General question regarding RMD.  If a participant has an outstanding loan, is the outstanding balance of the loan included in the 12/31 balance for the calculation?

In other words:

(Investments + Outstanding Loans) / RMD Factor

I believe that's the case, I just wanted to confirm.

Thanks in advance!

Can participant accounts be protected under 404(c) when the only investment vehicle is brokerage accounts and the Trustees offer no suggested funds to satisfy the requirement of diverse asset classes available?

Plan requires 2 years of service to be eligible for the PS component.  Therefore 100% vesting required. Plan is 401(k) Plan.

If the Employer does not want to make a Profit Sharing contribution, but a TH is required, can the TH contribution be on a vesting schedule?

This is an estate planning question.  I am well past the age of 59.5 while my wife is well under.  So, I am trying to develop an optimal strategy for her in case I die before she reaches 59.5.  I have an IRA and a Roth IRA; she has just a Roth.  My idea is that I should very soon divide my IRA into two IRA accounts at the same brokerage house.  Then when she inherits, she can take my Roth as her own, one IRA as her own, and one IRA as a beneficiary.  She will be able to take distributions from the beneficiary IRA account without penalty, because the taxation rules that applied to me will continue to apply to that account.  The downside is that she will have to drain that account within ten years.  The assets in the IRA she inherits as owner will not be available to her without penalty until she reaches 59.5, but she would not have to drain the account within any time period.  If she needs more income than the Inherited IRA provides she can withdraw from her Roth which now holds the combined assets from both our Roth accounts without tax and without penalty.  

Once I have divided my IRA into two IRA accounts we would shift assets between them annually to try to assure that the IRA that will become her Inherited IRA has enough assets in it.  

Would this work?

Hi All,

We have a handful of ex-pats (US citizens working abroad) where we offer an international plan for medical, dental and vision benefits.

At Open enrollment for US we offer them the option of healthcare and dependent care accounts along with voluntary life and voluntary LTD. We have recently implemented other voluntary benefits(pet, legal, ID theft & auto/home) but carriers indicated residence must be US based so have not offered to the ex-pats

Are there any things to look out for in offering the FSA accounts?

Much thanks in advance!

Kind regards,

Lexy

Husband and wife own a company with a retirement plan.  Neither ever named an alternate beneficiary.

Wife dies. 

Husband does not want to be the beneficiary, but he wants the benefit given straight to the children.

Is there any way to do this?

Hello,

I work for company A who has acquired several businesses through stock purchase, in different states, same business type and will continue to acquire more over the next few years. Each acquisition is maintaining their own EIN. We own 80% to 100% of each acquisition and we consider them part of our control group which allows them to participate in our health and welfare plans.

I have been asked for financial reasons to create multiple options for benefit offerings that may have differences in PTO days, 401k, health plans and other items for each acquisitions employees - none of the acquisitions has less than 60 employees.

Example: 

Plan 1 would have full health plan offering, 22 PTO Days, SH 401K w% Match

Plan 2 would offer full health plan offering, 19 PTO days, 401K no match

Plan 3 would offer HMO health plan options only, 18 PTO Days, 401k no match.  

My dilemma is around the 401k options - Company A (The acquirer) has a single employer SH 401K plan. Because we consider these acquisitions a part of our control group I do not believe we can shift our SH 401k plan to a multiple employer plan because we are related businesses.  

Company A has a safe harbor plan with employer match  and company A does not want to offer 401k employer match in all regions for financial reasons and because the acquisitions either have no 401k and if they do have a 401k they do not match

If you have suggestions for how I might design 401k options to fit this scenario I would be grateful for the ideas. 

Hi,

A DB plan had a benefit formula of 6% per yr of participation for the first year of the plan. Now for the second year (take over for second year ) we want to use 3% for each year of participation (of course with 204(h) notice). 

However, we want the accrual for this second year to be 3% of comp for this year of participation, without reducing the current accrual due to the benefits earned for the first year. Meaning the total benefit at the end of the second year will be the 6% of comp accrual for the first year plus the 3% of comp accrual for the second year equals the total accrued benefit earned for the first two years.

