With major recordkeepers announcing their PEP products this is going to be an instant question early on.

if a stand alone safe harbor plan wants to join a PEP, do you see any issue with that plan converting into the PEP and keeping safe harbor status (for as long as all provisions are identical)?

I know in the past i have heard of some payroll providers not really cooperating with these types of moves as well, requiring the plan to change providers prior to coverting.

thoughts?

Owner only 401(k) plan with a match formula of 100% on the first 3% contributed.  The owner hires an employee who becomes eligible for the plan 1/1/19 but doesn't offer him participation in the plan.  The owner corrects for the lost deferral opportunity through 10/31/20 and the employee chooses to defer 5% effective 11/1/20.  Normally, the ADP test is done by disregarding the improperly excluded employees so 2019 ADP Testing should be all set.  Why type of ADP Test should be done for 2020?

Hello DB Plans Community,

Here is the situation.   I just took over the defined benefit plan.   It has less than 100 participants (but more than 25).  All the participants are either receiving payments or terminated vested (however I am not sure it is relevant to my question).  AFN for 2019 has not been issued yet.  Some of the quarterly payments for 2019 Plan Year have been made late (more than 60 days late it is).  Plan sponsor made the required payments by October 15, 2020 to avoid the funding deficiency for 2019 plan year.  From 5500 has been filed timely without funding deficiency.

I would like to issue the AFN as soon as possible since it was due October 15.  Am I correct?  Do I need to issue a notification to participants regarding the “late quarterlies”?  I believe I do.  If so, I would like to include the language notifying the participants regarding “missed quarterly payments” and “the corrective action” as part of the AFN.   Where can I find a sample of the “notification and correction” language?

Thank you in advance.

401(k) plan year ends 10/31/2020.  

Deferrals for the plan year:

11/1/2019 to 12/31/2019:  $4755, all catchup for 2019 (total $25,000 deferred in calendar year 2019)

1/1/2020 to 10/31/2020:  $26,000

So the total deferrals for the plan year ending 10/31/2020, $30,755.

The plan makes a 3% safe harbor nonelective, so no ADP catchup to worry about.

If the 3% safe harbor contribution is $4860, then I'm thinking I can allocate an additional $32,640 in profit sharing.

That would be $19,500 in deferrals ($30,755 less $4755 in 2019 catchup and $6500 in 2020 catchup) plus $4860 safe harbor, plus $32,640 in profit sharing for a total 415 limit of $57,000.

So the overall total contributed for the plan year ending 10/31/2020 would be $68,255.  Basically the $57,000 415 limit, plus the combined $11,255 in catchup between the 2019 and 2020 catchup deferred during the plan year.

Does that sound correct?  

My admin system is treating the $4755 in last year's catchup as a 402g excess and not permitting the full profit sharing allocation.

Thanks very much.

Plan sponsor discovers participant loans were defaulted because of errors by plan sponsor (including failure to start payments) over a number of years.  The EPCRS Procedure sets out the steps the participant and employer can take in combination to fix that where there has not been a deemed distribution and 1099-R.  But what is the "fix" (1) where there has been a deemed distribution and 1099-R but no actual loan offset or (2) where there has been a deemed distribution and 1099-R followed by a termination or other event resulting in an actual offset?  If you were to go into VCP, what corrective measures would you propose?  (I understand in scenario (1), the participant can repay the defaulted loan creating basis but don't see that they gain much by doing that.)

Looking for feedback for the following scenario:

“Predictive equity analytics” addresses equity market risk and returns using graphical reports that warn beforehand of market downturn as well as enable capture of gains. “Essentially the quantitative predictive equity analytic capability found in investment banks and financial intermediaries is made available directly to 401(k) participants in a user-friendly manner."

Would 401(k) participants be better off directly managing their accumulated wealth within their accounts if given the proper predictive equity analytic tools and training or would they be better off  restricted to the menu of funding vehicles?

An employer is buying back stock from employees, which it will be reporting as taxable income on their W-2s. It seems clear that this is includable for plan purposes (including deferral contributions) for a plan using "W-2" compensation definition (if the plan doesn't specifically exclude it) -- similar to an exercise of non-qualified stock options (NSOs).

But for employees who terminate employment prior the transaction (if the transaction happens within the later of 2.5 months or end of the year), is such compensation NOT treated as "regular pay after severance from employment" and so excluded? (It's clearly not part of optional "post-severance compensation.)

Treas. Reg. §1.415(c)-2
(ii) Regular pay after severance from employment.— An amount is
described in this paragraph (e)(3)(ii) if—
(A) The payment is regular compensation for services during the
employee's regular working hours, or compensation for services
outside the employee's regular working hours (such as overtime or
shift differential), commissions, bonuses, or other similar
payments; and
(B) The payment would have been paid to the employee prior to a
severance from employment if the employee had continued in
employment with the employer.
(iii) Leave cashouts and deferred compensation.— An amount is
described in this paragraph (e)(3)(iii) if the amount is either—
(A) Payment for unused accrued bona fide sick, vacation, or
other leave, but only if the employee would have been able to use
the leave if employment had continued; or
(B) Received by an employee pursuant to a nonqualified unfunded
deferred compensation plan, but only if the payment would have
been paid to the employee at the same time if the employee had
continued in employment with the employer and only to the extent
that the payment is includible in the employee's gross income.

