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4 Cards in this Set
- Front
- Back
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TITLE I OF ERISA * TITLE II OF ERISA tax‐related provisions of ERISA |
Basic Plan Qualification Requirements FORM AND OPERATIONAL REQUIREMENTS * Top‐Heavy Rules * Participant loans * QDROs * Federal tax levies |
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Plan Documents INDIVIDUALLY DESIGNED PLANS (most flexible– updated every 5 years) plansponsor may retain legal counsel or other practitioners to prepare a plandocument from scratch, drafted particularly for that plan’ Adetermination letter is issued to the plan sponsor of an individually designedplan (not a requirement) Form5300 is used to request a determination letter for an individually designed plan. MASTER/PROTOTYPE PLANS (update every 6years) – opinion letter Documentthat has been pre‐approvedby the IRS for use for qualified plans maintainedby any organization that expects to have atleast 30 employers adopt a basic plan document sponsored by thatorganization mayalso be provided by a mass submitter issuean opinion letter for each type of adoption agreement offered with the basic plan document opinionletter is made on Form 4461 VOLUME SUBMITTER PLANS – advisory letter/specimenplan sponsoringorganization submits the plan document with all its options (called a specimenplan) to the IRS for approval issuingan advisory letter that the specimen plan satisfies the IRC’s documentqualification requirements |
FAVORABLE DETERMINATION LETTERS Aplan is never required to obtain afavorable determination letter and a plan may be a qualified plan withouthaving such a letter Individually designed planneeds to be restated once every fiveyears M&P and Volume Submitter Plans changesapproximately every six years |
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WHENTO PROVIDE THE SPD – 90 days for ptp’s, 120 new plan, 210 for bene’s: participant must receive the SPD by notlater than 90 days A beneficiary is not required to receive an SPD until 90 days after he or she beginsto receive benefits from the plan. new plans, the 90‐day deadline is extended so that the SPDmust be provided by not later than 120 days Every fifth year, the SPD must be updatedunless there have been no amendments made Every tenth year, the SPD must be updated,regardless of whether amendments have been made updated SPD must be provided toparticipants and to beneficiaries receiving benefits by not later than 210 daysfollowing the close of the plan year Summaryof Material Modification (SMM) EX: Fund changeletter |
Tax Consequences of PlanDisqualification: DISALLOWANCE OF EMPLOYER’S DEDUCTION employerloses its deduction for nonvested contributionsmade to the plan for open tax years TheNHCEs may be taxed on vested contributions taxyears generally are open for three yearsfrom the due date six‐year statute can apply ifthere is a substantial under‐reportingof income No statute of limitationsapplies if a return was not filed for the year, or if a fraudulent return isfiled. EMPLOYEE’S INCOME openfor IRS audit for three years six‐year statute can apply ifthere is a substantial under‐reportingof income No statute of limitationsapplies if a return was not filed for the year, or if a fraudulent return isfiled. TRUST INCOME statuteof limitations on trust income is three years from the date on which the Form5500 is filed DISTRIBUTIONS IN NONQUALIFIED YEARS distributionfrom a disqualified plan is not eligiblefor rollover Taxesmay apply if a distribution from a disqualified plan was rolled over andresulted in an excess contribution to an IRA. |
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Correction of Disqualifying Failures (EPCRS) *TYPES OF DISQUALIFYING FAILURES Plan Document Failure * Operational Failure * Demographic Failure * Employer Eligibility Failure * Late Filing of Form 5500 Series Return * Prohibited Transaction Excise Taxes * Title I Liability * Correction of Terminated Plans * Correction of Orphan Plans * Self‐Correction Program (SCP); * SELF‐CORRECTION PROGRAM (SCP) self‐initiated correction program for resolving operational failures
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