This is a general question - have just been presented with an ERISA 403(b) plan that has been operationally botched for an as yet untold number of years - could be 4, could be 13. VCP all the way unless ERISA attorney advises them to ignore the problems and start clean next year. Very doubtful...

Among the MANY transgressions, people ineligible for employer nonelective contributions have received them, for as far back as this goes. Plan is 100% immediately vested. Just wondered if anyone has ever SUCCESSFULLY negotiated with the IRS to have such contributions removed from their accounts and reallocated? I can't imagine that the IRS would allow this, but maybe someone has tried it with success?

A client asks: Employer used PPP money to pay Christmas bonuses in 2020. If the plan has no exclusion of bonuses from covered compensation, can these PPP funded bonuses be excluded from covered compensation?

Unless there are some regs that I haven't located, I can't see how these bonuses could be excluded.

Legal in state where the entity does business.  Are there any recordkeepers who will work with these businesses?  I know it's a whole thing I just am curious to know if its doable.

Suppose you have a small 401(k) plan that provides for a safe harbor NEC. There are 4 business owners (25% each) and 10 employees (all non-key nhces). The plan only provides the safe harbor NEC to non-keys.

For the past 4 years, 1 owner and 3 of the 10 nhce employees have been excluded. They have a December 31 year end.

The company wants to amend the plan effective November 1 to remove the exclusion for all (i.e. they want everyone to be eligible).

Question: if this is done now, will the 3 nhces that have been excluded be entitled to the safe harbor NECs even though they will have only had 2 months to make salary deferral contributions for this year? Would we be able to include them as benefiting for the salary deferral part of the 410b coverage test?

Thanks.

Hi

I am not a DC person in general and was asked to do a favor to someone for a plan that is in trouble.

Plan is a DC plan with deferral, 3% non-elective safe harbor and profit sharing provisions.

Plan effective date is 1/1/2015.

Only 5500 filing was done for 2015 but under DVFC program.

I am assuming the document is a PPA document so should be ok as just needs to be updated for Cycle3 - no confirmed yet. I am not sure if any statutory amendments were required, to be checked.

Nothing has been done since then, no filings, no SH notices, no nothing.

As no letters have been received for missing 5500 forms yet, i am assuming that it is ok to file all missing years under DVFC, correct?

I will have test/check each year for contributions made (or missing) and wanted to see what needs to be done if corrections are required - all may need to be done under VCP unless eligible for SCP:

• What if SH contributions were missed and/or not correctly calculated?
• What if any new employees were eligible and never provided deferral elections forms, SH allocations SPD etc?
• What if PS contributions were made and plan did not satisfy 410b and/or 401a4 - formula is group based i.e. not safe harbor

Any other questions I am not asking? I am aware that there are a lot check when and if i get any information for each year.

Usually I would like to run away from these but...

Thank you

Hi

To confirm, if sponsor wants to set up a new 401k plan for 2021, they are late for safe harbor for 2021, correct?

Same question for an existing PS plan and wants to add 401k feature for 2021.

There is no way to set up any plans that have safe harbor for 2021, correct? Just checking out there.

Any 401k deferral will be subject to ADP for 2021 unless they use the 5% rule, correct?

Thank you

Thankfully, none of my clients ever seem to be in a disaster area where they need disaster relief, but this time, one of my audited plans is in NYC and wants to take advantage of the 1/3/22 deadline.  From what I'm reading, there's nothing special to do - just file before the new deadline, and the IRS is supposed to know by the address that the plan sponsor is eligible for the relief.  For those who unfortunately have to deal with this on a more regular basis, does that sound right?  Doesn't the box on Line D usually have to be completed?  I don't want to add a $2,000 late filing penalty to this company's other issues...

What happens to QDRO if employee is terminated before retirement? or terminated due to vaccine mandate?

My wife and I got married earlier this year. She is not a US citizen and is living in Sri Lanka.

I want to add her to my 401K plan as a beneficiary. When I try to do that, it requires a SSN or TIN. Is there any other way to do this? Can I write a will instead that leaves everything to her?

A question came up on a HRA. I was able to obtain a copy of the Plan document, and the language is, shall we , a bit sparse, and not terribly enlightening. But here goes. 

Plan was established in 2008. In the adoption agreement, under "Maximum Benefits Per Coverage Period" it says: 

"Other: A discretionary amount to be announced by the Employer at the beginning of each Coverage Period." It then goes on to list the maximums for 2008.

So here's the question - the coverage limits have been increased several times since then. Do you think this language would be sufficient, if the amounts are properly communicated to employees each year, or should a Plan amendment have been done each time the limits increased?

