Non-Profit organization is not part of a controlled group with a For Profit company (I don't think its even possible?).  But there is some very strong connection between the two, probably donation driven, maybe the for-profit handles the accounting work, I don;t really know.

Any reason they both cant participate in the SAME 401(k) plan?

We have a prospect who wants to implement a 401(k) plan as soon as possible and we are coming into the discussion late.  The investment vehicle will be a major daily valued platform and this provider cannot implement the platform before January 2021.  The provider has advised the client to go ahead and start deferring and keep the deferrals in their checking account until the platform is ready to receive contributions.  I assume they are playing on the reasonable segregation language but I am not terribly sure what they are thinking.  I don't see how this possibly would not be a prohibited transaction, not only is it outside the Safe Harbor, any deferrals in November would be outside the standard even if reasonable segregation/admin feasibility is applied.

I can't find this situation anywhere, but surely it has occurred before.  I just want to make sure I'm not missing something here.

Anyone have a pipeline to the DOL? The calculator is great, but it would be GREAT if they could allow you to input the final payment date just once. Frequently there are a gazillion entries that have the same final payment date, and having to enter it each time is a PIA. Or is there some way to do it already that I don't know about? If so,  I'd greatly appreciate someone instructing me in the error of my ways!

I am researching Insurers that issue Bonds for Non qualifying assets.

Colonial Surety and Surety One, I have used in the past, but both are relatively expensive.

Any other out there that might be recommended?

A small company's industry is that of leasing its employees to other companies for their specific projects, so its employees typically don't work for it more than 18 months, and aren't typically re-hired. My understanding is that the employees understand this when they're hired. Therefore, even though employees become eligible for profit sharing contributions due to satisfying initial eligibility requirements, most of them terminate with 0-20% vesting under the 2/20 schedule. There are around 30-50 NHCE participants and a few HCEs.

It seems to me that there could be BRF "effective availability" issues, partial plan terminations (though that's "facts and circumstances" and it could be argued that the terminations are voluntary), and the Form 5500 reporting of large #s of partially-vested terminees could be an audit flag. And just the general design seems clear that it's intended to circumvent nondiscrimination rules to only benefit the owners, and the government would view it that way in an audit even if there's not a black-and-white violation.

The "safe harbor" plan option for Leasing Organizations (100%-vested MP plan, that allows a recipient organization to exclude such Leased Employees) may indicate that the IRS wants to avoid this type of scenario.

Maybe an ERISA's attorney's opinion that this specific employer's employee terminations are voluntary and don't create annual partial plan terminations, with a caveat to the employer by the TPA that it can't ensure that the government may not approve if the plan were to be audited, would help?

Also, I'm wondering if a vesting schedule was chosen where most participants at least partially-vest, or if they're receiving a 3% Nonelective Safe Harbor contribution, would give them a meaningful benefit that may help.

I'd appreciate any input on this.

Thanks.
 

The plan is a SHNE 3% plan and Profit Sharing is each participant is it's own group. The participant signed an Irrevocable Election Not To Participate on 6/17/2016, her date of Hire was 11/7/2014 and eligibility was one year and dual entry, so her eligibility date would have been 1/1/2016. The plan is a service term and the new advisor is questioning that she should be included in coverage testing( in the 410B group shes in an excluded group) How should she have been listed in the 410 b group? Also, should she have received a SHNE 3% contribution for plan years 2016-2019?

Thanks!

Apologies if this has been addressed. If it has, I can't find it.

The interim final rule on lifetime income disclosures specifies that it is effective as of September 18, 2021.

However, both the rule and the original legislation state a variant of the following:

"The requirement in subparagraph (B)(iii)shall apply to pension benefit statements furnished more than 12 months after the latest of the issuance [of]... interim final rules" link

I read this to mean that the first lifetime income disclosure would need to be released at some point within 12 months of September 18, 2021 (i.e., before September 18, 2022).
That is, the first lifetime income disclosure need not be released in 2021, but must occur during 2022, most probably by the Q2/2022 statement, at the latest.

What's the community opinion?

Thanks!   

Off PYE - 08/31- original effective date of Plan - 09/01/1995

401(k) and 3% Safe Harbor Non-elective effective on 09/01/2019

Plan Eligibility

age 19, 2 months elapsed time, 1st of month

Part -time employee hired on 01/02/2016 works 2 hours a week cleaning.  Has never deferred. On 08/31/2020 was eligible to receive a SHNE contribution.

Company wants to amend the Plan to exclude part-time from the Plan now 2 months after new Plan year.

1. My colleagues think that once an employee has met initial eligibility for the Plan and are in that you can't take a benefit away. Is this true?

2. It is too late to amend the Plan for the 2020 PYE.  Would it be acceptable to amend eligibility for the Plan for 2021 to be age 19, 1 year with 1,000 hours and dual entry? Would that PT employee still be eligible in this scenario in 2021?

Thanks

How often does it happen that a cash-balance pension terminates with the Pension Benefit Guaranty Corporation topping-up benefits?

