I submitted a VCP last October and have left several messages on the status inquiry line over the last few months with no response/call-back from the IRS.  Has anyone else had this issue?  Just wondering what the average turn-around for VCPs is given COVID, etc.

A medical practice plan has apparently just hired a doctor who is a Canadian citizen. Everyone understands that since paid U.S. source income, is eligible for the 401k plan - all normal.

Now, this plan allows each participant to have individual brokerage accounts. Doctor is from Canada, and his broker is in Canada. Is there any problem with a U.S. Trust allowing him to invest in funds in Canada? Further complication - Plan specifies each Doctor is Trustee for her/his account. So technically a foreign Trustee.

Anyone run into this before? P.S. FWIW, the Trust is in fact organized in the United States, so even if this person invests in funds in Canada, it would appear that the Trust itself is under the jurisdiction of U.S. courts, and therefore it is ok? Is this "settled" law or does this require an opinion from an ERISA attorney?

Starting up a new 401(k) and owner wants to roll money in from Self-Directed IRA. They sent me a copy of a checking account balance at some bank that, according to the owner, contained the money of several employees. Is there any substantiation I can request to make sure this mystery money is legit?

EE covered in a frozen pension plan and another pension plan of same employer. The sum of the monthly accrued benefits in both plans do not exceed 415 benefit limits. The lump sum is the greater of benefit based on plan rates ( '94gar 5%) or 417e rates but not to exceed applicable 415 limits. In this case 417e applies and the question is how to compute the 415 maximum lump sum. The plan doc in plan A and plan B states only  that if the sum of the accrued benefits from all plans exceed the applicable 415 limit, the limitation is first applied to plan A.  It doesn't cover this situation since the aggregate limit is not exceeded.

John has a monthly accrued benefit of $10000 in plan A ( frozen plan) and 1350 in plan B. The applicable 415 limit is $14166 per month at age 65. Not clear on how to compute the 415 lump sum for each benefit. 

Hi

Need to refresh memory.

Looking at a combo plans (DC+CB). Plans are top heavy and top heavy benefits are provided in the DC plan only. Not my typical way of designing.

CB has 1000+ hour requirement for pay credit

DC has 401k + 3% non-elective safe harbor + profit sharing.

Profit sharing portion has no hour requirement but has last day rule.

Gateway is 7.5% i.e. 3% safe harbor + 4.5% profit sharing

Have a participant (in both plans) terminated during the plan year with more than 1000 hours of service, however not employed at end of year.

The participant gets CB pay credit, the minimum to satisfy 401a26.

The participant gets 3% mandatory safe harbor.

What else does he get? Additional 2% profit sharing for top-heavy (it is 5%) or full 4.5% profit sharing for gateway?

Whichever he gets, I think i need 11-g, correct?

Thank you

Safe K plans can contain provisions where HCEs are not allocated a Safe Harbor match.  Are one or both of the following design allowed?

1) HCE Safe Harbor match is limited to $3,000 ($3,000 is an example)

2) Non-Shareholder HCEs match is limited to $3,000

Thank you  

Plan A wants to contribute $50,000 for the 2020 year but needs more deductions in 2021.  Can they deduct the 2020 contributions (which are deposited in 2021) on the  2021 tax return (i.e., you can always deduct on the cash basis) and then use the special 404a6 timing rule to deduct 2021's contributions (which are funded in 2022)  on the 2021 tax return as well?  The combined deduction is less than 25% of 2021's comp (it's a virtual certainty so that is not a concern).

My position has always been "of course because both deductions are perfectly legal, so why in the world 2 completely allowable deductions be disallowed?"  There is simply no rule on the books that says you cant take them both.

Now someone did mention that maybe there is some tax law that says you have to have consistency in approaches, and to that I can't speak.  Anyone have some first hand knowledge on that?

Our client is wanting to change their eligibility requirements to Age 21, 12 months of service and 500 hours, with plan entry being immediate. Basically if the employee is at least 21 and has completed 500 hours within their first year of employment, they would enter the plan as of their 1 year anniversary date.

