Once a Plan Administrator has obtained consent to distribute documents electronically - where does the burden of proof lie?  Say the plan administrator emails to the address on file, but does not request a return receipt, but the email does not kick back as invalid, if the participant then claims to have not received the document, who has the burden?  I've been looking for cases, guidance, etc., but the only thing I've found is the Thomas case wherein the employer posted on a website, but did not inform the individuals that it was posted.

Any further information/guidance/cases, etc. is greatly appreciated!

What is a daily valuation vs. a annual  or monthly valaution?  for a 401k plan with a recordkeeper, is this considered a daily valuation?  Thank you.

What type of severance plans require a Form 5500 filing?

If filing is  required, how does one determine participant count? Is it all active employees eligible for the plan?

Do you need to include those who have severed still receiving severance benefits?

1 of our subs who also has a separate severance program has never filed a Form 5000 (since 2015). Assuming should have is the DOL delinquent filer program the only option. active employees currently eligible for 2019 is 211.

Thanks

Alexa

ps. 1 follow-up : we do exclude in another section of plan compensation "long term disability payments" but STD is not mentioned here

Hi,

I have a sole proprietorship PLLC business.  For the year 2018, my CPA incorrectly calculated Maximum Deductible Employer Contribution to my solo 401k, which was contributed in April 2019.  I found out in May 2020 that it was over by $687.  I self-prepared by 2019 taxes in May 2020, and I correctly calculated  Maximum Deductible Employer Contribution $9554.  In the recent call with the CPA, he says this qualifies as "self-correction" with recommendation to reduce 2019 contribution from $9554 by $687 (excess employer contrib for year 2018) BEFORE July 15, 2020.  $9554 has been kept as cash till date.  He says I need not file any forms etc i.e. no Form 5330 needed.  

Questions:

1. Is it correct that I need not file Form 5330? 

2. What are the consequences of not filing Form 5330 if I am expected to by the IRS? 

3. If I should file Form 5330 and the CPA is not supporting but I still file, am I dead in water if there are issues?  Against CPA advice me filing Form 5330 ensures that he certainly won't cover the fees and taxes associated with his mistake...  

How would you proceed if you were me?  I need to remove $687 ASAP from e-Trade to be effectively out of the account before July 15th and avoid further issues.

Please help!

Thanks a bunch!

Hello, 

This is the situations: 

• Employee met 401(k) eligibility prior to termination on 2/15/2019
• Employee hired at 6/22/2020
• Without the employee making any affirmative election, system generates a 401(k) contribution on her first paycheck based on the contribution prior to termination. 
• The plan has automatic enrollment ( July 2, 2020- automatic enrollment disclosure sent to employee) 

My questions is as follows:

• Doesn't the employee supposed to affirmatively elect participation again once rehired? 
• If so or not, where in the rules does it state this? 

My limited understanding is that unless the employee is automatically enrolled based on due process of notification, there has to be an affirmative election. Am I wrong? 

If a 403(b) plan allows for employer contributions (such as the option is selected in the AA), but does not fund the contributions, can the plan be a non-ERISA plan? I'm thinking not, but don't believe that 29 CFR § 2510.3-2(f)(3)(iv) confirms that for me. There's no "funding," but does the "option to fund" indicate 29 CFR § 2510.3-2(f)(3)(iv) has not been met??

Plan Doc says participants will have investment direction over their accounts, but all the money is pooled into one account.

I think the easiest fix is to retroactively amend the plan to say it's pooled an move one.  (The population is owner, spouse and one low-paid employee who only gets a small SH & PS each year).

Can they do that?  SCP even though that's not explicitly one of the reasons to have a retroactive amendment under EPCRS?

These questions are in regards to the CARES act delaying the due date for all required payments during the 2020 calendar year to January 1, 2021.

Are credit balance election due dates also delayed until January 1, 2021?  My understanding is that the credit balance election must be made by the contribution due date.  Since the contribution due date has been delayed then the ability to elect to use credit balances would be delayed as well.

Also, If a client decides to delay their 2019 residual contribution to January 1, 2021, then how does this affect Schedule SB and PBGC filings?  Would one file the forms without the residual contribution, possibly showing an unpaid minimum on the Schedule SB, and then revise the forms later once the final payment has been made?  An extra attachment to the SB stating that it will be revised after the final contribution has been made could be added as well.  

I believe there is not yet much guidance on this, but would like to know if others agree with those statements or are taking a different approach.

I never deal with this issue.  can the plan purchase life insurance with Roth 401(k) deferrals?  everything i read says premiums are purchased with pre-tax dollars and PS 58 costs are taxable each year.  what would happen if you used Roth?  would you still have to pay PS 58 costs?

I’m seeking some help on Target Benefit Plan, important plan provisions and preliminary calculations are provided in the tables below.

Would you please check my calculation?

Target Benefit =  ((Average Annual Compensation *0.45 + (( Average Annual Compensation –Covered Compensation)*0.0052*6))/12)*(6/20)

 VBRA =  (Change TB) *(APR), the APR is 130.8344

Individual Level Premium = PMT(7%,5,0,-1*VBRA,1), for number of years I used 5 because the expected total year of service is 6 years and the participant waited one year to enter the plan. I'll be reducing the number of year each year by one.

In the Q&A on the Disclosure rules back in 2012, the DOL said that if a plan had only a brokerage window and no DIAs to avoid the fee disclosure rules, the the trustees may not be living up to their fiduciary responsibilities. (Q 39)

Quote

Nonetheless, in the case of a 401(k) or other individual account plan covered under the regulation, a plan fiduciary's failure to designate investment alternatives, for example, to avoid investment disclosures under the regulation, raises questions under ERISA section 404(a)'s general statutory fiduciary duties of prudence and loyalty.

https://www.dol.gov/agencies/ebsa/employers-and-advisers/guidance/field-assistance-bulletins/2012-02r

Is there anything else that talks about NOT having any DIAs in the plan and why that's a bad idea?  I seem to remember something like "having too many investments is as bad as having too few" but I cannot locate anything.  Especially about the prudence (or lac thereof) of the former.

