Artie M

I meant to post this earlier... https://www.whitehouse.gov/briefings-statements/2026/10/congressional-bills-s-240-s-283-and-s-2403-signed-into-law/

As far as I know, there is no clear statement in 2021-30 (or related guidance) regarding this issue. EPCRS guidance seems to measure the correction period from when the failure first occurred for the "affected eligible employee" [singular]. 2021-30 AppA.05(9). The guidance points to correction periods. That seems to support distinguishing between employees. But as you parenthetically note EPCRS generally requires corrections to be consistently applied. However when you look at the consistency requirement it points to errors for a plan year "Generally, if more than one correction method is available to correct a type of failure for a plan year (or if there are alternative ways to apply a correction method), the correction method (or one of the alternative ways to apply the correction method) should be applied consistently in correcting all failures of that type for that plan year." S6.02(3). I haven't done the historical research but I think this rule has been around since the program was established. I am saying this because I don't think the corrections provided for periods of less than a plan year were in place back then (e.g., the 3-month safe harbor). Also, treating employee groups differently arguably doesn't necessarily violate a "similarly situated" concept. A participant who missed deferrals since 2024 is not similarly situated to a participant who missed deferrals since 2026. The fact that EPCRS provides different corrections for these different groups in and of itself seems to support being able to correct their specific MDOs using the safe harbor that applies to that specific MDO. Regrettably, these are just my thoughts.

not sure if your premise is totally accurate. I am assuming this plan is maintained by a tax-exempt non-governmental entity. As stated above a nongovernmental 457b is generally a top hat plan. Assuming the plan is maintained primarily to provide deferred compensation for a select group of management or highly compensated employees, it generally qualifies for the top-hat exemptions under ERISA 201(2) — participation and vesting; ERISA 301(a)(3) — funding, and ERISA 401(a)(1) — fiduciary responsibility. But critically, those exemptions do not exempt the plan from ERISA Title I altogether, including 514(a), the express preemption provision. The plan could still be outside of ERISA but it would depend on how it is administered, etc. otherwise, it often remains an ERISA employee pension benefit plan for purposes of preemption. You need to verify if this is a top hat plan, was the former spouse on a valid beneficiary designation, and, I think most importantly, did the divorce decree include a waiver or other provision affecting the benefit (the waiver issue is split among the circuits and is an end run on the divorce decree statutes). If there is an enforceable waiver in the divorce documents, you may have a meaningful recovery claim against the former spouse. If your claim rests exclusively on automatic statutory revocation, considerably less confident, particularly if the §457(b) plan is ERISA-covered. if it's me, the single most important fact I'd try to obtain next is does the divorce decree contain a waiver of retirement benefits, or are relying entirely on the state's automatic revocation-on-divorce statute? That would determine which course I would pursue. Go look at Estate of Kensinger v. URL Pharma, Inc., 674 F.3d 131 (3d Cir. 2012) and Andochick v. Byrd, 709 F.3d 296 (4th Cir. 2013). As noted in my sign off, not advice just spouting off here...

I was under the impression that you weren't sure if you could be the beneficiary. If you KNOW you are not the beneficiary, is this just a fishing expedition? I will assume you have some kind of colorable claim. Beneficiary forms normally contain the plan/contract that they relate to, as well as the primary and contingent beneficiaries. Note that if you know the ex spouse was the primary beneficiary, it does not good for you to be the contingent as the ex spouse is still alive. If you have a colorable claim, then you should just make a claim as the beneficiary. Then they will have to deny it, etc. A 457 b is not required to have an SPD, though some will have summaries. so often times there are no claims provisions. In such cases, you usually contact the plan administrator, here likely the employer, for a copy of the claims procedures, deadlines, etc. In many top hat plans, the exec knows where to go for the benefit so that would be the person they would contact. Not sure what your other plan is.... if 403b ... sounds like a tax exempt employer... it may not need an SPD either... depends on it if it covered by ERISA or not (some are and some are not, depending on the contributions, etc.).