Where we are getting stuck is what if the employee does NOT meet the 500 hours within the anniversary year? We would be switching to evaulating the 12 month period then on a plan year basis. If the employee then completed 500 hours between the plan year of 1/1 and 12/31, does the entry date become 12/31 of the plan year the 500 hours was completed, or is it 1/1 of the following plan year? 

Company A is acquiring Company B via stock acquisition.  Both companies currently sponsor retirement plans.  Company A has a stand alone plan and Company B is part of a PEO.  Once the acquisition happens  Company B will retain their own EIN and act as a subsidiary of Company A.   The intent is for Company B to terminate participation in the PEO plan prior to acquisition.   Post acquisition Company B will become a participating employer on the Company A plan.

The question is does Company B employees have a distributable event or would participation in Company A plan be viewed as a successor plan? 

Hello - just wondering if anyone has any insight on whether the 2022 IRS 417(e) Mortality Table (used, among other things, for determining minimum lump sum amounts) is expected to be impacted by the significant decline in life expectancies during 2020 due  covid 19? 

Or is there some longer lag time between when this hit to life expectancies will start to appear in these IRS mortality tables? 

Thanks in advance for any thoughts/input on this. 

Hi, 

One of my client is terminating and there is one deceased Estate account, The participant deceased in 2020 and since there was no beneficiary the deceased estate became the beneficiary.   Estate beneficiary account was set, since the plan is Terminating now the client has informed the Estate Administrator to move the funds out of the 401k plan however the administrator remains unresponsive, given the fact the client has done all their due diligence and since the administrator remains non-responsive can the funds be rolled over to an IRA account?

Can a deceased estate( beneficiary)  account be rolled over to an IRA? if no any reason? 

Also the deceased was from the state of Indiana, so is there anything particular that needs to be considered looked into? 

Thanks. 

I'm reading that there is not a lot of clarity on this topic regarding how to report these contracts on SChedule A, D and H.  Anyone have some insight.  I found this letter where someone who sounds like they know what they are talking about wrote the DOL to ask for guidance. 

https://www.dol.gov/sites/dolgov/files/EBSA/laws-and-regulations/rules-and-regulations/public-comments/1210-AB63/00105.pdf

My conclusion:

From what I have gathered , the insurance component is separate from the underlying investments in the CCT.  The insurance would go on A and H as an unallocated /general accounts contract and the CCT would go on the D.  How it is reported on the H depends on if it is a DFE (I’ll bet it is).  If a DFE you get to just report it as a CCT on the 5500.  If not a DFE technically you have to report each asset class separately (stocks, bonds, mutual funds).  

Do I have it right? Does anyone have something more substantial written up?

Hi

A young employee is a full-time employee for couple of years under "student visa". 

Is it reasonable to exclude under "anyone who is on a student visa is excluded".

He is also a non-resident alien which is standard exclusion in my documents.

Unfortunately, must be included in all tests due to full-time status which US based income, at least they way I know.

Thank you

Hello! Here's a request for your comments on this idea:

It's somewhat less secure to have the standard username/password log-in system if a would-be intruder already has a username to work with. The log-in form can be submitted multiple times with a series of commonly-used passwords, looking to see whether 01234567890 matches, for example.

Currently these message boards enable you to log in using either (i) your "Display Name" (which is displayed, natch, next to every post you've made), or (ii) your email address (i.e., the one you used when you first signed up).

So somebody else would be able to enter your Display Name into a log-in form and then start throwing potential passwords into the form, until the intruder succeeds or goes to bed.

Of course, the world doesn't end if there were to be a "break-in" -- the intruder might simply alter your posts to say "I think ERISA attorneys are weenies" or some other heresy -- and yet many of us use the same password for our bank accounts, our Tinder accounts -- haw -- etc., so having a password that works on BenefitsLink lets them go monkeying around on other more potentially profitable websites on which you might be a registered user.

