By any chance can someone point me to the language in the Relius Corbel Doc that includes the provision to recognize the service of a temp-to-hire performed under the agency?  i.e., 414(n)(4)(B).  This the provision that says if someone is under the primary direction and control of the recipient, pursuant to an agreement, but does NOT meet the "substantially full time for a year" requirement, we nonetheless need to recognize their service for eligibility and vesting.

I've scoured the document and cannot find it anywhere...  There are a lot of "incorporated by reference" but nothing about this provision.

Non-governmental 457(b) plan - participant becomes eligible in 2021 and is age 62. NRA is age 65. Since participant is within 3 years of NRA, the participant can make a catch-up contribution. 

Since there is no under-utilized amounts from prior years (given that the first year of participation is 2021), is the participant able to make catch-up contributions? Since the catch-up is the lesser of 2X the annual limit or the under-utilized amounts from prior years, what do we use as the  under-utilized amount from prior years to determine the available catch-up? 

My understanding is that the advantage of qualifying as a top hat plan is that the plan is exempt from certain ERISA requirements.

Is it possible to have a NQDC that complies with the ERISA requirements requirements but is not a qualified plan?

Has anyone ever seen one?

What are the consequences of a client signing the Post PPA document with a date of 1/4/22 and the restatement is effective 1/1/21?

Has anyone else become acquainted with a letter like the one attached?

A summary of the situation:  The plan terminated and filed a final, short-year return for 2018.  2018 was the only plan year with any plan distributions and 945 withholding to be deposited.  The IRS indicates that they are missing Forms 945 for 2016, 2017, 2019, and 2020.  (At least they have record of the 2018 form, which from my experience is not always the case, even when they are sent in properly.)

The instructions seem pretty clear that you "don't have to file Form 945 for those years in which you don't have a nonpayroll tax liability."  I would probably be laughing about this if it hadn't given my client a heart attack.  How ridiculous!!

(Edit: I don't yet know the results of the scheduled telephone call.)

Scan_2022-01-06-100720871.pdf

I have a potential client that sent over the ownership percentages below, so we're trying to determine if there is a controlled group.  Since they are adult children, is it accurate that Company 3 is the only one that wouldn't be part of a controlled group (since the son owns 50% or less of the company).  Company 4's ownership would be attributed to the parents, and therefore part of the controlled group, since the ownership gets attributed to the parents since he owns over 50% of the company.

Thanks!!

I know participant statements must get a blurb if the PS is allocated using a permitted disparity formula (integrated with SS).

What if the formula is grouping method and subject to testing?  The contribution COULD be allocated using permitted disparity.  Is that same disclosure needed on the statements in that case?

I understand that a safe harbor contribution can be made to plan other than the plan where the 401(k) salary deferral was made.  Is a money purchase plan considered an eligible plan to receive a safe harbor contribution?  I guess I am getting hung up on the pension aspect and minimum funding standard of a money purchase plan.  

Happened to walk by my old DC-2 study guide and saw those words flip by and wondered if I remembered what it meant.

Luckily yes.

Anyone got any favorite no-longer-rules they miss?  415(e) perhaps?

Employee hired 10/3/2016.  Term’d 3/1/19. Plan effective 1/1/20.   Rehired 3/29/21.  Service requirement is 1,000 in 12 months. 

Is she eligible to enter immediately upon rehire date? (i.e. allowed to defer and receive safe harbor non-elective contributions).  Plan does not apply one year hold out rule or break in service rule. 

I know that if the plan had already been in effect (and if she met the age/service requirement prior to her term date) she would be eligible to enter immediately.  The effective date of the plan is throwing me off.  (She term’d before the plan was put in place.)  Although the plan document says that all service is counted.  So I think she would be eligible immediately??

Plan being amended to change corporate trustee.  Would you do an SMM or no?

I always assumed that W-4P was used for RMDs.

I just became aware of the existence of W-4R.

W-4P is for periodic distribs from a plan and the -4R is for non-periodic payments.

Are RMDs considered periodic from DC plans?  Most of the participants' RMDs that I work with are pretty much on an ad hoc basis:  they take them at various times during the year.  I have one lady who takes quarterly payments totaling her RMD for the year, but most take just one payment at the time it suits them.

So, should we be using W-4P or -4R?

Hi

I believe the answer is no issues but always would like to confirm:

Common factors:

Company A has a 401k/PS plan

Joe and Mary are married and have no minor children at this time

Mary owns 100% Company B and has no business relationship with Company A/no affiliation

Scenario 1

Joe is an officer of Company A (no ownership but CFO and making over threshold)

Joe's wife Mary also an employee of Company A - for all purposes, a rank&file employee

Company A provides ER contributions to both - Joe is at 415(c) dollar limit

Company B - no employees other than Mary - also provides ER monies to Mary

No issues as well as combined 415(c) limits for Mary, correct?

Scenario 2

Now Joe owns 49% of Company A. Other 51% is owned by unrelated party.

Mary is still an employee but now HCE due to attribution

No issues as well as combined 415(c) limits for Mary, correct?

Scenario 3

Same as Scenario 2 except Joe now is also employed by Company B

Company B pays Joe 305k of salary and wants to provide Joe maximum PS - in addition to Mary

So, Joe can get maximum limits in both companies separately, correct?

What am I not asking here?

Thank you

A dental office consisting of two dentists and about 5-6 employees.

Currently there is one profit sharing plan and all the money is pooled.

Each dentist wants to take his portion of the pooled account and open up a new plan (not account, but plan)  as well as creating a new plan (not account, but plan) with a pooled account for the participants.

