Wasn't there a ruling a few years back that stated if an employer were to have 401k plan assets under a pooled account, then they were required to provided quarterly statements on the plan and that only providing an annual statement on the 401k pooled assets was not sufficient anymore?

Cash balance plan's normal form is an annuity, but for the in-service distribution provision, the plan document specifically states it can only be taken as a lump sum (makes perfect sense).  That said, are you still required to display the various annuity amounts on election forms and include QJSA notice, etc.?

I just found out my Ex has recently been collecting a pension, that he conveniently neglected to reveal to the court during our divorce proceedings, and i have several questions. First is- who do I go to for a QDRO? A financial person that has pension knowledge, or a divorce attorney or ????

Second- would my benefit (50%) be calculated upon receipt of the QDRO request or from the time HE started receiving the pension (that is when I would have become eligible also)?

Third- the pension QDRO guidelines provide options for monthly payments, which appear to end when either of us dies,  a Shared Interest approach and a Separate Interest approach. Can you explain the difference?  Not sure if these are common options or just THIS pensions options. 
 

any incite into this situation would be helpful. 
thank you

I can use the SHNEC towards all of my nondiscrimination testing, right? i..e, new comp/cross tested, gateway minimum and the like?

Group:

New client is in initial stages of audit of Esop. 

In reviewing her businesses 2013 ESOP Plan Document I noticed there was no Adoption Agreement prepared for client at time. Or at least none the client could find. And no restated esop documents. There are corporate resolutions and an SPD. 

Its my understanding that the former TPA (who I'm told was a volume submitter) at the time assisted in drafting clients esop documents. I thought it would be easy to contact them but I don't believe they're still in business. 

It seems a little late in the proverbial game to draft an adoption agreement corresponding with the provisions of the plan document. 

As part of our IDR disclosure to auditor would you give copy of old ESOP Plan  Document with explanation that the TPA is no longer around to obtain a copy of any adoption agreement? 

Thoughts and comments appreciated. 

I have been out of the retirement plan admin business for a few years and want to run this by the group.  Owner has recently retired and wants to terminate his 401(k) Plan.  The plan owns a life insurance policy (variable life) where the owner/participant is the insured.  He happens to be my brother who was a State Farm Agent.

Can he buy the life insurance for it's fair market value (I realize that may be different than the cash value, but the policies are very mature).  The Prohibited Transaction Exemption is still applicable to this, correct?  He can take personal cash and pay it into the plan as a purchase of the policy - right.  Then he can take his RMD for 2021 (he is over 10 years over his 70 1/2 year and has been taking RMD's every year as required) and then terminate the plan and roll the assets into an IRA.  Upon his death, his much, much younger spouse can rollover his IRA into a Spousal IRA and then wait until 2032 (her 70 1/2 year) to start RMD's.

Am I missing anything?  Have any rules changed on me?

The profit sharing plan owns 3 life insurance policies on one insured.  The  PS 58 cost is reported on each contract.  If the insured would like to purchase one of the contracts can the insured use the total accumulated PS 58 costs on all three policies to reduce the taxable distribution on the one contract being purchased?

I have one last off calendar 2019 form year to file for a 1 man plan. In the past we filed SF 1 -man but for 2020 year the form no longer exists.

Can I still use the 5500-SF one man for a non-calendar year plan beginning in 2019 and ending in 2020?

If I can't use the SF, can I electronically file the 2019 Form 5500-EZ or does it need to be filed on paper? That is can only the 2020 Form 5500-EZ now be filed electronically or can the 2019 Form 5500-EZ also be filed electronically.

Plan effective date 1/1/2020.  Safe Harbor Non-elective component effective 10/1/20.  All employees met eligibility requirements as of 1/1/20.  (No mid-year entrants.)

Plan document says “Compensation shall include only that compensation which is actually paid to the Participant during that part of the Plan Year the Participant is eligible to participate in the Plan.”

Does that mean I use full year comp for Safe Harbor Non-Elective contribution? Or only from 10/1?  

What if plan sponsor wants to allocate a discretionary Non-Elective contribution in addition to the SHNEC?  It would be based on comp for the whole year.   Is it a problem if I use two different definitions of comp…whole year for p/s and part year for safe harbor?

I've got myself confused....since the employees were participants on 1/1, I'm now thinking I should use comp for the whole year for both.  

Comments are appreciated!!

I've been embroiled in a parentage case (parents were never married) that repeatedly defies logic. The latest twist is that the minor child's guardian ad litem is now seeking a QDRO to collect their fees from one parent's 401(k) Plan. I have no doubts that the judge will grant/enter/issue the requested QDRO once it is drafted. 

Is there any case law that supports naming a GAL as an Alternate Payee in a QDRO? I cannot find anything in my research.  

I searched archives and couldn't find an answer, would have thought this group would have discussed at some point - maybe I didn't look long enough.

Combination CBP (1,000 hours for allocation) and PS 401k with SH match and individual groups with no allocation conditions for PS.

Two NHCEs terminated with less than 1,000 hours, so no CB allocation and no top-heavy (if applicable, but not TH yet anyway). The CB providers doing the testing think that the employer can declare zero PS for these two NHCEs and therefore, they are not benefiting under the (combined) plan with respect to 401(a) source and need not be provided the gateway allocation of 5%. Employer was given option to give these two 0% or 5%. 

The DC providers think that these two NHCEs are required to get the gateway because there are no allocation conditions. 

