When filing the form 5500, what should the IRS plan # be listed as for the PE? What if the PE had a prior plan that merged into the MEP - what should the IRS Plan # be then? What happens when the PE decides to start their own "stand alone plan" - what should the IRS plan # be listed as then? What happens if the PE decides to start their own "stand alone" plan and previously sponsored a "stand alone" plan that merged into the MEP that the PE adopted? Additionally, what should the effective date of the "new" plan be listed as? Should it be a restatement?

Have any fellow TPA firms found software that will scan brokerage statements for certain items such as contributions, withdrawals, dividends, etc and convert into an excel file for ease of starting the trust accounting process? We have found a significant number of clients recently that are moving back to individual brokerage accounts making the trust accounting much more labor intensive and with room for data entry errors.  Looking for any best practice tips from other firms that have found efficiency solutions with brokerage trust accounting.

What is the cash value of life insurance and annuity policies to show on Form 5500 for a 412 plan?

A participant is terminating/retiring.  Because he is not an owner he did not have to take an RMD from the plan. Does he need to take one before he rolls his account balance into an IRA?  The goal is to pay him out before the year end and we don't want to miss an RMD if he is required to take one. 

Hello All:

We are talking with a prospective client(s) that we've identified as having a control group problem between two entities (one with a 401k, one without) that they are not aware of yet.  Before we recommend they fork out for an ERISA attorney to spell out their options, I'm curious what others have seen in similar situations?

Obviously the cleanest option is to bend the knee the file under VCP/VFCP. However, for businesses that don't or didn't otherwise qualify as a QSLOB and had not identified this issue over a period of many years and many employees as in this case, even remediation prior to an audit can be harsh and a business decision might need to be addressed between compliance and continuity. Open to any thoughts or experiences anyone has to share!

FYI I am not a TPA, but based on personal experience I am not surprised this issue wasn't addressed over the years by the existing bundled recordkeeper/administrator solution. 

Thanks in advance for sharing.

Have you been amending your vendor agreements for MHP and transparency bill reporting/disclosure obligations despite having broad legal compliance provisions in these agreements?  

My client is being audited by the IRS because their CB and PS plans are terminating. The TPA excluded 2 NHCEs from the CB plan "because that's what the prior TPA did", and it passed the numeric testing, but the plan document never stated that these two people should be excluded. These 2 employees were included in the PS plan, and received benefits every year there. Both plans are terminated, and assets are distributed.

The IRS is asking where the benefits are for these 2 employees, because the document doesn't exclude them. The TPA isn't sure why they were excluded, but they were, and everything passed testing. But the document doesn't exclude them. 

What can the client do, short of going back and calculating what the benefit would have been if they were in there and dumping that into an IRA? 

Just took over a case where they didn't have any beneficiary forms on file.  There is a participant who just recently passed away.  He has an ex-wife, who he divorced before the Plan ever started so I don't believe she's a factor here.

He has one biological child and step-children.

Would his entire balance then go to his lone biological child?  That's what I'm thinking, I just wanted to confirm.

Thanks in advance!

A 401(k) plan has been deemed Top Heavy and will begin making minimum contributions to non-key employees who are plan participants. However, there is a group of employees who are eligible to participate in the plan, but absolutely refused to do so because the funds offered by the plan invested in companies that have poor records regarding the environment. If a non-key employee is eligible to participate in the plan but absolutely refuses to do so, should they be receiving minimum contributions or can the plan sponsor argue that only employees that enrolled in the plan should receive minimum contributions.

Regulations Section 1.416-1 Q&A M-10 states that non-key employees that are "participants" in a top heavy plan must receive minimum contributions and ERISA 3(7) defines "eligible employees" as participants. However, Q&A M-12 refers to "employees covered under the plan" as receiving minimum contributions and I could argue that these non-key employees are not "covered" under the plan. Any thoughts? 

The Direct Rollover option is not mandated for QPLO distributions.   The QPLO amount, however, is still an eligible rollover distribution.

Q.:  What must the disclosure statement contain?

General question regarding RMD.  If a participant has an outstanding loan, is the outstanding balance of the loan included in the 12/31 balance for the calculation?

In other words:

(Investments + Outstanding Loans) / RMD Factor

I believe that's the case, I just wanted to confirm.

Thanks in advance!

Can participant accounts be protected under 404(c) when the only investment vehicle is brokerage accounts and the Trustees offer no suggested funds to satisfy the requirement of diverse asset classes available?

Plan requires 2 years of service to be eligible for the PS component.  Therefore 100% vesting required. Plan is 401(k) Plan.

