We have recently been brought in to consult on a 401k plan.  Client is ABC Company for our purposes.  ABC Company bought a number of businesses that were in foreclosure.  Lets call them Company XYZ.  the employees of XYZ started for ABC on 1/4/2021.   The current recordkeeper redrafted the documents effective for 1/1/2021 to recognize service for Company XYZ.  The document now states that ABC Company 401(k) plan recognizes Company XYZ for eligibility and vesting.  The client is now saying this was a mistake and they didn't want that those exemptions in the document.  No communications have been made to the employees of Company XYZ even though those employees would of been eligible on 1/4/2021.  Please note that no deferrals started for those employees and the plan has a 90 day wait and 1st of the month Eligiblity.  Can ABC Company have the recordkeeper redraft the documents and remove this since no communication was given to the employees?  

See this thread for more information.

Hi, 

One of my client is terminating the ESOP plan, this is the first time I'm assisting a ESOP plan termination.  Could you help me understand how different is a ESOP Plan termination from a 401(k) Plan Termination. 

• Terminating due to acquisition Part will be moving to the acquiring company plan - Can participants move the funds in- kind to the acquiring company 401(K) ?
• The plan does not have any Stock assets - Does the sponsor have 6months to distribute assets or is there a 6month rule ?
• If the participants do not take action can these be liquidated and rolled over to an IRA like we would normally do in a 401(k) plan. ?

I’m 60 years old. I have a 403b that is currently invested in a 6 year shield annuity. I’m in year three of the shield.I retired from teaching here in Milwaukee and now have a private sector side job that I’ve opened a tax deferred 401k with.  I also have my own personal Roth account. How do I move my investment in the shield annuity to my Roth account so that I can pay the taxes due out of my own cash savings to maximize what I can put into my Roth account. Do I need to surrender the shield annuity? 

Question on late retirement increases. Assume everything above board re: more recent DOL guidance (late retirement increase required for TVs, and for actives where plan either:

1) doesn't have suspension of benefits language

2) has the language but notice not provided

In this case, the plan has SOB language (touching only on the rehire circumstance and suspending benefits then but treating the benefits for actuarial adjustment purposes as if they've stayed in payment) and client has been providing notices to participants past NRD, but only restarted doing so in recent years. 

The case circulated through a few different actuaries, administrators after splitting from another plan eons ago. Other plan stayed with same counsel the entire time and language is clear (This is for background, not implying that another plan's language has bearing on this plan) - benefits suspended at normal retirement date if participant continues to work and benefits at a later date will be those earned at actual retirement, including service and pay). 

However, the subject plan has been "boilerplated" and sloppily so by previous actuary/administrator (I can't imagine legal counsel put the doc together). SPD and document only discuss rehire for SOB, and plan document says late retirement (again, boilerplate language) will be NRD benefit plus greater of new benefits earned or "Late Adjustment" required under the plan. 

capitalized, no verbiage elsewhere and assuming that's also boilerplate as it wasn't in the original doc before split. No definition of Late Adjustment method that's capitalized - assuming either the description was taken out elsewhere since no definition or detail refers to this anywhere else. 

SPD in this case is short, also boilerplate in nature (looks like bits and pieces thrown together). SOB language is old school "if you return to work, your benefit will be suspended", and no mention of what participant will get except for early and normal retirement. 

Please pick apart my conclusion (waiting for green light to get opinion from legal counsel). More important in this plan than some others (in terms of the decision) due to the proportion of over 65 participants.  

* SOB language only talks about rehires, but in general, that still counts in determining if plan allows SOB at normal retirement and no actuarial increase

* since the mother plan more clearly describes no late increase until 401a9 required, I'd like to see far more in terms of intentional adding of a late retirement adjustment (including an actual adjustment description or method that appears to be missing)

* with a combination of the two, applying actuarial increase through the date that SOB notices were restarted, and then for older participants who work well past 70, starting again at what would have been RBD (4/1 after CY that 70 1/2 is attained). 

