Hello, I realize that the 5500 has the special extension authorized by the IRS. The EBSA came out with its special extensions which don't apply to the Form 5500 report. However,  I wondered if the Summary Annual Report of the 5500, the SAR, as a disclosure notice, would have EBSA's Disaster Relief Notice - 2020-01 extension of March 1 - 60 days after the Covid 19 National Emergency has ended. The Office of Regulations and Interpretations has not returned my calls yet on my question. Does anyone else know? 

Also the the EBSA press release said to use a good faith effort to issue disclosures and one of the methods was text messages. When was text messages allowed for electronic disclosures? 

EBSA Disaster Relief Notice 2020-01 extends the time for plan officials to furnish benefit statements, annual funding notices, and other notices and disclosures required by ERISA so long as they make a good faith effort to furnish the documents as soon as administratively practicable. The notice explains that good faith includes the use of electronic alternative means of communicating with plan participants and beneficiaries who the plan fiduciary reasonably believes have effective access to electronic means of communication, including email, text messages, and continuous access websites. 

Can the required matching contributions to a 401(k) be paid with proceeds from a PPP loan? 

Should know this but brain freezing ---- plan wants to max out 3 partners and give 2 other partners $20,000 each.  Staff gets 5%.   Employer $$=Profit sharing only, not a SH plan, no match.  Plan is TH. Two Terminated participants not getting the 5% gateway OR TH allocation  because they were not there on the last day.   401(a)(4) fails unless I give staff 9%.   The scenario is very similar to 2018 and it passed with 5% to staff,   no contribution to 1 term'd participant.  Am I missing something?  

A client we had established a plan in 2018. 

Here are the relevant plan provisions:

1) Plan effective date: 1/1/2018

2) Plan does not exclude comp prior to participant entering plan

3) Eligibility for profit sharing contributions was Age 21, 1000 hours in a 12 month period, entry each 1/1 and 7/1

4) To receive a profit sharing allocation a participant must be employed on the last day of the plan year

5) Method to correct coverage failures for nonelectives is to "Add Just Enough"

6) Profit Sharing formula was discretionary, "New Comp - One Group per Participant"

7) There is no one year hold out rule for eligibility or vesting

8] There is no 5 year rule of parity rule for eligibility or vesting

The client gave us a census with 14 individuals who were employed at some point during 2018. There were 3 eligible HCEs (1 of which was not an owner), and 4 eligible NHCEs. Before the end of the year the sponsor terminated employment of all eligible NHCEs. The termination wasn't nefarious, a large project ended and no longer needed these employees. The owners, of which there were 2 gave themselves each a 30k profit share on 12/31 of that year. There were no other contributions. Using the annual coverage testing method the plan fails coverage and requires pulling back into the allocation several employees who had terminated (because of the employed on the last day rule). General testing required that those employees collectively receive an additional 42k in allocations to pass nondiscrimination. The partial plan termination didn't help the situation either.

If the plan uses the daily testing method for coverage on the last day of the plan year when the allocation was made, it passes coverage because there were no eligible NHCEs on the last day. Because of this there is no nondiscrimination issues. 

Is this allowable or am I missing something?

One of our CPA contacts, for a client NOT located in Arizona, but in Northeastern US., received this form from the Arizona Department of Revenue. We don't administer the plan, but the CPA had never seen such a form, and asked if we knew anything about it. I certainly don't. The plan in question is a Union, and it is a defined benefit plan. Anyway, the form is for a "TPT License" - and says that penalties will apply if you haven't paid.

We told the CPA we knew nothing about it, but for my own information, do any of you out in the Southwest (or anywhere else, for that matter) know anything about this? Is this a "normal" thing that actually applies to a defined benefit or other qualified plan in Arizona, perhaps similar to the (often ignored) loan document fee in Florida?

Hello all. I haven't been out here for years. My job of the last 9 years has made it difficult to stay in touch. As of March 31, I have been retired after being in the industry since 1970 . I was on a securities settlement desk when the DOW first hit 1000. I have thoroughly enjoyed my career and have seen  many changes. I've been privileged to know all of you through these message boards and all of you have been extroardinarily help in my pursuit of knowledge. Stay healthy in this stressful time.  May God bless you all.

I left my employer sponsored ERISA plan over 2 years ago and left my annuity balance there.  I decided in December of 2019 to roll over my annuity into my 401-k plan at my current place of employment and the check sent to my 401-k was dated /7/2020.   I took the balance as of 12/31/18 because the accounts are valued on an annual basis .  The valuations take place in April and I was expecting to receive earnings for the plan year 2019.  When I called the Fund office today I was told I am not eligible for any investment earning because I had to have an annuity balance on the valuation date of April 2020.  I feel I am being robbed a full year of interest and we know that 2019 was a good year for investments.  Does this seem legal?

Can a safe harbor plan change to immediate eligibility and vesting mid-year? I believe they can with notice, since it's increasing benefits. But does that then mean anyone not previously vested would become 100% vested?

There is no maximum auto escalate number on an EACA like there is on a QACA, is that right?  So I could auto escalate to 20% if I wanted to?

all of our plans with pooled trustee directed accounts allow for distribution in the first plan year following termination of employment.  Client has a termed participant they want to get paid out immediately and is considering amending to allow immediate distributions.  How many allow for immediate distribution from a pooled plan?  Are there any drawbacks to be considered?  I know that if they did amend to allow immediate that we couldn't then amend back due to anti-cutback.  This plan is PS only with EOY requirement.

