Employer has had 6-month wait to enter the plan, no hour requirement, just elapsed time.  This pulled in several part-time employees who work <1000 hours.  They have no balance in the plan.  The participant count went over 120 as of 1/1/2020 and so will be audited for 2020.  The plan was been amended to exclude part-time, seasonal, temporary defined as those scheduled to work <1000 hours effective 1/1/2021.   The intent then is to exclude these employees prospectively from participation as of 1/1/2021 - no longer covered under the plan and thus not included in the participant count.

Example: an employee who always worked <1000 hours was eligible in 2020 and has no plan balance.  The 2021 amendment is intended to exclude this employee from participation in the plan effective 1/1/2021.  I think this is ok.  Comments?

Thanks in advance.

Client owns a 50% membership interest in an LLC being taxed as a partnership.  LLC had a loss on the year, however, the client received taxable income in the form of guaranteed payments.  This amount qualified as "earned income" and can be contributed to an IRA, correct?

What are the consequences of an employer failing to timely deposit employee contributions into employees' HSAs?  According to DOL FAB 2006-02, "employers who fail to transmit promptly participants’ HSA contributions may violate the prohibited transaction provisions of section 4975 of the Code," but can find nothing more definitive. 

If it is a PT or other fiduciary breach, is the employer able to correct under the DOL VFCP?  The regs clearly list delinquent remittance of participant contributions to pension plans, insured welfare plans and welfare plan trusts as eligible transactions under the VFC program, but there is no mention of HSA contributions.  So a plain reading of the VFCP regs would suggest no, the employer would not be able to correct under the DOL VFCP.  Is there are other guidance I have missed? 

Thanks in advance.

In this pooled money purchase plan, the custodian hits the account for their fees directly.  The plan sponsor doesn't want the participants to have to suffer the fees, so they deposit money into the account to cover the fees.  I can't see any way in which can be OK.

My first thought was to include it as part of the contribution and reduce the remaining deposit.  But I've got terminated participants who are being affected by this fee as well, and obviously they can't benefit from a contribution allocation.

I asked the plan sponsor to bonus the participants in the amount of the fees that were allocated to each of them.  That was not met enthusiastically.

I asked the custodian to change their policy to bill the plan sponsor instead.  It's not the right kind of account, it doesn't work, all sorts of other excuses that I don't believe for a moment.  So now there's a big call tomorrow to discuss why I'm causing a problem.  Hey, I'm not the problem here!

Is there no way for the participants to be shielded from the fees (which aren't unreasonable in amount, but, still) because the custodian won't play nicely?

Hi,

This plan was not a safe harbor for 2020. For 2021, plan added a safe harbor match.

The ADP test failed and one HCE has to take back $2000 of the $2500 she put in. The plan also is top heavy for 2021. Total plan assets are $7000. $5000 for the key and $2000 for the non-key. If she hadn't put that $2000 in then the plan would've been fine!

Eligibility is 3 months of service making about 30 employees eligible. Their TH contribution for 2021 is going to be big ( for them). Any suggestions to lower the cost?

Please go gentle on me, I'm new to all of this.  

Two questions I'm trying to sort out are:

1. How often do ESOPs need to be restated (is this the correct term?) to the IRS?  I read every 5 years and now maybe every 6 if using this elusive prototype document process..

    1b. If a firm has not restated/resubmitted well beyond the allowed time is there a different process for restating or submitting or should that firm just hurry up and send it in to the IRS.

2. There is another post on this, so I risk redundancy, but after reading about how the IRS is now allowing ESOPs to follow the prototype, pre-approved process I'm having difficulty finding resources on this..  Anyone on here knowledge and generous to share more on this?

Thank you

JHawk

OK proposing on a plan where tip income is a large chunk of their pay.  What do I need to know? I "always" use the w-2 definition of wages, so I should be able to easily identify the comp number at year-end.

I think the biggest question I have is, if someone wants to contribute 4% of pay, how does that work?  Does anyone have an article about tip income and a 401k plan?

Originally posted this question in the correction of plan defects forum but got no responses.  Thought I would post here to see if anyone has any ideas:

Hi

A bit confusing myself with a scenario I have not seen before.

Defined benefit and profit sharing combo.

DB started 2015(HCE only) and PS started 2019. One non-HCE was already in the DB plan for 2018 - year of participation. Another non-HCE is only in the PS plan i.e. excluded for DB categorically. All 3 are participants in the PS plan effective 1/1/2019.

DB was amended for HCE only during 2020 using A+B method (A x% of average comp for YOS starting 1/1/2020) and B is AB as of 12/31/2019 without wearaway - standard design.

I usually use annual method but for 2020 wanted to look into accrued-to-date method. Assume all data is correct for all past years i.e. I have the correct salary history and the PS plan assets are all correct.

Are there issues I need to watch out for the 401a4 testing?

