Taking over a case where there are 6 participants, but technically 5 of them are HCE (2 partners, and 3 of the employees who have no ownership stake).  Is there an issue from a testing standpoint to use all 5 as HCE or should we test them with just the 2 partners considered HCE?

(Only reason I'm asking is because it does make a difference in regards to passing or failing)

Thanks in advance!

Sole prop (with employees) defers. But ends up with zero Schedule C income. Deferrals returned timely.

Do you report this on the 5500SF on line 8(e) for the year of distribution, or another line, or not at all? 

A plan is a SH match plan.  However, they decide to allow for after-tax contributions.  The plan is now subject to the ACP testing.  I believe the test can be conducted with or without the SH match included.

The question I have is...The plan is also top heavy.  The plan "loses" the top heavy exemption and is now required to fund the top heavy minimum.  Is this still true even if no participants actually make after-tax contributions?  My gut says yes they are required to fund because the plan is not considered "solely" safe harbor.   

Thoughts?

Say a QDRO specifies a lump sum of "X." Participant has several sources - deferrals, match, Roth, Pre-tax, etc.

QDRO and plan are silent on the issue of which source(s) from which the funds would be distributed. My answer would be proportionately from all sources - but does the Participant or Plan Administrator have the right to then dictate the source(s) from which the distribution is made? For example, all from Roth, or none from Roth, etc.?

Thanks.

A plan that currently permits profit sharing allocations to participants with 1,000 hours wants to add a last day requirement effective 1/1/22.  I believe that not having a last day requirement is not a protected benefit, so the amendment would be OK?  Is this correct?

2020 5500 will be ready to timely file since the plan no longer requires an audit, but 2019 5500 with its required audit will still be unavailable.  Should we file the 2020 5500 or will this make the DOL and IRS more likely to ask after the 2019? Prior years were filed timely; so the DOL has to know the plan is out here.

401k Plan currently excludes part-time employees from participating in the 401k plan.  If a full time employee moves to part-time can they be excluded prospectively? 

Of the popular mutual fund providers, which furnish prospectuses in Spanish, and which do not?

All of my research and in my experience working in a prior job says cash balance is a qualified plan that has to pass testing.  Has anyone ever heard of an executive cash balance plan?   Can a plan sponsor designate only HCEs and/or executives for a cash balance plan?

My understanding is that, for MEWA definition purposes, the DOL follows the common control rules, including an 80% ownership requirement for a subsidiary, although the Form M-1 filing exemptions apply down to 25% ownership. My further understanding is that the DOL will not consider an ASG to create a single-employer plan for MEWA definitional purposes unless they also meet the requisite ownership requirements.

I also understand that several (or many?) states' laws follow this definition to determine when a MEWA exists that may be subject to state regulation.

In other words, a subsidiary owned 70% by a parent would still give rise to a MEWA for DOL and state-law purposes (but would be excused from filing a Form M-1).

I'm interested in others' practical experience with how employers address this issue, particularly as a matter of state law with self-insured group health plans:

1. Whether intentionally or inadvertently, they ignore the arrangement's status as a MEWA. My guess is this occurs inadvertently somewhat regularly. Are state regulators more lenient on good-faith situations like this (as opposed to the problematic self-insured MEWAs that have made headlines)?
2. They follow all state law rules governing self-insured MEWAs, including registration, filings, etc. and continue the self-insured MEWA as such.
3. They don't cover the subsidiary and find another group health plan alternative (e.g., fully insured plan covering the subsidiary's employees).

Would appreciate any insight.  

Everything in this makes sense except for the timing of the notice to Participants:

"... within 60 days following the date the discretionary match is made to the plan."

Why would the notice come after the match is contributed?  Wouldn't it make more sense to have the notice precede the match?

Thanks!

Patricia

Employer has several late remittances of deferrals to the trust.  Prohibited transaction.  Fix (perhaps) under VFCP.

Is it also an operational error?  Corrected under SCP?  If so, what "operation" under the plan doc did they violate?