I know, dumbest question ever, right?

But is it:

1. E[mploye]R & E[mploye]E

or

2. [employ]ER & [employ]EE

For 20 years, I had always thought of it as one of the above, but someone else's usage just made realize that the other potential source exists.

Hi there- new here.

Employer  contributes to NHEC employee % of salary, based on years of service. After internal audit, employer discovered they had miscalculated years of service  (over and contributed at this higer rate based on this mistake... going back 10 years. 

 Is the only appropriate correction to adjust years of service back to the initial error, and remove difference in contribution plus interest and earnings  for the full 10 years from empoyee RSP account? This would represent a significant percentage of the employee's RSP balance. Are there any alternative approaches to correct? 

Thanks!

What liability does a plan sponsor have for accepting an invalid beneficiary designation form?

401(k) participant submitted a beneficiary form in 2018 naming wife and 3 children as equal beneficiaries (25% each). Participant signed his own name on the line for the spouse's signature for the spousal waiver. It is possible he had POA for the wife at that time, but that is not noted on the form and the plan administrator has no record of a POA. There was no witness signature. Form was accepted by plan sponsor. Participant died in January.

My opinion is this was not a valid spousal waiver and therefore the spouse is his beneficiary. One of the children is threatening a breach of fiduciary duty claim against plan sponsor for "recognizing the propriety" of the beneficiary designation form and leading participant to believe it had been properly submitted and was accepted.

Does plan sponsor have any liability here? 

Given the DOL/IRS May 2020 guidance (85 FR 26351) extending the time under ERISA/IRC a participant can file an appeal under a retirement plan during the COVID-19 emergency, by what date does a participant have to file an appeal?  Just say 60 days after announced end of COVID-19 emergency? 

I have someone who terminated in 2020 and took a distribution.  I need to add her distribution amount back to the plan balance for Top Heavy.

Do I have to also add back any of her in-service withdraws the previous 4 years?

I know the IRS has said that we could use either "1" or "2" for Box 7.  Just curious what the majority of people have been doing?  Also, I assume we mark the entire distribution as taxable?

Thanks!

While reviewing my tax form before filing, I realized the amount that was used to pay the 2019 service will be taxable (Box 29 of Form 2441). I never had this experience before since I always used up the $5000 DCFSA annual limit.

Scenario: *All amounts are not true amount.

• DCFSA Plan Year 2020 - covers Sep 2019 to Dec 2020 (incl. grace period)
• Contribution for Calendar Year 2020 - $3000 as shown on Box 10 of W2 (The other $2000 was contributed from Sep to Dec 2019 that paid CY 2019 service.)
• Total Paid for Calendar Year 2020 Service - $2000 based on the statement by the daycare each yearend (My kid stopped going to daycare last March 2020 because of Covid.)
• Year 2020 - Form 2441 - Box 29 - The $1000 is showing as taxable. This $1000 contributed in 2020 was actually reimbursed for 2019 Service Paid.

Please note that in Year 2019 - Form 2441, I declared $9000 as qualified expenses based on the statement by the daycare for that year. Part of that $9000 is the $1000 that is showing as taxable in my Year 2020 Form 2441. I did not get any credits as it was already over the $5000 DCFSA annual limit.

Question: Can I claim the $1000 as 2019 service paid in 2020 even though I declared it as qualified expense (part of the $9000) in Year 2019)?

Thank you and appreciate any insights.

I have a 401k plan where the participant died in 1998.  He has a small balance in the plan.  The employer who sponsors the plan has been purchased several times through-out the years and does not have any records going back that far.  The participant has a small balance and we were attempting to do a small balance cash out when we found he was deceased.   There is no beneficiary designation on file with the recordkeeper or the plan sponsor.  We have done searches and have not been able to determine if the participant had any family.  The plan document states to distribute to the estate of the participant.  Our dilemma is that we do not have any information on an estate to distribute to and the check will go uncashed.  The recordkeeper refuses to escheat the balance.  

