A 401(k) plan considers plan compensation to be gross W-2 salary + section 125 contributions.

I dont believe HSA premiums should be added.

Does anyone agree / disagree?

Thanks

We have a participant who died at age 72 and had already been taking RMD from the plan. The designated beneficiary is his spouse. Is this correct as to the options available for distribution of his remaining account:

1. The spouse beneficiary must take RMD in year of death.

2. In years after the year of death, the spouse may roll the account balance into her own IRA.

3. In years after the year of death, the spouse may leave the account balance in the plan (provided plan allows) and continue taking RMD each year.

4. If the spouse chooses to roll to her own IRA, the RMD could be delayed until the spouse reaches 70 1/2?

Am I missing something with this?

We have a nonqualified deferred compensation ("NQDC") plan. A retiree is due to start receiving payments this year. We currently have the funds invested in a third party service provider who will be making the payments to the reitree. I understand we, as the former employer, are supposed to report this on a Form W-2 because the NQDC was earned as an employee. But how do we handle withholding since it will not be paid from our payroll?

Should the third party withhold and report on a 1099?

Should we ask the third party to pay us so we can process through payroll (this is NOT what we want to do if we don't have to)?

Here is a strange one...

Plan year is 7/1/11-6/30/12:

Client provides compensation and contributions for the period 1/1/11-12/31/11. So, basically, we are testing the plan as if it were a calendar year plan. Is this ok?

HCE determination: the client is determining HCEs for the same plan year based on compenation from 1/1/11-12/31/11. Is this ok?

Any thoughts...if this is ok...where would I find it in the regs?

Thanks!

Is it true that the measurement date for whether a Participant is an owner (as defined in Section 416) for RBD purposes is made just one time: in the year that the Participant attains age 70 1/2?

If so, then someone who was a partner but non-owner as of the date he became 70 1/2 and who later becomes an owner through the retirement of other partners (i.e., 20 partners at 70 1/2, 19 partners (including this Participant) in subsequent year), this person must only take a distribution in the year that he stops working?

Same result if he was an owner at age 70 1/2, but then becomes a non-owner because of the election of new partners, he or she must still take the MRDs?

Or, do you take a new look every year? Which seems problematic as an administrative and practical matter, but probably not impossible.

Thanks.

A plan has a plan sponsor and two participating employers (PE1 and PE2). The plan sponsor is owned by Scott (100%) and PE1 is also owned by Scott (100%). PE2 is owned by Robert (75%) and Chad (25%). Robert is Chad's father. So sponsor and PE1 are controlled but PE2 is not part of the controlled group.

Cheryl, who has no direct ownership of anything is Chad's mother and Robert's ex-wife. She has no family relationship with Scott. She works for the sponsor.

Is Cheryl an HCE? Does family attribution cross companies that share the same plan but are not part of a controlled group?

I haven't happened to run into this before, and wondered if others had, or if not, what your interpretation might be.

Employer improperly excluded a couple of participants from making deferrals. No problem fixing that. Question is, how you interpret Revenue Procedure 2013-12, Appendix A, .05(4). I would interpret this to be that the correction for an age 50+ employee who was excluded does not mean that you give them the "catch-up" correction IN ADDITION TO the "normal" correction. Rather the catch-up correction is only for someone who actually deferred, but was improperly prevented from utilizing the catch-up. The only example in Appendix B that addresses this talks about someone who deferred but was improperly excluded from utilizing the catch-up.

Thoughts?

After reading through Rev. Proc. 2013-12, which now adds 403(b) plans to the mix, it seems to me that the ability to correct an operational failure through retroactive amendment is subject to the full submission fee under Section 12, while the correction of a failure to timely adopt the 403(b) plan document itself is subject to a 50% reduction (at leat for a limited period). I'm just wondering if I'm reading this correctly.

We have a situation in which the plan document has always been in place (ERISA 403(b) plan), and was timely amended and restated to reflect the final 403(b) regulations. However, we failed to follow the terms of the plan with respect to the contribution sources available for loans. The only fix is to retroactively amend the plan to conform its terms to actual operation and, in our case, the fee would be $15,000.

Since 403(b) plans are new to this whole correction thing, I'm wondering if I'm missing something or if I've read the Rev. Proc. correctly. Thanks in advance!

To define an employer that might have enough full-time-equivalent employees that it might incur a 'play-or-pay' excise tax on not offering health coverage, Internal Revenue Code section 4980Hc(2)C(i) provides that "[a]ll persons treated as a single employer under subsection (b), c, (m), or (o) of section 414 ... shall be treated as [one] employer."

Imagine that there are six non-natural persons (a mix of S corporations, limited-liability companies, and limited partnerships) that are treated as one employer. None of these organizations uses a common paymaster or shares an EIN with any other. None of these organizations combines its Federal income tax return with any other. None of the five flow-through owners makes a personal income tax return with any other.

Together, the six organizations have 73 full-time employees. But none has more than 14 employees.

Corporation Alpha, which has nine employees, does not offer health coverage to anyone. (If it helps, organizations B, C, D, E, and F also don't offer health coverage to anyone.) Mary, an Alpha employee, gets a tax credit or cost-sharing reduction that subsidizes her Exchange-bought health insurance.

Imagine that the Exchange application that Mary completed asked her for her estimate of how many employees her employer has, and she answered what she knew - nine.

