Company A and Company B are related employers (part of a controlled group). Company A sponsors non-safe harbor 401(k) plan. Company B is a participating employer under Company A plan. Company A and Company B can pass 410(b) coverage, separately. Can Company A and Company B be disaggregated for purposes of ADP/ACP testing? Can Company B adopt safe harbor 401(k) plan provisions with respect to Company B employees only?

I think this is permissible if Company A and Company B sponsor separate plans. Can we get to the same conclusion if there is only one plan?

Thanks.

Group, I apologize if this has been answered some time ago but how many years back can the Department of Labor go when investigating potential breach of fiduciary duties related to an ESOP? 

I thought there was a 3 yr SOL under IRC 6501 similar to an irs assessment. 

But can't seem to find a case on point. 

I seem to be getting conflicting information in my own initial research and discussing with clients general counsel. 

Anyone have a case where DOL was outside of their SOL in asking for information from 10 years prior? 

Thoughts and comments appreciated. 

Would a plan sponsor of a 401k with a match (non-safe harbor) be able to require exclude certain groups of employees from sharing in the match (regardless of hours worked)?

And then could they specifically say that employees with less than 30 hours/week will not share in the match? (I don't think this would be permitted).

A participant made an elective deferral election of 25% of his bonus.  The bonus was $4,000, so $1,000 was deferred under the 401(k).

However, the bonus was subject to the participant remaining employed with our company for at least one year.  The participant has chosen to leave the company after 6 months, and is required to pay back $2,000 of the bonus.

How does this affect the $1,000 deferred under the 401(k)?  Since half the bonus was forfeited, does that mean we have to remove half the deferral that was based on the bonus before forfeiture?  In other words, do we kick $500 out of the plan?

*Please note:  The numbers are made up, so to the extent some de minimis rule applies to the figures above, it is probably not applicable in this situation.

A 63-year-old active participant died in 2022.  Her 75-year-old spouse is trying to roll the balance to an IRA.  The product platform is saying that an RMD must be taken first.

Looking at 1.401(a)(9)-5 Q&A 5, it seems that there is a catch.  The way I'm reading it, it talks about the calculation for the year after the year of the participant's death... but nothing for the year OF the participant's death.  Does that mean that there's a "free year"?  I can kind of justify that, since as of 12/31/21, there was no RMD to be calculated for 2022.  Or am I just reading into it what I want to see?

Of course, if the product says "we're making the beneficiary do an RMD because that's how we do it, period", then that's the way it goes, but since we do non-product plans, I figured I'd see if I was at least taking a reasonable position (in case this comes up again, which I hope it never does).  Thanks.

We have a situation where a client has a new safe harbor match plan "001" with a 1/1/22 effective date with a bundled provider. They will be moving from the original service provider to our firm and. in order to meet their objectives, we will be setting up a profit sharing only plan (cross tested/new comp) and then merging the plans effective 1/1/23. They would like to setup the new profit sharing plan, with a retroactive effective date of 1/1/21. I'm wondering if anyone sees any issues with the new plan, eff. 1/1/21, being plan 002 even though it has an earlier effective date than plan 001? We'll be skipping the 2021 5500 filing for this plan and the first 5500 filing will be for the second plan year (2022).

Simple question that I couldn't find a straight answer on. Does the IRS limit the number of hardship distributions that a person can take in a plan year? Can the plan itself limit the number that can be taken?

Thank you!

We have an orphan plan (doctor died in 2014, he was the only participant in the profit sharing plan).  He did not designate a beneficiary and according to the document, the assets are payable to his estate.

Daughter is the executor of the estate (doctor's wife predeceased him) .  The assets are with Morgan Stanley (approx. 1.1 mil) - MS will not take instructions from daughter, as executor of the estate, but instead requires a court order appointing a successor trustee of the plan  

The plan document has not been updated and no form 5500s have been filed so we want to terminate the plan via EPCRS and file the delinquent returns.

Do we need to file a court proceeding to appoint a successor trustee? How do you do that for a profit sharing plan?  I can't find any instructions on how to appoint a new trustee for a retirement plan.

Just never been asked this. Couldn't seem to find anything related in the BPD.

Can a Profit Sharing contribution be deposited 'in kind', ie transferred from a business account to a 401k plan trust?

To make it worse, they really want to transfer it from a personal account.

We had a participant have a rollover processed from her old employer that was all Roth money not knowing that her current plan does not have Roth.  The current plan's custodian cashed the rollover check into the plan as the custodian does not have the ability or discretion on whether the type of funds is acceptable.  After current plan sponsor acknowledged they can't accept the current custodian issued check back to prior institution.  Now we have prior institution stating they will not accept the money back to help the participant have a new election.