Does anyone have any guidance they can offer to us?

Plan has 3 HCEs (2 contribute) and 12 NCHEs. Doctor/owner has until his tax filing deadline to contribute.  Last year I gave him 11000 and 6000 was categorized as catch up. Test passed.  This year I gave him 8850 and the test passes, the 11000 wouldn't work (change in demographics); however, it show a refund to HCE #2 in the amount of $550 (no SBJPA/Allocable Income/total Refund Amount)-- this in Relius. Then it shows the $550 as catch up to the doctor.  Does that make sense? 

Thank you in advance. 

I know that there are multiple (I think three) different options when it comes to entry dates for otherwise excludable employees (not satisfying statutory entry requirements).

My question is, can you choose a different entry date when testing coverage in different plan years, as long as you treat everyone the same in the individual plan year being tested?

For example, let's say you normally use statutory entry dates when determining the otherwise excludable group.  Then one plan year an HCE is in the otherwise excludable group and is messing up testing, but if we used, say the plan's actual entry dates to determine the otherwise excludable group, can we make that change for the plan year as long as everyone is treated in the same manner?

Thanks very much.

I have a scenario where the employer declared the 2019 discretionary profit sharing contribution before the tax filing deadline for 2019, signed and filed the 5500 with the contribution on it, and provided the participant statements showing the contribution.   Due to a change in bookkeepers, the check never got issued and is still outstanding today.  I believe the plan is owed the contribution and it should still be paid, but deductible in 2020.  

Are there thoughts on if the missed contribution can/should be paid to the plan since the participants were notified and it was declared?   The current CPA is going to amend to remove it from the 2019 tax return and believes is CANNOT be made to the plan now and that the 2019 5500 and participant statements should be amended as well.  

I may be on the wrong forum, if so I apologize and no need to reply.

My father recently passed away and had a pension that pays my mom the same monthly payment that he had been receiving for the past 30 years.  When we notified Fidelity (plan administrator for BP) they questioned my mother's DOB since their system indicates 1948 when her actual DOB is 1938.  They can look back at the original paperwork from 30 years ago and see that her DOB was correctly reflected as 1938 in writing, but it says 1948 in their system.  They requested a copy of her birth certificate to change their system.

Could this incorrect date affect the monthly pension my father received over the past 30 years and the amount my mother would receive going forward?  I want as much information as possible before bringing this up with Fidelity.

Sorry if this was asked before:

I own an S-Corp and own 100%.

My adult son is my employee and participant.

2020 5500-EZ instructions for who can file EZ:

2. Covers only one or more partners (or partners and their spouses) in a business partnership (treating 2% shareholder of an S corporation, as defined in IRC 1372(b), as a partner)

1372(b)2: 

(b)2-percent shareholder defined

We have a new 401k/PSP plan with an effective date of 1/1/2020, but a special effective date of 11/1/2020 for 401k deferrals and safe harbor (3% non-elective) contribs (it was adopted late in the year), so the 401k & SH provisions were just effective for the last two months of the year (from adoption date forward).  Note - the plan will be top-heavy.  If the only contribs for the year are the two months of deferrals and the SH 3% will the plan be deemed to satisfy top-heavy minimum?  Or will the employer need to top off all employees at 3% of comp for the entire year?  We don't know if, as long as the 401k deferrals and SH 3% for 11/1-12/31 are the only plan contribs for the year, if the plan will be deemed to satisfy top-heavy minimums, or if they still need to do 3% top heavy min for entire year since overall the plan has a 1/1/2020 effective date.  Our hope is that the entire year TH minimum would only be due only if the employer decided to add any additional profit sharing.  IS this correct?

We're doing 1099Rs for some clients that have brokerage accounts and the brokerage firm will not prepare the 1099s.

(No surprise).

Should we be getting the name, address and TIN of the brokerage house, as they prepared the check and note them as the Payor on 1099R, or use the Trust ID number for the Plan and make the plan the Payor