How do you react/respond to a client's request for their current plan docs (AA, BPD, SPD, etc)?

I find in way too many cases, soon after I supply the requested material, I get a letter saying the client thanks us for our service, but they are making a change.

Why should I facilitate that?

I know that's not the case will everyone who requests them, but I also want to shout into the phone:  YOU SHOULD HAVE ALL THIS.  IN FACT YOU MUST.

How do you admonish the client for not having these doc without sounding like a jerk?

A client provided bad compensation data on the plan for 2019 and we are realizing adjustments need to be made.  They also switched carriers and are in blackout until 2021.  Can they still make the adjustment matching contributions.  Document is set up for annual matching contributions and now need adjustments (additional matching contributions) that most likely will not happen utnil 2021.

A business has 3 unrelated owners who each own 33 1/3% of the business.  The business has no other employees.  Can this business sponsor a single plan that is considered an owner only/solo plan which is exempt from nondiscrimination tests and 5500 filing?  The business is structured as an LLC and taxed as an S-Corp.  

During 2019 there were 2 employees and one earned > HCE limit.

If we elect the TPG in 2020 , then there should be no HCEs in 2020 since we round down (2 x 20%)

Just want to confirm that there is no issue here since we are consistent with our rounding policy and that there is no rule we are not considering.

The Document Provider we will be utilizing for the Cycle 3 restatements has a notation at the top of the first page, on the Adoption Agreement - "[Collapsible Version – Elections that are not selected by the Employer and provisions that are not integral to the Plan are not included in the Adoption Agreement. A complete version of the Adoption Agreement has been made available for review to the Employer. The Employer certifies all provisions and elections appearing in this Adoption Agreement were taken from the complete version of the Adoption Agreement.]" 

We are utilizing the Collapsed Version and do not wish to supply the Plan Sponsor with the Adoption Agreement with all unselected provisions. We can see where the Client might just use this to "amend" their Plan, without informing us of the change. Obviously, we could add a watermark - but as you know, this will not stop some Clients from using it anyway.

How are other people handing this? Thank you.

I have a prospect with the following scenario -

Two companies, one a partnership 67/33 owned, and one an S corp, 75/25 owned respectively until May 1, then 100% owned by the majority owner.  As of May 1, 2020, the partnership effectively dissolves in an asset sale.  The S corp has lots of profits for this year and probably a couple of years going forward.

Any thoughts on how to set up a DB for the (one man) S corp?  Can we "just" make it effective May 1?

I think a primary concern is the "effective" dissolution of the partnership; it's probably in existence thru Dec 31.  But no discrimination problems since the only other person potentially in is an owner.

Taking on a new client (solo - EZ). They never filed 5500EZ for 2016-2019 so we are working to clean up. While working on these 5500's I discovered they deposited $500 to much in 2016 ($500 past 415 limit), and $35K excess for 2017. There were no contributions made in 2018 or 2019.  What would you recommend as the best way to fix the excess contribution? I am thinking that he needs to remove this money from the plan along with earnings. Thoughts?

I work within a payroll company where the main objective is sell as many plans as possible to meet sales goals. Right now we have over 300 plans and more coming in every day.. Including myself there is only 1 other person that knows how to administer the plans. I have only other employee that unfortunately doesn't understand the concepts so his role is minimal. Also, being a payroll company our area uploads the contributions for our payroll clients which is more than a full-time job by itself.

How big is a typical caseload for 1 administrator? I am seriously considering resigning after 7 years because I do not feel I can give the quality service that needs to be given to clients. I'm tired of working many long hours and cringe that our busiest season is right around the corner. The stress is beginning to affect my physical and mental well-being but I find myself wondering if I should just suck it up and continue in this situation. I've never resigned from a company before.

The only perk is that I can work from home.

Client is wanting to change their vesting schedule from 100% immediate to 4 year graded (25/80/75/100).  My understanding is that Vesting is a protected benefit which cannot be reduced or eliminated. The more restrictive schedule must be applied to all future contributions received on or after the effective date of the change.....unless you make all current participants 100% immediately vested in all future contributions as well and apply the more restrictive schedule to new participants. Are there recent or newer regulations addressing this that may have a different application than the one I've described? Is this how more restrictive vesting should be applied?

This is for a medical group partnership with no employees and all HCE's, common in emergency medicine. Each member is a separate entity but the group is an affiliated service group.  Are individual cash balance plans allowed?  I believe some members may have them already.

Although contributing to both a 401(k) and a SIMPLE IRA in the same year is not allowed, can an employer keep the SIMPLE account open if the only contributions made going forward are to the 401(k), or must they close the SIMPLE account before the 401(k) plan is started?