Anyone have experience with this type of situation? How to correct?  I can't imagine the current custodian having any options other than issuing back to prior institution without having a transaction of some sort in the current plan.

We were brought in to look at a SEP for a company in a controlled group because they didn't cover (2) employees in another company. (Not only that but they didn't include a partner in the sponsoring company.)  One employee was excluded for two years and one for one year, and the partner for three.

My reading of EPCRS is that this is a significant failure and not eligible for SCP; must go through VCP. Is that correct? Any experience with fixes for this other than giving the employees the same percentage as the partner who got the contributions?

Hello! 

I was hoping someone could help clear up some deadline confusion for new plans. 

I'm not clear on what the final deadlines are for establishing a new plan (both Traditional and Safe Harbor) for this year. Is it October 1st?

If its auto enrollment does that mean September 1st? But if there's not auto enrollment provision then its extended to October 1st?

I saw some mention that you can start a plan as late as December 31st, but is that only for plans starting next year?

Any clarity would be massively helpful! Thank you!!

Hi

DC plan terminating and will do distributions in 2022. Pooled account. Do not recall when i did one last time so asking out.

Owner has been taking RMD's for sometime.

There are a few other participants.

I am thinking of allocating the RMD based on the distribution amount for 2022 e.g. if the total distribution is 100k, take 10k RMD (assume correct amount) and rollover 90k

Is this ok or I have to provide RMD first  to the owner based on prior year balance and then allocate the distribution based on the balance?

Thank you

We have a client converting from one recordkeeper to another. Their payroll vendor is charging them to set up the new payroll files.  Would this be considered a qualified plan expense that can be paid from plan assets or is considered a settlor expense? We have received varying opinions. 

What is the life annuity rate for male age 81

My chart only goes to age 80, Age 80 rate life annuity rate is 68.605

Thanks

Client has operated as a sole proprietor and contributes to his SEP based on the net earnings from the business every year. Client and his spouse open a new business in which they materially participate (husband /wife partnership filed 1065). This business will also have employees separate from the husband/wife. In year 1, the new business reports a loss for self-employment purposes. Would the client be able to exclude the net earnings from the partnership and determine his SEP contribution based on his sole proprietor business or would the net earnings from both businesses have to be aggregated for purposes of determining net earnings from SE for contribution purposes? Would this SEP now be subject to controlled group rules as well and potentially make the employees eligible in future years?

One of the terminating plan there is a participant with a deemed defaulted loan.  The acquiring company will not accept the deemed defaulted loan, the part was not aware the loan is in the deemed defaulted status and the interest just kept accumulating. The loan was only for $15000 however the now with the interest it is $52000.  Since the loan is deemed defaulted should the participant pay the $52000 or is there any other way this can be handled.

Thanks 

We administer a 401(k) where the ESOP is administered elsewhere. Please don't waste any time on this if you don't know off the top of your head. This is an academic question only, as it is the ESOP's problem (if there is any problem) but I'm curious, as I had to look through the ESOP document for some items.

I'll spare you the details, (involved and confusing) but for 409(p) testing (this is an S-corp) the ESOP document refers to Code sections that don't exist, etc. so I'm unable to verify this via the Code sections referenced in the document, but here's the gist:

The plan document refers to "disqualified persons" as including family members. "Family members" include, for these purposes, "a brother or sister of the individual or the individual's spouse and any lineal descendant of the brother or sister." So, this creates attribution between siblings. Is this correct? Different from "normal" 318 attribution rules.

After a plan termination, we have always provided benefit elections to participants and have required that all be executed and returned to us before the distribution of benefits. Then upon receiving all elections, we prepare a letter to the broker (signed by the trustee) to make the distributions all at one time and attach instructions and amounts for each participant. Must it be this way?

I have heard others that just process the distributions as the benefit elections arrive. I think this could be a problem in a DC plan with pooled investments, but may be ok if the DC plan has all self-directed investments.

What about a non-PBGC DB plan with insufficient assets to pay benefits? In this case, the business owner will waive a portion of his benefit to pay all other benefits. In this case the business owner will receive his distribution first and all others will receive theirs as the benefit elections come in? I don't think this should cause any discrimination issues as ultimately all remaining participants (all NHCEs) will receive their full benefits and the owner will already receive less than his full benefit.

Anyone disagree or have any comments with this way of thinking?

Thanks.

I just wanted to make sure I was correct.

Cash Balance Plan is terminating as of July 31, 2022.  In order to calculate the 2022 requirement, they can maintain the 1,000 hour requirement correct?