I am in the CB camp (no gateway). Regulations say gateway is required for employees benefiting under the "plan" and refers to 1.410(b)-3 for "benefiting" which says:

§ 1.410(b)-3 Employees and former employees who benefit under a plan.
(a) Employees benefiting under a plan -
(1) In general. Except as provided in paragraph (a)(2) of this section, an employee is treated as benefiting under a plan for a plan year if and only if for that plan year, in the case of a defined contribution plan, the employee receives an allocation taken into account under § 1.401(a)(4)-2(c)(2)(ii), or in the case of a defined benefit plan, the employee has an increase in a benefit accrued or treated as an accrued benefit under section 411(d)(6).

These two terminated NHCEs are not receiving an allocation. It is clear we cannot exclude them from coverage and nondiscrimination testing, even if hours are less than 500, because that is not the reason they do not benefit, the reason is that the employer (under the terms of the plan) decided that these individual allocation groups will not be given a profit sharing contribution. As long as coverage and nondiscrimination pass with these people included as zeroes (in the denominators only) I think we're good - and it isn't an issue as this is a fairly large plan.

Who is correct CB or DC providers and why, if anything different or additional from above regulation?

Thanks

A participant is seeking to transfer or rollover funds from the Thrift Savings Plan. Part of those funds consist of tax-exempt combat pay. I am not seeing any guidance indicating whether an employer-sponsored 401(k) plan can accept transfers or rollovers of tax-exempt funds.

If permissible, I think it would need to be separately accounted for as tax-exempt and properly reported as such upon distribution for 1099-R reporting and withholding purposes.

Am I missing guidance on this? Any ideas on permissibility and whether it's an eligible rollover distribution? Thanks.

A participant defers a portion of his salary in January until termination, and each month the deferral account is credited with 4% interest.  When FICA tax is paid at the end of the year (using the rule of convenience), does the amount subject to FICA include the original amount of salary deferred plus the interest accrued throughout the year, or is the amount subject to FICA only the original amount of salary deferred? 

I know this has been discussed before, but looking for an answer  without having to read through a bunch of regulations, etc. etc.  Plan has 2 partners, no EEs.  They both get a K-1. Is the limit based on 25% of their combined net/earned income, or is the limit based on 25% of their individual net/earned income? 

Thanks -- 

Hi,

I have a quick question about special testing rules for the ADP Test.

I understand that there are 2 ways to run the ADP Test for the Otherwise Excludable (OEX) Employees:

1) Early Participation Rule (where only OEX NHCEs are left out of the test)

2) Disaggregated Plans Testing Method (where all Non-OEX employees are tested together and all OEX employees are tested together)

In the ADP test, there are 4 HCEs, one of which is OEX. All HNCEs are non-OEX.

I believe he plan should be tested as follows:

1) Non-OEX HCEs tested together with Non-OEX NHCEs

2) 1 HCE OEX tested by himself because there are no OEX NHCEs - this portion of the plan should pass automatically because there are no OEX NHCEs

However, our testing software is testing all HCEs (even the 1 who is OEX) vs. NHCEs for the Otherwise Excludable test. I don't think that's correct as I think there should be a separate test for OEX employees because we're using the Disaggregated Plans Testing Method.

Do you agree?

One of our plans has a 3% safe harbor non-elective employer contribution.     The employer has yet to make the 2019 contribution.     Also the employer filed for bankruptcy in 2019.   Is there a penalty or other problem with this?    I know it's a failure to follow the plan document, but I'm not sure what the ramifications are.  

Any advice is appreciated.

I'm not entirely clear on this. Say in 2020, a SH Nonelective plan was amended to remove the SH. Now in 2021, the employer wants to reinstate the SH for 2020. This is ok. But, is the SH now required to be 4% (since it is retroactive to the prior year) or can it be 3%, since it is reinstating the 3% nonelective that already existed but for the prior amendment?

edited to remove an inconsistency in original post

Since 1979, the Teachers' Retirement System of the City of New York has administered a supplemental 403(b) plan. In error, the Department of Taxation and Finance treats the TRS 403(b) plan as a pension plan of local government.  Pensions of local government are exempt from the state income tax. The 403(b) plan is pre-tax.  Making distributions tax free changes the 403(b) contributions from being pre-tax to tax-free.  We all know there is no such such thing as a tax-free retirement plan.  See:  NY State Department of Taxation and Finance publication 36 p.12.  

What say you?

Need Help!!!

I’m working on a plan and client wants to max out 1 owner (audit plan).

Plan demographics as follows:

Total Employees- 210

Participants – 110 (who has entry date)

Plan entry requirements: 18 age, 1 year of service, Semi-Annual Entry

Profit Sharing Method: New Comparability/ Grouping

 Allocation condition to get Profit Sharing:  Last day and 1,000 working hours.

Plan is not TOP HEAVY for 2020 Plan Year.

****Among 110 participants, 30 employees did not meet 1000 hours and few of them terminated before 12/31/2020.

Current Year’s contribution 2020: Deferral, Safe Harbor Match, Profit sharing (max owner, minimum % to pass others (no Safe Harbor Non-Elective contributions)

Here, Highest Key % - 10.11% (PS and Safe Harbor Match)

Question: Do I need to provide minimum gateway to 30 participates who did not fulfill last day and 1000 hours to pass new comparability test?

Thanks in advance!

If a plan adds voluntary after tax (VAT) to a plan, I understand it is tested under the ACP test.

What if it's a Safe Harbor plan?

My question is does the Safe Harbor Match get tested with it?

If a SHNEC is treated as an ACP SH, does that get tested under ACP with the VAT?