On a call with a huge recordkeeper (TIAA) who is taking the position that participants who elected a loan payment deferral  don;t have to make any payments for a full year.

I personally read the law to say that payments due in January are  NOT extended.  I think its nuts that not everyone is on the same page on that...  I think there is near universal agreement on that but I assume TIAA paid a "pretty good" ERISA attorney to advise them on that policy...
 

Hi, Owner only DB plan received letter that his plan has been selected for examination. The exam seems to be just that the IRS did not get his EZ for 12,13, and 2019 (for location and date it says N/A). The agent says that he should file the missing EZs with the delq. program, however, it must be sent to the agent (as opposed to filing directly DELQ. program). The 2019 was just  filed on October 15th, 2020. The other years as well. I recall that there was mention that there isn't anyone at the IRS location to process the 2019 EZs.  Thank you.

Umbrella company has several adopting entities included under the same plan.  Not a MEP, just a controlled group of related LLCs that all participate in the plan.  One of the business units budget has been hit hard due to Coronavirus, while the others are still doing well.  Is it possible under these circumstances to suspend the match for 1 entity but not the others?

Hi

With all the changes going on, want to confirm the following just to be on the safe side:

If a new plan for 2021 with SH provisions, has to be set up by 12/31/2020, correct?

If a new plan but no SH provisions, can still add SH for 2021 by December 1, 2021, correct?

Last, for a non-elective SH, unless I want to have a "may be" provision, no need for a notice, correct?

What is the HCE's are excluded from SH, is not providing a notice still an option?

Thank you

The Labor department’s rule about an abandoned individual-account retirement plan defines a qualified termination administrator as a bank, trust company, insurance company, or other person eligible to serve as an IRA’s custodian that “holds assets of the plan that is considered abandoned[.]”  29 C.F.R. § 2578.1(g)(2).  The rule does not say that a QTA must hold all, or even substantially all, of the plan’s assets.

Imagine an abandoned plan for which no QTA-eligible company serves as a trustee.  There are multiple custodians.  Imagine one would volunteer to serve as a QTA, but only for the assets held by that custodian.

Has anyone seen a situation in which the Employee Benefits Security Administration approved, or did not object to, a submission in which a QTA proposed to wind up a portion of a plan to the extent of the assets held by the QTA?

Let's say a participant separates service, leaving behind a $15,000 balance, of which $5,000 is an unpaid loan.

After the loan policy's prescribed time for repayment passes, can that loan be offset immediately if the plan document only allows for lump-sum distributions to terminated participants and there has been no request from the participant for a termination distribution?

I didn't want to add a ton of hypothetical detail to muddy the waters. I apologize if there's not enough here of if this question has been previously discussed.

Does a loan offset count as a distribution such that it can't happen on its own if a plan document only allows lump-sum distributions?

Thanks.

My ex (divorced) and I both work and will be splitting physical custody (50/50) of two children.  We plan to alternate some of the nights such that the child we're claiming will be with us >50% of the time..  Both of our employers offer DCFSA, are we both allowed to open an account if we're claiming one child each?  Both kids will be under her health insurance if that applies to anything.

I am starting to see questions from employers who laid employees off this year due to COVID and are planning to hire them back as to whether they can voluntarily grant accrual service for the period of the lay-off.  (Note:  The terminology seems to vary by employer and state, but I'm talking about a situation where there was actually a termination and rehire, not an unpaid leave where the individual remained employed.)  Even though the employers are trying to do a nice thing for these participants, granting service for a period of nonemployment strikes me as an exclusive benefit violation.  I have to imagine that others are seeing this question as well.  Thoughts?

Participant comes into plan sponsor and says I am NOT repaying this loan any longer.

What is a plan sponsor/trustee to do?  That's it.  That's the question.  I'll be darned if this question has ever been answered.

The SECURE Act changed the RMD for surviving spouses to the date the participant would have attained age 72. (401(a)(9)(C)(I).

What is the effective date?  The Act says that the effective date for the age 72 change is participants who attain age 70 1/2 on or after 1/1/20.  (The effective date for the stretch rules is participants who die on or after 1/1/20).  So what about participants who died before 2020 and who would not have reached 70 1/2 by 1/1/20?

Assume a participant who died during 2019 at age 68.  Does his spouse get to wait until he would have attained age 72, or because he died before 1/1/20, does she have to take when he would have attained age 70 1/2? 

ERISA § 104(b)(1) calls for a summary of a new or changed plan provision “not later than 210 days after the end of the plan year in which the change is adopted[.]”  (Quotations from the statute and rule are in a recent BenefitsLink discussion.  https://benefitslink.com/boards/index.php?/topic/66810-rmd-2020-waiver-and-sample-amendment/&tab=comments#comment-308944)

For some provisions, taking that long time (and not communicating sooner) could result in describing a provision after every participant no longer has any decision she could make.

Just to pick one example, if in March 2020 a retirement plan’s sponsor adopted a provision for a coronavirus-related distribution, a summary of material modifications furnished in July 2021 might describe a provision that expired a half-year ago.

BenefitsLink mavens, what do you think:  Should an SPD or SMM describe a provision even if the description is no more than history?  Or is it better to describe the changed (and expired) provision, even if including the description confuses or otherwise burdens a reader?

For this question, assume the plan’s sponsor/administrator has yet done nothing to communicate the new or changed (and now expired) provision.

Participant turned 70-1/2 in 2014 and had a required beginning date of April 1, 2015.  She died April 4, 2015, 3 days after her RBD, without taking any RMDs.  An RMD should also have been made for 2015, the year of the participant's death, but was not.  The participant's account remains completely undistributed because no one was paying attention to it until now, and there is a designated beneficiary.

