Plan currently has a dollar for dollar match on first 10%.

I think I can have a dollar for dollar match on the first 4% as safe harbor, and then dollar for dollar on the next 6% as a discretionary match.  I would still get to keep my ADP Safe Harbor, but obviously no ACP Safe Harbor.

My understanding is that this does not create any problems at all, right?  i just have to run my ACP Test.

We have a client who would like to allocate a Top Heavy contribution to both Key and Non-Key employees. 

The language in the document regarding Top Heavy allocations is as follows: Each Non-Key Employee who is a Participant, or was eligible to be a participant in the plan year, and is employed by the Employer on the last day of the Plan Year will receive a top-heavy minimum allocation for that Plan Year, irrespective of whether he or she satisfies the Hours of Service condition under the Employer's Adoption Agreement...

Based on this language, is it permissible to allocate to Key employees? 

Any feedback is appreciated! Thank you

I have a one-person Profit Sharing Plan that wants to name his daughter as a "contingent trustee", just in case something were to happen to him.  How would we go about that, or is it really more of a beneficiary (or just add her as a second Trustee)?

Thanks everyone!

Small DB plan just husband and wife. Husband is age 73, so has been taking RMDs. The annual annuity date is April 1st, so husband has already withdrawn his 2020 RMD. Now both husband and wife want to withdraw $100,000 each as CRDs. Is there anything wrong with that?

I was trying to find something in EPCRS that says that in certain situations if impractical you can use the DOL Lost Interest Calculator to adjust a corrective allocation for gains).  I routinely see attorney drafted VCP apps take this approach and have never seen it questioned.

Can anyone shed some light on this for me?  IF we're depositing a $100 into someone's account, we don't want to charge the client $250 in fees.

I haven’t seen this addressed anywhere, and I’m a little surprised. IRC section 6055/6056, as a result of ACA, requires reporting of health coverage. When the health coverage is provided under a single employer plan, is the cost to do this reporting an employer or plan cost? I think I know the answer; I just wanted to see if DOL, or anyone else for that matter, has addressed this question publicly. Thanks.

We have a client who is splitting off one location as a separate entity/company. We'll now have Company A and Company B. Each will sponsor its own 401(k) Plan. There is no common ownership for controlled group purposes, but may be as an affiliated service group due to management functions and/or as the 65% owner of Company B is the father of of the 50% of the owner of Company A. This will be passed by the company's attorney.  The intent of the companies/plans is to have zero liability to/for one another.

Question - an employee of Company A (non owner) acts as the Plan Administrator/Employer Sponsor for Company A's 401(k) plan. The plan uses a turnkey provider as Trustee, but names two individuals as Administrator/Sponsor in the Plan's documents. This person signs off on plan resolutions/amendments, approves distribution requests, handles payroll and contribution deposits to the plan, etc.  If new Company B uses the same individual in the same capacity, acting as Plan Administrator/Sponsor named in the docs, performing all of the same functions, wouldn't there be liability or a common tie there?  I have concerns for this person that would be named as Administrator on both plans.

I am trying to reconcile the rule under 424(h)(3)(C) with the accounting rules for share-based compensation. 424(h)(1) provides that if an ISO is modified, then it is a new grant. 424(h)(3)(C) provides that "the term “modification” means any change in the terms of the option which gives the employee additional benefits under the option, but such term shall not include a change in the terms of the option in the case of an option not immediately exercisable in full, to accelerate the time at which the option may be exercised." So far so good.

But the accounting rules say that acceleration of vesting is a modification that leads to a new grant. Are both things true in that one refers to status as an ISO and the other refers to accounting treatment? 

Any thoughts appreciated. TIA. 

Hello! I happen to be familiar with IRS Notice 2020-61, which came out today, covering the deferral of 2020 contributions to 1/1/2021 under the CARES Act. I found the Notice to be very confusing, so I thought I would start this thread as a PSA, to give pension actuaries a leg up on understanding this. This post will explain how & what interest rates are to be used in connection with DB contributions originally due during calendar 2020 under Notice 2020-61.

Under 2020-61, the CARES Act EIR rule (i.e., contributions are adjusted at the EIR of the plan year containing payment date) applies for payments actually made from January 1, 2020 through midnight on January 1, 2021 (or January 4, 2021 if the provision in the current Senate stimulus bill passes). For contributions that were originally due during calendar 2020 not yet paid by midnight, January 1, 2021, the CARES Act EIR rule expires. What replaces the CARES Act EIR rule (for unpaid amounts from 2020) is a modified version of 430(j); the modifications are that the quarterly & catch-up due dates are moved from calendar 2020 to 1/1/2021, and the quarterly contribution amounts are increased (with the EIR from the plan year they pertain to) to 1/1/2021.

So, for example (which is unfortunately not included as a Notice 2020-61 example), say you have a calendar year plan, with a 1/1 valuation date, not subject to quarterly contributions in 2019. Say the 2019 contribution is made on 1/1/2021. To determine whether the 2019 MRC has been met, you must discount the contribution back to 1/1/2019 at the 2021 EIR. If instead, the contribution was made on 12/31/2020, you must discount the contribution back to 1/1/2019 at the 2020 EIR.

