Plan has two trustees.

One of them has retired and is simply no longer involved or around.

There is no board for this small company.

Can plan be amended to only the one remaining trustee by this one remaining trustee and not involve the outgoing one?

A husband and wife in a common law state (so a controlled group) have separate businesses and separate calendar year profit sharing only plans.  The husband has no employees, the wife has one employee that is eligible for her plan effective January 1, 2022.  The wife's plan requires 1000 hours and last day to be eligible for a profit sharing allocation.  The husband's plan requires last day or 500 hours of service to be eligible for a profit sharing allocation.

The wife's employee terminates in 2022 with less than 500 hours.

Am I correct that we can exclude the employee from coverage since they did not earn more than 500 hours of service, and thus not have to provide a profit sharing allocation?

Thanks very much.

Hi,

An owner only DB Plan (100% owner -no partners etc.) opened account with Bank. Bank did not want to open pension account so he opened the account with the corporate name only and left out "Defined Benefit Pension Plan" on the account name. It is a checking account with no interest -so there are no issues of bank issuing a 1099 for interest income. Is this a big issue that the account is missing db plan on the label? Thank you.

Our plan allows both elective deferrals and after-tax contributions.  If an otherwise eligible employee was excluded from participation in the plan, I understand we need to provide a QNEC for the missed deferral opportunity and the missed after-tax contribution amount, plus applicable earnings, and the related missed match, plus applicable earnings.  If no one has ever made after-tax contributions under the plan, do we just use the ACP attributable to match for the employee's group?

I have a plan for which I have to do a Schedule D.  I cannot get it to take my entries past page 2.  I keep adding page 2 (page 3 is not available apparently), but it still only fills out the first 2 pages no matter how many I add.  Just spent 45 minutes imputing the info to see that most of it didn't take. How do you keep adding so it shows up? Thank you in advance! 

Hi!

A plan participant requested a rollover of his $40,000 account balance.  Due to a processing error on the TPA side, the distribution was coded as a cash distribution when entered, so federal and state taxes were withheld when the recordkeeper processed the distribution.  The net amount was paid directly to the IRA Custodian, and taxes were remitted to the IRS and state.

The distribution was processed in December 2021 and the participant notified us in March when he received his 1099-R's that something did not seem correct.

We contacted the recordkeeper with fingers crossed that the entire transaction could be reversed, but they said it could not, as it crossed tax years and the taxes had already been remitted to the IRS.  And, since it was not their error, they could not "front" the tax funds back to the participants account as it could not stay on their books.

The original 1099-R was issued showing the $40,000 as a cash distribution with taxes withheld, and since the participant is age 35, the form was coded with a 1, so the 10% early withdrawal penalty also applies.

The participant had not yet filed his taxes, so the recordkeeper reissued the 1099-R as two separate forms:  one shows the amount that was deposited in the IRA as a non-taxable distribution, coded as a rollover; the second shows the amount of the taxes withheld as a taxable distribution coded as a 1.

There has been a lot of discussion now regarding how to make the participant whole, and talk about how this will play out with his taxes regarding whether he gets a full refund of the taxable amount, and what will be due for the penalty.  To me, the participant should wind up with the full amount in his IRA that he asked to be deposited in his IRA.

Does anyone know a way this can be accomplished?  Should a 1099-R have been issued to show the full amount of the distribution, zero should have been taxable, show the actual taxes withheld and code as a G so no early penalty?  Will this result in the taxes being returned?  

The participants broker also feels that since the participant never actually received any funds, the 60 days does not apply for the participant to change his mind and deposit the tax amount into his IRA.  I do not even know if the participant has access to enough cash to be able to deposit the amount withheld for taxes.

I am hoping someone has had this situation and it came to a happy resolution.

Thank you!

Company A acquired Company B in stock acquisition in 2021.  Each entity sponsors its own 401(k) plan with calendar year plan year. Company A's plan is a QACA safe harbor with a 3% non-elective contribution. Company B is not safe harbor.

Company A wants to freeze Company B's plan as of 12/31/22 (end of 410(b)(6)(C) transition period), add Company B as participating employer under Company A plan as of 1/1/23, and merge Company B's plan into Company A's plan sometime in 2023. (No bandwidth to do a year-end plan merger.)

Company A wishes to carryover the deferral elections under Company B's plan to Company A plan as of 1/1/2023.

I am concerned that this doesn't satisfy the uniformity requirement under QACAs/EACAs (that eligible employees be automatically enrolled at a uniform percentage of compensation).

