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
General Information
Problem #1 (cont): Signing the Plan Document
It sounds easy. It does not seem like the kind of thing that anyone would mess up. It only takes a few minutes. But, experience tells us that people somehow get it wrong all the time. What simple task are we talking about? Signing 401(k) plan documents! Here are Nova 401(k) Associates’ tips to help with this seemingly simple task and make sure that you keep your plan document up to date.
Star the Nova 401-canine
Snoopy. Marmaduke. Spuds MacKenzie. Lassie. Unforgettable names for memorable dogs. And, now, Star the Nova 401-canine. The winning entry was submitted by Michael Fisher. While there were many great entries, Nova 401(k) Associates felt that this simple name appropriately transitioned from our past star-shaped logo to our new branding. Additionally, we feel that our staff … Read more
Final JBEA regulations
Cash balance plans and defined benefit plans are generally required to have an enrolled actuary sign the Form 5500 Schedule SB annually. The enrolled actuary certifies that the plan has met its minimum funding requirements and the plan’s adjusted funding target attainment percentage. On May 2, 2011 new regulations issued by the Joint Board for … Read more
Introduction to Actuarial Ethics
In the evening of April 25, 2011, Karen Smith of Nova 401(k) Associates along with Gloria Lesmeister of Buck Consultants and Chris Norman of USAA spoke to aspiring actuaries at the University of Texas at Austin on actuarial ethics. The students are part of the actuarial studies program at UT. For the last several years, … Read more
Problem #1 (cont): Type of Plan Document
Failure to keep a 401(k) plan document up-to-date is the first common mistake in the IRS 401(k) Fix-It Guide. To keep a 401(k) plan document up-to-date, it is often helpful to know what type of plan document the employer has. Plan documents fall into two broad categories: pre-approved documents and individually designed documents.
Problem #1: Failure to Maintain the Plan Document
The first common error highlighted in the IRS 401(k) Fix-It Guide is the failure to maintain the plan document. All qualified plans are required to have a written plan document. As laws change due to Congressional or regulatory action, employers are required to update their plan document to conform to new laws. About once every five to six years, every plan is required to be restated in its entirety to reflect all law change since the last restatement.
Understanding EPCRS
No one wants to make mistakes in their 401(k) plan, but unfortunately mistakes do happen. The IRS knows this. For this reason the Employee Plans Compliance Resolution System (‘EPCRS’) has been created to provide business owners a mechanism to fix mistakes they have made.
IRS Announcement 2011-12
The introduction of EFAST2 for 2009 Form 5500 filings ushered in a number of changes to the Form 5500, accompanying schedules, and attachments. One of these changes was the removal of the Schedule SSA from the Form 5500. The Schedule SSA is where the benefits for terminated employees with a vested accrued benefit or vested account balance are collected for the Social Security Administration.
IRS Resources for Your 401(k) Plan
IRS tax settlement company ads are running all of the time on TV. “Has the IRS put a levy on your bank account? Has the IRS garnished your wages? Are you being hounded for unpaid taxes?” Watching these commercials, it would be easy to get the impression that the IRS is an unhelpful, unmerciful government bureaucracy.