IF a plan document excludes overtime for example from the match calculation, does that present a Benefits rights and features issue?  How would that test even work?  People with no over time are treated as benefitting the same as HCE's?  My brain starts to melt down.

I would hav thought that if I passed testing based on a 414s definition of comp I was ok.  I have never heard of this before in 20 years...  

I have a significant amount of $ in an ESOP plan for a company where I terminated my employment in December 2016.  Their fiscal year runs through 9/30.  Finally in 2019 - I was eligible to request my first distribution - which I did - and requested the full amount paid out - as I just want to be done with all of this...  They chose to only pay out a partial distribution (~ 1/4 of what was in the account) - never informed me of how or why or anything else - just made a partial payment and closed the window of opportunity, so to speak.

Fast Forward a year, and it is now that the window to request a distribution is open again - and I would like to make another request for my $$ - as COVID has significantly affected our family and business financially, and there are some tax benefits to requesting it now.

I contacted the company who is handling my account (As this is what I am told to do by my former employer - not to contact them).  I was told that I "may not" be eligible to request a distribution this year - as the company can pick and choose who may or may not request one?!  How is this possible?  They already have the choice as to whether or not to pay me when I do request one...  Now they get to decide whether or not I can even actually make the "request"??  

Is it possible that since i requested a full pay out last year when I was eligible - they are considering that as a "request" for payment however/whenever they decide to give it to me?  At this point, I separated from the company nearly 4 years ago, and just want to roll this $$ into my IRA so they no longer have control of it..

Thanks for any help!

I have a significant amount of $ in an ESOP plan for a company where I terminated my employment in December 2016.  Their fiscal year runs through 9/30.  Finally in 2019 - I was eligible to request my first distribution - which I did - and requested the full amount paid out - as I just want to be done with all of this...  They chose to only pay out a partial distribution (~ 1/4 of what was in the account) - never informed me of how or why or anything else - just made a partial payment and closed the window of opportunity, so to speak.

Fast Forward a year, and it is now that the window to request a distribution is open again - and I would like to make another request for my $$ - as COVID has significantly affected our family and business financially, and there are some tax benefits to requesting it now.

I contacted the company who is handling my account (As this is what I am told to do by my former employer - not to contact them).  I was told that I "may not" be eligible to request a distribution this year - as the company can pick and choose who may or may not request one?!  How is this possible?  They already have the choice as to whether or not to pay me when I do request one...  Now they get to decide whether or not I can even actually make the "request"??  

Is it possible that since i requested a full pay out last year when I was eligible - they are considering that as a "request" for payment however/whenever they decide to give it to me?  At this point, I separated from the company nearly 4 years ago, and just want to roll this $$ into my IRA so they no longer have control of it..

Thanks for any help!

An participant in a 403b was fired and has requested distribution of her retirement plan accounts.  She has also filed a grievance of wrongful termination through her union and wants to be re-employed.  Although I'm told it is not likely she will win, Should the plan act on the distribution request, even though there is a chance she would be rehired soon?

Thank you

Our client's document says deferral election applies to irregular pay.  However, they often issue very small second checks for some reason.  (like under $100); an issue arose when the payroll company withheld FIT on a small check and no 401k deferrals....they quoted the OHS (OFFICE of HUMAN SERVICES) that FIT withholding takes precedence.  Anybody seen it handled differently?  The plan was audited by a CPA firm and they took issue with no deferrals being calculated prior to FIT.   So an impasse.....  

Is the SAR only required for 5500 & 5500-SF filers?  Or is it required for a 5500-EZ filer as well?

Have a client that is a sole prop, but added an s-corp in at the beginning of the year (calendar year 2019; sole prop was left open through 2019) and the employees were transferred to the s-corp as of 1/1/19.  It's a controlled group, and the s-corp adopted the plan 1/1/19.  The sole prop (which has only the owner, no employees) is booking a bunch of losses, so the net comp is going to be about -$5K, and the owner's s-corp W-2 is going to be $100K.

What's the best way to determine the owner's compensation?  Is it $100K?  $95K?  Something else?  Thanks.

Does ERISA anti-alienation still apply once funds are distributed out of the plan? I found an article from 2014 indicating that seven federal Courts of Appeal had ruled that anti-alienation does not apply and one has ruled that it does. Is that still the state of the law, or has something changed since them?

Thanks for any help.

Client uses a "Phantom Stock Program".  This type of program does not involve an actual exchange of equity, but does result in periodic payments which coordinate with actual dividends paid to actual stock holders.  These payment are processed through payroll, and are shown on W-2 as taxable income (payroll taxation does apply).  These monies are only paid to a select group of HCE.  The question is, can these monies be excluded for purposes of 401(k) Safe Harbor Match calculations?  Finally, would such exclusion violate the requirement to use Total Compensation under a 401(k) Safe Harbor Plan?

Long time lurker, first time poster  ?  

I work for a TPA.  We took over a profit sharing plan, where one of the former owners has assets invested in a partnership.  He has passed away.  How would the plan distribute his balance to his beneficiary?