The phrase "funded" means something different in this context. there is the legal meaning and the generic meaning. 457(b)s, if properly structured, are legally unfunded. Did you ever file a claim for benefits under either of these plans. Though 457(b)s, if properly structured are not governed by ERISA, they still have to follow the ERISA claims and appeals rules. When did the participant die? You never state that... there is a statute of limitations on claims, depending on the state you are in or the terms of the plan. Assuming the statute hasn't run, you could have filed a formal written claim under the plan. Under the rules the plan administrator can't ignore a form written claim and they are required to issue a formal written denial letter. Under the regulations, that denial must explicitly state the exact reasons and cite the specific plan documents or forms they relied on to pay out the benefits. Furthermore, under ERISA claims rules, once an adverse determination is made, the claimant has a right to request and receive copies of all "relevant documents, records, and other information" free of charge. This is the mechanism that legally forces the employer to hand over the beneficiary form that was used. Also, if you go to court without following this form administrative claim procedure, the employer will have an affirmative defense that you failed to "exhaust administrative remedies" which could easily cause your case to get thrown out. If they don't respond to your claim, that affirmative defense goes away, and also you might be able to go to the DOL with a complaint. Depending on the amount at stake, you should get a lawyer,.... but if you do, make sure you get one that is conversant in these rules and not some personal injury lawyer who has some down time.

I think it includes both. In the enrolled text, the phrase 'good faith reliance' appears in the adequate consideration definition: an ESOP fiduciary may rely in good faith on an independent expert’s valuation using RR 59-60 principles. The next clause expressly states that this rule does “[not] modify any fiduciary obligation under ERISA 404." So, on its face, the law is intended to preserve both the exclusive-purpose duty in 404(a)(1)(A) and the prudence duty in 404(a)(1)(B). I think "plausible method" perhaps understates what the text is trying to do (I don't profess to know what Congress is trying to do). Here, an ESOP fiduciary will be able to rely in good faith on an independent appraiser’s valuation when the appraiser uses 59-60 principles and methodologies. That's more than saying 59-60 is one acceptable reference--but it addresses the fiduciary’s reliance on the resulting valuation. I don't think it deems every valuation produced under the 59-60 "framework" to be adequate consideration, as it expressly preserves 404 duties. Also, you hit the central limitation of the bill on its head because, said another way, even a sound framework cannot cure unsound inputs. I think the law, if enacted, would authorize good-faith reliance on an independent valuation prepared under 59-60, but the fiduciary must still have a prudent basis for relying on that particular valuation, which includes its material information and assumptions (its "inputs"). It wouldn't make the appraisal self-validating.

To me, the Act does not modify a fiduciary's obligations under ERISA Section 404, including the duties of prudence and loyalty. An ESOP trustee could not simply obtain an appraisal and consider the fiduciary inquiry complete. The trustee would still need a sound process for evaluating the transaction and the supporting valuation, including projections, assumptions, financing terms and other relevant information. The Act purports to protect good-faith reliance on an independent valuation—not blind reliance on one.

Unless you have A and B backwards, your facts differ materially from the usual situation. I understand terminating the target’s plan (B's plan) before closing. But here the Buyer A terminated its own plan, survived, and then adopted the target’s plan. Doesn’t that mean the same employer identified at termination is maintaining an alternative plan during the restricted period?” (assuming the 2%, 24 month exception doesn't apply). Said another way. A is the employer at plan termination, A survives, and A then adopts B's plan during the restricted period. on those facts, B's plan seems like an alternative defined contribution plan barring distributions of restricted amounts solely on account of A's plan termination. Pre-closing execution or effectiveness doesn't resolve that problem.