A 401(k) plan for the first time has over 100 participants and unfortunately must meet the plan audit requirements. There are over 50 retirees  that have between $5000 and $10,000 in their account and if only a few of them withdraw their monies the plan would have less than 100 participants. The plan sponsor would like to force out or encourage these retirees to take a lump sum.  Are there any options available? It seems that the plan sponsor can contact these participants and remind them that they can take a lump sum or rollover to an IRA. I'm concerned that if the plan sponsor offers a cash or other incentive to take a lump and the retiree accepts it could be deemed self dealing with plan assets. Further if the employer recommends a lump sum or a specific rollover it could be deemed fiduciary investment advice Any suggestions? 

What is the Payment Event under 409A when a Transaction Bonus (calculated as a % of net proceeds) is payable 12 months following a CIC, but the bonus will be forfeited if the employee voluntarily terminates employment prior to the payment date. 

Is the Payment Event the CIC or a fixed date (the date 12 months after the CIC)? I believe it's a fixed date. 

But what if the plan language says the bonus is payable "within 12 months" after the CIC, and is still subject to forfeiture if employee voluntarily terminates employment prior to the payment date? I believe it is a drafting error as the actual language is "60% shall be paid within 12 months after the CIC and 40% 18 months after the CIC" and it appears to be intended to retain the employee past the transaction. I initially looked into correction methods for a payment period longer than 90 days following a Payment Event, interpreting the CIC as the Payment Event, but with the possible forfeiture I'm now leaning toward the Payment Event really being the date of payment.  And possibly correcting under IRS Notice 2010-6 Section VII(E), "Service Recipient Impermissible Discretion to Accelerate Payment Events." The argument would be that the Payment Event is a fixed date which is 12 months after the CIC and the "within 12 months" language is giving the Service Recipient the (impermissible) discretion to accelerate that payment event. Any thoughts?  

I have just been asked to set up 3-year cliff vesting but interestingly don't seem to have other plans with such a schedule.

I feel like I recall a recent law that 3-year cliff was no longer allowed?  Was that for DB plans only?

I understand it doesn't work for top heavy plans but plan in question is not top heavy.

Sponsor has a 401k and an ESOP; two separate plans with two separate third party recordkeepers.  Compliance for the 401k reported ADP test fail.  Corrective distributions were calculated and returned prior to March 15th 2021.  Compliance for the ESOP reported 415 limit fail that involved 1) limiting ESOP allocation to certain participants due to maximum annual contribution in the ESOP, and 2) additional excess contributions to be returned in the 401k, comprised of deferrals and match.  ESOP recordkeeper told sponsor to notify 401k recordkeeper with this information and indicated that the correction deadline is 12/31/2022.  Is this deadline correct for 12/31/2020 plan year end?  Where can I find the guidance that supports this?

Participant was supposed to have her first RMD in 2020, but that was suspended.  Had it not been suspended, her RBD would have been 4/1/21.

But since it was suspended, did she really have an RBD?

By when must her 2021 be taken?  21/31/21 or 4/1/22?

After the update, when I am in my personal view, there is a pane with recommended jobs.  Is there a way to get rid of that?  It takes up too much real estate on my screen.

Plan is failing 2020 ADP.  We were thinking of retroactively amending the plan for 2020 to be a 4% SHNEC, depending on the cost-benefit analysis.  (Plan is TH, too, so it'll probably be worth it.)  We can still exclude HCEs from that, right?

The main question is if we amend for 2020, will that automatically be in effect for 2021, too?  Or do we need to to another amendment for 2021 to be 4% SHNEC?

We will then amend the plan for 2022 to either be SHNEC or SHM, and talk to the owners to see if they want to exempt themselves from the SH.

ERISA is the Employee RETIREMENT Income Security Act.

What do Health Plans have to do with Retirement?

Just something I've always wondered about.  I don't deal with Health Plans, so I can't figure out why there is overlap.

I have a question about In-Plan Roth Conversions and the ability to take the conversions as In-Service Distributions prior to age 59 1/2.

Our plan document has a specific section for In-Service Distributions of In-Plan Roth Conversions. And, one of the Options is "any time", meaning that a participant can withdraw the In-Plan Roth Conversions at any time.

So, I have a hypothetical scenario. Employee A (who is, let's say 40 years of age) has been contributing Pre-Tax Deferrals to the plan. Normally, he would have to wait until age 59 1/2 to withdraw the deferrals as an in-service distribution. Instead, he chooses to do an in plan Roth Conversion (the plan document allows In-Plan Roth Conversions for all sources at any time). He then immediately (before there are any earnings) takes out an In-Service Distribution of these funds (because the plan document allows for In-Plan Roth Conversion amounts to be withdrawn in-service at any time). So, effectively, he avoided not only the 59 1/2 age restriction for in-service distributions, but also, the 10% penalty?

Is this scenario allowed under current regulations?

Thanks.

I have a client leaving a PEO and establishing single ER plan. Within the PEO, they had QACA design and are leaving 11/1. Plan year end is 12/31.

Can they continue the QACA in the Single Plan even though it was not adopted until mid year? Thanks