Husband/wife solo-401(k) plan.  They were not using a TPA, have self-directed brokerage accounts, and used a loan recordkeeping system to take out 4 loans back in 2019 - 2 for each of them.  As a TPA I have never dealt with this loan recordkeeping system so I don't know the whole story, but it allowed 2 of the loans to be taken with a 1% interest rate.  Not Prime + 1% - just a flat 1%.  The other two loans had Prime + 1% applied.

Their financial advisors wised-up and brought them to your friendly local TPA.  There are numerous other issues with these loans that we will help them fix through re-amortizing and consolidating.  My questions for the BenefitsLink community:

1.  Is there any possible way that a 1% interest rate would be a "reasonable interest rate" for a solo-401(k) loan in the eyes of the IRS?

2.  Does anyone know how to shut down these loan recordkeeping systems when their services are no longer needed?  They send monthly "invoices" for the repayments (which have been wrong - long story) and they charge a monthly fee that we need to end.  I don't want to mention a name because I think they have botched these loans, but again, I don't know both sides of the story.

The husband is a Participant in a Plan that will reduce his pension annuity benefits when he begins to draw Social Security benefits, that is, it is an "integrated" plan.  The parties have agreed that the wife will receive 50% of the marital portion of his retirement benefits (and are agreeable to either a shared interest allocation or a separate interest allocation). 

The question is whether or not it's possible to somehow freeze the wife's share of the husband's pension annuity so that her share will not be reduced when the Social Security causes the reduction in the husband's pension benefits.  As you may know, Social Security benefits are not considered to be "marital property", so if I cannot fix the problem her share of his benefits will decrease, and his benefits will increase, by an amount of his Social Security benefits not paid to his wife.  It is too late to consider workarounds like paying alimony equal to the wife's net loss. 

I have prepared QDROs for 33 years and never seen this addressed in any QDRO packages prepared by any Plan Administrator, or any any of the QDRO treatises I have on my desk.  

Thanks for your thoughts.

David    

A 401k was effective as July 1, 2020.  It had only two participants (non-spouses).  They put deferrals into the plan for a couple of months , but then terminated the plan as September 15,2020.  They took distributions before year end (12/31)...

.Do we have to file a 5500-SF?  If so, do we file it as the first and final all on the same form?   

Hi, 

One of the plan is terminating due to bankruptcy, the company is in the process of implementing the 3(16) services how does that change the plan termination process? will the record keeper company will need to do things that is normally done by the plan sponsor?   

We only prepare the NDT and 5500, will this needs to be filed by us in case the 3(15) service is implemented.  What our responsibility will need to be taken care?

Thanks

I see your baseball logo is being fazed out, as they now be called the Cleveland Guardians.

Get with it man! 

We have 3 companies that are part of a CGroup and each wants to sponsor a separate 401k plan just for their eligible participants.  Lets assume that there are owners who would be eligible for all 3 plans.  Would each owner (or participant) have separate 415 limits in each plan?  Or does the CG mean that they share only one 415 limit across all 3 plans?

Thanks

When testing a 401(k) plan that has made the determination to terminate the plan. Would the plan year end date for purposes of non discrimination testing be the date the termination resolution was signed?

Here is a example:

The company is going out of business and the resolution to terminate the plan was signed in March. Would non discrimination testing be run from 1/1 - March (the plan is calendar year) or would the compliance testing run from 1/1 - the date the assets are at zero?

An employer is required to fund additional money due to market fluctuations to pay out the final benefits and close a plan. The date of the funding is past the  deduction deadline (9/15/20)  for the year of plan termination (2019).  Can they deduct the contribution for the year it is made even though the plan was not active for that year?  I am being told that it's not deductible for 2020 since they do not have a plan for 2020.  

Here are some example dates:

Plan termination date 12/30/19

Tax deadline 9/15/20.

Contribution date  11/1/20.