Can a plan amend their document during the plan year to exclude HCEs from PW?  This is not a SH plan.

I know in-service withdrawals of deferrals may not be made prior to age 59 1/2, but is there any requirement that they must be allowed after age 59 1/2? 

We have a PS 401(k) plan that allows in-service withdrawals from all accounts only after NRA - NRA being age 65 and 5 years of eligibility service.  So I was wondering if participants would have to wait until NRA or if there was a rule regarding deferrals that would supersede that.

If anyone has an opinion and/or something they have found from the powers-that-be, please share. This has stumped several colleagues but I'm sure it can't be a totally unique situation.

ABC Company has a deferral-only 401(k) plan (no match or non-elective provisions) with one key employee Fred, who is the CFO and earns $250k per year.  The ABC Company 401(k) Plan is top heavy.  Fred is also employed by XYZ Company - completely unrelated to ABC Company - and participates in the XYZ Company 401(k) plan.  In 2019 Fred had a $10,000 excess deferral - he contributed the IRS maximum in the XYZ Company 401(k) plan and $10,000 into the ABC Company 401(k) Plan.

If the entire $10,000 that Fred contributed to the ABC Company 401(k) Plan is refunded as an excess deferral, is the ABC Company still required to make a top-heavy minimum contribution to non-key employees?

My initial reaction is no, because an excess deferral is not an annual addition, but I can't find anything that would support this.  I have colleagues that feel ABC Company is required to make a 3% top-heavy minimum contribution since Fred contributed 4% of his compensation to the plan even though the entire 4% is being refunded as an excess deferral.  Again - they haven't provided anything to support their position either.

If a plan has the following language related to suspension of benefits - A participant who remains employed by the Employer after his normal Retirement date and who is to be credited with at least 40 Hours of service each month will have a Late Retirement Date on the first day of the month coincident with or next following actual termination of employment with the employer or change in employment status to a position in which the Participant would be expected to be credited with less than 40 Hours of Service each month.  The Plan Administrator shall notify such participant that Monthly Retirement Income will not commence until his late retirement date and the Monthly retirement Income will be equal to that amount determined pursuant to 4.03.

and 4.03 (late retirement) says - When a participant retires on his late retirement date, his Monthly Retirement Income shall be an amount equal or greater of: (a) his accrued benefit based on the Participant’s Years of Credited Service and Average Monthly Compensation as of his Late Retirement Date, and (b) the Actuarial Equivalent, as of his Late Retirement Date, of the Normal Retirement Benefit which would have been payable at his Normal Retirement Date.  This benefit is payable in the Basic Form and commences on said Participant’s Late Retirement Date.   

Isn't it irrelavant if notice is given or not since the SOB language states that the monthly retirement income will be equal to the amount determined persuant to 4.03 which says the benefit will be the greater of the accrued benefit at the late retirement date or the actuarial equivalence of the NRB as of the NRD?  Even if notice was given the particiapant should have had actuarial equivalance if it was greater than the accrued benefit and it wouldn't have been limited to NRB at NRD.

Thanks for your input

Plan auditor determines that the plan did not follow the definition of plan compensation while performing the 2017 audit of the plan. Tells the plan sponsor to calculate the necessary QNEC at 25% of missed deferrals, plus appropriate match. Going out to do the 2019 audit, they find that the plan sponsor did not remit the QNEC to the plan until January, 2020. The auditor believes that the Sponsor should now go back and recalculate the QNEC at 50%, since the remittance was after the close of the 2nd plan year following the discovery and calculation of the QNEC.

Any thoughts on this?

We know this applies to SHNE for HCEs, I do not see any mention of suspension for NHCEs, such that ADP/ACP need be met the customary way and HCEs need go through the reductions anyway, through levelling, returning , etc and the 3% top heavy need be for the full plan year.

This may seem a dumb question, but how does this help the sponsor that can't afford the SHNE for NHCEs?

Especially for 2019- many sponsors wait until end of year or accrue the contribution.

The plan sponsor's new legal counsel  wants to review all contracts with their vendors.  Due  to the complexity of the agreements they want to use outside counsel or a  consultant.

The question is - can the cost associated with this service be paid from the forfeiture account. Forfeitures are used to offset admin fees.  This is not a plan design issue, just looking at agreements to be sure they are current and encompass all features provided.  Ok to pay for forfeitures??

Any site I can reference??

Thanks

I have opted out of the healthcare plan at my current employer since I have healthcare through my husband.  Since I opted out of our healthcare, my employer is contributing $4.54/hour to my 401K.   My employer adds this money into my weekly pay as "misc income" and then deducts it as H&W 401K.  Is this legal or should my employer be contributing separately to my 401K and not through payroll?

Hello, this might be a dumb question but I am curious as to know if the funds that are allocated in an employee’s esop account compound as the esop matures the same way that money sitting in a 401k for many years start to compound interest? I hope that I am making sense. I have worked at this company that is employee owned for 15 years and I plan to retire there in another 25 years or so. Thank you in advance.

if I may, I only have only one more question. Do most people diversify when they are 55 and over and have been working at the esop company for over 10 years? I mean if the company has done so well for all of the years that They have been there would it be foolish not to diversify? I would hate to miss out on a much larger return by diversifying but I also realize that any company can go bankrupt and lose everything. Just wondering if there are people that ride the esop 100% until retirement.