Appreciate your insight.  I have very limited experience with plans with assets invested in partnership.  (Luckily he was the only one.  The other owners and participants investments are all in brokerage accounts.)

I would be interested in receiving some good advice on what to do with this eroding situation since early February of this year.  I did create an initial post on the issue and at the time, the fix was weeks away and results unknown as to how my boss would handle the entire situation.  And to true form he let me (and others) down terribly, in my opinion.  So I'm turning to the board for "expert" advice based on my telling of what I perceive to be fairly factual evidence of wrongdoings and misdeeds and he should certainly be held accountable in some way.  I have questions about the attorney's responsibilities in this as well.

I will try to be concise with what has unfolded.  We have 6 current employees affected by the lost IRA contributions as of 2/1/2020 that were "overlooked" for every current employee except one apparently.  An ERISA attorney was hired to move forward with the VCP and as of 3/25/2020, we all had our new IRA amounts deposited into our accounts, fixing the error.  My years affected were from 2013 - 2020 and others were very similar to that time frame.  However the one co-worker who has been with the company for 15 years was not given anything during the VCP for reasons we are not aware of.  The ER sat us down with a memo (attached) in hand and read from it verbatim, explaining the entire situation and what he planned to do about it.  This is the part of the memo that shines a light on the ER's intentions:  "However, if an eligible employee was given an opportunity to make an election to defer into the Plan (and chose not to do so), no corrective contribution will be due for that employee."

This individual was offered, what appeared at the time to be the SIMPLE IRA plan, by the plan representative in 2008 (the first year it was offered).  The EE turned it down due to another investment that he was provided by the ER a year or two earlier and thought this was one of the same and didn't want to contribute from his check at the time.

What has come to certainly be known as the company SIMPLE IRA plan was never again offered in any way, shape or form to this EE and also to our current employees.  This is why we all received our lost IRA for this lengthy time period, no questions asked, but this one EE was left out and he thinks it has something to do with the initial ask and decline in 2008.

Fast forward to the dust settling on the VCP and this EE drafts a 4 page letter explaining and pleading for some explanation as to why he was left out.  Silence for quite a while until ultimately the ER decides it best that he go ahead and deposit his IRA portion, 5 months after the closure of the VCP.

Just to be clear, the ER did speak briefly to the EE shortly after the closure of the VCP and everyone else had received their "fix email".  He was sorry that he couldn't do anything for the EE and he had the "document" with his signature (guessing the one from 2008 where he declined the deductions for that year).  The EE asked to see the document and any evidence proving he had been asked each year and declined each time, to which none have been provided to this date.

Now, if this isn't bad enough with the ER trying to conceal and basically steal the money from the employees over the 12 year period, he tried to do it again to the one CURRENT employee AND still has not contacted any of the FORMER employees.  I know of at least 4 former EE's that had worked for this company for 3-4 years each during this time frame (2008-2020).

How can this be?  How can both the ER and the ERISA attorney have an opportunity to fix this egregious error and make the final decision to look over the 1 EE (with no investigation or even a question as to his status) and also not contact 1 former EE about this error and appropriate steps to fix their situations?

Something is terribly wrong here or I am terribly misunderstood how a VCP is supposed to unfold or at the very least, the requirements that the ER and ERISA attorney need to meet to finalize the VCP.

Please offer advice/suggestions as to what would be the next step in holding this ER/ERISA attorney accountable?  I feel he purposely left everyone out the first time around (year after year) and when he had the opportunity to fix it (after getting caught), decided to screw some people over once again, including an EE who has been with the company since day 1 (2005).  Also as a side note, the ER has ample opportunity to reveal the company IRA plan at the time of hire for us past 4 employees but never, not once, did the EE mention the IRA to any of us during the hiring phase.

Thanks!
DR245

p.s. I'm attaching the actual MEMO, read verbatim by the ER at the company meeting on 2/25/20.  I brought the entire IRA situation to his attention on 2/1/20.

SIMPLE IRA memo.docx

The plan is a multiple employer plan with 2 employers.  The employers are related, BUT not enough to be a control group or ASG (attorney has already opined on this).  One person owns 99% of company A which is a partnership and a small % of company B, which is a Corporation.  He receives compensation from both entities.  Both entities offer a basic safe harbor match, no other employer contributions.

Can this person split his deferrals between the 2 entities and get a full match from each entity?  I am going back and forth on this.  Because both entities are in the same plan (even though it is a multiple employer plan) do we would have to combine his pay and calculate just 1 match?  I read that there is one combined 415 limit, but what if the owner received $285,000 in pay from each entity and deferred $13,000 from each entity and received $11,400 match from each entity?  He would not be over the 415 limit.  I think this would be OK if each entity had a separate plan, but is there anything about the MEP that would prohibit the full match from each employer?