A client has asked me if they can make their PPA credit balance elections via email.  Meaning the email itself would contain the election language, and the signature would be their email stationery text at the bottom (e.g., "Name, Title, Address, etc.".)

Would this satisfy the regulations, or would an actual scanned signature in a Word document be required?

Hi

A sole-proprietor wants to set up a db plan for 2020.

I can technically set up a db plan now starting 2/1/2020 with PY ending 1/31/2021 where minimum funding is due 10/15/2021. Plan document would read income used for the calendar year ending within the plan year.

What is your thought on this?

Thank you

As of 1/1, a company changes its name and as well as the plan's name.

FIling 5500 for the prior 12/31 pye before such changes take effect.

I'm thinking 5500 is filed with original plan name, but with new plan sponsor name.

Then the following year the plan name is updated on the 5500.

I could be off base here.

My old employer's payroll department gave me an incorrect vesting date prior to my departure.  The company had a 3 year vesting schedule for 401k match.  They told me I was fully vested as of June 2021.  I left the company on 8/11/2021,  7 days short from my 3rd year anniversary date based on this communication with the payroll department.  Fidelity forfeited almost $7000 when I rolled over my 401k to a roll-over IRA account.  It was really surprising to me.  After discussions, the employer acknowledged their mistake and decided to just give me a check for the amount + extra amount to pay the tax.  The confusion was that ADP had a rule saying only 1000 hrs had to be worked in a year.  When the plan was moved to Fidelity, it was strictly about the anniversary date.  Now, I don't want to pay any penalty on this amount.  I would like to deposit back into an IRA account.  Is this even possible?  Wouldn't IRA consider this as a "withdrawl" from a retirement account and the amount would be subject to a penalty?  I am 50 years old.  I would like to know what my options are in this weird situation.  The employer said it's best to do it this way because their plan can be considered non-compliant and cause a lot of headaches.  I would appreciate what you professionals think about this situation.

Suppose you have the typical medical practice partnership with about 20 employees. The partnership sponsors a 401(k) plan. This medical practice partnership is owned 25% by each of the physicians corporations. The physicians are each 100% shareholders of their corporations. So the 401(k) plan is sponsored by the partnership and each physician corporation adopts the plan as a participating employer. In this case the Participating Employer Adoption page makes it clear that each participating employer will abide by the same plan rules and provisions as the sponsoring employer.

There was an employee of the partnership that terminated employment about 2 years ago and was an eligible participant in the 401(k) plan. She was paid her full distribution last year. Last week, one of the physician corporations hired her on a very part time basis.

Generally, when a former eligible employee like this terminates employment and returns within a few years, they immediately participate in the plan. Since the partnership and corporations are all related employers, I would think she participates in the plan immediately, even though she is re-hired by a different (albeit related) employer.

Anyone disagree with this?

Thanks.

I have been retained to review a Qualifying Court Order drafted by another attorney involving an active member of the Army

National Guard. The issue involves the formula used to divide the future pension. Where is a good source for this information? Thanks

Say Subsidiary is dissolving but its benefits plans are moving to ParentCo. Aside from some definition and title changes in the plan docs and an assumption agreement signed by both companies, what else would go into a to-do list for ParentCo to assume the plans? Filing Form 5500 and 401(k) safe harbor notices as usual? Any notices to employees of plan sponsorship change? New to benefits work and feel like I'm missing something.

I have a client (non-ERISA 03(b)), who defaulted on a loan in 2019 (it was also deemed in 2019 and a 1099R issued) who is now 59.5. They want the defaulted loan removed so they can take another loan. I was under the impression that once a client has qualifying event, that they would be able to offset the defaulted loan. But reading the requirements for what offsetting a loan, I don't think it would be allowed b/c the loan is not in good standing. Outside of the participant paying back the defaulted loan, is there any other option for the participant to "cure" or "offset" the defaulted loan? Could they just request the defaulted loan to be "distributed" to them since they have a qualifying event? In that case, since a 1099R was already issued for the defaulted loan, we wouldn't have to issue another 1099R right? Any guidance would be appreciated.