My husbands QDRO was submitted and accepted May 2019. Now his ex wife’s attorney is looking to revise based on clarifications sent in the pension offices approval letter. The pension office stated their interpretation and stated; “if this interpretation was not the parties intent then a subsequent order will need to be sent. The main issue being addressed is the survivor benefits, as written his ex spouse is not entitled to any death benefits. We would like to keep it that way. Now because my husband didn’t sign the new drafted agreement or respond the APs attorney is filing a motion to compel. Do we have to revise it? After being accepted by the plan do we have any legal rights to refusal? 

A client provided a "COVID stipend" to employees in 2020.  401(k) contributions were not deducted from the stipend in 2020.  Can the definition of compensation be amended retroactively as part of CARES Act amendment?

I don't get heavily involved in testing, so am hoping to clarify a point on ADP testing of otherwise excludable employees. I hope I'm asking the right question. 

Say a plan has immediately eligibility for deferrals, but age 21 and one year of service for all other contributions. Entry dates are January 1 and July 1. Plan year is a calendar year. 

An employee is hired in March 2019, works a year of service by March 2020, and enters the plan July 1, 2020. The person's March-December 2019 compensation makes them an HCE for 2020. For 2020 ADP testing, is that person tested as an HCE with the otherwise excludable group or the "regular" (i.e., fully eligible) group?

I have a question with regards to the application of an ESOP Valuation as is affects the share price paid to outgoing direct shareholders.

My employer is roughly 70% ESOP owned and 30% owned by direct shareholders.  When a valuation takes place a new enterprise value is reached by the weighted average of 3 different methods (DCF, CCF, & Guideline).  A discount for lack of marketability is then applied for a final enterprise value.  The final enterprise value is then divided by the number of outstanding shares to get the new share price.

Assuming the new valuation is higher than the previous valuation (as is usually the case), the new share price is higher for two reasons:

1) the company is worth more, and

2) there are fewer outstanding shares than the previous year because there are always many more shares sold by departing employees than bought by existing employees. 

For example, in a recent year the share price went up 14%; 8% was due to an increase in the value of the company while 6% was due to fewer outstanding shares.  Since all ESOP transactions take place on the last day of the year the new valuation is as of 12/31 as is the sale of the stock by outgoing employees.

My question – if outgoing direct shareholders are paid using the new 14% higher valuation then they are getting the 6% benefit of fewer outstanding shares.  This seems like faulty, circular logic to me – there aren’t fewer shares until AFTER they sell so in my opinion they should only be paid at an 8% premium not a 14% premium.  But since it all happened on 12/31 the company paid them out at the full 14% premium. 

Am I correct in thinking this is a problem or am I not understanding something?

DB plan is being terminated under a PBGC standard termination. Plan provides the lump sum option to all participants. One retired participant receiving monthly benefits (value of his benefits >$5,000) refuses to elect the lump sum option, and no insurance company is willing to offer an annuity contract for this participant’s benefit.

Is there any way this plan can be terminated? Can this participant hold up the plan’s termination?

Thank you.

A plan has 1 active participant who is 100% owner. However, the total participant count is 2 (one owner + another employee who still has a balance, is not an owner, but is terminated). Would a Form 5500-EZ or 5500-SF be filed?

Thanks.

This isn't a direct cafeteria plan question, but tis question was asked, and I don't know the answer. 

As part of an employer's overall benefit program, is it allowable to allocate (X) dollars per employee of employer contributions, which the employee can then use to choose among various option. For example, if an employer allocates $5,000 per employee. The employee can then choose to have the employer direct portions of this to the HRA, the Section 127 plan, the Health Insurance, the Cafeteria plan, etc.?

The employee would NOT be able to receive any of this in cash. So "use it or lose it" in the various benefit plans.

IF this is allowable, are there any tax ramifications?

Since an approach like this seems too easy, I'm guessing there are problems with it!

I'm going to refer the client to their benefits counsel, but thought I'd see if anyone knows a "general answer" to this. Thanks.

Can anyone provide some insight? We are looking into this set up for our 401k plans and find it interesting.  However we only know what our consultants tell us and we would like to have some feedback from those that may have a this type of set up or or may be contemplating the idea.

General question - when did it become standard practice to issue suspension of benefits notices for plans that don't provide actuarial increases and that have suspension of benefits notice language?

This might be more of a question for the old timers. I recall automatic actuarial increases for this becoming standard (worked at a large firm at the time) in the early 2000s - perhaps 2004.

I don't remember it from before that. Was the IRS pushing any plans, let's say, in the 1990s, to provide actuarial increases for failure to provide Suspension of Benefits Notices at normal retirement if the plan document stated the boilerplate (return to work) language only, and where the benefit was clearly defined as service and pay at late retirement date (presume over NRA, but under 70 1/2).  

If you receive an e-mail from the IRS saying your renewal is late and asking for documentation of your CE credits, the IRS probably lost one of your prior renewal applications. I filed my renewal timely on 5/6/21 and received the e-mail on 5/17/21. It said my renewal was late (but didn't say which one) and requested documentation for my 2018-2020 CE credits showing the IRS program numbers. The expanded listing from your PTIN account works, but not all of my credits are listed there.  A co-worker received a similar e-mail the same day from a different person at the IRS saying her 2018 renewal was late.  She sent a copy of the receipt of her 2018 renewal and that took care of the problem.  The IRS person told her half of the ERPA renewals didn't go through.  I sent a copy of my 2018 receipt and received a response that their records indicated I didn't renew in 2015 (I did), but they have my CE credits now and I'm good through 9/30/2024.

