All Nova 401(k) Associates’ offices will be closed on Monday July 4, 2011 in observance of the July 4th holiday. Nova 401(k) Associates will also be closing all offices at 2:00pm on Friday July 1st. What will Nova 401(k) Associates be doing over the three day weekend?
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Good Luck Heidi!
Nova 401(k) Associates would like to wish Heidi DeLoit the very best in her new role at Alliance Benefit Group of Houston. Heidi is leaving Malcolm Thompson & Associates where she has been a Sales and Marketing Director since 2008.
Deadline for Form 8955-SSA extended
On June 21, 2011, the IRS announced an extension of time to file the 2009 and 2010 Form 8955-SSA. The Form 8955-SSA replaces the Schedule SSA that used to be attached to the Form 5500. Terminated participants who are still due a benefit from a plan are reported on the Form 8955-SSA and this information is used by the Social Security Administration to notify individuals that they may be entitled to a benefit from an employer plan.
2009 Form 8955-SSA Available!
On June 18, 2011, the IRS posted the 2009 Form 8955-SSA on its website. The Form 8955-SSA is the successor to the Schedule SSA that previously was filed with the DOL along with rest of the Form 5500. The Form 8955-SSA is where the benefits for terminated employees with a vested accrued benefit or vested account balance are collected for the Social Security Administration (‘SSA’). The SSA uses this information to notify individuals that they may be entitled to benefit from a private retirement plan.
What special rules apply when performing the ADP/ACP test for union 401(k) plans?
If a 401(k) plan covers both union and non-union employees, the union and non-union employees must be mandatorily disaggregated for purposes of ADP and ACP testing.
Problem #3 Incorrect Definition of Compensation
The third error identified in the IRS 401(k) Fix-It Guide is using the incorrect definition of compensation. Every 401(k) plan document defines compensation for 401(k) purposes, and in some cases the 401(k) plan document defines multiple definitions of compensation for different purposes. For example,
Problem #2 (cont): Examples
Below are some examples of operational 401(k) errors. If a 401(k) plan sponsor is aware of an operational error, the plan sponsor should work with their 401(k) TPA or 401(k) provider to resolve the situation. In many cases, it is also necessary to engage an ERISA attorney. Example 1 XYZ Company’s 401(k) plan document says … Read more
Is the TPA financially viable?
Running a non-producing 401(k) TPA is usually considered to be a low-margin business. The average revenue per client tends not to be all that much, and there is a lot of work to be done for that revenue. Many 401(k) TPA owners grew to be owners of TPA firms after years of working on the technical compliance side of the business.
Problem #2 (cont): General correction principles
IRS Revenue Procedure 2008-50 includes general correction principles and some specific guidance for plans to use when a plan is correcting an operational error due to failing to apply a plan’s terms. The most fundamental correction principle for correcting operational failures is to try to put the plan back in the place it would have been had there not been an operational failure. In many cases (but not all), this principle gives us a pretty
Problem #2 (cont): SCP vs.VCP
If an employer has failed to operate a plan according to its provisions, the plan must be corrected. Assuming the employer finds the error before the IRS, the employer can file under VCP. Additionally, under some circumstances the employer can self-correct the error without a formal filing. While employers are often initially drawn to self-correction, not all operational issues qualify for self-correction, and in some cases more correction options are available under VCP.