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.
Investment Banker as a Professional Employer
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.
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.