An employer is buying back stock from employees, which it will be reporting as taxable income on their W-2s. It seems clear that this is includable for plan purposes (including deferral contributions) for a plan using "W-2" compensation definition (if the plan doesn't specifically exclude it) -- similar to an exercise of non-qualified stock options (NSOs).

But for employees who terminate employment prior the transaction (if the transaction happens within the later of 2.5 months or end of the year), is such compensation NOT treated as "regular pay after severance from employment" and so excluded? (It's clearly not part of optional "post-severance compensation.)

Treas. Reg. §1.415(c)-2
(ii) Regular pay after severance from employment.— An amount is
described in this paragraph (e)(3)(ii) if—
(A) The payment is regular compensation for services during the
employee's regular working hours, or compensation for services
outside the employee's regular working hours (such as overtime or
shift differential), commissions, bonuses, or other similar
payments; and
(B) The payment would have been paid to the employee prior to a
severance from employment if the employee had continued in
employment with the employer.
(iii) Leave cashouts and deferred compensation.— An amount is
described in this paragraph (e)(3)(iii) if the amount is either—
(A) Payment for unused accrued bona fide sick, vacation, or
other leave, but only if the employee would have been able to use
the leave if employment had continued; or
(B) Received by an employee pursuant to a nonqualified unfunded
deferred compensation plan, but only if the payment would have
been paid to the employee at the same time if the employee had
continued in employment with the employer and only to the extent
that the payment is includible in the employee's gross income.

Hi

This is a new one for me.

Did a proposal for CB plan however, they went ahead and obtained a TIN (already have an EIN) with the plan name XYZ DB Plan.

Is the TIN valid? Still need to do the CB plan and would look funny with DB name.

Please let me know your comments.

Thank you

In my qdro it was stated a specific amount on the value date we chose. The qdro was signed off by everyone and my 35,000 had to sit for the next 10 years until he reached 55 I could take it out. Over the years I would request the value of the money what it was worth and the pension company would write me a letter stating the gains/losses. Well this past April I took a lump sum and had 20% taken off of 57,000. Well 6 months later the pension says they over paid me 27,000 and I only get the 35,000 and I need to pay the 27,000 back because it’s his . He (ex)found a error stating adjusting the gains and losses until the date of disbursement it said until date of valuation and had the pension plan come back and get my investment for the last 10 years  because of the error in that one word. Now the pension wants it all back and I paid 11,000 in taxes on it. What can I do here? I don’t have the money and I didn’t wait 10 years for him to earn interest on my money   

We started a new calendar year PS plan eff 1/1/20 for a corp that previously had a 4/30 PYE (there are reasons).  The CPA who ran the prior plan (who is one of the reasons) is planning out his contributions for 4/30/20.  The owners of course want to max their profit sharing allocation for the 4/30/20 plan year.

If he uses compensation 5/1/19 through 4/30/20 - and I can't see any reason why he wouldn't - then doesn't that cause an issue for the 12/31/20 PYE?  It feels like the 415 limit (and maybe even the comp limit) should be reduced somehow so they're not double-dipping.  If we had done this via a short plan year, we would have had a year with less comp and pro rated limits, so it feels odd to benefit by doing it this way (though I know there are other times when doing things in a more convoluted way does give an advantage...).

Am I looking for a problem where there is none, or is my gut on the right track?  Thanks.

Does anything prohibit a participant from taking a legitimate COVID distribution and using  part of it to pay off an existing (non-COVID) loan?

Thanks in advance.

Looking into setting up db plans for some financial planners for 2020.

Does anyone have any experience on if and when they would be covered by PBGC? I am aware that I can ask PBGC pilot program but may not get a response in time.

Thank you

To confirm, a brand new 401k plan with safe harbor provisions for 2021 has to be adopted by 12/31/2020??

Just curious about everyone's opinion, in what instances a db plan covering only spouses would be covered by PBGC?

Thank you.

Curious about the following:

Set up a PS plan as a qualified replacement plan (QRP) and billed the client.

Excess assets from the DB now transferred to the QRP. Now QRP has only excess DB assets and no other PS contribution will be made for 2020.

Client now wants to pay the document fee from the new PS plan assets, can they?

Thank you

I know the Secure Act changed the notification requirements, etc but wasn't sure the impact on this.

Have a case that wants to change from a 3% Safe Harbor to a Basic Safe Harbor Match as of 1/1/21.  Is there a deadline for the amendment to be signed/notice to be given to the employees?

Quick Question, Four Veterans who were working for the company, were members of the company ESOP, were called back to duty for one year during the Iraq conflict. They came back after their service and were reinstated to their jobs after 1 year. It was found out later, the company took back 20% of their ESOP stock while they serving in Iraq.  Is this allowed?

