There are three threshold for key determination- 

Key Employees

1. An officer of the company earning $180,000 or more annually;

2. 1% owner with a salary of $150,000 or more; and,

3. 5% (or more) owner regardless of salary.

Situation 1: Mr. David got compensation in 2019 $ 140,000 and in 2020 $480,500.

Question 1: Do I need to  consider him as KEY Employee in 2020 plan year (plan year end 12/31/2020)?

Situation 2: Mr. David Mr. David got compensation  in 2020 $485,500 with 1% ownership. 

Question 2: What will be his key status for 12/31/2020?

Thanks in advance.

When starting a new plan, must eligibility be waived for ALL employees?  Or can we say "eligibility is waived for ALL full time employees"?  However full time is defined.

if a plan is reallocating forfeitures only to all active employees (hce & nhce) and 70% coverage does not pass but abt does pass, can you use the active employee status as an allowable determination class to use this option to pass coverage.

Happy New Year!

Wondering if anyone is aware of functionality that allows the plan's advisor to view participant-level transactions and, if permitted, execute transactions or act on behalf of the participant?

Do providers allow advisors to view participant-level transactions? If so, is this something that's common? I received an inquiry today and was unfamiliar. 

Thank you!

LawnBoy

Never seen this one... client wants to NOT allow prepayment on participant loans. Not seeing anything in 1.72(p) or 2550.408(b)-1 specifically prohibiting this, but it seems wrong on so many levels that I've got to assume this has been addressed somehow before.

First, it doesn't seem like ERISA would pre-empt state law on this question, so if state law doesn't allow for such a provision on loans, then that nixes it, perhaps. Then I start thinking about fiduciary issues - if a participant wants to pay it off early, and the plan/fiduciary won't allow it, then the participant is, in essence, being forced into an investment that is perhaps "underperforming." Etc., etc., - anyone ever heard of this question coming up?

I have a question about some plan language I have seen.  The plan provides 3 year cliff for matching contributions based on "Years of Participation".  Years of Participation are defined as, "Any Plan Year during which you both complete at least one thousand (1,000) Hours of Service and receive a match for at least six different months of the Plan Year."  An employee receives matching contributions for a payroll period if he/she defers at least 3% of compensation. Eligibility is date of hire and entry date is the date is based on the date you elect to defer.

I believe that minimum vesting requirements under 411 require counting all years of service for all Plan Years in which an employee earns at least 1,000 hours of service, unless the year of service is can be excluded.  The closest language I can find for this situation is Treas Reg 1.411(a)-5(b)(2), which states, "In the case of a plan utilizing computation periods, a year of service completed by an employee under a plan which requires mandatory contributions (within the meaning of section 411(c)(2)(C) and § 1.411(c)-1(c)(4)) to be made by the employee for such year, if the employee does not participate for such year solely because of his failure to make all mandatory contributions to the plan for such year. If the employee contributes any part of the mandatory contributions for the year, such year may not be excluded by reason of this subparagraph." (emphasis added) 

My reading of Treas Reg 1.411(a)-5(b)(2) is that a year of service for vesting cannot be excluded for any computation period in which some mandatory contributions (matching contributions in this case) are made (i.e., even if just for one payroll period), so that there may be an issue with requirement that an employee receive matching contributions for at least 6 months in the computation period (Plan Year in this case).

My question is, am I misreading Treas Reg 1.411(a)-5(b)(2), or is there some other guidance that permits the requirement stated by the plan?

Is there a way to check to see if a late 5500 was through DFVCP?  

I can see on the EFAST website that the filing was accepted (late), but I don't have a record that it was filed through DVFCP confirming payment of the $750 fee.

Happy New Year everyone.

Any help is appreciated.  If more information is needed let me know.

Around 50 doctors/partners in a medical management group.  Each partner receives a K-1 of around $100,000 annually from the management group.

The same doctors are also part of a very large regional hospital network from which they are maxed out in that the 401k and DB plan through the hospital.  Their compensation directly from the hospital is over 7 figures.

Can they establish a retirement plan through the management company and, assuming no discrimination problems, max out with a 401k and/or cash balance plan as well?

Thank you

I had a QDRO done back in 2015 (California).  My date of marriage were 12/2000, my date of separation was 5/2011 and divorce was final on 11/2014.  I was looking over some old files and the figure used for the QDRO was gathered from my 401K Plan on 12/2015, and lets say it was $362K higher than the plan balance on our date of separation. The alternate payee received close to 300K (compared to the $216 I believe she should have received) which was separated and placed into an IRA for her.  As far as I know she hasn't taken the payment yet.

Do I have any grounds to appeal this?  They clearly used the wrong valuation date in my opinion.  What options do I have? Or am I just missing something?

Below is what my plan guidelines outline for AP.

Amount to be paid to the Alternate Payee.  This order hereby awards, assigns and grants to the Alternate Payee and, as otherwise provided in this Order, the Plan shall pay to the Alternate Payee an amount equal to ____ percent of the total account balance of the Participant’s account accumulated under the Plan as of [specified date], plus any interest, earnings, investment income, gains, and increases, or losses, attributable thereon from such date until the date of total distribution to Alternate Payee.  For purposes of determining the value of the Participant’s account in the Plan, outstanding loan balances as of the relevant date (shall or shall not) be taken into account

Here are the facts:

1) A participant submitted a written request to their employer to raise their deferral rate.  The written request was received and acknowledged by the employer (voice and email).