Hi. How do you handle the contribution calculation for an HRA when a participant makes a mid-year change in coverage?  We (the employer) provide a $1,500 HRA contribution for Employee + 1 (spouse or child) coverage and a $750 contribution for Employee Only coverage.  We have a participant that changed from Employee + 1 to Employee Only coverage on April 1st.  Is the calculation simply pro rated for the remainder of the year?  

Here is an illustration of my thought process:

$1500 divided by 12 months = $125 per month for January - March = $375.00

For remainder of the year, $750 divided by 12 months = $62.50 per month for April - December = $562.50

 $375.00 + $562.50 = $937.50

Is this the correct approach?

Can a "regular" HRA be amended mid-year to either increase or decrease what the employer will cover? Received this question from a CPA, and while I believe it is possible (although I'd also think that if benefits are being reduced, it would only be for amounts not already incurred prior to the amendment date) I'm not sure.

Hi,

Is a Schedule A required to be filed with a 5500EZ? Thank you

Been filing 5500SF for this client, 2 owner LLC taxed as an S-Corp.  Should I now be filing an EZ?  2 owners are the only employees.  No unqualified assets

There seems to be some confusion about whether the Carrier pays bthe PCORI or the employer (sponsor)? I believe its the sponsor's responsibility.  Comments?

Hi, 

One of my client is terminating a plan that is part of a controlled group.  Company (A) is the parent company, company (b) is the entity, there will be a spin off of company (b) and once the plan is set up and funds moved from company (A) to the spin off plan, post that the plan will terminate.  Now question how do they determine what the termination will be for c ( Spin off ) plan? 

Also I believe the parent company will need to amend the adoption agreement, by removing company (b) from the document correct? 

Thanks

Simple question, a 401(k) Plan only allows for salary deferrals and a 401(k) ADP Safe Harbor Match. If eligible and assuming no outstanding loans and the total amount in his account meets the amount of his financial need, can the participant take a hardship distribution of 100% of each account?

I have a client that has 5 entities, all owned 100% by Person 1. A-E.

The 401k plan is set up under company A. Companies B-E are adopting employers.

Companies A-D are being sold on August 1. They will be 100% owned by an unrelated company from Person 1.

Person 1 will still own 100% of company E and the sole purpose of Company E will be to perform management functions for companies A-D.

Since there is no common ownership as of August 1 between companies A-D and company E, is E still part of the controlled group? Can employees of company E still participate in the plan either for the remainder of the year, until August of next year or must their participation end on August 1?

Some plan sponsors are getting calls from former participants who receive SSA letters about benefits they may be due.  But these participants are born in the 1970s!! Anyone else hearing the same thing?

Assuming a non-US citizen does not pass the substantial presence test and is classified as a non-resident alien for tax purposes, what restrictions/limitations may prevent them from contributing to a 401(k) and/or IRA? Please assume the individual maintains a US work visa and is seconded overseas while still being paid by the US entity, and they return to the US for short periods of time throughout the year.

I understand the individual must have US sourced income, but is there any firm guidance on how much? Is 1 day working in the US sufficient to classify the individual as having US sourced income and allow contribution to a 401(k)? Any special considerations if contributing as Roth vs. Traditional? Is it possible/common for a plan to specifically exclude non-resident aliens from contributing at all? Are the restrictions different for an IRA?

A participant is angry about a fund replacement decision made by his Plan's Investment Committee. He's has formally requested HR provide him with a copy of the report provided by the Plan's investment consultant advising them to make the replacement. The consultant's report was strictly for review by the Investment Committee and not plan participants. When told this, the participant got very angry and now thinks his employer is trying to hide something from him. How best to deal with this, would you provide him a copy of the report?

Assume a DB plan offers a lump sum window.  Shortly after the window closes, the plan administrator is contacted by a terminated vested participant who never received the paperwork because the address on file was outdated.  I would assume that the plan cannot now offer this individual a lump sum because it would conflict with the terms of the amendment that provided for the window (unless the plan is further amended).  However, if the plan administrator was less than diligent in maintaining current address records for its participants, I can see how they might have some culpability here (particularly given the DOL's recent aggressive enforcement in this area).

Surely, this is a fairly common occurrence.  What have others seen in terms of handling?