I am working on presenting such pros and cons to a client.  I can think of fairly long list of cons, but the only *pure* pro I can think of is benefit security for the members/participants. 

Anything else I can think of has significant cons working against it.

A taxable entity could get a deduction for contributions, but for medical that is significantly limited and would require an annual determination.

The trust could invest in assets the plan sponsor can't invest in directly, but that's problematic.  I.e., should any plan sponsor do this when the presumably have a core business/mission that they should focus on?  

Funding would lower the GAAP expense for the plan sponsor, but that is offset by the opportunity cost of using the money for something else.

What am I missing as a pro(s)?

Hello all,

We have a prospective client that wants our help in administering their ROBS plan. Our firm has no experience in administering these types of plans. Can anyone with experience tell me what goes into the administration and 5500 for this type of plan that is beyond what is normal for a regular 401k plan?

Thanks.

Our client has a PS 401(k) plan with 3% SH non-elective.  They have a new employee with a Visa; she is from Germany.  She has chosen to defer, but does not want to open an account (TD Ameritrade).  They have her first deferrals, which have been held for a couple weeks, as well as her 3% SH.  But there is presently no account for them to deposit the money to.

Can participant continue to defer if she refuses to open an account?  How long can ER hold the money before it becomes a problem?  Even if she does not defer, what do they do with her SH?  (Plan excludes "non-resident aliens" - she is here legally as a resident alien.

All thoughts and suggestions welcome.

Deceased participant...  
Spouse is the primary beneficiary...

Can she waive her right as the primary thus passing the benefit onto the secondary beneficiaries?  (the kids)  

Have a client that missed making their Safe Harbor Contribution.  Going to make the payment now, plus lost interest.  The question is what interest rate should be used?  Where the money is invested calculates the actual rate of return, and from the due date to today most of the participants have actually lost money (even though the Plan lost during this time, I don't believe we can't avoid making interest).

Therefore is it best to use the VFCP calculator to calculate interest? 

Thanks!

Will the IRS issue a private letter ruling with respect to the termination and final distribution of VEBA assets or is this a no ruling area.  Thanks.

A client has maintained a SOLO K for a few years - with just him and spouse participating.  There is NO age/service requirement - now they hired their minor kids.  Since it is still family - is there any requirement to change to a regular 401k at this point?  There are NO no-family employees.  

Just some clarification please...   If an owner participant dies before the year end but after the RBD (I was told he is way past 72), the RMD should have been taken before 12/31... correct?

Thanks

Can the initial 72(t) SEPP payment be prorated?

Or regardless (when during the year) it's taken is the IRA owner required to distribute what amounts to the full year payment?

What guidance has the IRS issued?

All assistance is appreciated

Anyone have the new table available in Excel?  

Good afternoon!  I know people can have Life Insurance in a Defined Contribution Plan.  Is it possible to have it in a Cash Balance Plan as well?  I just wanted to confirm.

Thanks in advance!

I read a bunch of cases a while back, but don’t recall seeing this addressed:

What is the legal authority that allows an Alternate Payee to immediately take a full disbursement of their portion of the participant's benefit assigned to them through a QDRO, when the participant’s benefit is not in pay status, the participant has not attained the earliest retirement age, and the participant does not otherwise qualify to take a withdrawal from the plan pursuant to the plan's rules. 
 

What are acceptable methods of self-correction if an employer missed setting up loan repayments? A participant was supposed to start getting loan deductions taken in September 2021 but the employer's payroll area missed setting it up. The participant can't pay a lump sum to catch up. Is the only option to amortize over the remaining period? Can they chalk it up to an administrative error and change the start date?

A proposed QDRO I just received states, "This Order *** is made pursuant to the domestic relations laws of the State of [redacted]."

Does this phrasing satisfy the requirement of § 1056(d)(3)(B)(ii)(II) that the domestic relations order "is made pursuant to a State domestic relations law" or does the specific state law/statute need to be identified in the order in order to be qualified by the Plan Administrator?

A PSP covering only a 100% owner has been filing the 5500-EZ for years.  It was recently revealed that his son was employed several years ago and met the plan's eligibility requirements but the owner kept filing the EZ.  The son is still employed but he's not owed any allocations since there haven't been any contributions since he was 'hired'.  What would be the recommended course of action - amend the returns to SFs?  DFVC?  Ignore and just have the owner file the correct form going forward? 

Good morning to all,

A participant in one of our plans received a hardship distribution in March of 2019 from her 401(k) account.  At that time, she was required to "sit out" from making subsequent deferrals for 6 months.  The question is, whose responsibility was it to resume her deferrals?  Is the burden on the participant to notify HR that she would like to start back up, or is the burden on the HR department to contact the participant and ask her if she would like to resume deferrals?  Or even possibly, was HR supposed to automatically resume her deferrals after 6 months based on prior instructions from the participant given prior to the hardship distribution?

In any event, she has not made deferrals since that hardship distribution, a little over 2 years ago, and is now complaining to the new financial director that her deferrals should never have been stopped because "she never signed a waiver asking not to participate".  We are trying to help figure out whether any back deferrals, match, and interest are due to her from the date 6 months after the hardship withdrawal was made through today.

I have researched this various places and cannot find this particular question addressed.

Thank you,

ldr

Can a cash balance plan have a full calendar year plan (i.e., effective date of 1/1) if the entity only came into existence in the middle of the year?

Are prototype documents allowed to use language that effectively allows for each participant to constitute their allocation group for purposes of a profit sharing allocation?  Effectively the employer is allowed to choose the amount each participant gets in terms of a profit sharing allocation... assuming you are passing top heavy and whatever testing is necessary (general test/cross test).  I have only administered volume submitter and individually designed plans. I have read through 2 or 3 adoption agreements and have not seen anything like this in a prototype document.  

The IRS letter suggested DFVC is an option if the DFVC requirements are met.  The only requirement I could find is that the plan has not been contacted by the DOL about the late filing.  Which they have not, but the IRS has contacted them.

Can they use the DFVC then in this instance?

Thank you

I have a client who is hoping their audit requirement is eliminated for 2021.  The active/eligible participants plus inactive with a plan balance as of 1/1/2021 are 98.  A fixed match true-up was calculated and funded in 2021 for those eligible in 2020.  Included in the true-up were 3 participants who terminated in 2020 and had no plan balance as of 1/1/2021.  So their plan balance was zero on 1/1/2021, then the small match true-up was deposited in mid-2021 and then they had that paid out as well.  So they had no plan balance as of 1/1/2021 unless you count their true-up A/R.  If we count them as participants with a balance as of 1/1/2021, then the count is 101.  The plan reports on the 5500 and audit on a cash basis.  

I suspect everyone will say get the audit to be sure and that is what I wil tell them.  I did look at 1/1/2022 as well which is clearly 98 and so 2021 will be the last year (for now) which I guess is the silver lining.

Just curious about comments at this point.  I will tell the client to get the audit.

Tom