Unless the Internal Revenue Service has an amazing relational database, does the IRS lack a practical means to assess the excise tax in circumstances like these?

Am I just being stupid, or is there a gap in the Government's ability to enforce the 'play-or-pay' idea?

Can someone give me some guidance on what normally happens in an acquisition situation or when an employer moves their plan to another vendor and holds onto participant deferrals a little longer than the segregation rules allows. Is there leeway for these type of circumstances? I mean like a 5 day delay or so, nothing extreme.

Thanks!

Heads up, the Form 5500 Web Client does not currently support Internet Explorer version 7. I know they are fixing the inability to Print, but don't know if the other functions will work or not.

Plan has no eligiblity requirement for deferrals. Entry is date of hire. Plan excludes interns from participation. If regular full time employee becomes intern, are they still eligible to defer?

§1.409A-3(j)(4) allows for the acceleration of Plan payment to the extent necessary to comply with a domestic relations order. Let's say the document contains this acceleration provision but also contains the nonassignability provision below -- do you see a conflict? Or am I correct in thinking that the distinction lies between one provision referring to payment and the other provision referring to assignment? Your thoughts, please. Thank you.

Nonassignability. Neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage, or otherwise encumber, transfer, hypothecate, alienate, or convey in advance of actual receipt, the amounts, if any, payable hereunder, or any part hereof, which are, and all rights to, expressly declared to be unassignable and non-transferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure, attachment, garnishment, or sequestration for the payment of any debts, judgments, alimony, or separate maintenance owed by a Participant or any other person, be transferable by operation of law in the event of a Participant’s or any other person’s bankruptcy or insolvency, or be transferable to a spouse as a result of a property settlement or otherwise. If a Participant, Beneficiary, or successor in interest is adjudicated bankrupt or purports to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber transfer, hypothecate, alienate, or convey in advance of actual receipt, the amount, if any, payable hereunder, or any part thereof, the Plan Administrator, in its discretion, may cancel such distribution or payment (or any part thereof) to or for the benefit of such Participant, Beneficiary, or successor in interest in such manner as the Plan Administrator shall direct.

We seem to be running into more resistance from plan custodians as we're trying to assist our clients in transitioning from one platform to another. We're seeing refusals to issue checks to the successor custodian, outright refusal to wire funds to the successor custodian, required medallion guarantees, etc... It feels like simple trustee instruction isn't sufficiant anymore. Is anyone else seeing this? Maybe it's all just in my head...

Hi. We have an elective deferral only plan (no employer contributions). We have been investigating the possibility of changing the plan's definition of compensation to exclude certain types of compensation. Specifically, we want to exclude bonuses from compensation so that no elective deferrals come out of bonus payments.

My research has been inconclusive on this. Some of the information I have found suggests that this type of exclusion could violate the requirements of effective opportunity under the universal availability rule. This is based on the notion that such an exclusion could impact a participant's ability to make a full deferral up to the 402(g) limit. Other information I have read suggests that the above position is simply conservative and that such an exclusion does not violate the rule.

Does anyone have any thoughts on this? Have you researched this?

Thanks for any thoughts.

I Have a participant who received a RMD in error, due to a bad birth date. He cashed the check. We are asking for a return of the distribution, but I believe there is an interest calculation to include. Not sure of how to calculate the interest.

After several years in TPA and Bundled plan administration, working year over year doing the same testing, and other recurring responsibilities, etc., I'm now looking to elevate my knowledge in the areas of 401k Plan Design and Consulting, particularly in areas of Controlled Groups, Plan Documents, Conversions (protected benefits), Prohibited Transactions, ERISA, and or NonQualified Plans - I know it's a real 'grab bag.'

Can anyone make recommendations of any upcoming seminars, training resources, webinars, materials, etc. that cover the above areas, or what you might deem to be a "higher-level" area of retirement plan expertise? Can anyone identify areas that will be critical to be knowledgeable about in the near-term (e.g. fee disclosures, or??). Thanks in advance!

Plan started 10/1/2012.

401(k)

415 limit is 50,000*3/12 =12500

Do they get to take the catch up on top of the 12500 for a total of 18000?

Haven't had one of these short plan years in awhile and want to make sure they don't exceed the 415 limit .

Thanks

Pat

ok - I know short plan year vesting credits have been reviewed before.

This relates to anyone who is not yet a participant when the short plan year occurs. For example, off calendar plan PY ends 10/31/2012. I'm hired 01/01/2012. Short plan year is 11/01/12 - 12/31/2012. Let's say for argument sake that I worked 1000+ hours from Feb - Oct 2012 and with the plan year & entry date change I enter the plan as of 01/01/2013. Do I get the "extra" vesting credits that active participants realize for the overlap period of the short PY if I continue to work (and over 1000 hours each 12 mos)?

I believe that vesting credits/vesting periods are a separate issue from eligibility and that an employee can be earning vesting credits prior to participation (of course depending on the Plan Doc). Someone else has opined that they believe the short plan year has no effect on the vesting calcs for the person who was not yet a participant when the short plan year occured.

Has anyone on a Daily platform ventured to execute In-Plan Roth Transfers in Relius yet? Is there a recommended workaround until updates are posted? Can't figure out how to do the withholding and remit the taxes. Are you just waiting for the IRS to come out with guidance before doing anything?