411(a)(11)(A) Discusses the mandatory cashout limit. But where is the statute, regulation or guidance that states the account value used to determine if this limit has been exceeded is determined on the date the employee terminated? Is it right under my nose and I'm completely missing it?

I'm fairly certain this is the case, but don't see any specific example or rule on point.

Small employer (always under 20 employees) has a group health plan. It's subject to state continuation requirements, but state law does not mandate any coverage after the group policy itself is terminated and there is no rule regarding M&A or successor liability. 

Large employer (always over 20) has a group health plan.

Large employer is acquiring small employer in an asset purchase. The seller's employees and its group health plan will be terminated in connection with closing. 

If an employee of the small seller chooses not to accept the employment offer at closing from the large buyer, does the large buyer have an obligation to offer them COBRA under the large buyer's plan?

I don't think so based on the small employer exception and the fact that even an employer that "grows" into a large employer under COBRA still does not have to offer COBRA to anyone who incurred (what otherwise would be) a triggering event during the time the employer was excepted under the small employer rules. Rev. Rul. 2003-70 doesn't address this fact pattern, presumably because it's already answered by the regs.

The only thing giving me pause is the definition of employer, which includes a successor, but I don't read that as requiring the (pre-sale) small seller to count the (post-sale) large buyer's employees as the seller's own employees prior to the asset sale. Instead, the rules seem more clear that, even if an employer becomes large via an asset sale, it still does not have to offer COBRA to any individual for any event that occurred while the employer was small.

Appreciate any thoughts or confirmation. 

So I'm wondering if anyone has any suggestions about how to handle the following situation:

We were recently engaged by a client to takeover their actuarial work.  As standard practice, the client messaged the prior actuary asking them to share historical plan information and discuss the plan with us.  We followed up with a formal request for data and heard nothing.  After repeated requests with no response we started calling the prior actuary with no response and no ability to leave a voicemail.

Well today I got through on the phone (Yay!).  I introduced myself and the prior actuary immediately hung up.  I called back a few hours later and was told, "**** you!" and he immediately hung up.

Any thoughts?

Here are the specifics:

SH - 3% nonelective

PS - allocation method - new comparability - everyone in their own group - plan document indicates plan year compensation is used for allocation purposes - no allocation conditions.

Plan is Top Heavy

The client would like to make quarterly SH and PS contributions throughout the year.  My question is do we need to perform the required new comp. cross-testing (rate group/non-discrimination/gateway) for each allocation if the HCEs are receiving a greater contribution than the NHCEs? or do we just need to make sure it passes at the end of the plan year?  If we do need to test each time a PS contribution is made, what code section indicates this?

Any insight would be greatly appreciated.

I had a plan sponsor calculate their own profit sharing and deposit it into participant accounts prior to the annual testing being completed.  If this contribution was for the 2020 plan year but the profit sharing was deposited in 2021, can't they just reduce the participant accounts by forfeiting the excess?  They are being told they need to use the correction method used for EPCRS, and I don't agree since the funding wasn't done until after the plan year end.  Or at least that is how we've always handled these previously, so now I am questioning the method.

When I am hand calculating earnings on an ADP refund, I usually take the gross amount of the refund, divide it by the amount of the contributions deposited in the year to get a factor.  Then multiply the factor times the earnings of the period to get the earnings on the refund.

For example, $5000 deferrals and $1000 refund.  Factor 20%.  earnings $500.  Refund earnings $100.

However, in this case, the participant is getting (nearly) all of her deferrals back (5800 out of 5850).

AND, not all of the deferrals were deposited during the year.  So, my factor is over 100%.  To cap it off, there was a zero balance to start the year.

So, I now have refund $5800, deposits $5000.  So my factor would be 116%.

My thinking is to use 5000 plus all the earnings plus the remainder of the deposit.  So, 5000 + 500 + 800 for a refund of 6130.

What do you think.  I've never dealt with this particular situation before.

This 401k plan does permit hardships for non safe harbor reasons.  But does that mean it can be any hardship that the Plan Administrator deems to be an acceptable hardhship reason?  Assuming it meets the immediate and heavy financial need, would an employee purchasing a new furnace for which she has no other means other than the plan be acceptable?  She is a non-HCE and we assume that any future requests for new furnaces from other employees would be reviewed and accepted?

Thank you

Medical Insurance company offers Vision as an option through its benefits, which itself is provided by a separate Vision insurance company.

Some groups will buy the Vision directly from the Vision company, others will bundle it with the medical insurance.  For those that bundle it, premiums, commissions etc are included in the medical company's provided Schedule A ltrs.

That's all fine.

The medical insurance company itself prepares its 5500. They do not include a Schedule A for their own medical benefits for its employees.

They include a Schedule A for the Vision that they purchase from the Vision insurance company.

Now, they are switching internally how they purchase their own Vision - they are now including it in the bundled option for themselves.

So, the question - would it still require a separate Schedule A letter?  Vision company does not want to provide one because of the extra accounting etc. but medical insurance company can run the accounting for themselves.

I have a client who has a C corporation- He did a split dollar life insurance collateral assignment- He assigned his whole life insurance to the C corp. The corp. pays the premiums and he personally pays the PS 58 costs. On the corporation books is the cost ( premiums paid) . If he decides to cash in the policy, he will have a taxable gain personally, because he stills owns the policy.He is now going out of business and I want to close out the corporation, what happens to the cost of the insurance on the books? Does he need to repay the cost of the premiums? He is the only employee and shareholder in the company.
Thank you. 

