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Hi everyone, We are currently working on ways to prevent unnecessary churn with our clients and one of the things we were looking at was making clients aware of the IRS Plan Permanency Rule that essentially states a plan must be established with the intent to be permanent,and if it is terminated within a few years, besides any of the approved reasons by the IRS, then they are at risk of violating that rule which could potentially lead to retroactively being disqualified. My questions are: 1. Is this really something the IRS even checks? In my six years in the industry, which granted isn't a ton of time, this is something I previously never heard of before and I don't believe it's ever been communicated to any of my previous company's clients when they requested a termination. Are that many people just not aware of it? 2. One of the approved termination reasons is a change in ownership. Does simply selling your business fall under that category? 3. Lastly, is the 5310 form actually required or is that only if they essentially want the IRS's blessing that the termination reason is qualified? The goal is ultimately to make them aware of this rule in the hopes they might delay the termination of the plan, and although it might not save a ton of business, I think it could definitely deter clients from terminating for reasons like " I just don't want one anymore" , or "my wife and I are going to rollover to an IRA (not Simple) and the employees will figure something else out" Any feedback is much appreciated!

I have a small Profit Sharing Plan that wants to terminate ASAP. I wanted to confirm we could accomplish this with a 15 day notice to participants so I checked the IRS website and found the below information under "Plan Terminations - Required Notices". Did we loose the 15-day notice and/or 30-day notice of Termination for small plans? Retirement Topics - Notices | Internal Revenue Service (irs.gov)

Wondering if others have dealt with this idea or can anticipate any hurdles -- Say a company had a standard dependent care FSA program, no pre-tax employer contributions to the employee accounts. Company now wants to establish a fund for employer contributions but subject to taxes, for participating DC FSA employees but not directly to their DC FSA accounts (so to avoid any pre-tax issues plus to avoid being considered towards the employees' $5k/$2.5k contributions limit). Fund would be fixed per year at $xx total (decided at the beginning of the year or end of prior year), and then allocated between participants based on the # of participants in the prior plan year (as if it's a pool to be divvied up based on prior year participation). Eligible participants include anyone who participated in the prior plan year and is still employed at the beginning of the applicable year. Anyone seen this before, or something similar? So long as it's post-tax and not directly to their accounts, any hurdles?

Hello! I happen to be familiar with IRS Notice 2020-61, which came out today, covering the deferral of 2020 contributions to 1/1/2021 under the CARES Act. I found the Notice to be very confusing, so I thought I would start this thread as a PSA, to give pension actuaries a leg up on understanding this. This post will explain how & what interest rates are to be used in connection with DB contributions originally due during calendar 2020 under Notice 2020-61. Under 2020-61, the CARES Act EIR rule (i.e., contributions are adjusted at the EIR of the plan year containing payment date) applies for payments actually made from January 1, 2020 through midnight on January 1, 2021 (or January 4, 2021 if the provision in the current Senate stimulus bill passes). For contributions that were originally due during calendar 2020 not yet paid by midnight, January 1, 2021, the CARES Act EIR rule expires. What replaces the CARES Act EIR rule (for unpaid amounts from 2020) is a modified version of 430(j); the modifications are that the quarterly & catch-up due dates are moved from calendar 2020 to 1/1/2021, and the quarterly contribution amounts are increased (with the EIR from the plan year they pertain to) to 1/1/2021. So, for example (which is unfortunately not included as a Notice 2020-61 example), say you have a calendar year plan, with a 1/1 valuation date, not subject to quarterly contributions in 2019. Say the 2019 contribution is made on 1/1/2021. To determine whether the 2019 MRC has been met, you must discount the contribution back to 1/1/2019 at the 2021 EIR. If instead, the contribution was made on 12/31/2020, you must discount the contribution back to 1/1/2019 at the 2020 EIR. The following chart is intended to help you walk through examples provided in Q&A 2 through 6: Notice Example Topic: Discounted contributions @ val date Topic: Adjusting QRC with interest to 1/1/21 PY contribution is for EIR used: orig due date to 1/1/21 Why? Payment dates used A-2 Yes 2019 2020 CARES Act EIR rule 12/31/20 A-3 Yes 2019 2020 CARES Act EIR rule 12/31/20 A-5 Yes 2020 2020 CARES Act EIR rule 12/31/20, 6/1/20 A-6 Ex 1a Yes 2020 2020 Expiration of CARES Act EIR rule; modified 430(j) Not paid by 1/1/21 A-6 Ex 1b Yes 2020 2020, then 2020+5% Modified 430(j) 2/15/21 A-6 Ex 2a Yes 2019 2019 Expiration of CARES Act EIR rule; modified 430(j) Not paid by 1/1/21 A-6 Ex 2b Yes 2019 2020 for 12/15/20 payment; 2019 for unpaid at 1/1/21 CARES Act EIR rule; Expiration of CARES Act EIR rule; modified 430(j) 12/15/20, nothing else paid by 1/1/21

