Plan specs:  age 21, 2 mos service, monthly entry.

Participant:

DOH  3/7/21

DOT  4/29/21 (not 2 month svc)

RH  10/5/21

When is entry date?  Rehire date or 11/1/21?

Slight change

DOH  3/7/21

DOT  5/17/21 (2 months but did not make entry date)

RH  10/5/21

When is entry date?  Rehire date or 11/1/21?

Client sold business  in 2021.  They have a 401k Plan with a discretionary match (calculated after year end)  The three owners are all over the age of 65 (NRA per the plan doc); their plan does not allocate the discretionary match to terminated participants.  Could we consider them retired instead of terminated at the date of the sale, and allocate them a match for the year?  I know at the time of the sale nobody was focusing on the plan.....  

In some volunteer work for a charity designing a new retirement plan, here’s a question I’m thinking about.

Assumptions

The plan’s investment alternatives are Vanguard and other managers’ mutual funds, with superior share classes obtained through the (independent) recordkeeper’s and its custodian’s omnibus purchasing power. None of the funds pays over any revenue-sharing or other indirect compensation.

The employer pays nothing toward plan-administration expenses. (The charity’s executive director and board chairperson both tell me they can’t get grants or fundraise for any contribution to, or expense of, a retirement plan, and can’t budget for either.) So, all expenses are charged to individuals’ accounts.

The absence of an involuntary cash-out provision won’t risk putting the participant count near the number that would invoke a CPA’s audit of the plan’s financial statements. That’s so for at least the next few years.

Beyond maintaining former employees’ goodwill (which the charity cares about), does such an employer have its own economic stake about whether low-balance participants involuntarily exit the plan, or may, by choice, remain in the plan? Are there factors I’m not thinking about?

For a participant who has only her $3,000 account, which is better: Staying in the former employer’s plan, or choosing a rollover into an IRA? (To simplify the comparison, assume the individual has no next employer, or the next employer has no retirement plan.) Is the individual’s choice as simple (mostly) as comparing the account charge under the former employer’s plan to the account charge of the IRA the individual could or would buy? Or are there more factors to consider?

Your thoughts?

The Integrated Benefits Institute released a report last week on workplace health programs and thought it may be of interest to you given your coverage of workplace and HR topics. Some highlights of IBI’s analysis include:

• Only 46% of workplaces offer health programs
• Employers are not measuring critical metrics of success, such as absenteeism, presenteeism, and turnover
• Only 50% of workplaces collect data at all to measure success, and half use data to decide which programs to offer
• Offering workplace health programs can help employers gain a competitive edge in attraction/retention, especially important during the Great Resignation

For more information, the report and infographic are available on IBI’s website.

Imagine that an employee at a startup is granted a number of ISOs, which are early-exercised with an 83(b).

A few years later, with those partially vested, and the fair market value of the shares substantially higher, he comes to a shared agreement with the CEO of the company to increase his stock compensation.

Is it possible to increase the rate at which the fully-exercised stock grant is vested, or would there need to be an additional grant issued at a different price to run concurrently?

It's unclear to me how the early exercise would interact with 424(h)3c—were the ISOs here "options not immediately exercisable in full"? 

Hi

Joe and Mary are spouses and have no children under age 21. They do not live in a community state.

Company A is owned 100% by Joe and has employees. No pension plans.

Company B is owned 50/50 by Joe and Mary but Mary is not an employee. There are no other employees, just Joe. No pension plans

Company C is owned 100% by Mary and Mary is the only employee. A DB plan is in effect covering Mary only.

None of these companies interact with each other and they all do different lines of work.

What issues are there?

Thank you

Client company sold and all of the HCE's terminated in May 2021.  They immediately took distributions.  Now as I run the ADP/ACP test I find that a corrective distribution was due one of them.  Do they need to have the Platform reissue the 1099R and if they rolled the funds - do they have to withdraw it from their IRA?  

I did post an incident to FIS but in the meantime am wondering if anyone else has heard when they are going to update the log in for ASP to use something more updated than Internet Explorer?  We are getting the messages now that Internet Explorer will no longer be supported after June, 2022.  We are surprised that FIS had not already migrated ASP to another browser...

Thanks in advance!

I have a client that wants to fund a discretionary profit-sharing contribution and would like to include terminated participants. The plan has the last day rule. Can this be done by adding language to the declaration? It is not taking any benefit away from active participants such as lowering the allocations they are receiving.

This doesn't come up very often, so I appreciate any insight.

I have an ESOP where the family that sold the stock to the ESOP received warrants when the sale was closed.  That is clearly synthetic equity. 

In 2021 the family give some of the warrants to a charitable trust they control but the assets in the trust have to be used for charitable purposes. 

Are those  warrants still synthetic equity?

