I'm saddened to report the passing of Bill Whitehurst, ERISA attorney extraordinaire.  And a really nice guy.

https://www.legacy.com/us/obituaries/winstonsalem/name/william-whitehurst-obituary?pid=197832813#utm_source=journalnow.com&utm_campaign=%2Fnewsletter-templates%2Fobituaries&utm_medium=PostUp&utm_content=355c2d446fed9f1e2e8dee78be6ebfb245df1f67

The IRS assesses a  multiemployer health and welfare fund a penalty for not timely distributing and/or filing Forms 1095-B due to an error by the fund administrator.  The penalty is not covered by the fund's E&O/fiduciary insurance policy.

Can the fund pay the penalty from plan assets?

Thanks.

I keep getting the CP214 form sent to me to remind me to determine if i need to file form 5500-EZ. I ignore it because it said we send this form just to remind you if you previously filed a form which I did in 2014. So today I was curious and I called the IRS. I said why do I keep getting this form even though I terminated the solo 401k plan.

She immediately ask me if I had the 5500-ez in front of me. I did and everything was filled correctly EXCEPT the part that said "total number of participants at the end of the plan year". I wrote 1. She said I should have written 0 and that is why I keep getting this form. The Assets was already 0 and I wrote Final written. I was told to mail a amendment for 2014. I asked if I have to pay a penalty. I already converted the plan to a traditional IRA in 2014 and already issue 1099 and my asset at end of year was 0. He said I should not. He claims I don't have to pay a penalty because I filed it on-time but I just filed it incorrectly. I was told to mail the letter with an explanation and a 5500-EZ. Is the IRS agent correct? Anyone ever encounter this? I read online somewhere I need to pay $1500 penalty or $150,000. I was the only person on this solo 401k plan and I only file this return (due to final year) once because my plan never exceeded $250k nor was it even close. 

Has anyone heard of forced rollovers for all participants from one employer to another if the employers were unrelated but there was an asset purchase involved? Again, not a transfer, but a mass rollover.

Terminating an overfunded db plan. Not relevant but 2 participants, owner/spouse.

Each took a loan out from the db plan and first payment is due late March. Loan is for 50k/each

Each will rollover their lump sum into their respective IRA's and loan will be rolled over into the qualified replacement plan (QRP) before first payment due.

Do they need to redo the loan agreement in the name of the new QRP without changing the original provisions?

Thank you

A participant was hired sometime in 2020, but met the entry date requirements on 12/31/2020. The compensation is $0 from entry date. The participant is due a Top Heavy minimum based on 415 compensation. How should this participant be treated for testing purposes (in terms of whether they are a participant or not - due to testing compensation of $0 - and what's their allocation rate for the General Test)?

I have a client that is a partnership sponsoring a 401(k) plan. There are 8 partners with equal ownership and 50 rank and file employees participating under the plan. All partners are surgeons, each has a separate P.A. and all are adopters and signers of the plan. Their plan document allows investment in "qualifying plan assets" only.

One of the partners wants to invest his account exclusively in gold and bitcoin. So, without requiring the plan to ease its investment restriction, is there a way to accomplish this? For example, could this be accomplished if this particular partner's P.A. sponsored its own plan? Or in another manner? 

Just needed to confirm something for testing purposes.  Owner has a son that makes $50k and contributes the max into the 401(k).  It's currently a Safe Harbor Plan, so there's no testing issues (they also make an additional Profit Sharing)

They are considering adding a Cash Balance Plan to further maximize the contributions for the owner.  If I were to exclude the owner's children from the Cash Balance, do I still have to include them into the testing for the offset? (obviously the son's EBAR is astronomical, since he's only in his 30s, so including him makes passing the test impossible).

If he's excluded from the Cash Balance, he can also still get the same Profit Sharing he would've gotten, correct?

Thanks in advance!

When the time comes and with some exceptions, a non-governmental § 401(k) plan must (to tax-qualify) permit an employee to make elective deferrals if the employee has at least 500 hours of service a year in at least three consecutive years and has met the plan’s age requirement (for example, 21) by the end of the three-consecutive-year period.

A plan need not provide nonelective or matching contributions for such a long-term part-time employee.

Relief from nondiscrimination and top-heavy rules applies only regarding “employees who are eligible to participate in the [§ 401(k)] arrangement solely by reason of [§ 401(k)](2)(D)(ii)[.]”  I.R.C. (26 U.S.C.) § 401(k)(15)(B)(i); accord § 401(k)(15)(B)(ii).

Some employers are considering simplifying a new provision by making all employees, with no age or service condition, eligible for elective deferrals (without providing a nonelective or matching contribution).

If an employer in its particular circumstances is not worried about coverage, nondiscrimination, and top-heavy rules:

Is there some other reason an employer should consider not extending elective deferrals to all employees?

