Sum_Guy

PS, with respect to ERISApedia, is the "Plan Corrections eSource" likely what I'm looking for?

Thanks so much everyone! I'm definitely going to look into the resources that Paul I and Ilene mentioned. This matter popped up for a pro bono client of the firm, and we're shepherding them through it. If anyone with experience wants to partner on a pro bono basis, well I'm always up for meeting new people! (And to pat ourselves on the back a bit, stopping the bleeding was the first thing we counseled, as they get their ducks in a row on the existing issues.)

Hi, we're dealing with a likely VCP situation in a 403(b) plan, where the plan was a) administered with a one-year wait, and b) wasn't properly drafted to exclude part-timers. We have no experience with VCP filings, and were hoping to see if there's a gold-standard guidebook out there on doing them, or perhaps some online resource where we can see other/sample filings. I think it doesn't strictly need to be 403(b) related, if there's a good resource for 401(k) that would probably help. Thanks!

It's my paraphrase, but I think it's accurate. Here's the full quote from the plan doc: And for completeness, here's the full paragraph on True-Ups: And to your other question, yeah she reached out to HR to get the full plan document. It was actually for an unrelated purpose: we were fighting with old employer and new employer over who would refund excess deferrals from last year, and it got to the point where I needed the plan documents so I could confirm how it worked. I really only needed the one from old employer, since we wanted the refund from them because they give no match, but I asked for the plan doc from new employer too just for completeness. (After a dozen emails with old employer and after they consulted their ERISA attorney, they finally came around; we just got the excess refund check from them yesterday.) Funny enough, I wouldn't have even caught this problem with new employer's match (I'm not in the habit of reading plan documents for fun) if new employer hadn't been so gall-danged weird in how they applied 401(a)(17) comp limit this year (and also if I hadn't gotten the plan doc for purposes of that excess refund issue). What happened was that new employer stopped matching my wife's deferrals completely in, like, October. When we asked them, they said it was because her comp had gone over the $290k pay limit for the year. But I knew there was no way that her comp since she became a participant was over the limit -- in fact the only way to get her over the limit for the year was if you included all her regular comp plus the nice signing bonus they gave her. They assured us that those missed matches would be made up in the true-up in March (and the true-up did in fact make them up), but it was still weird as hell to me to not track her comp against the limit solely based on benefits-bearing (i.e. post-participation) compensation. So I pulled up the plan document, expecting it to exclude special bonuses from definition of plan comp (it doesn't) and also of course expecting it to limit plan comp to only that earned in her time as a participant (it doesn't, as far as I can tell). So the true-up they gave her wasn't enough. She had deferred over 6% of her post-participation pay, but they only trued her up on 6% of post-participation pay. If they look at full-year pay, she deferred less than 6% of that but the match on the 4.9% of pay up to the comp limit is better than match on 6% of post-participation pay. We're not talking huge dollars or anything, but I do like things to be right. In case you're wondering, I was a retirement consultant (mostly DB/actuarial, but a decent amount of DC) with Mercer for 20 years, but a couple years ago I decided to chuck it all and do something completely different.

That's weird that it's unusual to you. Every plan I've ever seen that does a true-up does it specifically because of its by-payroll-period match. Matching by payroll period means that people can get "under-matched" if they vary their deferrals throughout the year. An especially common case is people who get hit by $19.5k deferral limit and have to turn off deferrals. So e.g. someone who likes to front-load and is deferring 20% of comp might the $19.5k limit at, say, just six months into the year, and then can't defer for the rest of the year. The by-payroll-period match would've only considered the first 6% of that 20% of deferral during the first 6 months, and then of course there's no deferral (so no match) for the rest of the year. Thus if you look at them for the whole year in total, they only got matched on 3% of their comp (6% for half a year, then nothing). Since that person actually deferred 10% of their comp (20% for first half of the year, then nothing), the true-up swoops in and keeps them whole on the match they would've missed -- match them on the full 6% of comp rather than than 3% Having the true up in there a much nicer plan provision than forcing people to make sure they have enough deferral space left through the end of the year. With no true-up, it's actually pretty tough in some cases to both defer all the way up to the limit AND not miss out on at least a little bit of match, especially if there's even a little variability in their comp.