So, if you get one of these e-mails, find your receipt from the prior renewal and send that first.  You may not have to send documentation of your CE credits.  In my case that would have been interesting because ASPPA and NTSA didn't report my CE credits to my PTIN account and they don't send certificates with the IRS program number.  I contacted ASPPA and they are working on getting documentation for me.

Hi

Late Friday night, thought was going to relax and therefore, shut down the brain activity. However, got an email from a client with not so great news as distributions were not completed by the dates as I provided.

When it comes to determining DB plan distributions, I am a stickler to due dates for the distributions to be physically completed. I use monthly adjustments.

For example, if a participant was born on the 15th of the month, the distribution has to happen physically on 14th otherwise I recalculate the amount for the next month cycle. The software I use also agrees with me.

I am working on a PBGC termination and this is the first time I need to deal with request date vs actual transfer date issue for distribution.

I instructed the DB distribution had to be finalized by the 14th of the month. The client provided a letter to the investment house, requesting this transfer to be completed on the 14th , on the 14th. However the physical transfer of assets occurred on the 17th due to investment house procedures/settling of transfers. I have actual letters provided with the 14th date.

To make matters more complicated, the per share value of a stock held in the account was lower on the 14th than the amount on the 17th which creates excess of 415 limit (participant is over age 70 and at 415 limit) at the time of physical transfer.

As I need to provide detailed documents to PBGC showing the amounts distributed and possibly how they were calculated, which date of payment is acceptable/correct one? If it is any relevance, they transferred the assets to the existing 401k plan.

I hope i was able to explain the dilemma here.

Thank you,

I have a take-over 401k plan and discovered form 8955-SSA was not filed for 1 participant who terminated in 2013.   She turned 70.5 in 2019 and has not taken any RMDs.   All accounts are earmarked and this participant has had full disclosure and control regarding the investment of her benefits.  Should I file the 8955-SSA for 2020?  The record-keeper missed the RMD deadline.  I would appreciate some advice on how to fix these issues.

We recently took over a tribal government plan and the prior TPA has been filing a Form 5500 for the plan since its inception. This plan truly qualifies as a tribal governmental plan and so it is not subject to the Form 5500 requirements. Should we file for the 2020 plan year and mark that it is the Final Form 5500 or not file and, when the IRS sends a letter requesting the filing, respond that the plan is not subject to the Form 5500 filing requirement?

Hello. I was wondering if anyone had heard of any guidance with respect to a participant who is an "eligible participant" for purposes of the 401(a)(17) limits who was terminated and was then later rehired by the same employer.

Under Treas. Reg. 1.401(a)(17)-1(d)(4)(B), an "eligible participant" for purposes of the grandfathered limits is "an individual who first became a participant in the plan prior to the first day of the first plan year beginning after the earlier of - (1) The last day of the plan year by which a plan amendment to reflect the amendments made by section 13212 of OBRA '93 is both adopted and effective; or (2) December 31, 1995." (emphasis added).

Based on the use of the word "first," I would believe there is an argument that an individual who was an "eligible participant," terminated employment, and was later rehired and became a participant again would still qualify as an "eligible participant" since that individual "first" became a participant during the appropriate deadline. However, I was hoping to see if anyone on the Board had heard any different or had alternate thoughts. The Preambles to the reg are not helpful

Thanks!

I came across a business owner that implemented an "Individual" Profit Sharing 401(k) Plan back in 2011.  Accordingly this do it yourself approcach did not include an employee that was hired in 2014 and still employed.  Does anyone have a recommendation for an ERISA Attorney in the Fort Worth, TX area that could prepare and file the VCP?

I haven't worked on a 403(b) in awhile, but my colleague is out-of-the-office and I'm getting questions from a potential client.

How can non-elective employer contributions be allocated to participants?  Can cross-testing be used, like in a standard 401(k) Plan?  What other formulas are allowed?

Thanks in advance!

Hi, everyone! I am not in the business but am a solo practitioner looking to set up a DB + 401k paired plan. The annual fees can erode the returns quite a bit. I was wondering if anyone can recommend lower cost offerings? Idealluy, below $2k annually. Thanks for any recommendations!

Hi,

I received a very helpful and detailed response, and want to show my appreciation. Is a like or a thanks (trophy) worth more? thank you.

We got a new client this year.   The owner gave us his information and he took huge losses (due to COVID) on his Schedule C.   He did have a net profit on his rental income on Schedule E.  If I am thinking clearly though - passive Schedule E rental cannot be counted for compensation for a retirement plan?  Is there any loophole?  He deferred every week and maxed himself out for 2020.  Any guidance is appreciated.

Has anyone had trouble filling a 401(k) admin position in recent months?  We are hiring and our ads have not generated much interest.  I've placed ads on LinkedIn, Indeed, and adding one to Benefitslink today.  I'm just wondering if others have had success and their recommendation for where to connect with good candidates.  

Thank you.