Has anyone been denied a determination letter for an IDP cash balance plan? I have a client that restated an IDP to a preapproved plan. The original IDP had never obtained a DL, so they wanted to get a DL for the original plan. We sent in the application last May (2019) and just received a letter stating that due to Rev Proc 2019-4, section 12 they are not able to issue a determination. Has anyone heard this before? The IRS agent stated that they are notifying a lot of applications of this. Any input would be appreciated, even if you just let me know it happened to you.

Has anyone tried using the IRS website to request a trust identification number recently? What should be listed for line 7a, and 7b? I would think the "Name of responsible party" would be the Plan Sponsor as the trust grantor, and then the EIN of the Plan Sponsor would be used, but the instructions say to use EIN only if the Name of the responsible party is a government entity. The website will not accept an EIN, and that screen cannot be by passed? Should the instructions for listing a responsible person for the business entity (principal officer, etc) be followed instead? but we aren't applying for an EIN for the business, its for the trust. what have folks been doing?

I saw the recent ASPPA article about the optional questions on the Form 5500, it also had a few paragraphs about the recent flurry of Form 945 notices that the IRS has sent out. Sorry I don't have the link handy. I actually had a conference call with a client and an IRS person this morning who claimed that for years where there is Zero withholding, the Form 945 was still required. In lieu of filing showing a Zero, the IRS would accept a statement saying no filing was being submitted because there was zero withholding. We have been inundated with client questions regarding these stupid notices. In every instance it is related to a year where there was no filing because there was no withholding (usually a very small plan that didn't even had a distribution that year). the 2015 Form 945 Instructions: https://www.irs.gov/pub/irs-pdf/i945.pdf Page 2, "Who Must File" "You don't have to file Form 945 for thoses years in which you don't have a nonpayroll tax liability" There is no reference to notifying the plans in lieu of non-filing. Is there something I'm missing or is the IRS just being stupid? The IRS person insisted that either a filing showing Zero, or a statement was required. For what its worth, this particular call was regarding as 2013 form, but we have had clients received the notices for multiple/variety of years. I don't recall the rules changing.

I understand that filing Form 5500 begins the running of the statute of limitations for an ERISA Plan IRS audit. A governmental DB plan, however, is not subject to the Form 5500 filing requirement. Any leads on what starts the running of the SOL for a governmental DB plan?

For a due date on an IRS inquiry, is that satisfied by mailing an item on the date or does it need to be received by the IRS by the response date? Can you tell me your support for this?

We've had some discussion here in the past regarding what vesting requirements applied to qualified governmental plans. The confusion arises because Code section 411(e)(2) says that governmental plans are required to comply with pre-ERISA section 401(a)(4) and (7), but Code section 401(a)(5)(G) says that 401(a)(4) does not apply to a governmental plan. I've now gotten a copy of an internal IRS directive on the subject, and have posted a copy of it at this link. Essentially, it is applying pre-ERISA section 401(a)(4) to the vesting standards of governmental plans, notwithstanding section 401(a)(5)(G). My analysis of the guidance can be found at this link.

I've just gotten hold of some internal IRS guidance on the application of vesting requirements to plans governed by section 411(e)(2). While the guidance was primarily directed toward governmental plans, it indicates that it would also be applicable to church plans. For anyone who is interested, I've put a copy up at this link.