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Found 5 results

  1. Greetings, The plan sponsor is required to make a corrective contribution for the missed deferral opportunity. The EPCRS states that if the employee had not made any investment choices, the rate of return (ROR) under the plan can be used. It was my understanding that if the ROR is negative, the IRS underpayment rates must be used but I can't point the Rev. Anyone has the citing for this? Thanks.
  2. Greetings, Is it recommended to refrain from depositing calculated corrective contributions until after a VCP submission has been reviewed and blessed by the assigned reviewer? On the one hand, if the IRS reviewer does not agree with the amount of the corrections, and the corrective contributions have already hit affected participants' accounts, it would make matters more difficult. On the other hand, if the deposits are not made until after confirmation by the IRS reviewer (which could be months later), the amount of lost earnings would be for a longer period and at a greater expense to the plan sponsor. Assuming deposits are not made until after the IRS gives its blessing on the proposed corrections, how far out is it recommended that the lost earnings be calculated to (i.e., the end period for the interest calculation)? Thank you!
  3. Can an employer contribute lost earnigs on match contributions even if they match contributions were made be the end of the year but not on the payroll date? I have a client that made late deferral deposits and as a benefit to the employees they want to contribute not only lost earnings on the late 401k deferrals but also on the match. Is there any issue with this?
  4. I was curious as to opinions as to how on the income statement of the 5500 the lost earnings that an employer deposits to the plan due to late deposits of employee contributions and loan payments (or any type of restorative payment) should be shown? We have been showing as “other interest” or I suppose since we are now doing more calculations using highest performing fund and not DOL calculator maybe this should go under “other income” or possibly lumped in with earnings of the type of investment in the plan (e.g. mutual funds). Perhaps this could be shown as an employer contributions? Does anyone do this? This is not an employer contribution from the corporate side of things as not part of the 404(a) limit and the IRS has said it is just a business expense. Thoughts and opinions? I tried to find some formal clarification but could not find anything so if anyone has anything definitive that would be helpful too.
  5. We have been using the DOL calculator without filing VFCP. If you do not file VFCP it seems to be unclear what performance should be used. Does highest performing fund need to be used or can the overall plan return be used? It seems like there are stories of DOL auditors upon auditing using highest performing fund? If you use plan return is there the possibility upon audit that would be changed to highest fund return? In 2012 a health care funds for example returned over 30%. This year returns are very good too. Has anyone had any bad experiences with the DOL doing a VFCP? It seems fairly straightforward. Do you prepare for you clients? Time commitment does not seem that bad although a few of the narrative questions (#4 & #5) seem a bit too much. Is everyone in agreement that if you self-correct, the DOL calculator can be used as the basis for the 5330 excise tax? Thanks!
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