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Message Boards Digest

June 8, 2018

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

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sdix401k created a topic in 401(k) Plans

VFCP-Required Excise Tax; Pay It to Participants?

We recently helped a plan sponsor complete a VFCP application. The amount of the excise tax was about $30. When an excise tax is less than $100, we've been telling our clients to give it to the plan participants rather than the IRS. We still complete the Form 5330 but we don't file it. San Francisco's EBSA office is telling the plan sponsor to file Form 5330? Thoughts?
Number of replies posted  3 replies      Number of times viewed  65 views      Add Reply
 
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kmhaab created a topic in Correction of Plan Defects

ECPRS Correction for Systematic Missed Deferrals from Last Paychecks?

Plan sponsor realized that elective deferrals are not being withheld from terminated employees' last paychecks during 2017. This is inconsistent with the terms of the plan document. I'm looking for input on the appropriate correction method under ECPRS. Would this be considered an Employee Elective Deferral Failure that doesn't exceed 3 months under Appendix A Section .05(9)(a) (allowing for a QNEC of only missed matching contributions)? Section .05(9)(a) provides three conditions, including that correct deferrals begin for an affected employee no later than three months after the failure occurred. Here, deferrals ceased due to employee's termination, so there's no opportunity for correct deferrals to begin. But the failure occurred for less than a three month period for each affected employee (one paycheck), which I think is the spirit of Section .05(9)(a). Thoughts?
Number of replies posted  2 replies      Number of times viewed  31 views      Add Reply
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EP created a topic in 401(k) Plans

Paychecks Not Enough to Support Elected Per-Paycheck Deferral Amounts

A plan allows dollar deferral amounts, e.g., $40, $50. What should be done when an employee doesn't make enough in a particular paycheck to cover the deferral amount? The plan sponsor has been netting them down to $0 in the past.
Number of replies posted  2 replies      Number of times viewed  48 views      Add Reply
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KoolLady4 created a topic in Form 5500

Reporting Coverage under Inflation Bond using Form 5500-SF

Plan assets at beginning of year are $1,855,000. If the client has a bond with an inflation guard, should I be reporting $185,500 coverage on 10(c)?
Number of replies posted  1 reply      Number of times viewed  20 views      Add Reply
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austin3515 created a topic in Form 5500

Using DocuSign to Get Client Signatures on Form 5500?

Is anyone using DocuSign to get clients to "manually" sign the Form 5500? Using DocuSign is MUCH easier then the whole credential process, and clients seem to be getting more familiar with signing documents this way. Is it acceptable to the DOL?
Number of replies posted  0 replies      Number of times viewed  16 views      Add Reply
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RatherBeGolfing created a topic in Retirement Plans in General

ARA Files Objection to DOL Threats of 'Alternative Enforcement Measures' for Failing to File VFCP

Here is a reprint of an article about a topic that may affect some of your clients:

(Written by Nevin E. Adams, JD, June 8, 2018)

A regional office of the Employee Benefit Security Administration has been threatening enforcement actions against plan sponsors who correct the late deposit of participant contributions or loan repayments without making a formal submission under the DOL's Voluntary Fiduciary Correction Program (VFCP).

The EBSA letter, signed by Chris Davis, Associate Regional Director of the agency's Chicago Regional Office, threatens 'alternative enforcement measures' if the plan sponsor does not file a VFCP application within 60 days of receiving the letter. The letter is apparently being sent to plan sponsors who, on Form 5500, reported the late deposit of participant contributions and/or loan repayments and correction outside of VFCP.

In response, the American Retirement Association (ARA) has filed formal comments with Mable Capolongo, Director of EBSA's Office of Enforcement, objecting to the threatening language in the letter. Noting that, 'In effect, the letter is telling plan sponsors the DOL may open a full blown investigation unless a VFCP application is filed right away,' the ARA letter points out that the 'inappropriate' threats are 'clearly intended to scare plan sponsors into participating in what is supposed to be a voluntary program,' and 'contradictory to the DOL's own longstanding guidance with regard to VFCP.' The ARA notes that the language 'flies in the face of the President's efforts to reduce regulatory burdens and should cease immediately.'

Commenting that, 'Plan sponsors should not be threatened with the heavy hand of a government investigation simply because they choose not to use a voluntary government program,' the ARA letter requests that the DOL immediately cease threatening that 'alternative enforcement measures' may be taken against plan sponsors who self-correct late deposit violations outside of VFCP, and recommends that to reduce regulatory burdens, the DOL add a self-correction component to VFCP as soon as possible.

The latter 'ask' refers to numerous comment letters from the ARA recommending the addition of a self-correction component to VFCP. 'We have regularly brought this subject up in meetings with the DOL and we are disappointed nothing has moved forward over the last nine years,' the ARA reminds, noting that adding a self-correction component is directly in line with the President's directive to reduce regulatory costs and burdens.

Source document: https://www.napa-net.org/news/technical-competence/regulatory-agencies/ebsa-threats-of-alternative-enforcement-actions-trigger-ara-response/

Number of replies posted  0 replies      Number of times viewed  22 views      Add Reply
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Dpf created a topic in Qualified Domestic Relations Orders (QDROs)

do we have to get the Qdro or can we agree on some lump some

Hello - our divorce settlement has language on need for a Qdro. The marriage was only about three years and the sum of money is relatively small ( less then 25k) and it is simply in regard to a 401k nothing else. We paid $2k for the Qdro to get done but for a variety of reasons we find ourselves 5 years later with a difficult record garnering issues to complete the Qdro. Can my ex and I, as mutual agreeable parties, ask for the Qdro to me removed if we can agree upon a lump sum. My ex is getting married and that is the reasons both figure we should do something to just finalize it. Qdro attorney says it is not the easy for all usual reasons why we should have just taken care of this originally (jobs have changed, plans are different, loans, etc) we live in PA. Hoping we can just go to Master and ask for a lump some? Thoughts?
Number of replies posted  5 replies      Number of times viewed  40 views      Add Reply
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401(k)athryn created a topic in 401(k) Plans

Questions About Content of Participant Fee Disclosures

My understanding is that TPA fees can be paid from participant accounts on a pro-rata basis. In some cases, this is done on an ongoing basis in the form of a monthly, quarterly or annual deductions. In other cases, we (as a TPA) will deduct a one-time fee to apply toward annual admin costs and then resume our billing directly to the plan sponsor on an ongoing basis. If we are charging the participant accounts on an ongoing basis, we will include a specific dollar amount or basis points on a 404a-5 fee disclosure notice. If not, our fee disclosure will simply say that a plan sponsor may pay the TPA admin fees or it may be charged to their account. [1] When deducting from an account, must the fee disclosure notice reference a specific dollar amount or is okay to simply state that TPA fees may be deducted? [2] If we must specify, it is okay to be in the form of basis points rather than a dollar amount? [3] Is this required even if the payment from the plan accounts is just a one-time payment and will not be ongoing, keeping in mind that the participants will see the fee on quarterly statements? I ask because I have just done a few of these and did not provide an updated 404a-5 notice to reflect this one-time payment. I cannot imagine having to do this every time an employer wants to pay from the plan. Thanks!
Number of replies posted  3 replies      Number of times viewed  28 views      Add Reply
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