Agree (and that's what I was trying to get at in my last comment in italics in my OP). To write that thought in a lot more words: It currently says: "ACA Safe Harbor Matching Contribution to each Participant equal to 100% of the first 4% of the Participant’s Elective Deferrals plus 50% of the next 2% of the Participant’s Elective Deferrals to the extent that such Elective Deferral amount does not exceed 5% of the Participant’s Compensation." I think it should say: ""ACA Safe Harbor Matching Contribution to each Participant equal to 100% of the first 4% of the Participant’s Elective Deferrals plus 50% of the next 2% of the Participant’s Elective Deferrals to the extent that such ACA Safe Harbor Matching Contribution amount does not exceed 5% of the Participant’s Compensation." Of course, my revised version has a redundancy: Since 4%*100% + 2%*50% = 5%, the first sentence alone is enough to limit the match to 5%. So in my edit, the second sentence isn't actually necessary. But as currently written it has two statements in conflict: how do you match on 4% and then the next 2% if you can only match on 5%? So I'm pretty sure they meant to be redundant rather than to write two statements in outright conflict (and FWIW, they are in practice matching 100% on 4% and 50% on next 2%, for 5% total, so their plan administrators read it the way I think it was meant to be written.) None of this matters to me because they're administering it as intended, but I might point it out to them.

This is for my own personal situation. My wife took a new job this year. The 401(k) plan does not exclude pre-participation compensation from the definition of compensation, and it has a year-end true-up (and a 30-day wait before participation). By my reading, that means she should have been eligible for match on her whole year's compensation, including before she was eligible for the plan, not just her compensation while a participant. Does that sound right? Or does a plan document not need to exclude pre-participation compensation; it's just assumed by default that pre-participation comp isn't eligible unless otherwise stated? Note that the plan only matches on the first 6% of deferrals, but she deferred 8% each period after she became eligible. That unmatched extra 2% could've been counted toward her her pre-part comp if pre-part comp is eligible. In other words, if you look at her whole year's comp and her whole year's deferral as a percentage of that comp, you get a bigger total match than you do when just looking at the period after participation. ------------------------------------------------ 401(k) provisions (these come from the full plan document, not the SPD which is pretty silent on most this stuff): - Provides a Match: "ACA Safe Harbor Matching Contribution to each Participant equal to 100% of the first 4% of the Participant’s Elective Deferrals plus 50% of the next 2% of the Participant’s Elective Deferrals to the extent that such Elective Deferral amount does not exceed 5% of the Participant’s Compensation." - Matching is done by payroll period - Has a True-up: "in an amount equal to difference between the Employer Matching Contributions actually made during the Plan Year and the Employer Matching Contributions that would have been made during the Plan Year if the Employer Matching Contributions were made on an annualized basis and not on a payroll-by-payroll basis." - Compensation: "(a) Unless otherwise specified, the term Compensation means Form W-2 Compensation, and includes (i) elective deferrals under a salary reduction agreement authorized in Section 3.2(b) or under any plan described in Sections 401(k), 408(k) and 457 of the Code sponsored by the Employer; and (ii) salary reduction contributions to a cafeteria plan described in Section 125 of the Code and sponsored by the Employer. (b) Unless otherwise specified, the term Compensation excludes: (i) differential wage payments paid while on active military duty; (ii) post-severance compensation (any compensation paid after the last day of employment); and (iii) the following Code Section 415(h) safe harbor exclusions: [fringe, expenses, relo, welfare pmts]" - Participation: "Eligibility for participation shall commence on the Entry Date coincident with or immediately following the Eligible Employee’s completion of the Eligibility Requirements" -Eligibility Requirements: "[E]ach Eligible Employee who is not a Participant as of the Effective Date shall be eligible to become a Participant on the first Entry Date coincident with or immediately following his or her completion of one month of Service and attainment of age 21." - Entry Date: "shall mean the first day of each calendar month, unless otherwise specified in Appendix B." Note that despite being capitalized in the plan document (see the excerpt on Compensation above), "W-2 Compensation" is not a defined term in the plan doc. [I also think there's a typo in the Match definition. The last reference to Elective Deferral -- "to the extent that such Elective Deferral does not exceed 5% of the Participant's Compensation" -- should be to "ACA Safe Harbor Matching Contribution.

I know, dumbest question ever, right? But is it: 1. E[mploye]R & E[mploye]E or 2. [employ]ER & [employ]EE For 20 years, I had always thought of it as one of the above, but someone else's usage just made realize that the other potential source exists.