We have a plan that will be terminating in 2021 at some point, date has not been determined.  However, the employer has been sold to new entity and employees are terminated as of 6/30/2021.

The plan is Top-Heavy as of 12/31/2020.  Non-key employee who is a participant and employed by the employer on the last day of the plan year gets a top heavy minimum. 

Is it too simple to say the the plan is terminating as of 11/1/2021 and therefore, no top heavy contribution is required?

I don't want to miss anything being this feels like such an easy question....

Thanks

A client has 3 small  businesses... 

1.  Lawn Service
2.  Professional power sweeping company
3.  Investment properties

While they sound like they would all be using each other's services I am told they do not at all.  

Businesses #1 and #2 each have 1 employee + himself.... #3 is just him.  

Can he open a solo 401(k) plan for business #3 and not worry about the other 2?  Or are we dealing with a control group?  I recall reading another thread where the situation was similar but the other businesses were owned by a spouse therefore there wasn't a control group.   He makes lots more money investing in real estate than the other 2 businesses combined.

Thank you

When filing the 5310 to terminate a plan, is there a requirement to submit and fill out the Procedural Requirement Checklist?  I previously used this checklist as a frame of reference and reminder as to what has to be filed with the 5310. I'm not aware of any requirement that this checklist  has to be completed and filed with the 5310. Any thoughts on this?

Anyone have a good recommendation out there for contribution projections for prospects?  The only one I can think of is Relius Proposal but it has been discontinued.  Any other good ones out there?

Plan sponsor has two groups of employees: "Exempt" and "Non-exempt"; both groups are eligible for the company 401(k) Plan

However, they wish to have two separate eligibility requirements for the plan: The "Exempt" group must complete 30 days of service, and they enter the plan on the 1st of the month following. The "Non-exempt" group must complete 60 days of service, and they enter the plan on the 1st of the month following.

Questions:

One, the prototype we utilize does not allow for a 30 (or 60) day requirement; it appears that it must be in months. Am I missing something?; and

Two, I don't believe you can have a dual eligibility requirement for the 401(k) feature of the plan.

Thanks for any replies.

Anybody see this from Paychex?

A Plan Transfer Fee of $1,500 will be applied to any client who transfers its plan recordkeeping to a new service provider and who is not currently/does not continue to process payroll with Paychex.
Select the Plan Transfer Fee payment method from the options below.
Note: If you do not select an option, Paychex will collect the fee from the Plan's assets.

I'd think that ceasing payroll services and tying that to taking fees from plan assets is problematic.

Good Morning - 

40 year old participant requested a hardship withdrawal from his 401(k) account to purchase a principal residence.  The purchase of a principal residence is listed as one of the safe harbors for hardships in the plan document and there are no maximums or restrictions listed.  Participant submitted the purchase agreement and is requesting the entire purchase price of $500,000 as a hardship withdrawal.  Participant certified they do not have other assets to satisfy the financial need and the employer does not have any information to the contrary.  Any issue outside of the financial hit to the participant as a taxable distribution subject to a 10% early withdrawal penalty? It certainly goes against the spirit of a hardship, but the purchase of a principal residence (without limitation) is deemed an immediate and heavy financial need.  

I appreciate your thoughts. 

After 2.5 years with the DO EBSA, their Solicitor’s Office couldn’t get ESOP Plan administrator to buy back my husband’s stock so he could get his final payoff.  We need a CO lawyer to handle this as the DOL said there is no question of the money being owed. Can anyone help?

401(k) Plan is terminated.  All plan assets are paid out, a final 5500-S/F is filed and the company is sold.

One individual's brokerage account was paid out in a check for $10,000 in March, then a check for 5¢ in April.  The $10,000 is deposited; the 5¢ check goes stale and returns to the account.  Participant can't be bothered to deal with the 5¢ check.  What to do....?

Basic structure - One corporation with limited staff owns two entities, each with their own EIN.  Neither entity has ownership  in the other.

The two entities want to set up a common PS plan, but they want one of the two entities to sponsor rather than the common owner.

Trying to figure out if this is a Single Employer or Multiple Employer plan?

Is there Hurricane Ida relief for 5500's?

Company involved is based in NJ.

Co. B bought Co. A in an Asset Purchase. I checked and it is permissible for Co. B to assume the existing 401k of Co. A.  Effective 6/1/20, the Plan Sponsor was changed from Co. A to Co. B.  Many employees who worked for Co. A immediately became Co. B employees.   I'm thinking:   Co. A. files a 5500 for the period 1/1/20 until the sale date which simultaneously made A's employees B's employees. That 5500 would end with $0 assets.  And it would be marked "final."  Co. B would file a 5500 for the period beginning on the purchase date thru 12/31/2020. 

Am I on the right track? Or the wrong track?

Thanks

Curious as to thoughts on this. I don't think I've actually seen anyone utilizing one. Any thoughts on why? Is it that the 2% employer contribution is a major sticking point, or are there other reasons? Seems like it would work well for many really small employers, if it isn't the required employer contribution that's the problem. Thanks for any thoughts.

A group of physicians is considering a cross-tested combination, 401(k) and cash balance.  One owner-doctor is Muslim and is questioning the hypothetical interest on the allocation when expressed as a fixed-rate.  He is fine with the 401(k) assets being market-driven, but has concerns about the cash balance allocation.  1.  Anyone ever handle anything similar? 2.  Can the hypothetical interest be 0 for his allocation class or is that a reduction?  3.  Is there a better way to explain the interest part that may avoid his objection?

