Hi 

I am never comfortable with providing prior service for the following situation but there are different schools of thoughts out there.

Working on a new DB plan. Have employees and the owner as eligible. I am now told that the owner's spouse have been working for the company and never drew a salary. He has been employed since 2000.

Assuming that he always worked 1000 hours, any issues in providing 1 to 5 past YOS (have not totally determined yet on how many years I will need for the plan design) for benefit accruals (under safe harbor rules)? I believe, the lack of salary history will be of an issue especially for 415 and testing but let's put that aside for the time being. I just need to determine if I can provide prior service.

Thank you

Husband and wife DB plan, both passed NRA of 62, are looking to terminate the plan, but plan asset value has exceeded 415 lump sum by 1 million. What are the ways to solve the overfunding issue so they can terminate the plan? 

One way an actuary suggested to me is having both participants start taking in-service distribution, which can be treated as eligible rollover distribution and rolled over to IRA without tax implications. But it seems to violate one of the exclusions of an eligible rollover distribution: "a series of substantially equal periodic payments over a period specified in section 402(c)(4)(A)". Is this really workable? 

Group:

Plan has had an investment in gold coins for several years. These are not qualifying investments, I don't think.

So, all along they should have been filing a "regular" 5500 with a Schedule I attached.

All along, the bond was for mare than the value of the gold.

Any harm or foul here?  Maybe next year file the I?

Did we really commit perjury by saying all the assets were qualifying in the past 5500's?

I have a DC plan with a 12/31 PYE and a terminating DB combo plan associated with the same employer. I know plans of the same employer with different plan years may be aggregated for ABT testing purposes under 1.410(b)-7(e), but do you just follow the rules of 1.410(b)-5(d)(5)(ii) and add the DC contributions divided by calendar year compensation to DB benefits divided by partial year compensation? Is it that easy or am I missing something? Any different rules when the plan is a short plan year versus just a different plan year? 

More IRS guidance.  And not on a Friday!

Notice 2020-51

My client owns “Altaba, Inc. Escrow” stock as an asset in a pooled fund in its profit sharing plan. It allocates total plan investment earnings annually among plan participants. The stock is no longer actively traded on the stock exchanges and Fidelity lists its asset value at 12/31/19 as “not available”. How can I determine the value of this stock at 12/31/19 to use in calculating its investment earnings for 2019 to use in my total plan investment earnings to be allocated among plan participants for 2019?

I was referred a plan sponsor whose 401(k) plan  is under audit.  The IRS agent is requiring proof that the Safe Harbor Notices were issued.  Other than email, what type of proof are other TPAs recommending to clients?  The agent actually called all the employees for the last 4 years to ask if they received the notice!

Please don't waste any research time on this, as it is an academic question that came up tangentially during a general conversation.

SH match plan calculates SH match per plan year. Can it be amended mid-year to change to per payroll calculation/deposit?

EPCRS provides the missed deferral opportunity (MDO) is equal to 50% of the employee's missed deferral.  The missed deferral is determined by multiplying the ADP of the employee's group (HCE/NHCE) by the employee's compensation.  We have a situation in which 2 HCEs participated in the plan 2014-2018 and during each of those years a NHCE was not given the opportunity to defer.  Since there is no NHCE group in the Plan, how is the missed deferral determined?

401(k) plan provides that unvested amounts are forfeited upon the earlier of 5 consecutive breaks in service or the date of distribution or deemed distribution.  Company is about to terminate the plan and just discovered that, while forfeitures have been occurring when employees terminated employment and either took a distribution or were deemed to take a distribution (e.g., terminated with no vested interest), no forfeitures have been occurring for individuals who didn't have a distribution or deemed distribution but have incurred 5 consecutive breaks in service.  So, these former employees still have unvested amounts credited to their accounts more than 5 years after their termination.  The plan provides that forfeitures are to be used to offset employer contributions, or reallocated if forfeitures are greater than the contribution obligation.

Any ideas as to what to do?  Can the company simply cause the forfeitures to occur now and transfer those amounts to the forfeiture account?  Or is a correction required for past years, and if so, what would that look like?

Plan has 1 YOS/age 21 for pretax, match and nonelective.  Based document (not AA) has language that indicates no age/service requirements to receive DB contribution.  So in theory, all employees are eligible for DB contribution. However, to actually receive a contribution you must work a DB job. 

