I don't generally use healthcare.  If something breaks or stops working, I get assistance via the emergency room.  My wife is deceased.  My youngest child is about to get his own healthcare.  This year I decided to switch to a High Deductible Healthcare Plan and open a Healthcare Savings Account.  HDHP went into effect the first of the year.  On March 14th, I fully funded the HSA ($8300).  I expect to use the account to pay my deductible and other expenses like dental.  I found Publication 502 which I believe lists covered expenses for the HSA.  I have just a few expenses this year...

• OPTUMRX, April 05, 2022, $883.01

• OPTUMRX, March 18, 2022, $2.62

• DENTALCARE, March 15, 2022, $50.00 (date of 2/5/22)

• MASS GENERAL, February 04, 2022, $798.94 (date of service 12/23/21 and 12/28/21)

Does date of service or date of billing determine whether cost of a service can be reimbursed from my HSA?  Can charges incurred prior to the creation of the HSA be reimbursed?  What kind of documentation do I need to keep as evidence of eligibility?

Also, my company's HDHP is not 'creditable'.  My understanding is that people who delay Medicare past 65 who do not have creditable coverage face penalties when they enroll in Medicare.  Should I switch to a creditable plan the year before enrolling or enroll on the first day of eligibility?

Topic has been used as a continuation of a previous discussion

The IRS states that the Audit CAP correction penalties will not be excessive and will bear a reasonable relationship to the nature, extent and severity of the plan failures. However, Rev Proc. Section 5.01 states that the Maximum Payment Amount would be the tax imposed due to plan disqualification including tax on trust income, failure to file form 1041, income tax due to loss of employer deductions, etc., Has anyone experienced this type of an Audit CAP penalty or a similar severe penalty imposed on a client plan. Typically given my experience with Audit CAP I've seen penalties in the $15,000 range due to multiple plan qualification failure issues. Has anyone had a client that experienced the Maximum Payment Amount penalty, or severe high $  penalties, and if so, what amounts? 

What is the right basis for correcting an MDO for automatic enrollment?  50% of the ADP, or the pct of the auto enrollment?

Here it looks like it would be 50% of the auto enrollment pct:

https://www.irs.gov/retirement-plans/fixing-common-plan-mistakes-correcting-a-failure-to-effect-employee-deferral-elections

Our situation: elections are made on our recordkeeper site, and transfer over to our payroll system.  Due to human error, some elections were not transferred.  These non-transferred errors include automatic enrollments as well as positive elections.  

It seems to me that all these participants were given the option to defer, as they received info from the recordkeeper and were directed to the site.  As they were given the opportunity, this 401k plan fix would not apply:

https://www.irs.gov/retirement-plans/401k-plan-fix-it-guide-eligible-employees-were-not-given-the-opportunity-to-make-an-elective-deferral-election-excluding-eligible-employees

Thanks in advance for any comments!

When an asset sale occurs between two entities both having 401k plans and the seller's plan terminates, what happens to the outstanding loans in the seller's plan?  Since it is being terminated rather than merged, is there any way to "transfer" the outstanding loans to the Buyer's plan in order to avoid the loans being defaulted and taxed to the participant?

Thanks for your help with this...I can't seem to find a definitive answer...Yes, I know it will depend on the plan documents of both plans, but wondering if the plan's could be amended to allow for the transfers of the outstanding loans.  

Thanks again!

Maybe a dumb question, but I haven't found anything concrete on the IRS website that shows how one proceeds with freezing a plan in the case of a merger, only that it's an option. Does freezing it require an amendment to the plan, or will a notice to current participants suffice (similar to a black-out period)?

A plan sponsor was sold 100% to an ESOP for its employees.  So the plan sponsor is now the ESOP.  I'm told there are no corporate officers but I am checking with their CPA firm.   The ESOP has a Board of Directors who are also plan participants.  I'd think of them as officers.  But if none of them have wages over the key employee limit, then it seems there are no key employees.  I thought I read at one time there had to be a minimum number of officers, or at least one.  All I can find now is there is a defined maximum number but I don't see anything about minimum number.

Thank you in advance for comments.

Hi

I want to check others' experience on time frame and expectations for getting a PBGC coverage determination.

Applied for determination on PBGC coverage beginning of March 2022 for a financial company.

Was contacted for additional information multiple times during March and provided everything they asked for. Last communique was on 3/31/2022.

Haven't heard from PBGC by mid-April so started following up multiple times and the responses I have been getting are:

"We are working on the request for an opinion letter for the proposed plan.   I do not have an estimated date that a letter will be issued."

"We still don’t have an estimated date for issuance of an opinion letter.  We’ll let you know when we do." This one was last week.

Anyone had a recent experience?

Client is anxious as this is for 2021.

Thanks

We have been asked if we can process a QDRO provided to us after the death of the AP.  Our QDRO procedure does not address this scenario.  Can we?

Have two attorneys that each own 100% of their own s-corps.  Those two attorneys each own 50% of an accounting firm of which they do not perform any legal work or share mutual client.  Is this a ASG?

We have had a participant sending us letters for months, warning us that we might receive a QDRO but we should not honor it because it will be bogus (in this case it is a child support QDRO and he claims and has provided some documentation suggesting he is current on child support).

Today we received the QDRO.  It is certified by a court and, under normal circumstances, we would approve and process it.

Questions:

1) should we tell the participant we received the QDRO and give him time to respond?

