A client just purchased/re-organized various companies so that we now have a controlled group due to family attribution.

                              Company A&B                   Company C

Dad                       51%                                    100%

 Son                      49%

 Currently we have three different plans with different entry dates, all are safe harbor match plans.

A--after 3 months immediate entry at the beginning of the month.

B—immediately upon hire

C--1 year, due entry 

 All companies have roughly the same number of employees—5 to 10.

The client is resisting one plan document with the same entry date for all participants.

 Won’t the different entry dates most likely cause testing to fail?  Which tests will most likely fail? 

 Am I required to have only one plan document?

Thanks

Hi,

Can anyone tell me if the increased loan limits under the CARES Act has been extended past September 27? 2020?

Thanks.

Takeover 401k PS plan - never had a TPA apparently.  There has never been tracking of balances by money source (401k & PS only). Terminated participant wants to take a full distribution. For tax purposes upon distribution only, does it matter that there are no defined balances between sources?

Does anyone know if DFVCP filling fees can be paid to the DOL from plan assets (ideally, forfeitures), or do they have to be paid directly by the plan sponsor?

I haven't seen a lot of discussion of this issue. That's likely because of at least two reasons: first, in DC plans where most people terminate and take a full distribution on or before NRD, there are thankfully relatively few death distributions, and second, Covid has thrown everything into a tizzy this year.

At any rate, recordkeepers are beginning to send out their "default" provisions - so it seems like a good time to think about the subject in more detail.

My own preference, from a plan admin point of view, and for most of our clients, is the desire to get such amounts paid out of the plan sooner rather than later. Beneficiaries GENERALLY want the full lump sum amounts ASAP (whether in cash or rolled to an IRA) so I'm really talking about a limited number of situations. Do you plan to allow the full range of allowable distribution options, or restrict it to a lesser time period (for example, the current 5-year limit)?

I have seen some auditors attach to the 5500 as the audit report a letter that basically says "hey. we're working on the audit."

The benefit of this approach (which is what I don;t like about it) as the filing will be accepted without error.  I happen to think it is a little disingenuous because though it looks like you are "doing the right thing" by disclosing the fact that you are working on the audit it has the effect of hiding the fact that you haven't done the audit.

Do others recommend in favor of or against this approach?

Giving out the SAR today for the 2019 plan year.

Who gets it?

All current eligibles as of today and former ee's with a balance as of today?  New participants in 2020 will get it.

All current eligibles as of 12/31/19 and former ee's with a balance as of today? New participants in 2020 do not get it.

As I understand it, former ee's with no account balance at the time of distribution of the SAR do not get it.

Client neglected to mention that the ownership for their company had changed to 50/50 between Owner A and Owner B. Further, Owner B owns another company 100% and the plan's census has "always" included comp from this other company in calculating allocations. I don't think there is a controlled group, because identical ownership isn't greater than 50%; however, I think it wasn't appropriate to include comp from, essentially, an unrelated company (until 2019). I *think* what I need to do is amend their plan to include the other company as a participating employer back to at least 1/1/2019 and/or amend the plan to allow employees to participate through the comp from the other company.

Your thoughts?

The Internal Revenue Manual describes a method for a plan’s administrator to decide a claim for a hardship distribution using only the participant’s written statements, including some that “summarize” an expense incurred.  Under this method, the administrator need not read, nor even immediately collect, a source document that shows the claimed hardship expense. 

https://www.irs.gov/irm/part4/irm_04-072-002#idm140377115475856

How many of your clients use this method and do not ask for any source document?

How many of your clients require a source document?

Do your clients’ methods vary with the plan’s recordkeeper?

Filings for 2016, 17 & 18 did not have the Sponsor's phone number entered.

Client insists she wants it that way.

5500 software validates all the way without it.

Is the phone # somehow optional?

R ally quickly, sole spouse is the beneficiary of a qualified plan. Participant passes, the sole spouse wants to keep the funds in the plan (spoke with Plan Admin and they are okay with solo spouse staying in the plan). We are updating the titling to John Doe deceased FBO Jane Doe (she doesn't want to do an assumption b/c she is under 59.5). Here's the question, if we are re-titling the account as a decedent account, it's still considered a rollover and we have to report it on a 1099-R with a tax code "G" or maybe "G4"? Because she rolled it over to an IRA, 1099-R would be issued.

Husband and wife were divorced ten years ago and a QDRO was issued awarding the wife 50% of husband's account. Wife, as the alternate payee, chose to keep the funds in the plan. Husband had primary custody of children and was due child support payments from the ex-wife. Fast forward ten years and the ex-wife has not made any child support payments. Husband obtained garnishment order from the court going after ex-wife's alternate payee account. The order also mandated that the garnished amounts be rolled over to the husband's account under the plan. The only way I see this being accomplished is if a QDRO was issued for the child support arrearages allowing for a rollover to be accomplished. The plan document is silent on the rights and status of alternate payees. With that being said, can you QDRO an alternate payee's account? Also, this is more of a family law question, but can the husband use this backdue child support for his own retirement purposes? 

