Newbie here. If an employer's 401(k) plan defines compensation as W2, then (correct me if I'm wrong) - but there could be compensation amounts that will not be on an employee's paystub - but could be reported on the W2. In other words, the amount reflected on an employee's last payroll statement of the year may not necessarily equal the W2 plan compensation amount.

I believe the primary difference is the taxable amount of items not paid in cash. Does anyone have any examples?

So if John is paid $5,000 monthly (gross) - his last payroll statement will show $60,000. If he deducts 3% of of pay to his 401(k), then each paycheck will see $150 contributed as an elective deferral, for a year-end total of $1,800. (3% of $60,000 is $1,800).

But what if his W2 compensation is $66,000? I believe his deferrals should be $1,980 for the year. How does an employer typically account for this in their payroll?

An employer has a DB plan and a DC plan (pooled). He wants to terminate the DB plan, but it has some illiquid assets, and the employer is asking whether he could exchange it for some liquid assets in the DC plan. It feels like a PT. Is it? There may also be some exclusive benefit issues.

Dog

Particpant, whose RMD started in 2011, died in 2012.

How do I determine the PVAB payable to beneficiaries in 2013?

Do I use AE to determine the PVAB at death and have it accrue interest (AE) to a payment date without regards to mortality?

Sorry for being vague but not sure how to post this question.

Thanks

A money purchase plan contains rules concerning the payment of benefits when a unmarried participant dies and does not have a beneficiary card on file. In January an unmarried participant passed away with no spouse or children. The Plan's default rule in this case is to pay the participant's estate. However, because the participant was young and had limited assets, the family has stated that no estate is expected to be opened.

Under applicable state law, the participant's parents would receive the account balance if it went through probate. They are the only ones with any viable claim.

The employer is interested in amending the Plan retroactive to the first day of the plan year to modify the distribution rules and add parents and siblings to the list of those who can receive benefits outside of probate. In other words, when an unmarried participant passed away without a beneficiary card the administrator would move down the list-- spouse, children, parents (new), siblings (new), then to the estate.

In order to save the parents the expense of opening an estate for a small benefit (> $10k) the employer is willing to make a retroactive amendment. If there were any chance of competing claims we wouldn't do this, but it looks like it will be the easiest way to handle the situation.

Any problems with such a retroactive amendment?

Is there a rule or regulation specifying how long a 401(k) plan may take to grant or deny an application for a hardship distribution?

I'm making a list of the ways in which the Affordable Care Act affects the administration of a 401(k) plan. I'll bet that BenefitsLink mavens can explain things that I wasn't smart enough to see. Let's see who has the most ideas.

May a non-profit terminate an 403b and start a 401k plan in the same year?

Hi-

I have a client that allocates the profit sharing contribution on a per payroll basis. The formula is 9% of compensation (6% on one definition of compensation & 3% of another definition of compensation). They have a number of employees (almost of them HCEs) who hit the $250,000 limit in March..therefore do not receive any ps contribution after that. So, on an annualized basis, they are only receiving 4.5% contribution. The formula in the plan document is discretionary. Is this method of allocating the contribution ok?

If an employee only paid in $500 to her medical FSA, used up her entire $5000 election (i.e. for 2012, the limit is still 5K), then left employment. Does she have to report the extra $4500 she withdrew from her FSA (i.e. the portion above and beyond her contributions) as taxable income?

Old Medical Practice was equally owned by 6 doctors. Two leave. Old Medical Practice goes inactive on Friday, just collecting accounts receivable.

In anticipation of this, the other 4 doctors have formed New Med Practice, owned equally by them. New Med Practice hires all the staff employees that had worked for Old Med Practice, leases a new space, and resume medical practice three days later (Monday).

They do not constitute a control group. Considering only the 4 doctors that own interests in both Old and New Med Practices, they own 100% of New and only 66.67% of Old Med Practices.

Neither Old nor New Med Practices owns an interest in the other. They are therefore not an A-org affiliated service group.

Clearly, the 4 doctors in New Med Practice each own 10% or more of both practices. However, neither New Med Practice nor Old Med Practice provides any services to the other. So they are not a B-org affiliated service group.

Neither New Med Practice nor Old Med Practice receives more than 50% of its revenues for providing management services to the other. So, no IRC section 414(m)(5) affiliated service group either.

Consequently, it would appear that all of those that worked for Old Med Practice has had a separation from service that permits payout from the qualified retirement plan of Old Med Practice, despite working for New Med Practice.

Am I missing something in this analysis?