Does not make any sense to me, keep the existing plan and amend to allow for individuals to direct their own investments; but the dentists do not want to do that.

Is this discriminatory??

May a 55 year old participant  earns 200,000 (sole participant)

May his 2021 contribution be

$20,500 deferal

    6, 500 catchup

    6,000  3% safe harbor

Total  $33,000  for 2021

Is the 33,000 allowed

I am advising a TPA firm that unfortunately had an employee who helped backdate a plan amendment for a plan customer. This means that the plan client and TPA missed a plan amendment deadline but backdated the signature date to be within the deadline. This happened fairly recently. The question is how to correct this. My opinion is to reach out to the plan customer and draft a new plan amendment which rescinds the backdated plan amendment. After this is accomplished I will determine through EPCRS what additional steps need to be taken. Any thoughts on this as to whether rescinding the backdated plan amendment is the right first step here and then what additional steps need to be taken, other than using EPCRS?

This is a new one for me.

Short DRO incorporates the much longer Marital Settlement Agreement by reference.  The MSA awards 50% of the funds accrued from date of marriage to date of the divorce, adjusted for earnings (marital portion).  The MSA further states that Participant shall receive $20,000 from APs share of the marital portion of Participant's retirement account by virtue of the same DRO that divides the marital portion.

I may be grumpy due to the lazy DRO which made me go through the MSA to find the relevant language, but this doesn't sound right to me.  If AP has agreed to pay P $20,000 from APs share of the marital portion, P can use the MSA to enforce that agreement.  It shouldn't be the plans responsibility to pay P from P's retirement account using a DRO that assigns the benefit to the AP  but with part of the award payable to P.

Am I missing something here?

Company A and Company B are both corporations owned 100% by Fred so we obviously have a brother-sister controlled group.  Both Company A and Company B sponsor 401(k) plans - both have 12/31 PYE, same HCE definition, and current plan year testing for ADP/ACP.  Historically the Company B 401(k) plan has failed coverage testing so the plans have been aggregated to pass coverage and ADP/ACP.

Fred sells 100% of his stock in Company B to his best friend Barney on December 1, 2021, so there is no longer a controlled group.  Nothing else changes other than the stock ownership and there is no affiliated service group.

1. Are the employee populations of Company A and Company B required to be combined for coverage in 2021?

2. If they aren't required to be combined, can the plans be permissively aggregated for 2021 (and 2022 if desired)?

I assume 1 is no and 2 is yes since the 410(b)(6) transition rule allows the parties to a stock acquisition to test their plans for coverage and nondiscrimination purposes as though the transaction did not occur, but I'm just not 100% confident in my thinking... or there was too much holiday cheer last week and my brain still isn't functioning properly.

I am thinking about what procedures (and perhaps plan-document provisions) an individual-account retirement plan might want for situations in which the plan continues periodic payments to a participant for many months (or even a few years) after the participant’s death.

Imagine a situation like this. (This is based on a real situation, but I changed a few facts to protect the employer/administrator’s confidences, and to simplify the legal issues.) In 2017, Jack was 62, eligible to retire, and did retire. Although the plan precludes a life-contingent annuity, the plan allows other periodic payments (subject to minimum-distribution provisions no more restrictive than as needed to meet IRC § 401(a)(9)). Using the recordkeeper/trustee’s form (which the employer/administrator adopted), Jack instructed payment, by direct-deposit electronic funds transfer, of $3,000 every month, to be paid on the first banking day of each month. (Jack never had a spouse.) In 2017-2020, all goes well. On January 9, 2021, Jack dies. Then, no one told the employer/administrator, the recordkeeper/trustee, or Jack’s bank about Jack’s death, and none of them had any knowledge of Jack’s death. On January 4, 2022, Martha (Jack’s friend, but not a relative) informs the recordkeeper/trustee about Jack’s death, and furnishes the death certificate, Jack’s will, and a probate court’s letters testamentary that appoint Martha as Jack’s personal representative. The trustee promptly turns off Jack’s periodic-payment instruction. But before this, the plan made, and Jack’s bank accepted, twelve payments ($36,000) after Jack’s death. The employer/administrator checks Jack’s plan beneficiary designation; it names someone who is not a legatee or beneficiary under Jack’s will, and has no apparent relation to any of them.

Here are my questions for BenefitsLink neighbors, hoping some have experience with this problem:

1)        Must the plan try to get the $36,000 from the bank?

2)        If the plan tries and the bank refuses, how strong or weak would the bank’s defenses be in the plan’s lawsuit to recover the $36,000?

3)        If the plan does not get the money from the bank (and no one otherwise restores Jack’s account), how strong or weak is the designated beneficiary’s claim that the plan fiduciaries’ actions deprived the beneficiary of money the beneficiary otherwise would get?

Because the plan’s participants include a few thousand retirees, the employer/administrator presumes the problem of periodic payments continuing after a participant’s death (until the recordkeeper/trustee is notified) is recurring.

A)      What procedures might help manage this problem?

B)       Could a plan-document provision legitimate after-death payments to a participant (if no surviving spouse has any ERISA § 205 right)? (The employer uses no IRS-preapproved document. Also, the employer’s frequent mergers and acquisitions would set up an opportunity to get an IRS determination on whatever text the employer might add.)

C)       Would a plan-document provision be wise or unwise?

Any further suggestions?

Company A is 100% owned by a non-US company.

Company B is 100% owned by the same non-US company. 

Is there a control group for 401k purposes?