We have a plan that has a discretionary match formula in the document.  This year they did something unusual that I have not seen before and I am trying to figure out if I really need to do a BRF test for it.  The annual match is based on the average weekly deferral contribution of the participant.  Average deferrals of between $1 - $100, annual match is $200; between $101 - $100, annual match is $350; between $200 - $299, annual match is $550; over $300, annual match is $800.   The plan does pass the ACP test but the only employees with the $800 match are the HCEs.  It isn't a lot of money and looking at the percentages of compensation it benefits the NHCEs more but having only the HCEs with the $800 may not look right.  Are the results of the ACP test enough to just move on and not look any further at the way the match was done?

Im a vested member of the IBEW and have a 401a plan through the Union. I have made a career change after almost 20yrs and was under the assumption that I could roll the balance of the account into a self directed IRA or some other qualified plan. I just got off the phone with the plan admin and Im being told that this is not an option. According to the admin  no action can be taken until I reach age 55 1/2. Is this accurate? Thanks in advance for any insight.

I have a 1 man plan where owner just reached NRA this month and is under 415 limit on payout but getting close. The question I have is can I terminate the Plan effective 12/31/2020 to have full plan year, but have have him elect a lump sum now and rollover to IRA so possible gains don't push him over 415 payout? He is not married so spousal consent not an issue.

I don't think there is an issue but wanted to make sure I wasn't missing anything.

If we have everyone in their own group, and no allocation conditions, for testing purposes, can we exclude those with less than 501 hours and term'd?  I don't think so/just checking.

I'm looking at a plan that provides for a safe harbor match of 100% of deferrals up to 4% of compensation, available only to NHCEs.  The plan also has a discretionary match, which excludes NHCEs.

Consistent with the otherwise applicable requirements for safe harbor status, the plan states that matching contributions will only apply with respect to deferrals that do not exceed 6% of plan compensation and to the extent that any matching contribution formula is discretionary, the total amount of discretionary matching contributions will not exceed 4% of plan compensation.

However, I am concerned about the exclusion of NHCEs from the discretionary match.  It seems that this plan design might negate any reliance on the safe harbor.  Any thoughts?  Does the exclusion of HCEs from the safe harbor contribution make any difference insofar as upholding the plan's safe harbor status? 

I have an ex who retired on purpose after coming into 62,000.00.  He retired on purposed in order to reduce his support obligation to me because we have a 10 year old child together.  He was married before and they had 2 children who are grown adults one is actually married.  His attorney is claiming that his former spouse is entitled to 347.00 per month of his pension payment because of a QDRO.  I do not understand this?  I did not receive a QDRO in my divorce and I was married to him longer than his first spouse.  They were married 5 years and we were married 8.  How can this woman be entitled to anything when the children are grown and gone and how can the amount that he has to pay her have anything to do with my child and the purpose of calculating his support obligation.  I do not feel she should get anything but if that is the law then at the very least the 347.00 she receives should not reduce his monthly income for calculation of support for his daughter with me.

I've got a new plan where the potential ASG issues are complicated enough that I felt that they should go to an ERISA attorney to make sure which side of the line they fell on, and they are in the process of doing so.  Are those attorney fees includable in the start-up costs for the new plan credit?  Seems like it should be.  Thanks.

Hey, guys,

I'm writing with a question regarding rollovers from US plans to TSP plans for Federal employees in Puerto Rico. There are two federal employees (doctors) that recently relocated to Puerto Rico and work at the VA Hospital in San Juan. 

They both have Stateside qualified plans (one in Michigan and one in Florida). I know that they wouldn't be able to rollover from a USA plan to a PR plan unless it is dual-qualified; however, I'm unsure what the rules are when they are Federal employees. Can they rollover from a Stateside 401(k) or 402(b) to their TSP here in Puerto Rico?

Plan sponsor has 403(b) plan which complies with ERISA, and each participant has individual account.  Plan sponsor makes matching contributions each payroll.   Wants to convert plan to 401k administered by Paychex.   Plan sponsor does not have  HR director, and feels it would be easier to have the same payroll company and TPA.    Assume 403(b) plan termination occurs as of 6/30/2021, and want to start new 401k  7/1/2021.  

Are there any special legal issues in terminating the existing plan or starting the new plan, considering that participants are not terminating employment

Is there a required 12 month wait between the termination date and the new plan starting date.

How must the individual accounts of the 403(b)  be handled.     Do participants have a choice of taxable distribution, rollover to IRA, or rollover to new 401k plan, or a combination of choices.