Message Boards Digest

November 29, 2017

Here are the most recently added topics on the BenefitsLink Message Boards:

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JJRetirement created a topic in Correction of Plan Defects

Is Late Deposit of Employer Contributions an 'Operational Defect'?

I have a client who has just closed a DOL investigation for (very) late deposit of prevailing wage contributions. Client has made all of the unpaid contributions, including estimated interest based on a method approved by the DOL investigator, has paid corrective distributions to former employees, and has received a closing letter. I expect that these late contributions would be an operational defect that would require a VCP filing, and my client is prepared to do this. My biggest concern has been whether the DOL-approved method of allocating interest would be acceptable to the IRS, but now I am wondering whether there actually is an operational defect -- I can't find any plan provision that specifies when these contributions must be made. The plan has a schedule to the Adoption Agreement that lists the prevailing wage fringe benefit portion to be paid for each covered hour. The plan provision for Time of Payment of Employer's Contribution states: "Unless otherwise provided by contract or law, the Employer may make its contribution to the Plan for a particular Plan Year at such time as the Employer, in its sole discretion, determines." I don't think the "unless otherwise provided..." language incorporates the statute or contractual language by reference. There's also plenty of typical plan language about when annual addition are credited, and when contributions must be made to be deductible for a plan year, or to be taken into account for testing, but those aren't really the issue here. State law does in fact require the contributions to be made quarterly, and there clearly has been a violation of this law. If the plan document doesn't have a deadline for the contribution, is there an operational defect when contributions are made later than the statutory or contractual deadline? I am now thinking that the answer is no, which would mean there's no operational failure that could need to be corrected under VCP. Agree?
Number of replies posted  2 replies      Number of times viewed  45 views      Add Reply

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austin3515 created a topic in 401(k) Plans

Premiums for 'Loan Eraser'?

Anyone know what the premiums are on this? See -- I just can't imagine they're affordable.
Number of replies posted  4 replies      Number of times viewed  80 views      Add Reply
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Fiduciary Guidance Counsel created a topic in 401(k) Plans

May a Plan Change from 'No True-Up' to 'True-Up' for a Year Already Begun?

2017 is about 90% done. Assume the plan document says that safe-harbor matching contributions are made on a payroll-by-payroll basis, and that "true-up" contributions will not be made. The employer now would like to provide that matching contributions are recalculated (after a plan year ends) based on the ratio of elective deferrals to compensation for the plan year, and "true-up" contributions are made. May the employer make this amendment effective for 2017? Or must the employer apply the amendment only to 2018 and later years? Which regulation and what reasoning allows or precludes the change for a year already begun?
Number of replies posted  5 replies      Number of times viewed  73 views      Add Reply
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401 Chaos created a topic in Correction of Plan Defects

EPCRS Correction of Failure to Implement Elective Deferrals AND CATCH-UPs

Plan discovered that a few participants who had made elective deferrals for the year (including some that had also elected to make catch-up contributions given that their regular elective deferral elections would max out) were not implemented for the plan year. The participants have missed several months of deferrals. The employer plans to correct under EPCRS by making QNECs for missed elective deferrals and matching contributions and earnings, per Revenue Procedure 2016-51. Question: do the missed catch-up contributions get corrected/included in the QNEC calculations? (Here, there is no doubt that the individuals would have qualified for the catch-ups had their deferral elections been properly implemented yet, in actuality, they will now end up with actual elective deferrals not reaching the max for the year.) I see that the EPCRS has a separate section/correction protocol for missed catch-ups under Appendix A .05(4), but it appears to be limited to employees excluded from "catch-up contributions only." The example provided shows that a participant was permitted to make their maximum regular elective deferral but simply denied the ability to make a catch-up contribution. Unfortunately, I don't see anywhere else in Rev. Proc. 2016-51 where somebody who was eligible for making maximum regular elective deferrals plus maximum catch-up contributions for the year gets corrected by having a QNEC made on the catch-up portion as well as the regular elective deferral amount. Perhaps the potential for covering the missed catch-up is generally assumed but the narrow phrasing of the .05(4) section and careful limiting of the QNEC correction there to catch-up only mistakes leaves me to conclude otherwise. Also, when looking at an IRS presentation on Correction Methods for 401(k) Failures from 2012, page 28 notes: "If an employee has been excluded from making any deferrals then ordinarily no additional correction with respect to catch-up contributions is required because the deemed elective deferral is below the threshold for being eligible to make a catch-up contribution." Should that be be read to basically mean one never makes a QNEC correction for missed catch-up amounts unless they are the only missed deferral amounts? See
Number of replies posted  2 replies      Number of times viewed  32 views      Add Reply
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Tom Poje created a topic in Retirement Plans in General

2018 Taxable Wage Base Reduced to $128,400

The folks in Washington have reduced the 2016 average wage figure from $48,664.73 to $48,642.15. Even that small difference of $22 was enough to change the Taxable Wage Base to be $128,400:



Divide by

Multiply by







 1992 index


 by 300



by 300









Number of replies posted  1 reply      Number of times viewed  36 views      Add Reply
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leesuh12 created a topic in 401(k) Plans

When to Withhold Money for Automatic Enrollment Plans?

When does money need to be withheld under an automatic enrollment plan? For example: Plan has requirement of minimum age 21 and three months of service for eligibility. Entry Date is first day of month following meeting those requirements. If a person meets eligibility on 10/16, he or she enters on 11/1. Does the plan sponsor actually withhold the money on the 11/1 pay period if no election or opt-out has been chosen by participant? Or does the sponsor wait to withhold until the opt-out period has ended?
Number of replies posted  4 replies      Number of times viewed  51 views      Add Reply, Inc.
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