Based on this, would the following be an appropriate language for the plan document as the plan benefit formula. For 12/31/2021 year 6% of avearge comp and for 12/31/2022 and going forward 3% of avg comp, WITHOUT WEARAWAY.   Thank you for any insights on this.

When filing the form 5500, what should the IRS plan # be listed as for the PE? What if the PE had a prior plan that merged into the MEP - what should the IRS Plan # be then? What happens when the PE decides to start their own "stand alone plan" - what should the IRS plan # be listed as then? What happens if the PE decides to start their own "stand alone" plan and previously sponsored a "stand alone" plan that merged into the MEP that the PE adopted?

Suppose you have two related companies where a controlled group exists. Each of these companies sponsor a profit sharing plan that provides a uniform contribution which is the same for each plan. No testing issues.

Now they want both plans to be cross-tested. Since they have a controlled group, both companies will need to be tested as one. It actually looks like the plans will pass the general test.

One problem. One company and plan have a 12/31 year end and the other company and plan have a 10/31 year end. How is the cross-testing done with two plans that have different year ends? 

Have never run into this issue in all these years.

Thanks.

Plan sponsor has frozen DB plan that is well funded in economic sense, but does not satisfy the "well-funded plan safe harbor" of PBGC reg. sec. 4043.10, because pays variable rate premium. May or may not satisfy the "low-default risk" safe harbor. Have not determined that yet.

Pursuant to SECURE Act, sponsor amends pan to permit in-service lump sums at age 59-1/2. Enough active employees cash out so that at some point during 2020 the number of active participants in plan drops from 55 to 30, so more than a 20% reduction. Plan has several hundred terminated vesteds and retirees, and paid flat-rate premium for more than 100 participants for 2019, so does not satisfy the requirement for small plan waiver.

It does not seem clear to me under reg. sec. 4043.23 whether a greater than 20% active participant reduction reportable event occurred. The plan's amendment could be viewed as a "single cause" under 4043.23(a)(1)(ii), sort of like an early retirement incentive program, except that the participants didn't retire, they just cashed out their benefit, but 4043.23(a)(1)(i) defining a "single cause" greater than 20% active participant reduction refers only to a  greater than 20% reduction in the number of "active participants," without saying whether this is referring to a reduction in the number of "active participants" employed by the plan sponsor or covered by the plan, and the definition of "active participant" in 4043.23(b)(2) says it's someone working for, or on leave, etc., from the sponsor, again without referring to plan coverage. Thus, since all or most of the folks who took the in-service distribution are still working for the company, there was not, strictly speaking, a 20% reduction in the number of "active participants" as so defined. It's harder (maybe impossible) to wriggle out of the greater than 20% active participant reduction due to an "attrition event" [oxymoron?] definition in 4043.23(a)(2), because that definition does refer to the number of "active participants" covered by the plan at the end of the plan year as compared with at the beginning, but at least if I have an attrition event, the requirement for the reportable event notice is delayed.

Follow-on question: Assuming plan sponsor did, at least arguably, have a reportable event, does anyone have experience with reporting late to PBGC, voluntarily, with a "good cause" explanation? It does not appear that the PBGC has any guidance for obtaining a penalty waiver, but it seems likely that in a case such as the one described above they would likely waive or apply only a small penalty if the sponsor made a voluntary delinquent filing.

Company started a new plan, with a 1/1/2019 effective date. 2019 Form 5500 was filed, with a beginning of the year participant count of 188, making plan subject to audit. However, on Schedule H, Part III, the Form 5500 prepared and filed on EFAST checked box 3d2 - the audit will be attached to the next Form 5500 pursuant to 29 CFR 2520.104-50 (less than 7 month exception). Our reasoning for the exemption is that, for plan eligibility purposes, the plan Adoption Agreement indicates that anyone employed on July 1, 2019 was eligible. According to the plan sponsor, deferrals began in August 2020.