This is a first for me. A plan participant executed their distribution election forms but passed away before the distribution was made (within a week of completing the forms). The distribution is in connection with a plan termination, the participant had not reached retirement age, and the election was for a lump sum distribution greater than $5,000. The death benefit is PVAB. I do not see that the plan document addresses this exact situation. My initial thought is that the participants elections prior to death are now not applicable since the distribution was not made, and the spouse should receive distribution election forms for a death benefit distribution. Any input would be appreciated. Thanks.

ESOP has a rebalancing provision that requires year-end reallocation so that each participant's account is made up of the same ratio of company stock to other investments.

For the first time, there is an ESOP participant who wishes to sell company stock he/she owns outside the ESOP.  The ESOP Trustees believe it would be in the best interest of participants and beneficiaries for the ESOP to purchase the stock.

IRC Section 409(n) provides in part that:

"no portion of the assets of the plan . . . attributable to (or allocable in lieu of) employer securities acquired by the plan . . . in a sale to which section 1042 applies may accrue (or be allocated directly or indirectly . . . ) . . . for the benefit of . . . any taxpayer who makes an election under section 1042(a) with respect to employer securities."

Assume that the ESOP's acquisition of the stock is completed in May of 2020.  When the "regular" calendar year 2020 allocation is done (in the spring of 2021), certainly the selling shareholder cannot receive an allocation of any portion of the stock the ESOP acquired from him/her.  So, such participant receives a smaller allocation than that received by a similarly situated participant who had not sold company stock to the ESOP in a sale to which section 1042 applied.

Immediately after completing the "regular" allocation for 2020, the rebalancing provision is addressed.  May the selling shareholder's account receive the allocation of additional company stock needed to bring his/her account into balance (ratio of company stock to other investments) assuming the reallocation calculations would so require?  Inasmuch as the rebalancing would likely affect virtually all participants in one way or another, it would seem that the prorata portion of the stock initially acquired by the ESOP in the 1042 transaction that might find its way to the selling shareholder's account would be minimal. 

Is the answer any different for the rebalancing that would be completed for 2021 (in the spring of 2022) - assuming no additional 1042 transactions?

I am an employee of a small law firm. I am "of counsel". 4 years ago, my employer complained that he had to make a Safe Harbor payment into the Profit Sharing Plan for me in the amount of 3% of my compensation. Since it was not addressed in my employment agreement, he pressured me to reimburse the 3% payment. Each year since I have done so, with $500 deducted from my pre-tax compensation calculation ever two weeks. To my knowledge, no one else at the firm has been required to do so but nearly all others are salaried employees. I am starting to think this practice violates the Safe Harbor rule and is not legal. That is, it seems this does qualify as a Safe Harbor contribution if the employer is reimbursed for the entire payment. Am I right? If so, what is the proper way to address it?

I have been told if I take my retirement, earned over 40 years, that I cannot work in my craft in areas under Local 12 jurisdiction or I could lose my pension.

Is this true?

We were presented with a plan to takeover that was effective in 2016 and only employed the 2 owners.  The owners set up a Fidelity prototype and opened accounts and each owner made employee deferral contributions.  Eligibility is age 21 and 1 year entering the plan on 01/01 or 07/01 following.  Employee is hired in 09/2017 and enters the plan on his date of employment and starts making employee deferral contributions.  The employee should have entered 01/01/19 but made employee deferrals for 2017 and 2018 and then terminated  in Dec 2018.   It is a bit late for an 11g amendment so should an application be filed via VCP?  Can the employee's deferrals be refunded to him since he was not eligible?  Would be able to exclude employee as otherwise ineligible in ADP testing for 2017 and 2018 but there would be a TH issue, this is a deferral only plan.  They also never filed a 5500 for the years that the employee was in the plan.

Would the best course of action be to submit via VCP for the early entry, determine the TH amount for each year and prepare and submit the 5500 filing for 2017 and 2018 via the DFVCP?

For a health and welfare Form 5500, I  have a group that was under a collectively-bargained agreement at the beginning of the year. However by the end of the Plan year, they were not. Is the collectively-bargained box on the 5500 still to be checked?

My usual apology is this has been asked and answered.

The CARES Act allows special tax relief for 2020 distributions up to $100,000 by a "qualified individual" from a defined benefit plan, as long as the distribution is not made earlier than an otherwise-permitted distribution event. But the special tax relief implies that a lump sum will be taken. How would the $100,000 limit and special tax relief apply to an in-service annuity payment from a DB plan (or even a money purchase pension plan)?

Question came up, if an employer wishes to adopt a profit sharing plan in 2021 effective 12/31/2020, can they apply a last day rule to the 2020 profit sharing allocation?  

Several writers in BenefitsLink discussions have mentioned an idea that a plan provision for a coronavirus-related distribution might be unnecessary if the participant who would take it is severed from employment or otherwise entitled to a distribution.  But here’s one further reason why a classification might matter.

Some recordkeepers are waiving a processing fee for a coronavirus-related distribution, but not for a normal distribution.

A Plan currently permits loans for hardship necessity only (safe harbor standards). If they are going to permit loans under the CARES Act, will they have to amend their loan program to permit loans for any reason (possibly for the CARES Act duration)?