Here are my questions: 

1) For ADP/ACP, do we only include those with 1 YOS/age 21?  What if someone received a DB but did not have 1 YOS?

2)  Plan is top heavy, of those employed on the last day of the plan year, who receives the Top Heavy allocation?  Only those with 1 YOS/age 21?

3) Can the Davis Bacon contribution be used to off set the Top Heavy obligation?  The plan has the option to use the DB as a QNEC for ADP or to Off set ER contribution.  Does this matter?

Is it possible for a third party to loan to a solo 401K plan?  

I have been researching and have seen some references that an arm's length third party loan to a Solo 401K Plan would represent an exemption from a prohibited transaction as long as the following conditions are met.  It must be non-recourse, pay a reasonable interest rate, and be for the benefit of the participants of the plan.

I would greatly appreciate it if someone could confirm (or refute) my assumptions.

Thanks in advance.

Business has a premium only QSEHRA just covering health insurance premiums and not dental, vision premiums etc. An employee will be going on Medicare soon. While I know Medicare part B, Medicare Advantage (part C), part D, and Medicare Supplemental premiums may be reimbursed under QSEHRAs, is it fair to cover the supplemental/voluntary medicare premiums like Part D or medigap premiums for this employee if we only cover primary health insurance premiums for employees with market place or other health insurance coverage? Would that be considered a difference in how we are treating employees with market place coverage vs. an employee on Medicare? Or would that mean we should permit employees who do not use the full amount of the reimbursement amount if they have marketplace coverage (say if they are young with a relatively lower premium) to use the "extra" amount toward supplemental health insurance too if they so wish?

Would it be safer to just reimburse the employee's Part B premiums and/or Medicare Advantage premiums, but not supplemental premiums such as Part D and medigap?

Or should we amend the plan document to be more specific as to what premiums are covered and which ones are not?

Thank you.

i don't think the pandemic makes a difference on this but if an employee is paid during the pandemic but doesn't work and they don't work 1000 hours, do they get a year of service for vesting?  plan defines a year of service as 1000 hours.  

Good morning all

Owner only 401k plan - OwnerCo.

Owner also works for another company as an employee - EE-Co.

Owner over age 50.

Owner will defer $6,000 in the company - EE-Co he is working as an employee.

Owner will receive $22,000 salary from OwnerCo and will defer $20,000.

So between the 2 deferrals, Owner is not going to exceed $26,000 for 2020.

Of the $20,000 deferral under OwnerCo, the owner will treat $6,500 of the deferral as catch-up which will reduce the base deferral to $13,500.

Owner will also make a $5,500 profit sharing contribution from the OwnerCo. Therefore $13,500+$5,500=$19,000 will not exceed 100% of pay i.e. $22,000.

Agree?

Thank you,

If 2 plans are part of a control group, but on occasion an employee might be terminated from one plan and hired in another, is that a distributable event?

Can they roll their balance from one plan to the other? 

I know Larry and some others here do a lot of pooled plans, and I'm just curious to hear your opinions (if you have any at this early stage) of this suit:

[Lipshires v. Behan Bros. Inc. Retirement Plan, No. 20-252 (D.R.I. complaint filed Jun. 8, 2020)]

https://www.napa-net.org/news-info/daily-news/401k-plan-sued-covid-19-related-missteps

I don't think the participants can win this but if you've been sued you lost.  Monday morning quarterbacking it, they communicated poorly (I'm not a lawyer but it seems that some of those communications might have left them exposed), and totally dropped the ball on moving assets to cash when they KNEW these distributions were pending.  

Notice 2020-50

Am I the first one to see this?  

Under this safe harbor, a qualified employer plan will be treated as satisfying the requirements of § 72(p) pursuant to section 2202(b)(2) of the CARES Act if a qualified individual’s obligation to repay a plan loan is suspended under the plan for any period beginning not earlier than March 27, 2020, and ending not later than December 31, 2020 (suspension period). The loan repayments must resume after the end of the suspension period, and the term of the loan may be extended by up to 1 year from the date the loan was originally due to be repaid.

"I was wrong."  They even said you can do the crazy thing of suspending through Dec 31, making the regular payments until the 1 year mark for the suspension, and then reamortize what is left.  "I was totally wrong."  At least we know what we have to do.