Ha. @Peter Gulia always asks the most important question first... Have you gotten paid? Rev. Proc. 2021-30 §4.07 expressly permits VCP or Audit CAP correction for a terminated plan even when its trust no longer exists. Thus, at least the IRS believes you can still have a plan even if no assets (my view is no trust = no assets). If the employer has no resources, perhaps consider a VCP proposal documenting the insolvency and available recovery; but of course don't assume the IRS will waive funding. From a DOL fiduciary standpoint, the unpaid employer contributions generally differ from withheld employee deferrals: the employer’s unpaid cash is not automatically a plan asset. However, the plan’s contractual right to collect contributions can be an asset. Did the responsible fiduciaries consider and preserve a claim to those contributions in bankruptcy, including any filing deadline and realistic recovery. Owners or committee members do not automatically become personally responsible merely because the company cannot pay; their conduct and the governing documents matter. Yes, the uncorrected disqualification could affect prior distributions and rollovers. However, that is a potential consequence, and not up to you do determine that every rollover is already invalid. Distributions from a disqualified plan are not eligible rollover distributions—one reason to address qualification despite the empty trust. However, it its the IRS that disqualifies the plan. Here, the consequences though would really harm the participants. You should at a minimum coordinate with bankruptcy counsel...they and the court would have to guide you as far as VCP and recovery, etc. This is a definite CF.

So, counting 10 days from October 5 and excluding Sunday, the apparent deadline is October 16, subject to the constitutional rule concerning an adjournment that prevents return of the bill.

I guess the new rules seem to say you don’t have to put in the additional earnings, though under the old rules you would Here are my thoughts: The erroneous portion of the distribution constitutes an inadvertent benefit overpayment within the meaning of 414(aa) and Notice 2024-77. 414(aa), added by SECURE 2.0(?), generally provides that a qualified plan will not fail to satisfy 401(a) merely because the Plan does not obtain repayment of an inadvertent benefit overpayment. 2024-77 provides that the corrective-payment requirements otherwise contained in Rev. Proc. 2021-30 §6.06 generally no longer apply to an inadvertent benefit overpayment. Although recovery now is not required to preserve the Plan's qualified status, the HCE has voluntarily agreed to return the overpayment. So, under these rules it seems the HCE would return to the Plan the $5,000 overpayment and the earnings attributable to the $5,000. 2024-77 says that no additional payment by the employer is required solely because of the inadvertent benefit overpayment. Note under the 2021-30 §6.06 the employer may have had to return the overpayment plus earnings. I looked at 2024-77 again and Q&A-2 is unusually strong, providing that, subject to the specified exceptions, “any requirement described in section 6.06 of Rev. Proc. 2021-30 that a corrective payment be made to a plan … no longer applies.” That means to me that post-distribution earnings are no longer mandatory, just like a potential employer-make-up. One item… to not do earnings though, note that 2024-77's definition excludes an overpayment to a §4975 disqualified person or §401(c) owner-employee. You said this HCE is not an owner, so that exclusion does not appear to be a problem—but you should confirm they aren’t otherwise a §4975 disqualified person (officer, 10% shareholder, etc.). I don’t think it’s a big deal because they’re returning the overpayment. However, if they don’t meet this definition, then I think you go back to including earnings as you go back to 2021-30. Some could say just include earnings to be sure, but note that if you aren’t required to provide earnings an argument could be made that you are favoring the HCE and permitting them additional deferrals… . haven't thought that through.