1. Am I being too conservative? Would such carryover be okay for a QACA?

2. Would your opinion differ if the plans were merging as of 1/1/2023, given that the merged plan would be a continuation of both Company A and Company B plans?

The owner would like us to take the Cycle 3 restatement fee from the plan. The plan document allows us to take this type of fee from the plan. However she (the owner) has indicated that she wants the whole fee to come out of her account only and not across the board from the participants accounts. Is this permissible, can we take the fee from her account only? The document doesn't address this unfortunately.

I have previously prepared a Form 5500 for a Master Trust, which held assets for two plans of a plan sponsor. As of the end of 2021, the Master Trust no longer exists, as one plan merged into the other and the master trust was no longer necessary.

In preparing the Schedule D, Page 3, would you list the two plans that were in the Master Trust during 2021, or would you leave it blank, since there's no Master Trust at the end of the year?

Thanks for any replies.

Hi, 

Plan was terminated by Sponsor on 12/28/2021. Plan was terminated by plan counsel advice. As a corporate action/ acquisition plan is starting a new plan. Plan counsel is advising that the terminated plan needs to be amended. Do the terminated plan needs to be amended? When a plan terminates we don't ask for an amendment since the letter of Direction Document and the Board of directors resolution captures the  requirement of the plan sponsor's intent to terminate the Plan and this ideally suffices the requirement to terminate the plan.  However since here the counsel has the plan sponsor to do an amendment what kind of amendment will be required? 

Thanks

For the fiduciary-breach lawsuits that been in the news for the past 15½ years, has anyone done a scorecard on how many, or what percentage, were:

completely dismissed?

won by the plaintiffs?

won by the defendants?

settled?

Group:

In researching ESOP Loans and potential prohibited transaction violations of ERISA under 406(a) I'm curious more than anything whether Sam Zell was assessed for violating 406 as that transaction seems to be a direct transaction with a potential for conflict of interest? 

Did his bankruptcy discharge any potential prohibited transaction violations? 

Did the esop loan meet erisa 408 exemption? 

Is erisa prohibited transaction rule 406(a) intended for esop loans? 

Thoughts and comments appreciated. 

Resources and court cases would be helpful as well as I'm beginning research on this topic. 

Thank you 

For a spouse’s consent to an election against a survivor annuity or naming a beneficiary other than the participant’s spouse, the IRS has relaxed the physical-presence condition and allows—from January 1, 2020 through June 30, 2022—a remote witnessing that uses live audio-video technology and meets all requirements and conditions under the State law that applies to the notary or, for a plan representative, meets controls specified in the IRS’s notice.  IRS Notice 2021-40; 2021-28 I.R.B. 15 (July 12, 2021); Notice 2021-3, 2021-2 I.R.B 316 (Jan. 11, 2021); Notice 2020-42, 2020-26 I.R.B. 986 (June 3, 2020).

Do we guess the IRS will let this relief expire with June 30?

Or does anyone predict another extension?

Hello. I need help with 2 Solo(k) issues:

First scenario: Client had a Solo(k) at Oppenheimer and utilized their prototype plan document. Advisor moved the plan to Pershing and completed Pershing's retail account paperwork in the name of the Solo(k) (i.e. John Doe Solo(k) plan).  Pershing never questioned the registration and opened the account as a retail account. Since the account was opened as a retail account, the paperwork to utilize Pershing's prototype plan document was never completed. Per Pershing, they are acting only in a custodial capacity. That was in 2011.  Client has received 1099's from the account for the last 11 years and has never said a word about them. Not sure if he has reported them on his income taxes. Would I be correct to say that the plan really does not exist at this point? No plan document was ever issued by Pershing. I don't think we can consider the Oppenheimer document as a valid plan document any longer, since the plan was moved from Oppenheimer. No restatements have been done in 11 years. To make matters even worse, the plan is over $250k in assets and has never filed a Form 5500.  Several issues going on. I specifically need help on 1) Plan document failure - can this be correct? If so, how? 2) Should we request that Pershing re-register this account as a Solo(k)? 3) What do we do about the 1099's? Do we even try to correct those at this point? 4) Failure to file Form 5500 - how should we correct this issue? 

Second scenario: Client completed paperwork to open Pershing Solo(k).  Plan was to use the Ascensus prototype document service. Paperwork was sent to B/D.  B/D sent paperwork to Pershing, who opened the account. Pershing is acting in a custodial capacity only for this plan. B/D failed to transmit paperwork to Ascensus. Ascensus never issued a plan document for this plan. They have no record of the client. Client has been funding the Solo(k) for several years without a plan document.  Is there really even a plan in place? Can this be corrected? 