We have a situation where a participant in a plan has died.  His brother has provided a POA naming him.  He doesn't have any letters of testamentary because he's saying he doesn't need one - he's the POA.  Our process is to require a letter of testamentary to show who was appointed the executor.  Are we ok distributing to the estate without a letter of testamentary - just distribute to the estate - paid to the estate, etc.  I think we still need one - we need something to show that this person has the authority to sign on behalf of the estate.  Any help would be appreciated.

Thank you,

Suppose a 5500 shows an unpaid minimum for one year(2018). If the unpaid minimum is not corrected by the time the of the next 5500 filing(2019) and thus is  reflected on the schedule SB  line 40  and on the 5500SF line 11a  will the 10% excise tax be experienced again on the yet unpaid amount? I know in theory a 100% tax can be imposed but can the initial tax be imposed more than once similar say to prohibited transactions?

The fee disclosure that was provided to participants  didn't include all the TPA fees being deducted from participant accounts.  I can't find anything that addresses what the correction procedure is.   Can anyone offer direction? 

Before I stand accused of wasting time, and know this is not going to fly, but accountant as well as broker did question.

I have a 401K safe harbor with voluntary, after tax contributions.  One of the owners mistakenly over contributed a portion of the voluntary such that he's over 415.

Since voluntary is not deductible anyway, could not the excess be transferred to a rollover account.

I said " no", but I they they're fishing.

Hello all,

I have an interesting problem that doesn't seem to quite fit into some others that I've found here while searching.  Here's the situation:  We are a RK vendor for part of a non-ERISA 403(b).  A participant died naming her spouse as her primary 100% beneficiary and her parents as 50/50 contingent beneficiaries.  Her spouse died 2 days later.

Initially, we believed that he passed without having made a designation himself.  Per the plan document, the default is spouse, then estate.  This would mean his assets now belong to his estate, who wants us to roll it over into an IRA the estate seems to have setup (I know this isn't correct, but it's a topic for another post).  It has since been discovered that the spouse was a former participant of the plan on his own and he did have a beneficiary designation dated in 2009.  His form named his spouse as 100% primary and his brother as 100% contingent.  He took a full distribution of his account in 2016.

The TPA firm, and to an extent the client, is trying to say since he took a full distribution years ago, his beneficiary form is basically null and void as the account was 'closed'.  The beneficiary form doesn't have any language that would nullify it except upon receipt of a new beneficiary form.  My opinion is that his beneficiary form is still valid and in force regardless if he cashed out previously or not.  It'd be no different than if someone left service, took a full distribution, and then ended up with a non-elective contribution 8 months later but died in the interim.  I've tried digging through IRC and even the EOB trying to find any guidance and have not come up with anything concrete enough to prove my point.  Has anyone seen anything like this or have any other places to try looking?

I believe there is a Revenue Procedure that specifies that if a participant had less than 1,000 hours in the prior year (and therefore no benefit accrual according to terms of the plan ), you MUST assume they will have 1,000 hours in the current year. This is for purposes of a BOY actuarial valuation. 

I thought it was in RP 2017-56 or 2017-57, but I cannot seem to find it. 

I’m asking because client (of owner only plan) wants to minimize cost for 2020 and if they confirm <1,000 hours in 2019 we can assume same for 2020 and not have a normal cost. 

An ESOP owns 80% of 2 different corporations; ownership is as follows:

Company A:

80% ESOP
10% Individual 1
10% Individual 2

Company B:

80% ESOP
20% Individual 3

Based on the 80% ownership, is there a controlled group, or is the ownership interest by the ESOP disregarded for controlled group purposes?

We are converting a simple 401(k) plan as of January 1, 2021 to a regular 401(k) plan.  If we convert a participant's balance in the Simple to the regular 401(k) plan can we avoid the 25% penalty tax if some of the monies "converted" have not exceeded the 2 year limit for the 25% penalty tax.  We will continue to maintain separate accounts for the Simple 401(k) and the Simple Employer Contribution accounts in the new regular 401(k). 

Both plans (the old Simple and the new 401(k)) will be maintained by the same employer.  

Sources of money in the new 401(k) plan would be Simple 401(K) contributions, Simple Employer Contributions, Employee pre-tax 401(k), Employee Roth 401(k), and Employer Matching Contributions.

FYI, this is not a Simple IRA.  

Hi

Have not dealt with loans for couple of years and now a participant wants one. Loan procedure states prime rate plus 1%. Is this reasonable? I believe 2% is the unofficial safe harbor.

Thank you