Are there any legal loopholes that an employer can use to not pay former employees for a SIMPLE IRA plan that was not administered properly (at all)?  For example, an employee was at the company for 5 years and during this time there was a SIMPLE IRA plan in place but the employer failed to notify any employees for 12 years.

Fast forward to 2020 and the employer was notified and fixed the mistake for the current employees but never contacted any former employees. 

When the employer hired an ERISA attorney to handle the VCP, is there anything available to the attorney to NOT consider past employees, especially when they could be easily contacted?

Thanks

Is it possible to amend a 401(k) Plan with a non-elective safe-harbor to add In-plan Roth Rollovers before the end of the year?

We are planning to restate for cycle 3 plans in the process of terminating. so there are 3 kinds of terminating plans.  Curious as to thoughts about this.

1) Plan termination amendment prior to 8/1/2020 but funds still in the plan after that date.

2) Plan termination amendment after 8/1/2020 and funds paid out in fall of 2020.

3) Plan termination amendment after 8/1/2020 and funds not out of the plan until January 2021.

Thank you for your comments.

A client wants to set up a funded 409a Top-Hat/SERP Plan for executives with participant direction. As I look for a provider that offers this, I wonder about any tax reporting requirements. The funds remain an asset of the employer until distribution and are in an investment account. Do the earnings on that account need to be reported as they have increased the value of the employer's assets? Or is their an exemption for a 409a Plan? Thank you in advance.

The Consolidated Appropriations Act, 2021 (if enacted) amends, retroactively, the CARES Act to allow a § 401(a)-qualified money-purchase plan to provide a coronavirus-related distribution.

Coronavirus-related distribution from money-purchase plan.pdf

Today’s Consolidated Appropriations Act, 2021 treats a situation in 2020 as not a partial termination “if the number of active participants covered by the plan on March 31, 2021 is at least 80 percent of the number of active participants covered by the plan on March 13, 2020.”

Temporary rule preventing partial plan termination.pdf

Here’s a brain-teaser for the super-smart BenefitsLink mavens.

A section of today’s Consolidated Appropriations Act, 2021 amends Internal Revenue Code of 1986 § 401(a)(36) to allow a § 401(a)-qualified plan to provide a distribution to a worker not yet separated from employment as soon as age 55.

But that change applies only for “a multiemployer plan . . . with respect to individuals who were participants in such plan on or before April 30, 2013, if—(i) the trust to which [the before-separation provision] applies was in existence before January 1, 1970, and (ii) before December 31, 2011, at a time when the plan provided that distributions may be made to an employee who has attained age 55 and who is not separated from employment at the time of such distribution, the plan received at least [one] written determination from the Internal Revenue Service that the trust to which [IRC § 401(a)(36)(A)-(B)] applies constituted a qualified trust under [IRC § 401].”

Which unnamed plan gets this tax law?

Curious to know what "fix" - if any, might be available. Say an employer withheld HSA contributions in a prior year (let's say 2019). Never deposited them into the HSA. W-2 for 2019 showed the deductible HSA amounts. Now the error is discovered.

Is it just a case of "so sorry, too bad" and a revised 2019 W-2 must be done, or is there a "correction" such as depositing the HSA funds now (although I suppose the HSA custodian might not allow it anyway...)

In the 401(k) world, these things can be fixed, but I don't know about HSA's...

If a participant terminates in December of 2020 but has small compensation and 401k paid in January of 2021, should they be included in all of the testing for 2021?

Hello, I am a retired American living in the Philippines since 2003. I retired from the Federal Reserve Bank which is not government but private enterprise. I need some advice on a very difficult problem. Due to Covid-19 the Philippines government has stopped all deliveries of US mail to customers indefinitely. My pension check is sent to me through the mail and I have not received one since April 2020. Direct deposit is not possible since US banks do not allow direct deposits to foreign banks.

Of course, I have been in contact with the FRB's Office Of Employee Benefits for some time now but the last notice I received from them was negative about any further help changing the way the checks are sent out. I had suggested that the checks be sent out by private courier instead of the mail so that it would come directly to me. I even offered to pay for the service myself but since no provision for that is included in the directive manuals of the FRB, I was told nothing could be done. So I am without my retirement benefits and apparently will be for the foreseeable  future.

I am just wondering if anyone has any ideas that could help me. I don't know if any rules or regulations exist that govern the sending out of pension checks. In this case I doubt that anyone could have anticipated this problem due to Covid-19.

Does ERISA has anything to say about this problem?

Thanks.

In a topic on this board at some time in the past, I recall a couple of users chiming in that it was possible to rescind a plan termination by corporate resolution. Assuming this is true, is a distribution to a pre 59.5 active employee after the termination date too problematic such as to preclude the rescinding action? The employee is an NHCE;I doubt that has any bearing from a qualification standpoint. Any input is appreciated.