2) In the acknowledgement email from the employer, they told the participant to expect an email confirmation from the record-keeper.

3) At year-end, the participant realized they never did receive a confirmation from the record-keeping, and their request to raise their deferral rate was not implemented.

4) When the participant contacted the employer, the employer said the participant should have noticed that they didn't receive a confirmation from the record-keeper of their request.  Consequently, the employer deems the participant responsible for the mistake, and the employer won't make the retroactive corrections.

Who is responsible for the mistake?  The participant or the plan sponsor?

I cashed out a 401k in February 2020 . I lost my job in March. Will I need to pay the penalty for withdrawing?

I was legally separated from my spouse in 2009. We agreed on our legal separation (filed in court) to split all retirement 50/50. The value of my 401k/IRA was worth about the same as his Municipal pension + IRA at that time. The intent was that he got 50% of my 401k/IRA and I got 50% of his Pension. We never got or filed a QDRO.

Fast forward to last year. He could start collecting his Municipal pension. Since no QDRO was ever filed we filled out the paperwork together. I signed off on him getting his full Pension during his lifetime and I get 50% after his death. He signed off his rights as beneficiary on my 401k/IRA & Pension (all of the Pension was earned after 2009) and I sent that in and it was approved. 

Do we / should we still get a QDRO or is the the paperwork we sent in to his Municipal pension plan and my 401k/Pension plan enough?  

For whatever reason, the payor EIN on the schedule R has been the company's tax id for several years.  Up until 2015, they were using the EIN of the custodian.

Should we amend those filings for that little thing?

Is it permissible to use a county or city tax assessment value for retirement plan purposes.? This would apply to any plan as far as annually reporting plan asset values on a 5500. For a defined benefit plan, it would also affect the minimum and maximum required contribution amounts each year. It would  also be a factor in valuing distributions in kind and be especially important as to whether 415 is complied with for lump sum distributions which include real estate.

Nonqualified Deferred Comp Plan provides for payment on the later of attainment of age 70 or separation from service following age 70 (installments).  Also provides for payment in the event of a "CIC followed within 12 months by a separation from service, irrespective of age (lump sum)."  

Based on that language, what happens with an individual who is under age 70 and has already separated from service at the time of a CIC?  There is not a separation from service  in the 12 months following the CIC, because the individual has already separated. I believe the intent was to pay out the benefits upon a CIC in this situation, but am uncertain whether the plan language supports that interpretation. 

Thoughts?

Hi folks

Our 1099 coordinator had asked me to confirm that an RMD was processed for a DB plan participant.  Turns out the participant elected a full PVAB distribution as a lump sum so that the DC method could be used.  The non-RMD went to his IRA.  The RMD check was paid directly to a charity.

Am I forgetting any issues with that?  The plan still does a code 7 for the RMD portion, right?

thanks.

-bri

Hoping to get some feedback on this situation -

we had a participant pass away a number of years ago - large balance - who named a trust as beneficiary.  It is a "see-through" trust so we have been spreading the payments over the two beneficiaries' (grandchildren) lifetimes.  One of the grandkids is now 40, and the trust says they can have whatever is left at age 40 (prior to that it was income only, and I think some percentage of the corpus at age 30 and 35 with the balance at age 40).  We have been making payments to the trust which then in turn pays the beneficiaries.

Do you think we can just start paying the bene directly?  The trust could otherwise effectively be dissolved and I'm pretty sure that would apply to the plan account as well, i.e. the grandchild effectively is the direct beneficiary now, but just checking.

We have a plan that was terminated in 2020, all money is out of the plan; broker tells us the account must stay open as dividends and interest will trickle in 2021.

Client does not want to file 5500 for 2021.  I don't see how unless maybe the plan account can be renamed to an individual account in the name of the company prior to 12/31, then the account is liquidated and the proceeds paid to TPA as a fee.

Suggestions?

It looks like I'm going to have to re-characterize all of my 2020 maximum Roth IRA contributions to Traditional IRA due to exceeding income limits. As soon as I do that, is it possible for me to take advantage of the Traditional IRA to Roth IRA backdoor conversion for 2020, for the maximum amount?

I have reviewed the regulations so many times I am afraid I am missing something. To me, it seems that there are 4 possible ways two companies can/should be combined (absent a MEP, PEP, etc.):

1) Controlled Group with Common Ownership

2) ASG as A-org (requires common ownership - albeit only a very small amount)

3) ASG as B-org (requires common ownership - albeit only a very small amount)

4) Management Group (does NOT require common ownership)

If my understanding is correct, then only #4 requires common ownership of any kind. With that said, I am pretty sure this hypothetical situation isn't allowed but I don't know why:

I am a TPA owner with 15 employees and a DC (401k/PS plan with 3% SHNE). I decide to open a new business that my best friend (not related) will own but not take a salary. I will move all the 15 employees to that company and they will perform the TPA services. That company will pay me a consulting fee. I will open a solo401k for my consulting company and get away with excluding all my employees from the plan. There is no common ownership and one company isn't doing management for the other. 

What am I missing? And is there a specific definition of what it means to provide management services?

Thanks in advance.