So (at long last, getting to the point here), the proposal would be to require the use of email addresses for log-in, and no longer permit Display Names for log-in. Your email address, unlike your Display Name, is not displayed on the message boards, so it's not public knowledge insofar as a message boards visitor is concerned. But of course you know your own email address, so the log-in process wouldn't be seem to be any more burdensome.

I thought about the possible problem of logging in after your email address has changed (you're at a new job, etc.), but actually the log-in process would be unaffected. You'd still enter the email address you had used when you signed up, and your usual password. The log-in system wouldn't know or care that your "real" email address has changed.

What do you think?

Payroll company, which by definition is in the business of processing payroll, asked my client to confirm tax retporting for after-tax contibutions.  To which I responded, "can you please have your payroll confirm who the HCE's are for 2021"? (kidding of course).

My understanding is that as far tax reporting goes on W-2s and 941s, these deductions are no different than 401k loan payment.  Am I correct?  i think its one of those things where I can't find any articles on how to reprot it on w-2's and 941s because there is simply no requirement to do so...  I'm trying to prove a negative is the other way to look at it.

Any help appreciated!

I did find this in the w-2 instructions:

Reported in box 14, but not in box 12.

• After-tax contributions that are not designated Roth contributions, such as voluntary contributions to a pension plan that are deducted from an employee's pay.

And Box 14 is apparently just a "whatever you want it to be" box, nothing regulatory about it.

411(a)(11)(A) Discusses the mandatory cashout limit. But where is the statute, regulation or guidance that states the account value used to determine if this limit has been exceeded is determined on the date the employee terminated? Is it right under my nose and I'm completely missing it?

I'm fairly certain this is the case, but don't see any specific example or rule on point.

Small employer (always under 20 employees) has a group health plan. It's subject to state continuation requirements, but state law does not mandate any coverage after the group policy itself is terminated and there is no rule regarding M&A or successor liability. 

Large employer (always over 20) has a group health plan.

Large employer is acquiring small employer in an asset purchase. The seller's employees and its group health plan will be terminated in connection with closing. 

If an employee of the small seller chooses not to accept the employment offer at closing from the large buyer, does the large buyer have an obligation to offer them COBRA under the large buyer's plan?

I don't think so based on the small employer exception and the fact that even an employer that "grows" into a large employer under COBRA still does not have to offer COBRA to anyone who incurred (what otherwise would be) a triggering event during the time the employer was excepted under the small employer rules. Rev. Rul. 2003-70 doesn't address this fact pattern, presumably because it's already answered by the regs.

The only thing giving me pause is the definition of employer, which includes a successor, but I don't read that as requiring the (pre-sale) small seller to count the (post-sale) large buyer's employees as the seller's own employees prior to the asset sale. Instead, the rules seem more clear that, even if an employer becomes large via an asset sale, it still does not have to offer COBRA to any individual for any event that occurred while the employer was small.

Appreciate any thoughts or confirmation. 

So I'm wondering if anyone has any suggestions about how to handle the following situation:

We were recently engaged by a client to takeover their actuarial work.  As standard practice, the client messaged the prior actuary asking them to share historical plan information and discuss the plan with us.  We followed up with a formal request for data and heard nothing.  After repeated requests with no response we started calling the prior actuary with no response and no ability to leave a voicemail.

Well today I got through on the phone (Yay!).  I introduced myself and the prior actuary immediately hung up.  I called back a few hours later and was told, "**** you!" and he immediately hung up.

Any thoughts?

Here are the specifics:

SH - 3% nonelective

PS - allocation method - new comparability - everyone in their own group - plan document indicates plan year compensation is used for allocation purposes - no allocation conditions.

Plan is Top Heavy

The client would like to make quarterly SH and PS contributions throughout the year.  My question is do we need to perform the required new comp. cross-testing (rate group/non-discrimination/gateway) for each allocation if the HCEs are receiving a greater contribution than the NHCEs? or do we just need to make sure it passes at the end of the plan year?  If we do need to test each time a PS contribution is made, what code section indicates this?

Any insight would be greatly appreciated.