I appreciate any guidance that you can give to help me get these clients back on track. 

I am not heavily involved in the PEO, MEP, PEP, etc. field, so would appreciate any input here.

I've come across a few large PEO plans that treat their 401(k) plans as multiple-employer plans on their 5500s. They generally report as a multiple-employer plan and file the schedule of contribution allocations for participating employers.

I recently came across one that, on its 5500, says it is a "single employer plan which is operated consistently with the requirements for a multiple employer plan...". The 5500 is marked as a single-employer plan and there is no list of contribution allocations for participating client organizations. Plan design elections and compliance testing is done on a client organization/participating employer basis. 

Am I missing a nuance between a multiple-employer PEO plan and a single-employer PEO plan that is treated as a multiple-employer plan?

Appreciate any clarification.

A large employer (closely held by father and 3 kids) has 7 leased employees (no coverage issues, this is purely an allocation eligibility issue); the Plan excludes leased employees.  But as it turns out, the leasing employer is in a controlled group with the recipient employer, as the father, and a family trust comprised of the spouse and three kids, are also the owners of the leasing employer.  As such, are these 7 employees still able to be excluded due to the leased employee classification; or should they be benefitting participants because the controlled group means they are just treated as employees of the sponsoring employer?

Marriage was bifurcated, (due to age and health of both parties both in their 80s and respondent has Alzheimer’s)   court hearing set to address community property but was continually postponed by petitioner’s and respondent’s lawyers.  18months after DOS, petitioner never received any retirement benefits due to the fact that her attorney never filed a DRO.  Petitioner’s health declines and has a guardian ad litem appointed to her.  Petitioner subsequently dies but the retirement benefits had not been addressed by the courts.  2/12 years later a court date is set to address retirement benefits and petitioner’s estate is now filing a DRO.  Will petitioner’s alternate payee status flow to her estate in a defined benefit plan?  Will there be any ramifications if petitioner’s council didn’t file the DRO while his client was alive?  

Al, the owner of the company which sponsors the PS-only plan, was taking RMDs and then passed away in 2017.  His two sons, who were his 50/50 beneficiaries and who were participants and now became the 50/50 company owners chose to not take Dad's money out of the plan.  An RMD is being calculated on Al's balance each year and paid to each of the sons (split evenly between the two of them).  The plan does have the 5-year-rule selected (though I thought that was only applicable if the participant died before RBD).

Is there any limit as to how long the sons can keep this going inside the plan?  Is there something that will require them to take Al's money out at some point?  The sons are just over 60 themselves, so they have a few years before they hit RMD status on their own accounts.

Thanks.

Here is a new one for me.

PBGC covered DB plan, owner plus 1 rank&file employee.

Client pushed to have the only non-owner participant to be paid out in 2021 after employee's termination. Client provided the final salary paid for 2021 based on the final payroll (even had them confirm). The final salary for was lower than prior years and did not affect the average compensation

Provided the lump sum and they paid out. So, now the plan was just covering just the owner for the rest of 2021. Went to PBGC and got exemption from further coverage effective 2021 year. All good, well....

Just got the actual 2021 w-2's and the actual salary is much higher that I was provided and affected the 3 year average compensation i.e. the employee was under paid, a lump sum of somewhere between $100 to $200 - did not do the actual math. No 415 issues whatsoever so no MASDs etc.

The question now, what happens with the PBGC exemption? Technically I still do have a rank & file as of 12/31/2021 with a $1.50 accrued benefit and very small lump sum due.

Also, can they pay this participant out based on the prior distribution election form (IRA rollover)?

Anyone had this issue before?

Thanks

Marriage was bifurcated, (due to age and health of both parties both in their 80s and respondent has Alzheimer’s)   court hearing set to address community property but continually postponed by petitioners and respondent’s lawyers.  After 18months -  Petitioner’s attorney never filed a DRO.  Petitioner’s health declines and has a guardian ad litem.  Petitioner subsequently dies but the retirement benefits had not been addressed by the courts.  2/12 years later a court date is set to address retirement benefits and petitioner’s estate is now filing a DRO.  Will petitioner’s alternate payee status flow to her estate in a defined benefit plan?  Will there be any ramifications if petitioner’s council didn’t file the DRO while his client was alive?