Am am leaning towards no since no one in the family is a beneficiary of the trust but I am not finding a direct cite.  Does anyone know of a direct cite or has a thought let me know. 

Hi,

A DB Plan at year end receives the following statement in regard to their plan assets:

                                                                                                                            Levonte Capital                                                                                                                                                                                                                                                                                            Capital Statement 12/31/2021

                                                                                          Asset 1 -Howard Avenue  $250,000

                                                                                         Asset 2  Clearstream            500,000

                                                                                         Asset3  Flushing Ave             600,000

                                                                                          Total Plan assest               $ 1,350,000

Is this considered eligible assets for an SF? Thank you.

I'm having a tough time finding it in our document, but are you allowed to exclude compensation received prior to becoming a Plan participant in Cash Balance Plans (specifically in the EBAR calculation)?  We have it set that way for the Profit Sharing Plan, just wanted to see if we could for the Cash Balance as well?  I'm leaning no, but wanted to confirm.

This may seem like a stupid question.

Suppose a plan currently has a last day/1,000 hour requirement, but allocation requirements are waived for anyone who terminates after attaining NRA or Early Retirement Date. Now they want to amend the plan to eliminate this waiver.

Clearly, if someone already terminated employment this year and has attained ERA/NRD, this amendment won't apply to them. But what if someone has attained ERD/NRA, but has not yet terminated employment? Is it ok to apply to them for 2022, or can it not apply to them until 2023?

Is the determining factor the termination of employment - in other words, since they haven't terminated employment yet, is there no cutback? Or would you interpret it similar to a plan where there is a 500 hour requirement with no last day, so that as soon as you get 500 hours, you are eligible for that year? (So that in this case, as long as you have already attained ERD/NRA, you are eligible for this year?) I incline toward this latter interpretation, but I can see the argument for the "dark side."

Granted that the plan is everyone in their own group, not a safe harbor, and not top heavy, so that it may be possible to exclude them anyway...

I've been drafting QDROs for 6 years and haven't seen this situation before. I'm told by the attorney who retained me to draft the QDRO that the Participant/Petitioner's address cannot be in the QDRO due to a restraining order or something against the Alternate Payee/Respondent. It can be excluded from the body of QDRO but listed in the Appendix to the QDRO . The Appendix is not filed with the court but included when the QDRO is sent to the plan administrator for processing. A GAL has been appointed by the court to represent the minor children.

1. If the attorney does want not the Participant's address even in the Appendix, does anyone have an opinion on whether or not the plan administrator will qualify the DRO without the Participant's address anywhere?

2. Does the GAL need to sign the QDRO? 

Thanks.

Is it permissible to have a DC plan in which employer contributions are a flat amount per hour worked? i.e., $2.50 per hour?  I can't find anything that specifically prohibits this approach, but I am not comfortable that it is allowed.  

Employer is trying to move away from a union pension with an hourly accrual rate. 

Thanks in advance!

Good Morning.  

I have a plan that will be terminating. 

Say they terminate in 7/1/2022.  All participants would become fully vested.

What about any participants that were paid out in the 1st 6 months of 2022?  Would i need to go back and fully vest them and do a secondary distribution?  Or should i fully vest them now knowing the plan will be terminating?

Try to avoid any issues. 

Appreciate your input!

Hello - Thanks in advance for any thoughts you have. 
 

Due to a coding error there were a couple benefit plans (e.g., voluntary life) that were coded as pre-tax when they should have been coded after tax. This happened for about 2 1/2 years. No life insurance proceeds have been paid on there yet. Error was discovered and fixed going forward.

Does anyone have experience with this and how to go about fixing the past errors?

Thanks

Hi,

Thank you in advance for any information or advice regarding the following. The late filing penalty for the 5500s used to be $25 per day. It seems that was increased to $250 per day. This is quite high in relation to tax returns that even if filed up to a month late the penalty is a SMALL percent? True, there is the DFVCP , that caps the penalty  at 750, however, if someone files a day or two late, the penalty is 500? Thank you for any information etc regarding this.

Hi

Company owned by dad and son 50/50.

Company also employs mom and daughter (son's sister).

All above are HCE's for 2021.

On March 1, 2022, dad sell his portion to son and son becomes 100% owner.

When does sister become a non-HCE?

Thank you

I have a self employed client that has DB/DC combo plan.  They are maxing out their deferral and contributing 6% to the profit sharing account and putting 200k into the DB plan.  He asked if they can also contribute after-tax money with the intent of a Roth conversion.  For example; 

• Client is 58
• Client's earned income is $800,000
• He  contributes $27,000 in 401(k) deferrals
• The company makes a 6% Profit Sharing on $305,000 or $18,300
• The company makes a defined benefit contribution of $200,000

Can he contribute an additional after-tax contribution to the 401(k) plan of $22,200 ($67,500 - ($27,000+$18,300))?

.