A plan discovered a significant error from plan years ending December 31, 2012, 2013 and 2014. The plan submitted a VCP application and it was approved. Part of the correction is to fix the ADP failures. The plan was not tested correctly and refunds were never processed. Every participant needing a refund has taken their money and rolled it to an IRA. In which year should the 1099 for the excess amount be coded? Is a corrected 1099 sent to the participants for 2012, 2013, 2014 respectively?

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It was discovered when I brought a copy of my Marital Settlement Agreement and my QDRO for my 401k plan to my financial advisor that my premarital portion was subtracted from the balance on the date the divorce was entered and the remaining balance was split 50/50. But the marital settlement agreement states that my premarital portion was to be identified and that it would then be treated as if it earned 5% annually for the 20 years that I was married. This new amount would then be subtracted from my 401k balance (a much larger amount) and the remaining balance split 50/50. At the time of signing the QDRO my lawyer advised me that the document looked proper and followed what all parties had agreed to in the divorce. (I always asked before signing anything if there was anything that was changed from a draft or not in my best interest since most of this paperwork is confusing and I am paying him for his expertise in the matter.) The marital settlement agreement has never been amended. If the QDRO does not match the marital settlement agreement filed and no amendments have ever been made since that filing is the QDRO valid? Can it be amended since certain portions of the marital settlement agreement were omitted from the QDRO? This omission was missed by both lawyers. I believe the QDRO was prepared by my ex-wife's attorney. I live in Illinois. My ex-wife has already received her portion of the 401k (including the 5% portion of interest that was awarded to me via the marital settlement agreement).

Large plan (125 participants) filed Form 5500 but failed to include an audit with the filing. Are penalties automatic or are there allowances for first-time offenders? The instructions say that penalties MAY be assessed or imposed, unless failure to file properly is for reasonable cause. What would they consider reasonable cause?

Participant submitted request for a hardship withdrawal in order to pay the retainer necessary to hire a criminal defense lawyer for a family member (not spouse or dependent). Clearly, this doesn't fall under the safe harbor. BUT the 401k plan states that a hardship withdrawal may be allowed for "any other situations that, based on the facts and circumstances, the Committee determines to constitute an immediate and heavy financial need." Thoughts on whether this could be allowed under IRS regs? I think the main issue is whether this is a need of the employee's as required (or spouse/dependent/primary beneficiary). If payment of funeral expenses for a "family member" can be considered a need of the employee (as stated in regs), can that logic be extended here? Cost to hire lawyer to keep "family member" out of jail could be considered a need of the employee? (i.e. father "needs" to keep adult child out of jail? has no expectation to repayment, etc.).

Suppose a traditional defined benefit plan prior to restatement for PPA'06 has actuarial equivalence for optional forms other than lump sums as 7.5% UP84 and for lump sums the greater of 417(e) and 5.5% with applicable mortality. Is it a cutback to restate the plan with the lump sum now being the greater of 7.5% UP84 and 417(e)? If it is a cutback, must the AB on the restatement date merely be maintained and the PVAB at 5.5%/applicable be computed as an additional lump sum floor on ultimate distribution or does the document also need to spell this out? Similarly, if the AE basis is changed from 7.5%UP84 to say 5.5% IRS applicable, what are the cutback implications for optional forms other than lump sums and early/late retirement factors (admin and doc language)?

I'm a sole proprietor and I opened a defined benefit plan for my company (myself) in 2015. The plan administrator is telling me that I need to restate my plan by 2019. There is a hefty fee for that, on top of the annual maintenance fee. Given that I haven't changed anything on the plan and it's only for me a single employee, must I really restate the plan?

Company ABC had a 401(k) plan for several years. In May 2017, they adopted the XYZ MEP. It's an open MEP. How does the ADP test work in this case? Do we (they) do one ADP test for the entire 2017 plan year? Or, do they run two ADP tests, one from Jan to April and the other May to Dec?

I'm dealing with FSA account balances of employees whose employer is being merged into a different entity as of 1/1/19. The surviving entity has its own FSA, so the merged entity's FSA is being terminated effective as of the end of the calendar year (creating a stub year because the plan year was originally on a 6/30 fiscal year). Other than amending the soon-to-be-terminated plan to provide a 2-1/2 month grace period, is there any other way to protect these employees from losing their account balances?