If a participant in a 401(k) plan dies without designating a beneficiary, I know that you would follow the terms of the plan to determine the beneficiary. What happens if someone else is named in the participant's will as beneficary of his/her 401(k) balance?

Thanks for your help!

A Trust for a deceased participant (who had aready started recieving a 10 year annuity) is receiving the remainder of a 10 year benefit from our DB Pension Plan. It was the named beneficiary on the distribution form. The original participant was not RMD age, and would not have been prior to the end of these benefit payments.

The Trust was scheduled to close on 12/31/12, but has remained open. The administrator would like to close the Trust as scheduled, and distribute it's assets to the beneficiaries. Benes are 2 adult children at 50% each.

Question:

If I am provided with a copy of the Trust that identifies the beneficiaries under the Trust and percentages, is it possible to pay the beneficiaries directly the remaining 7 years worth of benefits? Or must they keep the Trust open for that timeframe.

I have a pension answer book, but it's not fully answering my question.

Thanks!

Can you confirm that there is no way for the HCE's in a 403b plan to get an employer noneletive contribution without including some non-highly's?

I just remember some nondiscrimination revenue procedure unique to 403b's / non-profits. a) I think that was superseded by the new regs and b) I think even that required some level of employer contributions.

I think it said something like the HCE's could always get a 1/3 more without worrying about testing, or something like that.

Hello all,

what is the consensus (and I searched any case law about this and didn't find any) about a tpa firm who determines HCE or Key EE status or who is a stat exclusion as being considered a plan admin because of that ?

Obviously my feeling is no, if so most tpa's would fall under that label.

*as far as why or reg cite or case law --I didn't get that from the person who brought that up, so if a response was going to be to ask them to provide the cite, I don't have it.

Thanks

Hi, I have a plan where a aprticipant signed up for ROTH contributions in 2012. The contributions were designated pre tax, contributed to the pre tax account and the W-2 reflects what happened. Participant is now asking Sponsor to "fix" the contributions to what she signed up for in the first place. Is it possible to make the correction now and issue an amended W-2?

Thansk for your help.

I always thought if you were going in under EPCRS you had to go in with everything that you know is incorrect. Is that correct? So as an example, can you go into EPCRS for failing to do the Top-Heavy Minimum, but not the ADP refunds that were done late.

For the sake of argument assume none of this can be self-corrected.

Follow-up: What if the ADP refunds were never done and won't be done? Does that bar you from doing a submission regarding the THM?

Believe me , this is a 100% hypothetical, I'm just trying give a good example to understand how the system works, and what you're options are under the program. Sometimes you might want to correct and submit for one failure, but not the other.

Put it another way, do you have to represent that these are the only problems you are aware of?

I have a card carying union business onwer who owns 100%. He has 3 non-union employees. He has approx 40 union employees. Union employees are cover by union retirement plan which owner contributes to. Currently the owner also pays into the union plan for his own retirment plan coverage and also health care coverage. The owner wants to keep the health care coverage but stop his union retirement plan contributions and use the company sponsored 401(k).

I've heard and read yes he can do it. I've heard and read no he cannot.

Yes he can

Owners/management are not employees and thus not covered by CBA

He is a "bargaining unit alumni" which allows him keep union benefits but not be covered by CBA

His wages are not collectively bargained (pays himself what he wants/can) and thus not covered by CBA

No he can't

Document says Union = Any Employee who is included in a unit of Employees covered by a CBA, if retirement benefits were the subject of good faith bargaining. "Employee" definition does include Self Employed. "Self Employed" is any indvidiual who has Earned Income from the business.

He has a union card so he is union until he turns in his card.

Any respnse is appreciated.

Am I reading the Rev. Proc. correctly that if a loan has been deemed by a platform recordkeeper and a 1099-R is issued, the failure to repay the loan cannot be corrected through VCP?

The Rev. Proc. seems to address requesting relief from reporting, but as I strictly read the text it does not imply that the procedure would reverse a loan that has already been reported as taxable on a 1099-R.

Thanks.

We have a DB plan and the owner is at NRA, at the 100% of comp. limit and continuing to work. There is currently an excess in the plan and as a means of controlling the excess, he could rollover the PV of his AB to his 401(k) plan. Prior to that, we were wondering if he could somehow take some annuity payments from the plan assuming the document allows for this. Ideally, those payments would go to the 401(k) plan as well, but the regs say that periodic payments cannot be rolled over. I don't really understand the reasoning behind that. Any thoughts on how this can be accomplished without purchasing an annuity and then surrendering it and rolling over the proceeds? Any guidance/suggestions would be appreciated.