2) should we give the participant a copy of the QDRO (if not by default, should we if he asks for it)?

3) should we give him additional information, like the cover letter with the attorney's contact information (if not by default, should we if he asks for it)?

My preference is to honor the QDRO if it has been approved by the court, but we have had at least one QDRO submitted in error in the past that was processed (i.e. the account divided and paid out to the AP) and it turned into a big mess.  Our normal process is not to look outside the four corners of the QDRO document, but I want to avoid future headaches.

EDIT:  To add some context requested by some of the questions: 

• "We" refers to the delegate of the Administrator tasked with approving QDROs.
• I refer to the Order as a QDRO, because we have already determined that it satisfies the criteria necessary to be approved as Qualified.
• Our process does call for notification of receipt of the Order, but not necessarily providing an actual copy of the Order, and definitely not for providing additional information, such as cover letters and attorney contact information.

The big questions revolve around how much additional information we should provide to the participant upon request, and whether we should give any credence to non-QDRO related information (such as the participant's objection), and if we need to give the Participant time to respond before proceeding.

We are moving a 401(k) from another provider to our platform.  The plan has both related and regular rollover.  We set up 2 separate money types to keep the funds separate.  I'm being told that I need to find out the prior sources that the related rollover came from, like deferral, match, etc.  I have never heard anything like this before.  Is this correct?   At prior employers, we never got this information, and I wouldn't know what to do with it if I had it.  Thanks. 

Client is looking to add after-tax  (voluntary) contributions to their current safe harbor match plan.

I understand the ACP testing and top heavy issues that arise with after-tax contributions, but I am trying to determine if the client is required to provide the Safe harbor match to the after-tax contributions.  Can anyone provide some guidance?  Thanks.

So our firm took over the audit of a 403(b) Plan, YE 12/31/20 (yes, 2020, don't ask). The plan document we have shows that it is written as a "Safe-Harbor" 403(b) Plan, with a match equal to 100% of deferrals on the first 3% of compensation and then 50% of deferrals on the next 2%. However, in going into the participant testing, the first person picked for testing had $19,500 of deferrals, ok. When the match was tested, the matching contribution was equal to 5% of compensation, not 4%. Anomaly? No, anybody with greater than 5% of deferrals received a 5% match.

We noted that the document does allow for a matching contribution, and it's defined as discretionary. Question brought up is whether the extra 1% can be considered a discretionary match, and, what, if any, ACP testing would have to be performed? To complicate matters, there is no TPA retained by this employer, so it is a big old mess.

Thanks for any replies.

I have a client who was reviewing entry and discovered they missed two EE's that were eligible 1/1/2022.  They are going to provide the enrollment information ASAP.

There is no match, so just the missed deferral

If they EE's return the forms and indicate they do not want to defer, do you still have to provide a QNEC for the MDO?

Their NHC ADP average is low, if they return the form and want to defer, 10% can i use that % for my correction instead of waiting until next year when i do the ADP test?

I appreciate your help.

Thanks

A plan with a pooled arrangement allows inservice withdrawals for amounts that have accumulated for at least two years in the plan. What would be the best way to determine the amount for such a withdrawal at this time since account balances are lower now than they were two years ago due to the market's volatility over the last few months?  Since there won't be a 2022 contribution, basing the withdrawal on the balance from two years ago could result with a distribution from a participant's account exceeding their 1/1/22 balance.  Doing an interim val on this sizable plan just because one participant requests an inservice withdrawal seems unreasonable - I'm hoping there's a better solution. 

So we asked Relius why we could not get our Lifetime income numbers to work and they said:

Quote

Prior to generating any reports or results, the user must download needed tables and updates into Relius. These are global and are done by choosing Utilities / Update Global Tables from the main menu. The two tables are (a) the Ten-Year Uniform Life and (b) the Ten-Year constant maturity Treasury (CMT) securities yield rate for the first business day of the last month of the period to which the benefit statement relates.

These rates must be updated monthly and are available from FIS. They are typically available for download by the fifth business day of the following month

What they don't mention is WHERE we get the rates.  Anyone know?

Also would anyone know what the math is to caluclate the benefits if say I needed to do it in Excel?

          I have a 401(k) Plan that had a required contribution of about $55,000 for Plan Year 2020. This required contribution didn't get deposited until 4/22/22. Given the pandemic and a downturn in business, even though the client wanted to make this contribution in a timely manner, the soonest they were able to make the deposit was late this past April. I would like to hear from someone who has had a client in the same situation (as I am sure that this has got to be a somewhat common situation) and what they did about it. Also, if the IRS got involved, what relief were they willing to give.

Thanks for the help

Can plan allow distribution event to be "later of" separation from service or a specified date? 

Hello everyone,

My understanding is that the 2% Shareholder Insurance Premium is included in Code 415 Compensation (aka Current Includable Compensation), W-2 Wages (aka 6041 and 6051 Compensation) and Wages under Code 3401(a) (aka Wages for Income Tax Withholding), but it's excluded from Code 415 Safe Harbor Compensation. I want confirmation that the 2% Shareholder Insurance Premium is a taxable fringe benefit (per IRS Publication 15-B) that is excludable from Plan Compensation under the exclusion "All fringe benefits (cash and noncash), reimbursements or other expense allowances, moving expenses, deferred compensation, and welfare benefits." Thank you.