Can the entire account be paid to the designated beneficiary or must the RMD amounts for the 2014 and/or 2015 distribution calendar years be paid to the participant's estate?  If the estate, any idea of how, if at all, to adjust for earnings, etc.?

Also, it has been suggested that the 2014 and 2015 RMDs be paid to the estate and leave the estate to file Form 5329 and ask for abatement of penalties with respect to those amounts.  But we also have missed RMDs for 2016 - 2019.  Regardless of whether the estate is entitled to part of the account, wouldn't it make more sense, and have a better chance of success, if the plan were to file under VCP both to correct the operational failures due to the missed RMDs and to obtain relief from RMD penalties?  

Non-Profit organization is not part of a controlled group with a For Profit company (I don't think its even possible?).  But there is some very strong connection between the two, probably donation driven, maybe the for-profit handles the accounting work, I don;t really know.

Any reason they both cant participate in the SAME 401(k) plan?

We have a prospect who wants to implement a 401(k) plan as soon as possible and we are coming into the discussion late.  The investment vehicle will be a major daily valued platform and this provider cannot implement the platform before January 2021.  The provider has advised the client to go ahead and start deferring and keep the deferrals in their checking account until the platform is ready to receive contributions.  I assume they are playing on the reasonable segregation language but I am not terribly sure what they are thinking.  I don't see how this possibly would not be a prohibited transaction, not only is it outside the Safe Harbor, any deferrals in November would be outside the standard even if reasonable segregation/admin feasibility is applied.

I can't find this situation anywhere, but surely it has occurred before.  I just want to make sure I'm not missing something here.

Anyone have a pipeline to the DOL? The calculator is great, but it would be GREAT if they could allow you to input the final payment date just once. Frequently there are a gazillion entries that have the same final payment date, and having to enter it each time is a PIA. Or is there some way to do it already that I don't know about? If so,  I'd greatly appreciate someone instructing me in the error of my ways!

I am researching Insurers that issue Bonds for Non qualifying assets.

Colonial Surety and Surety One, I have used in the past, but both are relatively expensive.

Any other out there that might be recommended?

A small company's industry is that of leasing its employees to other companies for their specific projects, so its employees typically don't work for it more than 18 months, and aren't typically re-hired. My understanding is that the employees understand this when they're hired. Therefore, even though employees become eligible for profit sharing contributions due to satisfying initial eligibility requirements, most of them terminate with 0-20% vesting under the 2/20 schedule. There are around 30-50 NHCE participants and a few HCEs.

It seems to me that there could be BRF "effective availability" issues, partial plan terminations (though that's "facts and circumstances" and it could be argued that the terminations are voluntary), and the Form 5500 reporting of large #s of partially-vested terminees could be an audit flag. And just the general design seems clear that it's intended to circumvent nondiscrimination rules to only benefit the owners, and the government would view it that way in an audit even if there's not a black-and-white violation.

The "safe harbor" plan option for Leasing Organizations (100%-vested MP plan, that allows a recipient organization to exclude such Leased Employees) may indicate that the IRS wants to avoid this type of scenario.

Maybe an ERISA's attorney's opinion that this specific employer's employee terminations are voluntary and don't create annual partial plan terminations, with a caveat to the employer by the TPA that it can't ensure that the government may not approve if the plan were to be audited, would help?

Also, I'm wondering if a vesting schedule was chosen where most participants at least partially-vest, or if they're receiving a 3% Nonelective Safe Harbor contribution, would give them a meaningful benefit that may help.

I'd appreciate any input on this.

Thanks.
 

The plan is a SHNE 3% plan and Profit Sharing is each participant is it's own group. The participant signed an Irrevocable Election Not To Participate on 6/17/2016, her date of Hire was 11/7/2014 and eligibility was one year and dual entry, so her eligibility date would have been 1/1/2016. The plan is a service term and the new advisor is questioning that she should be included in coverage testing( in the 410B group shes in an excluded group) How should she have been listed in the 410 b group? Also, should she have received a SHNE 3% contribution for plan years 2016-2019?

Thanks!

Apologies if this has been addressed. If it has, I can't find it.

The interim final rule on lifetime income disclosures specifies that it is effective as of September 18, 2021.

However, both the rule and the original legislation state a variant of the following:

"The requirement in subparagraph (B)(iii)shall apply to pension benefit statements furnished more than 12 months after the latest of the issuance [of]... interim final rules" link

I read this to mean that the first lifetime income disclosure would need to be released at some point within 12 months of September 18, 2021 (i.e., before September 18, 2022).
That is, the first lifetime income disclosure need not be released in 2021, but must occur during 2022, most probably by the Q2/2022 statement, at the latest.

What's the community opinion?

Thanks!   

Off PYE - 08/31- original effective date of Plan - 09/01/1995

401(k) and 3% Safe Harbor Non-elective effective on 09/01/2019

Plan Eligibility

age 19, 2 months elapsed time, 1st of month

Part -time employee hired on 01/02/2016 works 2 hours a week cleaning.  Has never deferred. On 08/31/2020 was eligible to receive a SHNE contribution.

Company wants to amend the Plan to exclude part-time from the Plan now 2 months after new Plan year.

1. My colleagues think that once an employee has met initial eligibility for the Plan and are in that you can't take a benefit away. Is this true?

2. It is too late to amend the Plan for the 2020 PYE.  Would it be acceptable to amend eligibility for the Plan for 2021 to be age 19, 1 year with 1,000 hours and dual entry? Would that PT employee still be eligible in this scenario in 2021?

Thanks