The 2020 Form 5500 has not been filed, as the TPA will not file the return without a 2019/2020 audit. We have been brought in to perhaps prepare the 2019 and 2020 audits. Question:

Can the plan claim the exemption for a year less than 7 months, utilizing the eligibility feature noted? Or should we, if engaged, recommend an amended 2019 filing with a 2019 audit, once it's complete, attached to the amended return?

Thanks for any replies.

Has anyone experienced problems with responses being changed in Form 5310 being filled out through pay.gov?  I'm using Chrome.  On multiple times, I've had the numbers in line 16a(3) change on me after I've logged back into the form.  I'm having similar issues with additional items being checked off in line item 3f and line item 20.

How does one submit the completed procedural checklist for the Form 5310 on pay.gov?  Does it appear after the signature page is completed?

Thanks

If one is awarded half of retirement account and QDRO but it is not with the benefit administrator of the spouse and he quits his job and takes all the money, can one sue the spouse for her portion?

Hi

An EE hired more 10 years ago and worked 1000+ hours each year. In 2014 becomes part-time but working 750/year.

Owner wants to set up combo plans for 2021 and wants to exclude this employee.

I think this employee is included in all testing because never terminated and never had a break-in-service, correct? He would be excluded categorically.

What if, worked under 501 hours since 2014, still needs to be included?

Thank you

EPCRS says if a deferral election is not started in an auto enrollment plan, a QNEC can be avoided if the election is started by: 

"(i) Correct deferrals begin no later than the earlier of the first payment of compensation made on or after the last day of the 9 1/2-month period after the end of the plan year in which the failure first occurred for the affected eligible employee or, if the Plan Sponsor was notified of the failure by the affected eligible employee, the first payment of compensation made on or after the end of the month after the month of notification;"

Say a plan with auto enrollment has payrolls the 15th and the last day of the month.  A participant is supposed to be auto enrolled on January 1, 2021, but is not.  The participant finally notices and informs the plan sponsor on June 1, 2021. 

When must the deferrals begin to avoid the QNEC? 

The month of notification is June.  The month after the month of notification would be July.  Since there would be a payroll on "the end of the month after the month of notification" (July 31, 2021), is that the payroll date that deferrals must start?

What if the last payroll in July was July 25, 2021, would the deferrals need to start with the first payroll in August, which would be the first payroll "on or AFTER" the end of the month after the month of notification?

Thanks very much.

One  Participant, owner only plan.

The owner was taking annual distributions and passed away.

He had elected a Joint and Survivor benefit and his spouse passed away years ago, and therefore there is no beneficiary to continue taking his annual distributions.

The Plan is heavily overfunded. What happens to the plan now. 1. Does the overfunding revert to the estate and the estate will owe the excise tax for he overfunding? 2. Can the estate sell the plan to an underfunded plan (as is done at times to avoid an excise tax on the overfunding)? Thank you very much.

Does anyone have a quick summary or chart that shows what SH Notices still need to be sent and which ones don't?

Plan has no exclusions to compensation.

Employer did vacation day buyback, but did not withhold 401(k) deferrals.  Were they required to?

Also, they do a 4% profit sharing each year, and did not remit the PS for the buyback.

I am thinking they owe a 50% QNEC on the missed deferrals (plus earnings).  No match.

The missed PS may be ok.  The PS allocation is New Comparability, and if it passes testing they are ok.

Is it your opinion the Employer must do a Profit Sharing Resolution each year to memorialize the amounts everyone gets because it is New Comp and not a stated formula?

Would appreciate it if someone would confirm the rule here.

Plan has a basic SH match to satisfy the ADP safe harbor requirements. It also has a discretionary match, which is not intended to satisfy the ACP safe harbor test.

If the discretionary match imposes a 1,000 hour or last day requirement, does that blow the ADP safe harbor because it could cause an HCE who works all year to get a higher rate of match than a non-HCE who leaves during the year?