The Keogh owner has died.  We have a qualified Keogh document that needs to be updated and terminated.  Who can sign on behalf of the Plan Administrator/employer?  The Keogh owner was self employed.  The Will names a daughter as Executor, but no Probate Estate was opened, therefore, no recorded Letters of Office.

Plan Sponsor received a check from RBC, payable to the Plan, that was a settlement with the SEC over certain fees involved in a mutual fund.  The check says it is for the benefit of a participant that has long since departed from the employer.   Plan Sponsor has no address for the participant.  How should this be handled?

My Name is Ms. Gloria White. I reside in Houston. Texas and Retired

I was in Pay status, receiving monthly distributions from my separate property annuity, when my spouse filed for divorce.  The divorce was finalized.

I 1/2 year later, he filed a Dro as an Alternate payee on my Retirement Plan.  It was approved but he manipulated the language in the final divorce decree, omitted the valuation date of our marriage and had the Dro signed by a substitute judge.  With the Plans' qualifying approval , he started receiving 1/2 of my monthly distribution.  It was a Defined Benefit of 50% joint and Survivorship.  I did name him as the death beneficiary after my demise.    Not as an Alternate payee!   I was never served and did not sign the QDRO.

Can the Plan or Plan Administrator  be sued for mismanaging the Qdro or does ERISA precludes them from being sued?

 Please answer ASAP today

Ms. Gloria White

I just picked up a 401(k) Plan effective January 1, 2018. The Plan Sponsor has never requested the tax credit for startup costs. As of its effective date forward, it met all of the criteria to receive this credit. How far back, if at all, can the plan request and receive this credit?  

Corporation A and B are a controlled group. They have identical separate plans. Participant is partially vested in Corp A plan, then terminates employment with A and moves to B. Account balance remains in the A plan. 

Since all service with all members of the CG is counted for Years of Service, then as long as participant works for B with 1,000 hours each year, the vesting under the A plan will continue to increase, even though participant is no longer working there. Is there any dispensation that I'm missing that would allow vesting in A plan to remain frozen?

This post is exclusive of anything related to CARES Act.

I feel like I saw some headlines going back to 2019 indicating that loan payment rules were being relaxed, such as longer periods to either pay back to the plan or roll the amount into an IRA, or pay by check once terminated into the plan, but perhaps I dreamed it?  Just curious, has anything to that effect been enacted?

I recently discovered our client is a part of a controlled group (newly established in 2019) and one entity maintains a SIMPLE IRA and the other a 401(k) Plan. Good news, we're still within the exclusive plan transition rule under 408(p). Bad news is we're beyond the 410(b) transition rule. What now? In addition, if the SIMPLE remains and those employees are NOW eligible for the 401(k) plan, does the (k) plan need to be amended to exclude the employees benefitting under the SIMPLE IRA plan or are those employees eligible to participate under both plans if they so desire so long as they don't exceed the 402(b) limit? If the employees could be eligible for both plans, is there a coverage test for the 401(k) plan if all employees are "eligible" under the 401(k) plan? 

Also, just to confirm, I'm right that if the employees previously employed under the entity who sponsored the SIMPLE IRA plan are now working under another entity within the controlled group, such employees must still be eligible for the SIMPLE IRA (contributions coming from an entity who does not sponsor the SIMPLE IRA) as if the plan sponsor of the SIMPLE IRA were still a separate entity, correct?

my dad passed a few months ago, somewhat unexpectedly after a brief but serious illness, so my siblings and I are dealing with the aftermath of not having everything wrapped up in a neat little ribbon.  he had an IRA that was paying him a small monthly installment to cover his annual RMD.  my mom wanted to transfer the IRA to her own and continue getting the monthly installments, but the custodian is telling us there was no beneficiary designation on file (what?  hard to believe my dad didn't do this!) and the only default is to an Estate, and taxable.  why wouldn't it be to a spouse?  I deal mostly with qualified 401k and retirement plan distributions so an IRA is out of my field of expertise.  we continue to search for old documents at the house, but in the meantime am looking for some guidance.  is this normal for an IRA?  it doesn't make sense that mom will have to get an attorney and set up an estate, go thru probate, have to pay taxes (and legal fees!), etc.   thanks!

Notice 2020-52 made it clear last year that safe harbor contributions for HCEs can be suspended mid-year without effecting the plan's safe harbor status (notice required), as contributions made for HCEs are not included in the definition of safe harbor contributions.

Since safe harbor contributions are generally required for the entire plan year, would I be correct that a mid year amendment to include HCEs back in the safe harbor match would not be permitted?  For example, HCEs are amended out of the safe harbor in 2020.  2021 the company begins to recover and would like to add the safe harbor back for the HCEs.  NHCEs were never affected.

Yes, it can be done, retroactive to the beginning of the plan year?  Or, no way, need to wait until next year?

Thanks very much.

We have an owner  only cash balance plan that purchases warrants but the warrants are never valued. The asset statements only show wire transfers out of the plan account for warrant exercises and does not show which warrants) are  being purchased by the wire transfer. How do we value the monies that are leaving the plans to purchase warrants if we don't know what was purchased? Is it shown as the value of the monies wired out of the plan or just as a loss on the assets for the year? Does the client have to request that their Financial Advisor  provide the current price for each warrant listed as the end of the plan year?


 

The plan satisfy Average Benefits Testing on Allocations permitting us to use the lower threshold to pass rate groups.

