Early inclusion into 401(k)

[BG5150]

I have a plan that is on a VS plan. We will be restating to another VS sometime this year.

They have 1 participant who was allowed to defer early (Jan 1, 2015). What are the correction options?

If we do an amendment, do we have to submit the PPA restatement for a Determination Letter?

Is distribution of the funds acceptable?

[Lou S.]

If you do a search I think this came up a few weeks ago. If I recall correctly the conclusion was "amend" and "no submission required on pre-approved plans".

Assumed participant allowed in early is NHCE.

[BG5150]

Lou, do you have a cite for the "no submission" deal?

[Lou S.]

Lou, do you have a cite for the "no submission" deal?

I did not but I thought someone else gave and IRS position on the matter now that they are not ruling on "pre-approved" plans. I tried searching for the thread yesterday but I couldn't scare it up with the word combos I tried. Sorry.

[Belgarath]

I believe, from memory, that you don't have to submit if it is a Demographic Failure. But since this sounds like an operational error, then I think you have to submit.

If you did a 401(a)(4)-11(g) retroactive amendment, this would be a Demographic Failure, and wouldn't require a d-letter submission.

Big caveat on this one - no research done to confirm if above memory is correct!

[Kevin C]

The cite is Rev. Proc. 2013-12, Section 6.05:

.05 Submission of a determination letter application. (1) In general. This section 6.05 sets forth the situations in which a determination letter application is required to be submitted as part of the correction of a Qualification Failure if the correction includes a plan amendment. If a determination letter application is required under this section 6.05, then, unless otherwise specified in this revenue procedure, the provisions of Rev. Proc. 2007-44 will apply. Thus, for example, in the case of an ongoing individually designed plan, a determination letter application will be reviewed with respect to all items included in the Cumulative List (as defined in Rev. Proc. 2007-44) that would apply to the remedial amendment cycle during which the determination letter is filed. Notwithstanding any other part of this section 6.05, a determination letter application is not required and may not be submitted with the VCP submission if (a) the correction by plan amendment is achieved through (i) the adoption of an amendment that is designated as a model amendment by the Service or (ii) the adoption of a prototype or volume submitter plan with an opinion or advisory letter as provided in Rev. Proc. 2012-6, 2012-1 I.R.B. 197, on which the Plan Sponsor has reliance (or is treated as having reliance pursuant to section 6.05(5) below), or (b) the failure corrected is a Demographic Failure.

[Lou S.]

Kevin, you rock.