline was already gone, though, you have a harder road to a benefit.. 3. Have you tried contacting the office of your state representative? (Either state house or state senate). They may be able to help you with the state agencies. 4. You may want a lawyer to advise you. Be careful, though. Also, you may want to get in touch with the Pension Rights Center.

They (and I) know this answer. The guy just wanted to take his money without signing any more paperwork or paying any more fees.

Let's stipulate that the self-employed individual is under 59-1/2. In my case, we have an owner-employee who has gone back into corporate employment, and would like to find a way to roll his money into his corporate employer's plan, rather than keep it in his self-employed plan (he doesn't want to pay the fees). He doesn't anticipate having self-employment income in 2020 or future years.

When does a self-employed individual truly have a termination of employment allowing him to take a distribution from his qualified plan? Is it: 1. When he moves from one type of business to another? (So he's effectively terminated is current trade or business) 2. When he runs the same type of business, but he significantly relocates it? As an example, suppose a real estate agent has moved from one agency to another. Is the trade or business -- my real-estate business with company x? Or is it -- my real estate business? I am looking for some general thoughts and experiences. I realize we are likely in the IRS world of facts and circumstances.