In 2010, there was an interesting PBGC Appeal Board decision regarding the definition of professional employer. An appeal was brought by a participant of the Compass Capital Partners, Ltd Defined Benefit Retirement Plan (the ‘Plan’) because the PBGC had determined that the Plan was not covered by the PBGC, and thus the participant was not eligible for benefits from the PBGC.
Nova401k
How will you work with my financial advisor?
A 401(k) plan may have three providers: a record-keeper, a financial advisor, and a 401(k) TPA. Generally, each of these providers is independent, and it is usually possible to replace one of the three while keeping the other two.
What is the Form 8955-SSA?
The Form 8955-SSA is a successor to the Schedule SSA where the benefits for terminated employees with a
Karen Smith to speak on Qualification Standards
Karen Smith will speak on a panel at the ACOPA Advanced Actuarial Conference in San Francisco on June 6 –7, 2011. Karen will speak on the Qualification Standards and Carol Zimmerman of the IRS will speak on the new JBEA regulations. US actuaries are required to comply with the Actuarial Code of Conduct. Precept 2 … Read more
What are the requirements to be considered a union retirement plan?
Union retirement plans are eligible for special coverage and non-discrimination testing rules. However, being a union retirement plan
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is not a state of mind. It is not sufficient for an employer to sit down with a leader from the employees and come to an agreement about the employee’s retirement benefits. There are specific requirements for a plan to be considered collectively bargained and a union plan:
Problem #2: Failure to operate the plan according to its terms
ERISA and the IRC require that a plan have a written plan document that includes the plan provisions such as the eligibility, contribution amounts, distribution provisions, etc. Additionally, the plan document includes certain IRS provisions like age 70 ½ distributions. Plan documents explicitly provide all major plan terms, and it is generally unnecessary to establish a lot of administrative provisions interpreting or clarifying the plan’s
What is a MEP?
‘MEP’ stands for multiple employer plan. MEPs are defined in IRC 413(c) and are retirement plans that cover unrelated employers. A MEP can be either a 401(k) plan or a defined benefit plan. Examples of MEPs include the following scenarios:
Do you have a succession plan?
Many 401(k) TPAs are small businesses – sometimes just the business owner and a couple of employees. That is actually how Nova 401(k) Associates started in 2000.
Problem #1 (cont): Examples
Below are some examples of plan document errors. If a 401(k) plan sponsor has a plan document 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.
Problem #1(cont): Missed amendments and restatements
If an employer realizes that they failed to sign a required amendment or restatement, the employer’s best course of action is to promptly file a VCP application with the IRS. The IRS does not provide for self-correction of plan document failures. For many plan document failures, the IRS allows plan sponsors to do a streamlined filing which generally reduces the professional fees associated with preparing the filing. Additionally, the IRS’s turnaround time on streamlined filings is pretty quick. The IRS VCP fee associated with a plan document failure depends on the type of failure and when the failure is corrected. The starting point is the general IRS VCP fee in Rev. Proc. 2008-50, which depends on the number of