Rate groups then pass on benefits.

Is it permissible to satisfy ABT on allocation rates and then satisfy rate group testing on benefits?    This is how the question should have been posed initially.

A client acquired a small DB plan a few years back (around $1M in assets) in connection with acquisition of the sponsor entity.  The plan appears to well over 100 percent funded and the only participants in the plan are terminated and retired employees.

The company would like to terminate the plan but the problem is we recently discovered that since the client's acquisition of the plan, payment of benefits under the plan (affecting all participants) have been made from the corporation's general assets instead of from the plan assets. 

This is obviously in violation of the terms of the plan but our question is what correction needs to be made if any?  The client does NOT want to recover the amounts that were mistakenly paid out of corporate assets, so any correction would be for compliance purposes to ensure the plan can be properly terminated and there is no penalty to the participants that were paid out of the wrong account. 

Would appreciate insight from anyone who has dealt with a similar situation. Was unable to find anything on point in the IRS correction procedures

Another discussion that might be relevant to this Message Board.

https://benefitslink.com/boards/index.php?/topic/67381-any-updates-on-non-erisa-governmental-401k-plans/

Can a profit sharing plan not allocate investments earnings and losses to the accounts of deferred vested former employees?  Is there any authority you can cite to?

Hi all- I was looking back at some previous post (some over 10 years old) and I wanted to know if anyone had any updated information regarding Non-ERISA 401k plans (just high level information). Also does anyone know the answer and either source or citation for the following:

• Does a Non-ERISA 401k plan have reporting requirements, if so, i'm assuming fling under 5500?
• Can Non-ERISA 401k plan have Employer contribution element?
• Contributions to Non-ERISA 401k plan does not limit a participant's ability to contribute to their 457 plan, correct?
• Does the Non-ERISA 401k plan function like a ERISA 401k plan, same hardship requirements, RMD, etc...
• Also, does anyone know if there is a major difference between a Non-ERISA 401k plan and a ERISA 401k plan outside of who is eligible to sponsor one and possible reporting requirements. 

Any guidance would be helpful, thanks

I have a plan that had a 3% SHNEC contribution for 2019. For 2020, they chose NOT to have a Safe Harbor provision. They are top heavy for 2020. Do they need to make a 2020 top heavy contribution for 2020 or are they all set because they were a Safe Harbor in 2019.

Thank you!

I may not be following the right trail of breadcrumbs, but is there an obligation to offer COBRA in the following situation. Foreign company employs several hundred employees. Say the wholly owned US subsidiary only has 5 US employees who are offered a group health plan. The COBRA regulations seem clear that the foreign parent and US subsidiary will be aggregated to determine whether the US subsidiary has 20 employees for COBRA purposes (it does). 

Say the US subsidiary terminates its group health plan altogether, but the foreign parent continues to offer whatever the comparable health insurance is in the foreign parent's country.

Are the 5 US employees entitled to COBRA coverage? Or has the "employer" (which includes the foreign parent) stopped offering any "group health plan" to "any employee" such that COBRA coverage ends?

In other words, does something exclude the foreign coverage from being a "group health plan" for COBRA purposes? I have to assume so - the foreign plan couldn't offer continuation coverage to the US employees - but am not seeing where that result comes from. 

Suppose a plan had 3% safe harbor nonelective provisions in place for the plan year ending 12-31-2020 and it was a brand new 401(k) plan. Deferrals were allowed right away upon hire, but to be eligible for the 3% safe harbor nonelective, a year of service was required. Assume they only have deferrals and safe harbor in the plan for 2020. Also, they excluded the non-key HCEs from the safe harbor (a lot of people).

Also suppose they are now "enjoying" the top-heavy surprise since not enough non-key employees deferred in 2020 to keep the plan out of top-heavy status (not even close, even with the eligible NHCEs all getting 3%).

Based on the language under IRC 401(k)(12) after its changes for the SECURE Act, do you believe they could amend the plan now to adopt a 4% safe harbor nonelective for 2020, making it's eligibility the same as the deferral eligibility, thus making the plan exempt from top-heavy for 2020?

Just looking for confirmation, but a participant loan program in a 401(k) plan can be eliminated as loans are not considered a protected benefit.  Does eliminating the availability of new loans apply to all participants, or just to terminated participants and/or newly eligible participants?

Thank you

Apologies if this is not the best forum to post this particular question but I'm curious about possible trends with respect to dispute resolution and similar terms in engagement letters for plan audits.  We recently were asked to review a proposed engagement letter for a 2020 plan audit for a large 401(k) plan sponsor and, in looking over it, noticed that since last year the audit firm had inserted broader indemnification provisions as well as mandatory mediation and binding arbitration clauses.  In addition, and particularly disconcerting to my mind, they also have inserted provisions to attempt to contractually limit the statute of limitations to one year and included express express terms prohibiting suit against any employee or partner of the audit firm for any reason.  I don't think anybody anticipates any issues with their audit firm and know you would not typically sue individual auditors personally if there was an issue but some of this seems way overbroad in the event some individual goes off track as part of the audit process, etc. 

Are these kinds of provisions market and/or a growing trend.  I'd really like to tell the client that they should reject the proposed terms and request something along the lines of the letters they've signed for many years in the past.  Or look for a new auditor.  And less of an increase in the audit fee . . . . Thanks.