I have a 401k with 350k. I am 61 and want to start withdrawing every month. Is there a calculator to use? What percent of the balance am I able to withdraw every month and still have a balance in 25 years?

Good morning all

I was asked to perform a 110% test for a cash balance plan and see if an HCE is eligible for lump sum. I was told the client is eager to pay the lump sum.

I have done this many times for a defined benefit plan and never needed for a cash balance plan.

As I am not 100% sure, would one of the 2 methods be acceptable?

1- simply use the account balance (no 415 issue) as of distribution date (adjusted for interest credit if required) and compare to the assets as of the same date, or;

2- determine the AB's as of distribution date and convert them to lump sum using?? PVAB would be based on plan actuarial assumptions, 430 assumptions, 417e assumptions??

Any other methods that are acceptable that I am not thinking of?

Also, do you provide the client the method to choose as sometimes one method would allow lumpsum where another would not? I remember this discussion sometime ago and some well known actuaries had no issue to let the client decide between 430 and 417e options (it was for a defined benefit plan), as long as the ramifications were well explained and disclosed to the client.

Thank you all and have a great weekend.

Having a brain freeze...

4 participant plan - 2 HCEs (father, son) and 2 NHCEs (1 young, 1 older)

Plan provides 401k, 3%SHNEC and discretionary PS by rate group (ea ppt is in own)

The Gateway is 5%

QUESTION:

I would like to restructure for (a)4 testing: 1 HCE (father) and 1NHCE (younger) based on cross-testing and 1 HCE (son) and 1 NHCE (older) based on allocation rate testing. Each will pass coverage at 100%. Provided the C/T group passes (and it does) and the the Allocation Rate based group passes (proposed same % for HCE as NHCE),  the Plan passes, correct?  Am I forgetting anything?

Thank you.

Most of our SH plans are of the "maybe" variety.  Based on the SECURE Act, I took the position that the end of year 2020 notices did not need the maybe language and just said "yes it's a SH for 2020."

Then when I was writing a new plan for 2021, I automatically checked that option (maybe), but starting thinking mmmm, maybe I should just be saying "no" and amending retroactively.  I asked our doc provider, FTW, and they said (conservatively I think) that if we check the "maybe" box then we need to do the "maybe" notice.  But I'm thinking that this is just due to the fact that the docs are not amended yet for SECURE, and when those amendents are done, they will more or less fix everything (by eliminating the maybe option or exactly what, I'm not sure).

Notice 2020-86 says in A-10 "Accordingly, the retroactive plan amendment rules of § 1.401(k)-3(f) no longer apply for those plan years."  I think that means the maybe notice is defunct, dead, gone no matter what.

I hope this makes sense.  I'm not too worried about it but should I be (about not doing the maybe notice which the plan, as currently written, calls for)?

I had been told a long time ago that we needed to get an EIN# specific to the plan and not use the employers on the Form 5500.  Is this no longer the case?  One of our clients got a notice and it would appear that we should be using the employer's EIN# to file the Form 5500.

Sorry if it's a silly questions, just wanted to confirm.  Thanks in advance!

If a 401(k) uses a nonelective safe harbor, and an employee who is employed all year moves from an eligible to ineligible class during the year, is it permissible to say their SHNEC will only be based on their compensation earned while in the eligible category? 

For example, the participant starts off the year in an eligible class (Division A). They can defer, etc. Then on September 30 they move to an ineligible class (Division B). They are no longer eligible to defer as of moving to Division B on September 30. The plan says the SHNEC will only use their compensation while in an eligible class (Division A). Participant earned $100,000 total, $75,000 through September 30 and $25,000 from October 1 through December 31.

Can the SHNEC be based on $75,000?

Which over rules and why?

1. Quadro order stating alt. Payee, which I'd former spouse gets 50 percent.  Was signed in 2000. 

2. Ex in 2005  assigned no survivor benefits when he took retirement.

If quadro was legal and in place, in 2000, then ex can't waiver to no benefits in 2005, with order already in place.   Legal to do??

Plan manager over looked quadro. And let ex waiver. Legal?

Note in quadro, any changes to quadro must be reported to judge.

Plan never reported, 

Spouse found out, he changed plan benefit after he died,  legal?

Does anyone have any insight on whether interest is required on delayed (non-RASD) payments?  I've read Stephens v. U.S. Air, which suggests the courts (or at least the D.C. Court of Appeals) will require plans to pay interest on delayed payments.  However, I cannot find anything in the regulations that require it.  Advice from more seasoned professionals is appreciated.

11/1 - One of two named trustees terminates employment with Plan Sponsor

12/1 - Company informs us they have changed trustees

Questions:

• Can change in trustee amendment be backdated to 11/1?
• Does outgoing trustee who is no longer employed have to sign the change in trustee amendment? (last time this was done ten years ago the outgoing trustee signed).