I looked every where for this so sorry if this is a repeat.

The employer was part of a PEO, Multiple Employer Plan and has spun off into their own plan 401(k) plan.  Is the new plan considered a successor plan, and therefore cannot use the use the 3% Prior Year average available for the first plan year?  Or is the new plan considered a new plan?

I have a client with a document that allows prevailing wage contributions to offset employer matching (non-safe harbor) contributions. What test applies to the portion of the prevailing wage contribution used to offset a participant's employer match, ACP or 401(a)(4)?

Wasn't there a ruling a few years back that stated if an employer were to have 401k plan assets under a pooled account, then they were required to provided quarterly statements on the plan and that only providing an annual statement on the 401k pooled assets was not sufficient anymore?

Cash balance plan's normal form is an annuity, but for the in-service distribution provision, the plan document specifically states it can only be taken as a lump sum (makes perfect sense).  That said, are you still required to display the various annuity amounts on election forms and include QJSA notice, etc.?

I just found out my Ex has recently been collecting a pension, that he conveniently neglected to reveal to the court during our divorce proceedings, and i have several questions. First is- who do I go to for a QDRO? A financial person that has pension knowledge, or a divorce attorney or ????

Second- would my benefit (50%) be calculated upon receipt of the QDRO request or from the time HE started receiving the pension (that is when I would have become eligible also)?

Third- the pension QDRO guidelines provide options for monthly payments, which appear to end when either of us dies,  a Shared Interest approach and a Separate Interest approach. Can you explain the difference?  Not sure if these are common options or just THIS pensions options. 
 

any incite into this situation would be helpful. 
thank you

I can use the SHNEC towards all of my nondiscrimination testing, right? i..e, new comp/cross tested, gateway minimum and the like?

Group:

New client is in initial stages of audit of Esop. 

In reviewing her businesses 2013 ESOP Plan Document I noticed there was no Adoption Agreement prepared for client at time. Or at least none the client could find. And no restated esop documents. There are corporate resolutions and an SPD. 

Its my understanding that the former TPA (who I'm told was a volume submitter) at the time assisted in drafting clients esop documents. I thought it would be easy to contact them but I don't believe they're still in business. 

It seems a little late in the proverbial game to draft an adoption agreement corresponding with the provisions of the plan document. 

As part of our IDR disclosure to auditor would you give copy of old ESOP Plan  Document with explanation that the TPA is no longer around to obtain a copy of any adoption agreement? 

Thoughts and comments appreciated. 

I have been out of the retirement plan admin business for a few years and want to run this by the group.  Owner has recently retired and wants to terminate his 401(k) Plan.  The plan owns a life insurance policy (variable life) where the owner/participant is the insured.  He happens to be my brother who was a State Farm Agent.

Can he buy the life insurance for it's fair market value (I realize that may be different than the cash value, but the policies are very mature).  The Prohibited Transaction Exemption is still applicable to this, correct?  He can take personal cash and pay it into the plan as a purchase of the policy - right.  Then he can take his RMD for 2021 (he is over 10 years over his 70 1/2 year and has been taking RMD's every year as required) and then terminate the plan and roll the assets into an IRA.  Upon his death, his much, much younger spouse can rollover his IRA into a Spousal IRA and then wait until 2032 (her 70 1/2 year) to start RMD's.

Am I missing anything?  Have any rules changed on me?

The profit sharing plan owns 3 life insurance policies on one insured.  The  PS 58 cost is reported on each contract.  If the insured would like to purchase one of the contracts can the insured use the total accumulated PS 58 costs on all three policies to reduce the taxable distribution on the one contract being purchased?

I have one last off calendar 2019 form year to file for a 1 man plan. In the past we filed SF 1 -man but for 2020 year the form no longer exists.

Can I still use the 5500-SF one man for a non-calendar year plan beginning in 2019 and ending in 2020?

If I can't use the SF, can I electronically file the 2019 Form 5500-EZ or does it need to be filed on paper? That is can only the 2020 Form 5500-EZ now be filed electronically or can the 2019 Form 5500-EZ also be filed electronically.

Plan effective date 1/1/2020.  Safe Harbor Non-elective component effective 10/1/20.  All employees met eligibility requirements as of 1/1/20.  (No mid-year entrants.)

Plan document says “Compensation shall include only that compensation which is actually paid to the Participant during that part of the Plan Year the Participant is eligible to participate in the Plan.”

Does that mean I use full year comp for Safe Harbor Non-Elective contribution? Or only from 10/1?  

What if plan sponsor wants to allocate a discretionary Non-Elective contribution in addition to the SHNEC?  It would be based on comp for the whole year.   Is it a problem if I use two different definitions of comp…whole year for p/s and part year for safe harbor?

I've got myself confused....since the employees were participants on 1/1, I'm now thinking I should use comp for the whole year for both.  

Comments are appreciated!!