During the year, the plan sponsor received a reimbursement from the plan's revenue credit account for investment advisory and other consulting fees that the plan sponsor had paid directly.  The record keeper issued a report reflecting all payments and recipients during the year, and listed the plan sponsor as a service provider receiving a direct payment.  How should this be reported on Schedule C?  Is the plan sponsor to be listed, with what service code and what relationship?

Thanks.

If you are the beneficiary of your fathers kehoe acct( spelling)? Can his surviving spouse refuse to sign it over to you.  And if she could not gain access where would I find out about said account 

If you are suddenly having trouble signing in because, when you click on the words "Existing user? Sign In," you see a "Sign In" box only for an instant such that you can't enter your display name (or email address) and your password, please let me know.

Dave Baker -- davebaker@benefitslink.com

Individually Designed Attorney Drafted Document - Calendar Year End Plan

Prior to 01/01/2019, eligibility for 401(k) and 3% Safe Harbor Non-elective contribution was

No age, 30 days, 1st of month

Effective 01/01/2019 Plan amended 3% Safe Harbor Non-elective and ESOP eligibility to be

The eligibility requirement for participation in this plan is completion 1,000 hours in one Year of Eligibility Service. An Employee in Covered Employment shall become a participant (“Participant”) on the first Entry Date preceding the date the Employee satisfies the eligibility requirements with respect to ESOP Contributions and Safe Harbor Contributions and the first Entry Date following the date the Employee satisfies  the eligibility requirements with respect to all other Employer Contributions. Entry Date for purposes of ESOP Contributions and Safe Harbor Non-elective Contributions means the first day of each Plan Year. Entry date for purposes of all other Employer Contributions means the first day of each month.

Question - What is the SHNE entry date for someone hired on 02/28/2019 and worked 1,256.93 hours? Is it 01/01/2020?

Question-What is the SHNE entry date for someone hired on 06/17/2019 and worked 1,326.69 hours? Is it 01/01/2020?  Do you know how I set up Relius to have it calculate the SHNE?

Question - Do I have to disaggregate the ADP testing since it has dual eligibility in the Plan now?

Plan uses gross compensation (w-2 wages) for testing and allocations.

Thanks,

Our client just filed their 2019 1095-Cs with the IRS.  They were overlooked back in the spring (an extension to May 1 was filed) due to COVID/PPP things, and we just realized they  hadn't been filed last week.  No letter has been received from the IRS.  Technically, a penalty of $270 per record could be charged.  But do any of you know if the IRS is actually assessing the penalty when the taxpayer files them on their own, without the IRS having to get involved?  Please give us some good news!  And yes, the forms were distributed to the employees timely.

Fact pattern:

In April 2018, sole proprietor sends in $18,000 as a head start on her 401(k) for the 2018 year.  After the 2018 taxes are prepared by the CPA, the Schedule C shows a loss from self-employment earnings.

In April 2019, a distribution is processed from the plan for the 18,000 plus earnings, as a correction of excess annual additions.  No income = no contributions.

The CPA doesn't understand why the 18,327.15 is considered taxable income for 2019.  (At least, not the 18,000 part.)

Should the CPA have reflected the 18,000 as a deduction on the 2018 Form 1040 as self-employed retirement plan contributions?  Typically with refunds of excess like this, the amount is taxable in the year of distribution.  If there had been an 18,000 deduction on the 2018 return, then the 18,327.15 in income for 2019 make sense - just with the suckiness of her tax rate for 2018 being lower than 2019 will be.  That's the typical explanation I'd give for an ADP test refund - the 2019 refund income offsets the deduction for 2018 - but in this case, it's a 415 issue. 

I'm suspecting the solution is either (1) Review the 2018 return to see if an 18,000 deduction is appropriate, OR (2) Change the taxable amount on the 1099-R issued in January so that only the 327.15 gets listed as the taxable amount.

But which is right?   (realizing there could also be a door #3)

Thanks.... --bri

DC plan paid someone out at 100% vested when they should have been only 20%.  About an $8,000 difference.

So start in EPCRS, Appendix B, Section 2, part .05 Correction of Other Overpayment Failures

An Overpayment from a defined contribution plan is corrected in accordance with the rules in section 2.04(2)(a)(iii).

section 2.04(2)(a)(iii)

(iii) Return of Overpayment Correction Method. A failure to satisfy § 415(c) that includes a distribution of the § 415(c) excess attributable to nonelective contributions and matching contributions may be corrected using the return of Overpayment correction method set forth in section 6.06(3) of this revenue procedure.

But, 6.06(3) is Correction of Overpayment (defined benefit plans).

Shouldn't I be using 6.06(4), Correction of Overpayment (defined contribution plans and 403(b) Plans.)? 

Widowed male (age 81) put pre-tax money in a 401(k) plan during employment; on retirement at age 62 he began receiving a monthly distribution.  The plan accounts are now managed by T Rowe Price.  The monthly payments have never increased.  The individual is concerned that the required minimum amount for 2021 (based on his age and account balance) will be more than the annual total of monthly payments.  What is his best option for determining whether the payments must be increased? (The original plan was sponsored by Westinghouse).

Thanks!