Minimal benefits in 403(b)

[Belgarath]

Wondered if anyone had any direct experience with a VCP submission on a 403(b) plan, where the submission proposed no correction for minimal benefits that do not exceed a certain threshold. For example - a 403(b) plan incorrectly excluded certain part time employees. Many of these people worked there only a few days or weeks, and terminated employment. A corrective contribution might be only a few dollars, and the cost of locating, providing, and processing would be prohibitive.

In such a situation, have you proposed no correction for benefits not to exceed, say, $25.00 or some other cutoff point, and if so, with what results?

Also, I presume if you must make such payments, the check would be made out directly to the former employee, (similar to what is allowed for "orphan" contracts) as an annuity provider wouldn't even accept such payments for a non-active employee.

[QDROphile]

Check the EPCRS provisions relating to the minimum ($75 I recall) distribution (not necessary to correct if the cost of distribution excedds the distribution -- read it carefully). For a former employee with a very small amount, the correction would usually include a distribution, so that might save all the trouble. For current employees, the provision does not apply becuase there is not distribution as part of the correction.

[Belgarath]

Yeah, I had looked at that, and that's one reason I wondered if the IRS has allowed that for a VCP corrective contribution situation. I've heard one instance where they required the corrective contributions to be made, but they allowed them to be allocated to only current participants. Obviously, the plan sponsor would prefer not to make them at all. So, I was just wondering if anyone had actually submitted a VCP with some sort of similar situation.

Thanks for the response.