A participant in a 401(k) plan with automatic enrollment e-mailed her initial enrollment on 12/18/17 to her payroll department. She requested 3% deferral. The payroll administrator missed the e-mail and auto enrolled the participant at 6%. Payroll was processed on 1/2/18. So the participant's deferral was 3% more than requested. The plan does not allow for distributions when opting out of automatic enrollment. She also received a higher match as a result of the error. I know what to do if the deferral was missed, but in this case the deferral is too much. My thoughts are to keep the deferral as processed and make sure payroll is updated.

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Understand the requirements of ERISA, including penalties, vesting requirements, fiduciary responsibilities, plans covered by the PBGC, and the roles of the various enforcement agencies.

So the IRS recently got rid of the reduced VCP filing fees for stupid things like RMD's and loan defaults. Schedule of User Fees for VCP submissions, is revised to change the user fees to $1,500 for plans with assets of $500,000 or less; $3,000 for plans with assets of over $500,000 to $10,000,000; and $3,500 for plans with assets of over $10,000,000. All other reduced or alternative fees previously set forth in Appendix A, .09, no longer apply. So the small business which is likely to have loan failures and missed RMD's pays $1,500 or $3,000. Plans over $10 million pay just $3,500. What a nice thing for the mega corporations!

It was discovered that coverage testing has been done incorrectly for over five years. Plan fails coverage. No fail-safe language in the plan document. We're proposing an 11(g) amendment and filing a correction under VCP. The TPA's suggestion is to allocate a QNEC contributions to the lowest paid participants sufficient to pass the AVB. While QNEC for ADP testing needs to be limited to no more than 5% or twice the representative rate, there doesn't appear to be any limitations for purposes of the QNEC for ABT. Treas. Reg. section 1.401(a)(4)-11(g)(vii) states that the QNEC should be equal to the NHCE's compensation multiplied by the ADP and/or the ACP, so I'm afraid that allocating a QNEC contribution to the lowest paid employees might be considered discriminatory by the IRS. It doesn't appear they would pass the reasonable classification test. Is it permissible to target the QNEC allocation? Any IRS guidance on how to allocate the QNEC?

A business owner employs her children (all younger than 14) as employees of her business. The employer's labor lawyer has vetted these jobs as proper under federal and state child labor laws. The 401(k) plan document doesn't impose age 18 or any age as a condition for participation. Assume each child's employment involves real work with no more than reasonable compensation. Could anything under ERISA or the Internal Revenue Code preclude such an employee from making elective deferrals and getting the plan's safe-harbor matching contributions?

Treas. Reg. Section 1.401(k)-1(d)(3)(iii)(B) permits participants to take a "safe harbor" hardship distribution if they incur expenses for the repair of damage to the employee's principal residence that would qualify for the casualty deduction under IRC Section 165 (determined without regard to whether the loss exceeds 10% of adjusted gross income). But the Tax Cut and Jobs Act seems to amend IRC Section 165 (effective after December 31, 2017) to state that casualty losses are only deductible to the extent it is attributable to a federally declared disaster. This would mean that participants would only be able to take a hardship distribution for a casualty loss situation if they live in a federally declared disaster area, which would appear to dramatically reduce the number of participants that could take hardship distributions due to a repair of principal residence. So, in 2018, if my house burns down due to an accident and isn't covered by insurance, and the fire is unrelated to a federally declared disaster, then I can't get a safe harbor hardship distribution?

We administer an 18 participant DB plan covered by PBGC. Going through a standard termination. Sponsor will fund any difference between assets and liabilities. Participants likely will be paid their benefits in late March 2018. Exactly at that time should the contribution be funded? Also, given the plan termination, are there any restrictions on what year the deduction for the contribution can be taken? Must it be 2018 or could it be 2017 (assuming they went on extension)?

I'd love to hear opinions from the DB experts here. Prior to IRS Notice 2015-49 (the "De-risking Notice), the RMD regulations (section 1.401(a)(9)-6, Q&A-13 and Q&A-14) allowed certain accelerations/modifications to distributions being made to comply with the RMD rules, such as retirement after the annuity starting date, or upon plan termination. Within limits, a lump sum was allowed. Section III of the De-risking Notice seems to say these exceptions are removed but only for situations where there is has been a previous AMENDMENT to the plan per 1.401(a)(9)-6, Q&A-14(a)(4) that allowed an acceleration. So apparently the exceptions in Q&A-13 still exist for normal (non-amendment) situations. Agree?

Our 401(k) plan just received a consent order from the state probate court ordering the reformation of a deceased participant's beneficiary designation from the estate to the trusts of the participant's three children. I've seen PLRs on this topic (e.g., 201628005) with respect to IRAs; the IRS has said "no" to reformation in the context of RMDs under IRC section 401(a)(9). Has anyone come across this? How did you proceed?