We are terminating a defined benefit plan and have some participants with $0 accrued benefit. The Plan Sponsor has decided to file for approval with the IRS and we are filing with the PBGC. When do we consider the participant with no accrued benefits paid out of the plan? Would it be on the termination date or once we get approval from the IRS and pay out the participants with accrued benefits?

From the client:

We recently awarded a trip to Jamaica  through a raffle drawing for employees that elected to make contributions to AFSAPAC.  This trip is taxable to the employee.  We currently have a TFB (fringe benefits code) that we use for car allowances through payroll.  This code taxes them on the income but does not pay them a net amount in their paycheck.  For the annual 401k audit, we exclude this TFB amount from their gross income.  Can we use this code for the trip as well? 

Document specifically excludes "taxable fringe Benefit for car allowance" from compensation and that's it.

So, to me, that means this "income" is subject to 401(k) deduction.  But how do they deduct for it?

One company in a CG got sold.  The new ER does not have a plan, nor does it want one.

What happens to the folks in the old ER who were in the plan?

Numbers-wise, this is not a partial plan term--6 participants out of about 85.

So, do these people have to be 100% vested?

I would think not, but just want to make sure.

If a plan provides multiple forms of distribution to a Distributee (definition includes employees as well as Alt Payees), can the QDRO specifically eliminate some of those options?  Specifically if the QDRO provides for Immediate Payment, does that effectively eliminate the ability for the Alt Payee to choose a deferred benefit, one of the allowable forms of distribution, leaving them with only options that would provide for an immediate determination such as a lump sum payout or single life annuity.  

Have a bit of a weird scenario here and unsure how to proceed. We are getting ready to onboard Company X, who will be offering its employees a 401k for the first time. However, Company X acquired Company Y recently in a total stock purchase. Company Y has an existing Safe Harbor plan. Our belief is that Company X is now the sponsor of that plan. Is that correct? It isn't a merger of plans because there was no plan at Company X to merge with. If Company X is in fact now the sponsor of that Company Y plan, how can we get rid of the Safe Harbor provisions (Company X did not want a Safe Harbor plan)? Are Company X's employees eligible for the plan right now if they meet the general eligibility requirements? We believe yes. Can the SECURE Act provisions around Safe Harbor be utilized here for making a midyear change?

Thanks in advance for any insight or suggestions!

I am working on presenting such pros and cons to a client.  I can think of fairly long list of cons, but the only *pure* pro I can think of is benefit security for the members/participants. 

Anything else I can think of has significant cons working against it.

A taxable entity could get a deduction for contributions, but for medical that is significantly limited and would require an annual determination.

The trust could invest in assets the plan sponsor can't invest in directly, but that's problematic.  I.e., should any plan sponsor do this when the presumably have a core business/mission that they should focus on?  

Funding would lower the GAAP expense for the plan sponsor, but that is offset by the opportunity cost of using the money for something else.

What am I missing as a pro(s)?

Hello all,

We have a prospective client that wants our help in administering their ROBS plan. Our firm has no experience in administering these types of plans. Can anyone with experience tell me what goes into the administration and 5500 for this type of plan that is beyond what is normal for a regular 401k plan?

Thanks.

Our client has a PS 401(k) plan with 3% SH non-elective.  They have a new employee with a Visa; she is from Germany.  She has chosen to defer, but does not want to open an account (TD Ameritrade).  They have her first deferrals, which have been held for a couple weeks, as well as her 3% SH.  But there is presently no account for them to deposit the money to.

Can participant continue to defer if she refuses to open an account?  How long can ER hold the money before it becomes a problem?  Even if she does not defer, what do they do with her SH?  (Plan excludes "non-resident aliens" - she is here legally as a resident alien.

All thoughts and suggestions welcome.

Deceased participant...  
Spouse is the primary beneficiary...

Can she waive her right as the primary thus passing the benefit onto the secondary beneficiaries?  (the kids)  

Have a client that missed making their Safe Harbor Contribution.  Going to make the payment now, plus lost interest.  The question is what interest rate should be used?  Where the money is invested calculates the actual rate of return, and from the due date to today most of the participants have actually lost money (even though the Plan lost during this time, I don't believe we can't avoid making interest).

Therefore is it best to use the VFCP calculator to calculate interest? 

Thanks!

Will the IRS issue a private letter ruling with respect to the termination and final distribution of VEBA assets or is this a no ruling area.  Thanks.

A client has maintained a SOLO K for a few years - with just him and spouse participating.  There is NO age/service requirement - now they hired their minor kids.  Since it is still family - is there any requirement to change to a regular 401k at this point?  There are NO no-family employees.  

Just some clarification please...   If an owner participant dies before the year end but after the RBD (I was told he is way past 72), the RMD should have been taken before 12/31... correct?

Thanks

Can the initial 72(t) SEPP payment be prorated?

Or regardless (when during the year) it's taken is the IRA owner required to distribute what amounts to the full year payment?

What guidance has the IRS issued?

All assistance is appreciated

Anyone have the new table available in Excel?  

Good afternoon!  I know people can have Life Insurance in a Defined Contribution Plan.  Is it possible to have it in a Cash Balance Plan as well?  I just wanted to confirm.

Thanks in advance!

I read a bunch of cases a while back, but don’t recall seeing this addressed:

What is the legal authority that allows an Alternate Payee to immediately take a full disbursement of their portion of the participant's benefit assigned to them through a QDRO, when the participant’s benefit is not in pay status, the participant has not attained the earliest retirement age, and the participant does not otherwise qualify to take a withdrawal from the plan pursuant to the plan's rules. 
 

What are acceptable methods of self-correction if an employer missed setting up loan repayments? A participant was supposed to start getting loan deductions taken in September 2021 but the employer's payroll area missed setting it up. The participant can't pay a lump sum to catch up. Is the only option to amortize over the remaining period? Can they chalk it up to an administrative error and change the start date?

A proposed QDRO I just received states, "This Order *** is made pursuant to the domestic relations laws of the State of [redacted]."

Does this phrasing satisfy the requirement of § 1056(d)(3)(B)(ii)(II) that the domestic relations order "is made pursuant to a State domestic relations law" or does the specific state law/statute need to be identified in the order in order to be qualified by the Plan Administrator?

A PSP covering only a 100% owner has been filing the 5500-EZ for years.  It was recently revealed that his son was employed several years ago and met the plan's eligibility requirements but the owner kept filing the EZ.  The son is still employed but he's not owed any allocations since there haven't been any contributions since he was 'hired'.  What would be the recommended course of action - amend the returns to SFs?  DFVC?  Ignore and just have the owner file the correct form going forward?