Am I required to give a new TPA who is replacing me a copy of the Plan Document?

Plan sponsor is judicially dissolved due to a shareholder dispute and a receiver is appointed to liquidate the company.

Receiver terminates the 401(k) Plan and distributes assets to plan participants.

Plan audit for final 5500 reveals numerous errors in plan operation that individually are insignificant.

The cost to correct the errors would be very significant and would result in participants receiving very small amounts

 IF receiver choses not to correct plan errors, can receiver be held liable if the plan is audited? What about the former shareholders of the company?

Is it acceptable to provide that the initial default rate in a QACA will increase on the anniversary of the participants initial automatic enrollment?

For example, participant is auto enrolled at 3% on July 1, 2021.  The deferral rate would increase to 4% on July 1, 2022, 5% on July 1, 2023, etc?

Thank you very much.

Hi, hoping someone less dense than me can help since I haven't been able to find any straightforward information on my own 

I'm trying to understand the nuance behind if a individually designed plan ESOP that previously received a determination letter (that has since expired, but it looks like the expiration date has been waived across all IDP's) needs to switch over to the Cycle 3 pre-approved plan design?

I read that employers should consider adopting a pre-approved plan since IDP Esops are no longer being reviewed by the IRS.  However, what would compel an employer to switch over?  e.g., it doesn't seem that there is much enforcement in this area and I'm trying to find laws or rulings that would motivate or otherwise incentivize an employer with an IDP ESOP plan to switch over to a cycle 3 pre-approved plan design.

Hopefully that's somewhat clear.. thanks in advance.

The former plan sponsor of a plan that terminated and was paid out in 2011 just received a check at her home from the fund platform that held the old plan.  The accompanying letter says that, as plan fiduciary, she needs to handle this $1,400 which comes from a settlement from 2012 by either allocating it among the plan participants or applying it as plan fees, so this leads me to think that this isn't specifically for her account.

Ignoring the fact that a settlement is arriving in 2021 from nine years ago... there were 8 or 9 participants with balances in the final year of the plan.  Distribution fees alone could easily eat up 1/3 of that.  Throw in some consulting time...

The problem I see is that there is no trust any more to pay the participants from.  We'd have to re-establish the accounts back at the platform, probably sign new paperwork, send distribution forms (find the participants!), etc.  And if the trust has assets again, doesn't that mean the plan is active again and we have to file a 5500?  Update the document?  By the time all those fees are tallied up, this money is definitely spent.

On the other hand, taking this money pre-emptively but not doing that work to 'earn it' seems wrong, unless consulting for it is a very long process.

Any suggestions?  Thanks...

What type of person/organization would you reach out to if you had a client who wanted to establish an Employer Educational Assistance Program?  Anyone you can recommend?

Thanks

I have a db plan frozen 12/31/2013

SPD is really old 12/1/2000

I am assuming at least an SMM should have been done?

plan doc was restated 1/1/2015

are there different requiremnts when a DB plan is frozen;ie. 5 years after a major change, 10 years otherwise?

Much thanks

Lexy

Sometimes I gotta ask a question that seems obvious but who knows...

Are there options for types of pay to consider as eligible pay for a one-person S-Corp other than W-2 pay?

Looking at the Plan Doc is not an option as plan is being set up right now.

Elective deferral plan states that upon attainment of age 65 deferred amounts will be distributed in 120 monthly installments beginning the first of the following month. A new Director joined in May 2019, elected to defer his fees and turned 65 six months later (Nov. 2019). He has been allowed to continue deferring his fees and no distributions have been made to him yet.

I’m trying to identify exactly what the failure(s) are here and am looking for input/opinions related to the amounts deferred after he turned 65.  

Should he have been allowed to defer at all after age 65? If not, the entire amount deferred after age 65 must be paid out this year and the entire amount deferred in prior years is likely subject to penalties.

Or was he allowed to defer after age 65, but the distribution installments should have begun immediately following the deferral? For example, could he defer fees in May 2020, but distribution should have begun immediately since he was over age 65? Still on a 120 installment schedule? If this is the case, only the installment amounts that should have been distributed so far must be paid out this year and subject to penalties.

Thanks in advance for your input!

So, in this situation, where due to the QACA the 2-year vesting is being utilized, if you amend the plan mid-year to take it out of safe harbor stratus, does the 2-year vesting still apply to the safe harbor piece? It would seem reasonable top me that it would immediately become 100% vested, but I've not seen this issue. Thoughts?

Our TPA firm has just been engaged by our first client that makes employer contributions to their non-governmental Section 457(b) plan. (We have 5 other clients with non-governmental Section 457(b) plans, but none have employer contributions.)  The plan also permits the participants to make deferrals from their salaries.

I have a very basic question for which I have not been able to find the answer--does the participant in this 457(b) plan need to make a deferral election with respect to the employer contribution?  If so, must the election be made the month before that employer contribution is made to the Section 457(b) plan, just like deferrals from their paychecks?

The deferral form that this new client has been using does not seem to address a deferral election for the employer contribution because it requires the participant to elect either a dollar amount or a percentage of his/her compensation for each payroll period.

Thank you for any guidance to which you can point me.