Thanks

I received a call from a financial advisor who has a solo-k client.  The client has taken his RMD's faithfully for 10 years.  The TPA who had the plan was told that the financial institution calculates the RMD and distributes it automatically.  They were also told that the financial institution would prepare the 1099-R each year.  Fast forward to 10 years later.  The plan terminates and the client rolls his assets to an IRA (with the same financial advisor and same financial institution).  When the TPA inquired as to the amount of the rollover and confirmation again, that the financial institution would be preparing the 1099-R, they informed them that they found out that there was never a 1099-R issued by the financial institution...ever.  I asked if the financial institution withheld federal withholding, and if so, the IRS should have caught it (as they would have received 945 withholding and have nothing to tie it to), but that hopefully it's not as big of an issue as it could be then.  They stated that they confirmed that the financial institution never withheld federal withholding.  YIKES!  So I asked if the client reported the income on his taxes.  They stated that they don't believe he did.  DOUBLE YIKES!  So they asked what would be involved in correcting this.  However, the owner is now incapacitated and his son has power of attorney.  To be honest, I have no idea how to fix this and how far back we have to go.  I have never had this issue.  Has anyone had this problem or know what needs to be done, or can direct me to a cite.  Thank you so much.

A carrier in NJ is putting a “Covid Surcharge” on medical premiums since the February plan month.  Its no secret that carriers have lost significant revenue due to lower utilization (members not getting elective services) during the sheltering in place period of the Pandemic.  Does anyone have a good explanation / rationalization for the surcharge?  Was there any recent regulation that I may have missed that addresses this? Is this solely a New Jersey thing? Any help or guidance on this would be appreciated. Thanks!

Employee made deferral election upon beginning employment in September 2020.  Recently discovered that no deferrals were made from September through December, 2020.  When new plan year began and employee completed annual enrollment forms, proper deferrals began January 2021.  Since we just discovered the missed deferrals, we cannot meet the 45-day notice requirement under the safe harbor correction method.  Should we go ahead and make the 25% QNEC plus earnings and give the employee notice and move on or must we correct under the regular method for missed deferrals?  Thoughts?

An individual's DOB is 7/16/55, he turns age 66 this year.  I think SS full retirement age for those born in 1955 is 66 and 2 months.  So September 2021 would be full retirement age and assuming he wants to start his benefits at this time the first payment would be in October.   Is this correct?

How does this mid-year benefit start coordinate (or does it) with the earnings cap in this first year?   This person earns about $6,750 per month, so as of Sept 1 earnings will be $54K YTD.  He plans to continue working.  I know after full retirement age there is no earnings cap but I don't know how they track/measure/compute this for a mid year benefit start.

I've tried to figure this our reading info from SSA but nothing really seems to be on-point and it is confusing to say the least.  It's hard to research (at least so far) because so much is written about the earnings cap and early benefit start.   I'm not a SS expert at all.  Thanks for any help.

I have become the admin on a high school 403(b) plan and I don't work on that many 403(b)s.  In conversations, they have indicated that they are letting people defer once they reach 1,000 hours.  I explained the universal availability rule and so they put in the exclusion of Employees who normally work less than 20 hours a week.  My thinking is they can't possibly have everyone fall under this exclusion.  I thought they could exclude only if they expected them to work 20 hours a week or less.  What if they know they are hired as full time, can they use this exclusion and then once they reach 1,000 hours, let them in.

My company is so terrified to tell the client that they can't do something, so they try to come up with these clever ways to get around the rules.  

They have a discretionary match and I told them they can have the 1,000 hours requirement on that source but not the deferrals.

Any input is greatly appreciated. Thanks!

We have a plan in which the only participant is the owner.  The 1/1/20 BOY valuation was originally run assuming 1,000 hours (and therefore a benefit accrual) for the participant for 2020, which resulted in a TNC and a MRC > $0 (the plan has no shortfall).  We now get to the end of the year, and due to a down-turn in business, the participant/owner ended up not working 1,000 hours.  Would it be reasonable/allowable to re-run the 1/1/20 valuation showing no expected benefit accrual, which in-turn means no TNC and $0 MRC?

If allowable, would that be considered a change in Actuarial Assumptions for the year as reported on Schedule SB?

Thanks for any insight!

I have a new governmental client that sponsors a 457(b) plan and a 401(a) plan.  To my surprise, these two plans are contained in the same document.  My question is whether you can combine a 401(a) plan and a 457(b) plan in the same document or must they maintain separate instruments.

Not quite sure if this is the correct place but the job posting section on this site didn't seem to cover my question.   I'm looking for just some support staff contract employees for data entry and entry level tasks remotely but not full-time.  Am I missing something in the job postings section where I could find them or is there another good resource for this for folks with some retirement plan very basic experience?  Thank you.

Our actuary is searching but I thought I'd just put a note out here as well.  We currently have a company that has an overfunded DB Plan that is terminated.  He is looking to sell the business and with the overfunding and I'm wondering if anyone here has info on companies that purchase these.  I know they are out there, not sure where to look.  Thank you.

I am wondering if anyone has come across this issue. Does the 4960 tax to excessive compensation paid to executives apply to the executives of a company that is 100% owned by an ESOP? 

I need a sanity check - Is an individually designed 401(K) plan still required to be restated every 6 years? If it has been timely amended as required?

I understand the requirement to request a new determination letter has been eliminated and my interpretation was the restatement requirement was eliminated as well, but a client's record keeper is advising them they must restate.