I divorced in 1994 after 10 years of marriage and had a QDRO drafted by an attorney who represented my wife and I (big mistake).  The QDRO specifies that my wife is to receive 50% of my current pension benefit, reduced by the fraction: number of years married / number of years worked for the company.  This gives her about 14% of my current pension value.  The issue is that my pension is based on my 3 highest years salary and I earn significantly more money today than I did when I divorced in 1994.  Additionally, in 2000 I quit the company but later returned to the same company in 2004 (10 years after the divorce).  I never cashed-out my pension.  At the time of my divorce, my income was about $70,000 per year and my lump sum pension estimate was $90,000 at age 65.  In 2020, my salary is about $200,000 per year and my pension estimate is $1,400,000.  Some of that increase related to salary and some is driven by low interest rates.  Based on the QDRO calculation, my ex-wife would receive about $200,000.  If the QDRO had based the calculation on my income at the time of divorce, my ex-wife would receive about $60,000.

This seems completely unfair.  My ex-wife is entitled to part of my pension as community property for the time period we were married. However, as written, the QDRO is allocating significant benefit to her for events that occurred 10+ years after our divorce.  Additionally, since I left the company in 2000, that would seem to put an end to the QDRO drafted in 1994.  I'd be willing to calculate her portion of the QDRO through 2000 because my income significantly increased after I left the company and subsequently returned.  Unfortunately, since the QDRO specifically names my company's pension, and since I'm still getting that same company pension, my company plans to calculate my ex-wife's share of my pension based on the current pension value.

Is this something I can take to the court and realistically get relief?  Would California courts be willing to change the QDRO almost 30 years after it was drafted and make the distribution more applicable to the marriage time period by adjusting the salary portion of my pension calculation?

If a plan opts to adopt the sample amendment found in Notice 2020-51, is a notice to plan participants or SMM  required to be distributed plan participants?   If yes was a sample notice to participants provided ? 

I'm testing a Plan that's failing the Contributions & Benefits test, the DCA 25% Concentration Test and the DCA 55% Ave Benefits Test. The software is giving me a $4000+ number for the correction to the HCEs DCA contribution amount. Would that "reclassification" then funnel down to a new number to be used now in the Contributions & Benefits test, since his DCA contribution total is going to be adjusted?

Thanks

Plan failed 2019 ADP test.  Refunds are being done now.

What 5330 would i use?  I figured 2019.  However, is the form considered late (calendar year plan--it's even past the extension date)?

An employer provides for loan deferment for qualified individuals under the CARES Act. If a participant has already defaulted on their loan but later becomes a qualified individual, does the employer still have to give that participant the option to defer the loan (i.e., reverse the loan default)?

I am curious to see what opinions there are on the following scenario.

A 401(k) plan uses a 3% non-elective safe harbor, that is limited to non-Highly Compensated Employees.

The employer wants to allocate the safe harbor with each payroll.  They realize it goes to everyone, and is not a match.

They may, and likely will, also make a profit sharing contribution, allocated at year end.

Does anyone see a problem with the the NHCEs receiving their 3% throughout the year, and the HCE receiving their profit sharing at a different time?

Worst case scenario (I think), the 3% SH is allocated all year in a terrible market year, and at the end of the year the 3% SH that was allocated is now something less then 3%.

The year ends and the when the market is at it's lowest the Owners (only HCEs) decide to make a 3% profit sharing contribution for themselves, or maybe even 9% if it passes testing.

I like the idea of not having the HCEs receive the non-elective safe harbor, but I'm not sure I'm comfortable with the different allocation timing.  

Thanks for any opinions.

If a participant takes an in-service distribution (not hardship nor RMD) of property from a 401(k) plan, how is the 20% mandatory withholding handled? Does the participant have to also take a cash distribution equal to 20% of the property value so that can be withheld 100% for taxes?

My client that is sponsoring a defined benefit plan is considering an acquisition of another business.   In scenario 1 the purchaser makes 100% cash deal and pays $3,000,000.  In scenario II the purchaser pays $500,000 and covers all employees  of the acquired company in the DB plan granting past service back to original date of hire with the seller.  Lets assume that the value of the accrued benefits one day after the deal is $2,500,000.   How does the Scenario II impact the taxation from both the buyer and the seller perspective?  How is the Form 8594 prepared to report the transaction?  Are there any other considerations?   All the coverage, non-discrim, participations, etc. issues before and after the transaction are non-issue.   Thank you in advance.

Hi all,

When running the Contributions & Benefits test, do you add up all pretax contributions (Ins. premiums, HSA, FSA, DCA, LPFSA) together and then test the HCEs vs. NHCEs, or do you just use a shorter list of contribution types?

Thanks

I apologize if this is not relevant to this group.  I am a software consultant. I work through my LLC. My LLC has a Solo 401K plan in which I contribute $19500 + 25% profit as per the law. Unfortunately, my wife legally cannot contribute to this plan because she doesn't work for this company. But we want to maximize her retirement contribution. So, we are considering to buy a business (thinking to buy a Laundromat at this moment) for her so that she can contribute to the retirement plan. Considering this situation, which type of company should we open to run the business - S-Corp, C-Corp, LLC or partnership ? I understand I need to talk with a CPA, but I want to enhance my knowledge even before talking with a professional. 

One more thing: We have significant medical expenses. We bought health insurance from the marketplace. We have a HSA account where we contribute the maximum. But that is not enough to cover our medical expenses. I have read about HRA. I also learned that in some cases HSA and HRA are compatible. Which business type will be good to open a HRA ? Is there any example for this ?

Please advise considering both the situations.