Hi

This is a new one for me.

Did a proposal for CB plan however, they went ahead and obtained a TIN (already have an EIN) with the plan name XYZ DB Plan.

Is the TIN valid? Still need to do the CB plan and would look funny with DB name.

Please let me know your comments.

Thank you

In my qdro it was stated a specific amount on the value date we chose. The qdro was signed off by everyone and my 35,000 had to sit for the next 10 years until he reached 55 I could take it out. Over the years I would request the value of the money what it was worth and the pension company would write me a letter stating the gains/losses. Well this past April I took a lump sum and had 20% taken off of 57,000. Well 6 months later the pension says they over paid me 27,000 and I only get the 35,000 and I need to pay the 27,000 back because it’s his . He (ex)found a error stating adjusting the gains and losses until the date of disbursement it said until date of valuation and had the pension plan come back and get my investment for the last 10 years  because of the error in that one word. Now the pension wants it all back and I paid 11,000 in taxes on it. What can I do here? I don’t have the money and I didn’t wait 10 years for him to earn interest on my money   

We started a new calendar year PS plan eff 1/1/20 for a corp that previously had a 4/30 PYE (there are reasons).  The CPA who ran the prior plan (who is one of the reasons) is planning out his contributions for 4/30/20.  The owners of course want to max their profit sharing allocation for the 4/30/20 plan year.

If he uses compensation 5/1/19 through 4/30/20 - and I can't see any reason why he wouldn't - then doesn't that cause an issue for the 12/31/20 PYE?  It feels like the 415 limit (and maybe even the comp limit) should be reduced somehow so they're not double-dipping.  If we had done this via a short plan year, we would have had a year with less comp and pro rated limits, so it feels odd to benefit by doing it this way (though I know there are other times when doing things in a more convoluted way does give an advantage...).

Am I looking for a problem where there is none, or is my gut on the right track?  Thanks.

Does anything prohibit a participant from taking a legitimate COVID distribution and using  part of it to pay off an existing (non-COVID) loan?

Thanks in advance.

Looking into setting up db plans for some financial planners for 2020.

Does anyone have any experience on if and when they would be covered by PBGC? I am aware that I can ask PBGC pilot program but may not get a response in time.

Thank you

To confirm, a brand new 401k plan with safe harbor provisions for 2021 has to be adopted by 12/31/2020??

Just curious about everyone's opinion, in what instances a db plan covering only spouses would be covered by PBGC?

Thank you.

Curious about the following:

Set up a PS plan as a qualified replacement plan (QRP) and billed the client.

Excess assets from the DB now transferred to the QRP. Now QRP has only excess DB assets and no other PS contribution will be made for 2020.

Client now wants to pay the document fee from the new PS plan assets, can they?

Thank you

I know the Secure Act changed the notification requirements, etc but wasn't sure the impact on this.

Have a case that wants to change from a 3% Safe Harbor to a Basic Safe Harbor Match as of 1/1/21.  Is there a deadline for the amendment to be signed/notice to be given to the employees?

Quick Question, Four Veterans who were working for the company, were members of the company ESOP, were called back to duty for one year during the Iraq conflict. They came back after their service and were reinstated to their jobs after 1 year. It was found out later, the company took back 20% of their ESOP stock while they serving in Iraq.  Is this allowed?

We have a plan that has a discretionary match formula in the document.  This year they did something unusual that I have not seen before and I am trying to figure out if I really need to do a BRF test for it.  The annual match is based on the average weekly deferral contribution of the participant.  Average deferrals of between $1 - $100, annual match is $200; between $101 - $100, annual match is $350; between $200 - $299, annual match is $550; over $300, annual match is $800.   The plan does pass the ACP test but the only employees with the $800 match are the HCEs.  It isn't a lot of money and looking at the percentages of compensation it benefits the NHCEs more but having only the HCEs with the $800 may not look right.  Are the results of the ACP test enough to just move on and not look any further at the way the match was done?

Im a vested member of the IBEW and have a 401a plan through the Union. I have made a career change after almost 20yrs and was under the assumption that I could roll the balance of the account into a self directed IRA or some other qualified plan. I just got off the phone with the plan admin and Im being told that this is not an option. According to the admin  no action can be taken until I reach age 55 1/2. Is this accurate? Thanks in advance for any insight.

I have a 1 man plan where owner just reached NRA this month and is under 415 limit on payout but getting close. The question I have is can I terminate the Plan effective 12/31/2020 to have full plan year, but have have him elect a lump sum now and rollover to IRA so possible gains don't push him over 415 payout? He is not married so spousal consent not an issue.

I don't think there is an issue but wanted to make sure I wasn't missing anything.