The following chart is intended to help you walk through examples provided in Q&A 2 through 6:

Small plan (less than 100 participants) client filed the 2018 5500-SF this year when filing the 2019 5500-SF when it was discovered that 2018 had not been filed.   All previous filings since plan inception (1992) have been timely.  Client received a letter from the IRS with regard to the 2018 late filing and a penalty assessment of $87,000!  The IRS letter references the new penalty amount of $250 per day "effective for forms required to be filed after December 31, 2019".

The size of the assessed penalty aside (!) any idea why they would use the new penalty amount for the 2018 filing? 

As referenced in other posts, the client has filed under DFVC with the DOL and paid the $750.  Copies of same will be forwarded to the IRS and hopefully penalty will be abated.  Needelss to say $87,000 would be a great financial hardship for this small client. 

I hope that you can help me with this question. I have spent part of today trying to figure this out, and am getting nowhere.

I seem to recall that there is an issue to address when a plan wants to change the timing a forfeiture occurs.

Currently, the profit sharing plan provides that forfeitures occur after 5 consecutive breaks-in-service. The client wants to change that provision to the earlier of distribution of the vested interest or 5 consecutive breaks -in-service. Forfeitures have always been used to reduce the profit sharing contribution. There will be a large amount of forfeiture to be used this year as a result of the change because most of the unvested amounts are attributable to terminated participants who have already taken distribution of their entire vested interests.

Is there is something I should be looking at before telling the client that it can be done?  Thanks!

Hi Folks,

I'm looking for some input from folks smarter than me.

How will auditors look at plans with post-10/15 contributions for the 2019 plan year? Specifically, I'm assuming that these contributions are not reported on the 2019 SB (since they haven't been made yet) as of the time of filing. Will they be left off of the audit report? Included as a footnote? If the plan sponsor amends the filing post-10/15 to include the contributions on the SB, will the H/audit also require amendment?

Thanks for your thoughts on this!

Bug

Good morning, this falls under the "please don't shoot the messenger" heading.

A prospect for a non-ERISA 403(b) Plan, which is a church, is asking whether they can take advantage of the "tax credit under the Secure Act".  We don't see how this could benefit an entity that does not pay any taxes in the first place, but we were still asked to research the question.  Maybe we are missing something.

Thoughts?

Thank you.

I was just looking at an engagement agreement, and I saw something that I don't recall seeing (or perhaps never noticed, because I don't necessarily review a prior TPA's engagement agreement) before. It states that the TPA will bill the Plan Sponsor for services, then goes on to state that the TPA may deduct the service fees for the services directly from the participants' accounts upon non-payment of fees by the plan sponsor after 60 days.

Is there any problem with this from a legal standpoint? It feels funny, but maybe it is fine as long as the plan sponsor/fiduciary has authorized it. Is this a common provision? 

An employee expects to be laid off in the next couple of months, the employer is closing a local office and the employee does not intend to move to the new location.   Can she change her health plan election when electing COBRA?  
 

She is still employed and they are currently in their open enrollment period.  She is currently in Plan A and would normally continue in this plan.   However Plan B Is less expensive. If she cannot change she may choose Plan B now. If she can change she will stay on A For now and then decide between A and B when the COBRA decision must be made later. 

The info I’ve found seems contradictory, it say generally you cannot make such a change, but then it says there are exceptions that allow the change for HIPAA qualifying events. And losing group coverage eligibility is a qualifying event.  I’m a pension guy, just trying to help out a friend and want to make sure I’m getting it right.  Thanks.  

I have a potential client with the following facts:

Person A owns 73.33% 

Person B owns 16.66%

The remaining 10% is owned by a trust. The Trust is an irrevocable trust where Person A is the grantor and Person A's children (ages 25 & 27)  are the beneficiaries. Person A's brother is the trustee of the trust. The children are set to receive 1/3 of the benefit at age 30, 1/2 at age 35 and the rest at age 40.

I am trying to figure out if the children's benefit in the trust should be attributed to Person A, creating a controlled group with a separate company person A owns 100%.

Any help would be greatly appreciated.

Are individual states required to comply with the relief enacted under the Cares Act with regards to waived 2020 RMDs, Aug 31st due date for rollovers, & one IRA rollover per year exemption?

I was told NYS is not following the Cares Act & was asked how to handle RMDs that were taken during 2020 & then rolled over into IRAs after 60-days for state tax purposes.

Wouldn't it be based on how the states define eligible rollovers & if they cite the federal code & regulations?

How is a Family Limited Partnership (FLP) considered for controlled group rules? Specifically, when multiple companies are involved and individuals own portions of some of the companies (perhaps constituting a brother-sister controlled group or combined via ASG rules) and then the same individuals own other companies but only through an FLP. 

I'm new to this and I heard that when people leave a company, they tend to leave their 401k behind. Is it a big problem for the employer to keep all those orphaned 401k's? If so, how should we encourage people to rollover their 401k when they leave? Thanks!