Jane starts out 2020 owning 100% of both Company A and Company B.  Both companies make and sell products, they are not service orgs and they do not provide services to each other.  Company A has about 50 ees and a 401(k) plan.  Company B just employs Jane and her husband (B's actual production is outsourced) and B has no retirement plan.

In July 2020, Jane sold 23% of A to a private equity firm, so now she owns 77% of A and 100% of B.   So effective with the transaction they are no longer a CG.

Can they now establish a plan in B for just Jane and husband for 2020?

My first reaction is that if the plan is set up for calendar year 2020 this would not work due to the CG. Coverage testing would be based on the plan year and they have former NHCEs > 500 hours in the testing group.   If they set up a plan in B effective 10/1/20, then the plan never exists while there is a CG, and the testing year would not include any NHCEs so presumably they would not have to consider company A in coverage.   But does this raise a potential 1.401(a)(4)-5 discriminatory timing concern?     Thanks.

If a self-employed individual exceeds the 402(g) limit, is he subject to the refund correction?  He didn't get a W-2 and his tax return hasn't been filed yet so he really hasn't taken the deduction at this time.  Could his accountant change the deferral on his tax return to $25,000 (2019 limit) and then we could apply the excess to another contribution type for 2019 (ie. match true-up or PS)?

has anyone had a situation where the named beneficiary is not a US citizen or resident?  I'm not sure what to use for a taxpayer ID number or whether I should be advising this person that they will have to file a US income tax return, as the funds being paid out are coming from a qualified retirement plan (not individual) where the participant lived/worked in the US and had an SSN.  unfortunately he passed away unexpectedly following retirement and we didn't have a chance to pay him out directly.  now dealing with a family member outside the US who is non-english-speaking and I have no direct contact information other than thru the prior employer.

I retired early due to COVID and am now on COBRA benefits   If I go back to work for the same company I retired from and get health insurance benefits again, when I leave or reduce my hours would I be eligible for COBRA benefits again from the same company?  

Is anyone aware of a good discussion on whether/when an individual employment agreement will be construed as an amendment to an ERISA plan?  For example, assume a retirement plan provides for 3% employer contribution, but the company signs a contract with one employee promising 5%.  Or, alternatively, a retiree health plan provides that benefits can be discontinued at any time, but the company signs a contract with one employee promising to maintain those benefits for life.

I have to imagine that this issue comes up relatively frequently especially at less sophisticated companies, but I have found surprisingly little guidance so far.  Thanks!

We have a small employer health plan that is maintained in conjunction with a trust.  Therefore, it is funded and we file a Form 5500SF.  We have assigned the filing Plan # 501.  When the plan terminates the trust and switches over to a fully insured product we list Code 4R saying the plan will not file a Form 5500SF going forward.  We believe this is better than indicating it is a final filing.  In other words, the plan continues, but the funding method has changed; but the plan is not terminated.  If we marked the filing as final, then we would have to use Plan # 502.  

Does anybody have any thoughts on this?  Clearly we have to use Code 4R or mark it as final; otherwise the government will expect another filing.  Again, we think the better approach is to use Code 4R rather than indicate it is a final filing when the employer simply continue the plan but changes the funding method.  Thanks.   

How would you administer the 1 year/5 year elective postponement rule for an employee who is a specified employee?

Example: Jill is a specified employee with a payment due at separation. She intends to retire in 7 months, but the payment must be delayed for 6 months. Is the 1 year deadline to make the postponement election measured to the date of separation when the payment would have been made, if not for the 6 month delay? If so, it is too late for Jill to postpone? Or is the 1 year election deadline measured to the date it will actually be paid, 13 months from now in this example, which would make this a timely election for Jill? And, just to be consistent, from which date - termination date when it would have been paid or 6 month delay date when it is paid - does the 5 year postponement clock run against?

I'm thinking that the 1 year and the 5 year periods are each measured against the actual payment date, taking the 6 month delay into account as a plan provision. In other words, Jill in this example could make a timely election, even though only 7 months before the date when the payment would have been made were it not for the 6 month delay. The 5 year postponement period would also be measured from that actual payment date. 

Regards!

The 2019 Form 5500-EZ asks for the Total plan assets at the End of the year on line 6a column 2. The 12/31/2019 account statement shows a 12/31/2019 value of $300,000. In February 2020 a $17,000 contribution was added for the 2019 plan year. Should 6a column 2 show $300,000 or $317,000 for the End of year value?