In my experience, a cp220 for a retirement plan includes the late filing penalty and not just corrections or changes to the form 5500. The notice should state the tax period to which it relates. It is my understanding the IRS processes account adjustments on a per-year basis meaning they don't combine multiple calendar years into a single notice cp220. Bottom line... if your client received only one cp220 it should be tied to one specific year. Look at the tax period on the top right. This likely won't make your client feel better because if the first two years were late, the client should expect to receive another notice cp220. First thing I would do is call the IRS to get the facts. Usually there is a number in the right hand corner of the cp220. If you're a CPA, enrolled agent (I think that is the term) or attorney with a signed 2848 on file for this client, call the practitioner priority service (if you do this, have your 2848/8821 ready and say you are calling about an employee plans master file Form 5500 penalty assessment and they will route you to the right person). Otherwise, call the IRS Employee Plans customer account services line. Sorry, I have the numbers somewhere in my emails but I am not finding them. As far as DFVC... I would argue that the client is still eligible for the DFVC. Eligibility is only cut off if the DOL sends a written notice of intent to assess a penalty. Receiving a penalty notice or letter from the IRS (such as a cp220) does not disqualify the plan from using the DFVC. We did this recently. Note that strictly speaking the DFVC was designed for unfiled forms. To retroactively apply DFVC protection to a return the IRS already has, you must submit an amended filing through EFAST2. When you prepare the amended Form 5500-SF to correct the situation, you actually have to deal with two different dates: The Plan Year Dates (Part I, Box A): These should be exactly the same as the original late filings (e.g., May 1, 2021 – December 31, 2021). This tells the system exactly which historical period you are correcting. The Transmission / Execution Date: When you electronically sign and submit the amended form via EFAST2, the system automatically stamps it with today's current date. Then, when you log on to the online DFVC Penalty Calculator, it will ask for the Date Filed. Here, you must enter the date you are submitting the amended DFVC return, NOT the original late filing date from years ago. Entering the original date will confuse the system because it calculates the late fees based on the day you are actually submitting the correction and paying the fee. By submitting the amended return with Box B (Amended Return) and Box D (DFVC Program) checked, you are effectively telling both the DOL and IRS: "We know we filed this late before, but we are now retroactively pushing it through the amnesty program and paying the proper capped fine." Once EFAST2 accepts the new, current-dated amended transmission, you will get a new electronic filing receipt. Use that brand-new receipt as your primary evidence to send to the IRS to request they wipe out the cp220 notice.

Yes, that is not uncommon from our experience. Most/many correct the election prospectively but hold off on determining/funding the MDO QNEC until after year-end, then determine the total actual elective deferrals. If reached max, no missed deferral and no MDO QNEC. If there was an improper exclusion instead of failure to implement election, have to wait to year end anyways before know HCE's ADP. Caveat--though likely got their match... determine whether the failure cause them to miss a match. Per pay period, etc. might cause a quirk.

you don't provide enough facts but have you looked at utilizing SCC for some of the delinquencies. Not sure if others agree, but we have looked at those rules and their history and we do not see where it states that only violations post 3/2025 are eligible. The SCC rules focus on how promptly the employer corrected the underlying delinquency and not when the SCC filing occurs. The effective date language of the final rules don't change that and there is no grandfather/transition rule. If some of the 2023 deferrals were corrected within 180-days of the error then they might be able to fall under SCC. As far as your question, the final rules state that you can (should?) treat each pay period separately: "Generally, the Department has considered each pay period as a separate transaction; however, the Department has permitted more than one pay period to be treated as one transaction under the VFC Program if the pay periods are close together in time and the delinquencies are related to the same cause." https://thefederalregister.org/documents/2025-00327/voluntary-fiduciary-correction-program?

If the plan covers only a 100% owner (or owner and spouse), it is generally not a Title I ERISA plan because the owner/spouse are not treated as employees for this purpose. DOL has expressly taken that position. Consequently, the DOL plan-asset rule in §2510.3-102—earliest date reasonably segregable and the 7-business-day small-plan safe harbor—is not the governing rule for that owner-only plan. Also, like @Peter Gulia says subject to state law because you don't have 514 pre-emption. Not sure though if look at State fiduciary law or simply State wage payment rules. It's a wage deduction. In Texas, where I am, I wouldn't be too concerned under wage payment law because there doesn't appear to be a DOL analogue for when the payment has to be transferred. Also, presumably, they get a regular paycheck..... and, presumably, the amounts were withheld and never paid to the owner. Then under the federal tax code they would get until 9/15 to fund and arguably not delinquent. But as always... what does the plan say?