Hello - just wondering if anyone has any insight on whether the 2022 IRS 417(e) Mortality Table (used, among other things, for determining minimum lump sum amounts) is expected to be impacted by the significant decline in life expectancies during 2020 due  covid 19? 

Or is there some longer lag time between when this hit to life expectancies will start to appear in these IRS mortality tables? 

Thanks in advance for any thoughts/input on this. 

Hi, 

One of my client is terminating and there is one deceased Estate account, The participant deceased in 2020 and since there was no beneficiary the deceased estate became the beneficiary.   Estate beneficiary account was set, since the plan is Terminating now the client has informed the Estate Administrator to move the funds out of the 401k plan however the administrator remains unresponsive, given the fact the client has done all their due diligence and since the administrator remains non-responsive can the funds be rolled over to an IRA account?

Can a deceased estate( beneficiary)  account be rolled over to an IRA? if no any reason? 

Also the deceased was from the state of Indiana, so is there anything particular that needs to be considered looked into? 

Thanks. 

I'm reading that there is not a lot of clarity on this topic regarding how to report these contracts on SChedule A, D and H.  Anyone have some insight.  I found this letter where someone who sounds like they know what they are talking about wrote the DOL to ask for guidance. 

https://www.dol.gov/sites/dolgov/files/EBSA/laws-and-regulations/rules-and-regulations/public-comments/1210-AB63/00105.pdf

My conclusion:

From what I have gathered , the insurance component is separate from the underlying investments in the CCT.  The insurance would go on A and H as an unallocated /general accounts contract and the CCT would go on the D.  How it is reported on the H depends on if it is a DFE (I’ll bet it is).  If a DFE you get to just report it as a CCT on the 5500.  If not a DFE technically you have to report each asset class separately (stocks, bonds, mutual funds).  

Do I have it right? Does anyone have something more substantial written up?

Hi

A young employee is a full-time employee for couple of years under "student visa". 

Is it reasonable to exclude under "anyone who is on a student visa is excluded".

He is also a non-resident alien which is standard exclusion in my documents.

Unfortunately, must be included in all tests due to full-time status which US based income, at least they way I know.

Thank you

Hello! Here's a request for your comments on this idea:

It's somewhat less secure to have the standard username/password log-in system if a would-be intruder already has a username to work with. The log-in form can be submitted multiple times with a series of commonly-used passwords, looking to see whether 01234567890 matches, for example.

Currently these message boards enable you to log in using either (i) your "Display Name" (which is displayed, natch, next to every post you've made), or (ii) your email address (i.e., the one you used when you first signed up).

So somebody else would be able to enter your Display Name into a log-in form and then start throwing potential passwords into the form, until the intruder succeeds or goes to bed.

Of course, the world doesn't end if there were to be a "break-in" -- the intruder might simply alter your posts to say "I think ERISA attorneys are weenies" or some other heresy -- and yet many of us use the same password for our bank accounts, our Tinder accounts -- haw -- etc., so having a password that works on BenefitsLink lets them go monkeying around on other more potentially profitable websites on which you might be a registered user.

So (at long last, getting to the point here), the proposal would be to require the use of email addresses for log-in, and no longer permit Display Names for log-in. Your email address, unlike your Display Name, is not displayed on the message boards, so it's not public knowledge insofar as a message boards visitor is concerned. But of course you know your own email address, so the log-in process wouldn't be seem to be any more burdensome.

I thought about the possible problem of logging in after your email address has changed (you're at a new job, etc.), but actually the log-in process would be unaffected. You'd still enter the email address you had used when you signed up, and your usual password. The log-in system wouldn't know or care that your "real" email address has changed.

What do you think?

Payroll company, which by definition is in the business of processing payroll, asked my client to confirm tax retporting for after-tax contibutions.  To which I responded, "can you please have your payroll confirm who the HCE's are for 2021"? (kidding of course).

My understanding is that as far tax reporting goes on W-2s and 941s, these deductions are no different than 401k loan payment.  Am I correct?  i think its one of those things where I can't find any articles on how to reprot it on w-2's and 941s because there is simply no requirement to do so...  I'm trying to prove a negative is the other way to look at it.

Any help appreciated!

I did find this in the w-2 instructions:

Reported in box 14, but not in box 12.

• After-tax contributions that are not designated Roth contributions, such as voluntary contributions to a pension plan that are deducted from an employee's pay.

And Box 14 is apparently just a "whatever you want it to be" box, nothing regulatory about it.

411(a)(11)(A) Discusses the mandatory cashout limit. But where is the statute, regulation or guidance that states the account value used to determine if this limit has been exceeded is determined on the date the employee terminated? Is it right under my nose and I'm completely missing it?

I'm fairly certain this is the case, but don't see any specific example or rule on point.

Small employer (always under 20 employees) has a group health plan. It's subject to state continuation requirements, but state law does not mandate any coverage after the group policy itself is terminated and there is no rule regarding M&A or successor liability. 

Large employer (always over 20) has a group health plan.

Large employer is acquiring small employer in an asset purchase. The seller's employees and its group health plan will be terminated in connection with closing. 

If an employee of the small seller chooses not to accept the employment offer at closing from the large buyer, does the large buyer have an obligation to offer them COBRA under the large buyer's plan?

I don't think so based on the small employer exception and the fact that even an employer that "grows" into a large employer under COBRA still does not have to offer COBRA to anyone who incurred (what otherwise would be) a triggering event during the time the employer was excepted under the small employer rules. Rev. Rul. 2003-70 doesn't address this fact pattern, presumably because it's already answered by the regs.

The only thing giving me pause is the definition of employer, which includes a successor, but I don't read that as requiring the (pre-sale) small seller to count the (post-sale) large buyer's employees as the seller's own employees prior to the asset sale. Instead, the rules seem more clear that, even if an employer becomes large via an asset sale, it still does not have to offer COBRA to any individual for any event that occurred while the employer was small.