We sent a large group of 5558s to the IRS via Fed Ex on July 27th.  Our clients have now started receiving denials of the 5558 because they were not received timely.  Tried calling the IRS and they have too many calls and the line just hangs up on you.  I know this happened back in 2010, wondering if anyone else has had this issue this year?

Taking over a case that has two Plans, a Profit Sharing and a fully funded Defined Benefit Plan.  Is there any issue with terminating the DB Plan, rolling it into an IRA and then opening a new Cash Balance Plan?

Thanks in advance!

Client currently has a grantor trust and wants to convert it to a VEBA. 

Is there any IRS guidance or practical considerations on converting an existing grantor trust to a VEBA? Is conversion of the existing trust even possible or should a health plan deplete the existing grantor trust and then transition to the new VEBA? Or should the existing trust document just be amended to comply with the VEBA requirements on a go-forward basis? 

Worked 14 years 1997-2010, took lump sum from defined pension. Returned to hospital in 2016 at age 62 with intent to work until age 70. Was told I would need to work 5 years to be vested. In 2021 hospital was bought out and pension was frozen, employees were gifted an additional 4-7 years of vesting deep on age and wages. Moneys were give to an actuary and all employees are now being offered a window to receive a lump sum. I don’t want a lump sum. I had returned to work specifically to earn an annuity and expected that if I were offered an annuity of $1000 at ERA after 14 years at half the wages that I would now at double the wages and 8 years vested look forward to at least half of that. In addition my lump sum in 2010 was over $100,000. So I would expect a lump sum of at least half of that after 8 years vested at double wages. I was offered a tiny annuity and small lump sum. When I question it to the actuary handing the funds, this is the reply I got….  Can anyone here help me understand this? I feel discriminated against because I am over 65. and disappointed because I thought I could keep working and earn another pension to help me when I planned to fully retire at 71.  

Hello, This email is in reference to your recent question regarding your XXX Pension Benefit. The current benefit amount that would commence on 11/01/2021 is $14,589.23 as a lump sum and $127.86 as a life annuity. This benefit is less than your previous lump sum benefit in 2010 because of how the plan calculates benefits after a benefit has already been received. The plan states that if a participant is rehired after receiving a lump sum payment, and earns additional benefit service, their benefit is calculated as if no payment was made. The amount of the lump sum previously paid is increased with interest at 8% per year. Therefore, because of this high 8% interest rate being added to your previous lump sum during the calculation, your benefit is less than before. If you chose to wait until you reached age 70 your benefit would decrease to $0.00. This is again due to the high interest rate being added to your previous lump sum benefit during the calculation. If you have any other questions, please let us know. Thank you,

I asked for clarification… and got this…

We apologize for the confusion.  Let us try to explain the offset better so it may make more sense.If a Participant is rehired after receiving a lump sum payment (which fits your scenario as you took a large lump sum in 2010) , and earns additional benefit service, their benefit is calculated as if no payment was made. The resulting lump sum value, at the new payment date, is reduced by the amount of the lump sum previously paid increased with interest at 8% per year. The final present value is then converted to an annuity.  In your case what is happening is, since the plan froze and no benefits are being earned, the offset is growing faster and will eventually wear away any additional benefits. Since you were over 65 at 2/1/2021 you should have received a separate packet prior to the lump sum offering that back dates your lump sum amount to the first eligible payment date.  That is the date that your lump sum will be greatest since the offset will continue to wear away your benefit.  If you need that reprinted please let us know.

I have not received a reprinted backdated offering  even thought I asked. 
Nor can I get them to give me a copy of the pension plan with the rules they are stating. One customer service person told me it was federal law being followed. I am real savvy with my nursing skills but I am lost with this stuff. I really feel like they are stealing my pension. Thanks 

Hi

I was just asked to do a 2020 run for controlled group situation - employers, 2 plans (because the payroll company will not do it - shall not be named) as a favor. Must do it prior to 10/15. No good deed goes unpunished i.e. I just checked all the provisions and unpleasantly surprised.

If any of the gurus have some suggestions on testing for top heavy and also coverage, would appreciate it.

Plan B is not top heavy but not sure about plan A yet as I am waiting for assets. I also do not know if combined plans will be top heavy - to be determined.

Provisions of each plan are as follow:

Plan A (Company A's plan) has 3% non-elective safe harbor, 401k deferral and profit sharing (1000 hours and must be employed at EOY). No compensation exclusions. For all provisions, entry date is the month following age 21/1 year service.

Plan B (Company B's plan) has enhanced match (100% of elective not in excess of 6% of compensation, 401k deferral and profit sharing (must be employed at EOY - no hour requirement). Only for match, compensation is from date of entry (No way for me get this unless payroll company will provide it). For all provisions, date of entry is the next payroll period (Plan is run by a payroll company so they can do this, I guess) upon satisfaction of age 18/1 year of service.

They want to have PS allocation in Plan A and none in Plan B. PS allocation for Plan A is group based i.e. needs to be tested.

I need to combine both for top heavy even if each plan passes 410b and 401a4 on its own (they do).

Since each plan has different safe harbor assumptions, separately top heavy for each plan is not an issue, one is 3% non-elective and the other one is enhanced match.

Do I need to test them all together for coverage and non-discrimination? What would the answer be if

• If Plan A is top heavy, Plan B is not and combined not top heavy
• Neither plan is top heavy and combined not top heavy
• If Plan A is top heavy, Plan B is not and combined they are top heavy

What am I not asking properly? I never had to test two DC plans like this.

Any words of wisdom is appreciated.

Thanks

Plan had basic safe harbor match in 2020 but payroll company calced as 100% on 4%.

epcrs says I can amend retro to increase a benefit but 2016-16 says I can only increase safe harbor match by 10/1 (right?).

which one wins?