If the Employer does not want to make a Profit Sharing contribution, but a TH is required, can the TH contribution be on a vesting schedule?

This is an estate planning question.  I am well past the age of 59.5 while my wife is well under.  So, I am trying to develop an optimal strategy for her in case I die before she reaches 59.5.  I have an IRA and a Roth IRA; she has just a Roth.  My idea is that I should very soon divide my IRA into two IRA accounts at the same brokerage house.  Then when she inherits, she can take my Roth as her own, one IRA as her own, and one IRA as a beneficiary.  She will be able to take distributions from the beneficiary IRA account without penalty, because the taxation rules that applied to me will continue to apply to that account.  The downside is that she will have to drain that account within ten years.  The assets in the IRA she inherits as owner will not be available to her without penalty until she reaches 59.5, but she would not have to drain the account within any time period.  If she needs more income than the Inherited IRA provides she can withdraw from her Roth which now holds the combined assets from both our Roth accounts without tax and without penalty.  

Once I have divided my IRA into two IRA accounts we would shift assets between them annually to try to assure that the IRA that will become her Inherited IRA has enough assets in it.  

Would this work?

Hi All,

We have a handful of ex-pats (US citizens working abroad) where we offer an international plan for medical, dental and vision benefits.

At Open enrollment for US we offer them the option of healthcare and dependent care accounts along with voluntary life and voluntary LTD. We have recently implemented other voluntary benefits(pet, legal, ID theft & auto/home) but carriers indicated residence must be US based so have not offered to the ex-pats

Are there any things to look out for in offering the FSA accounts?

Much thanks in advance!

Kind regards,

Lexy

Husband and wife own a company with a retirement plan.  Neither ever named an alternate beneficiary.

Wife dies. 

Husband does not want to be the beneficiary, but he wants the benefit given straight to the children.

Is there any way to do this?

Hello,

I work for company A who has acquired several businesses through stock purchase, in different states, same business type and will continue to acquire more over the next few years. Each acquisition is maintaining their own EIN. We own 80% to 100% of each acquisition and we consider them part of our control group which allows them to participate in our health and welfare plans.

I have been asked for financial reasons to create multiple options for benefit offerings that may have differences in PTO days, 401k, health plans and other items for each acquisitions employees - none of the acquisitions has less than 60 employees.

Example: 

Plan 1 would have full health plan offering, 22 PTO Days, SH 401K w% Match

Plan 2 would offer full health plan offering, 19 PTO days, 401K no match

Plan 3 would offer HMO health plan options only, 18 PTO Days, 401k no match.  

My dilemma is around the 401k options - Company A (The acquirer) has a single employer SH 401K plan. Because we consider these acquisitions a part of our control group I do not believe we can shift our SH 401k plan to a multiple employer plan because we are related businesses.  

Company A has a safe harbor plan with employer match  and company A does not want to offer 401k employer match in all regions for financial reasons and because the acquisitions either have no 401k and if they do have a 401k they do not match

If you have suggestions for how I might design 401k options to fit this scenario I would be grateful for the ideas. 

Hi,

A DB plan had a benefit formula of 6% per yr of participation for the first year of the plan. Now for the second year (take over for second year ) we want to use 3% for each year of participation (of course with 204(h) notice). 

However, we want the accrual for this second year to be 3% of comp for this year of participation, without reducing the current accrual due to the benefits earned for the first year. Meaning the total benefit at the end of the second year will be the 6% of comp accrual for the first year plus the 3% of comp accrual for the second year equals the total accrued benefit earned for the first two years.

Based on this, would the following be an appropriate language for the plan document as the plan benefit formula. For 12/31/2021 year 6% of avearge comp and for 12/31/2022 and going forward 3% of avg comp, WITHOUT WEARAWAY.   Thank you for any insights on this.

When filing the form 5500, what should the IRS plan # be listed as for the PE? What if the PE had a prior plan that merged into the MEP - what should the IRS Plan # be then? What happens when the PE decides to start their own "stand alone plan" - what should the IRS plan # be listed as then? What happens if the PE decides to start their own "stand alone" plan and previously sponsored a "stand alone" plan that merged into the MEP that the PE adopted?

Suppose you have two related companies where a controlled group exists. Each of these companies sponsor a profit sharing plan that provides a uniform contribution which is the same for each plan. No testing issues.

Now they want both plans to be cross-tested. Since they have a controlled group, both companies will need to be tested as one. It actually looks like the plans will pass the general test.

One problem. One company and plan have a 12/31 year end and the other company and plan have a 10/31 year end. How is the cross-testing done with two plans that have different year ends? 

Have never run into this issue in all these years.

Thanks.