Appreciate any thoughts or confirmation. 

So I'm wondering if anyone has any suggestions about how to handle the following situation:

We were recently engaged by a client to takeover their actuarial work.  As standard practice, the client messaged the prior actuary asking them to share historical plan information and discuss the plan with us.  We followed up with a formal request for data and heard nothing.  After repeated requests with no response we started calling the prior actuary with no response and no ability to leave a voicemail.

Well today I got through on the phone (Yay!).  I introduced myself and the prior actuary immediately hung up.  I called back a few hours later and was told, "**** you!" and he immediately hung up.

Any thoughts?

Here are the specifics:

SH - 3% nonelective

PS - allocation method - new comparability - everyone in their own group - plan document indicates plan year compensation is used for allocation purposes - no allocation conditions.

Plan is Top Heavy

The client would like to make quarterly SH and PS contributions throughout the year.  My question is do we need to perform the required new comp. cross-testing (rate group/non-discrimination/gateway) for each allocation if the HCEs are receiving a greater contribution than the NHCEs? or do we just need to make sure it passes at the end of the plan year?  If we do need to test each time a PS contribution is made, what code section indicates this?

Any insight would be greatly appreciated.

I had a plan sponsor calculate their own profit sharing and deposit it into participant accounts prior to the annual testing being completed.  If this contribution was for the 2020 plan year but the profit sharing was deposited in 2021, can't they just reduce the participant accounts by forfeiting the excess?  They are being told they need to use the correction method used for EPCRS, and I don't agree since the funding wasn't done until after the plan year end.  Or at least that is how we've always handled these previously, so now I am questioning the method.

When I am hand calculating earnings on an ADP refund, I usually take the gross amount of the refund, divide it by the amount of the contributions deposited in the year to get a factor.  Then multiply the factor times the earnings of the period to get the earnings on the refund.

For example, $5000 deferrals and $1000 refund.  Factor 20%.  earnings $500.  Refund earnings $100.

However, in this case, the participant is getting (nearly) all of her deferrals back (5800 out of 5850).

AND, not all of the deferrals were deposited during the year.  So, my factor is over 100%.  To cap it off, there was a zero balance to start the year.

So, I now have refund $5800, deposits $5000.  So my factor would be 116%.

My thinking is to use 5000 plus all the earnings plus the remainder of the deposit.  So, 5000 + 500 + 800 for a refund of 6130.

What do you think.  I've never dealt with this particular situation before.

This 401k plan does permit hardships for non safe harbor reasons.  But does that mean it can be any hardship that the Plan Administrator deems to be an acceptable hardhship reason?  Assuming it meets the immediate and heavy financial need, would an employee purchasing a new furnace for which she has no other means other than the plan be acceptable?  She is a non-HCE and we assume that any future requests for new furnaces from other employees would be reviewed and accepted?

Thank you

Medical Insurance company offers Vision as an option through its benefits, which itself is provided by a separate Vision insurance company.

Some groups will buy the Vision directly from the Vision company, others will bundle it with the medical insurance.  For those that bundle it, premiums, commissions etc are included in the medical company's provided Schedule A ltrs.

That's all fine.

The medical insurance company itself prepares its 5500. They do not include a Schedule A for their own medical benefits for its employees.

They include a Schedule A for the Vision that they purchase from the Vision insurance company.

Now, they are switching internally how they purchase their own Vision - they are now including it in the bundled option for themselves.

So, the question - would it still require a separate Schedule A letter?  Vision company does not want to provide one because of the extra accounting etc. but medical insurance company can run the accounting for themselves.

I have a client who has a C corporation- He did a split dollar life insurance collateral assignment- He assigned his whole life insurance to the C corp. The corp. pays the premiums and he personally pays the PS 58 costs. On the corporation books is the cost ( premiums paid) . If he decides to cash in the policy, he will have a taxable gain personally, because he stills owns the policy.He is now going out of business and I want to close out the corporation, what happens to the cost of the insurance on the books? Does he need to repay the cost of the premiums? He is the only employee and shareholder in the company.
Thank you. 

Am I required to give a new TPA who is replacing me a copy of the Plan Document?

Plan sponsor is judicially dissolved due to a shareholder dispute and a receiver is appointed to liquidate the company.

Receiver terminates the 401(k) Plan and distributes assets to plan participants.

Plan audit for final 5500 reveals numerous errors in plan operation that individually are insignificant.

The cost to correct the errors would be very significant and would result in participants receiving very small amounts

 IF receiver choses not to correct plan errors, can receiver be held liable if the plan is audited? What about the former shareholders of the company?

Is it acceptable to provide that the initial default rate in a QACA will increase on the anniversary of the participants initial automatic enrollment?

For example, participant is auto enrolled at 3% on July 1, 2021.  The deferral rate would increase to 4% on July 1, 2022, 5% on July 1, 2023, etc?

Thank you very much.

Hi, hoping someone less dense than me can help since I haven't been able to find any straightforward information on my own 

I'm trying to understand the nuance behind if a individually designed plan ESOP that previously received a determination letter (that has since expired, but it looks like the expiration date has been waived across all IDP's) needs to switch over to the Cycle 3 pre-approved plan design?

I read that employers should consider adopting a pre-approved plan since IDP Esops are no longer being reviewed by the IRS.  However, what would compel an employer to switch over?  e.g., it doesn't seem that there is much enforcement in this area and I'm trying to find laws or rulings that would motivate or otherwise incentivize an employer with an IDP ESOP plan to switch over to a cycle 3 pre-approved plan design.

Hopefully that's somewhat clear.. thanks in advance.