Does anyone know of any updates on the upcoming Plan Restatements due to begin on 05/01/2020?

So I signed a QDRO when divorcing my husband after being married 17 years of marriage. I relinquished rights to my husband’s pension, in trade, I then got the funds that was in his annuity. A year later, we remarried. We were then married another 5 years until he passed away last year. I am receiving his pension but only half of what we thought. I’ve brought this to their attention and now they want my divorce decree. My question is, since I relinquished his pension when we divorced, can that affect me receiving it now even though we remarried? He passed away 6 months ago and as long as I don’t push it, they aren’t doing anything about it. But when I brought this to their attention, they got a company lawyer involved. Obviously getting something is better than getting nothing so I don’t want to push for the rest if I could potentially lose it all!! 

Is anyone aware of a source for a complete (and current) list of the various lawsuits in the recent high-profile actuarial equivalence litigation?  I believe there have now been 11 different cases filed, but want to confirm that I'm not missing any.  Thanks!

Client would like to allow employees to defer from all compensation, bonuses, etc.  Client wants to match on only base compensation, however.

The match is 100% of the first 3% of compensation deferred.  Since the match would be capped at 3% of base compensation, I'm assuming I have testing issues?

If the allocation compensation passes the compensation ratio test, am I good at that point?

Or do I need to test the match rates for BRF?

Thanks very much.

Client would like a two tiered match formula in which up to the first 4% of compensation deferred is matched at 0%.  Second tier 4 to 6% of comp matched at 50%.

Since each participant is matched the same at each level of deferral, is this an effective availability issue?  And assuming the match is communicated to all participants, an acceptable match?

Thanks very much.

Plan has consistently been using the prior year method testing otherwise excludible employees separately.  In 2017 plan failed testing but did not do refunds in time so plan can not permissively disaggregate otherwise excludible employees to calculate the refund/contribution under the one-to-one correction.

Is the one-to-one simply a correction mechanism, or does it cause the plan to have a change in coverage for testing purposes because 2016 and 2018 are being tested on an otherwise excludible basis but not 2017? 

I could not find anything specific in the statutes or guidance, and appreciate all comments. 

Thank you for this Forum. I have been a loyal follower, but have never posted. I work for a third-party administration firm. My question involves an issue that has occurred for one of our client plans.  I have searched for this topic on this Forum, but have not been able to find any prior threads. If there are other relevant threads, I would appreciate your reference to therm.

Have you had experience with determining whether a trust is in existence when a death benefit becomes payable from a 401(k) plan?

FACTS:  In 1989, a participant named his parents' Family Trust as the primary beneficiary of his 401(k) plan account (and a non-family member as the contingent beneficiary). The participant was the sole beneficiary of the Family Trust upon the death of the last of his parents.

In 2016, the participant set up his own Revocable Trust, but did not change his 401(k) plan beneficiary to be his Revocable Trust. The participant passed away in 2019.  

The trustee of the Revocable Trust has filed claim for the 401(k) plan death benefit.  Since this is not the trust named as beneficiary, the Plan asked for a copy of the Family Trust. The trustee has provided a copy of the Family Trust, but stated that the Family Trust no longer exists. There is no language in the trust documents connecting one to the other. The Plan has denied the claim, on the basis that the Family Trust no longer exists.

The Plan has now received a letter from the attorney representing the Revocable Trust, who has argued that the Family Trust still exists. The attorney has cited 26 CFR 1.641(b)-3 as authority that the trust continues. This regulation deals with termination of trusts in relation to federal income taxes. There is no reference to California trust law or any case law.

The Plan is now faced with determining whether the Family Trust still exists for purposes of paying the death benefit. I welcome any thoughts you care to share.

SS-4 for a plan listed plan name as "ABC Defined Benefit Pension Plan and Trust".  Adoption Agreement mistakenly showed plan name as ""ABC Defined Benefit Pension Plan and Trust"".  Plan is a couple years old and our actuary caught the mistake.

What is the best way to resolve this?  Would it be appropriate to do a retroactive amendment to correct the original documents?

I am just wondering if any of you have had a plan affected by a blackout period where deferrals were submitted  Late because there was an issue with the new provider accepting them?....Did you calculate lost earnings on the late deferrals?  

Hi,

We recently received K-1 for the partners. I'm not as familiar with the K-1's For the Form 1120-s as I am with the others. That being said, I'm not sure where to find the earnings that I will need to be used in the profit share allocations.

Can someone direct me?

Thank you!

Does a self-insured health plan that charges premiums that produce a surplus, i.e. the total amount collected exceeds the claims paid/incurred, have to rebate any portion back to the employee? I cant seem to find an answer that clearly states that self-insured plans would be required to do so. Any help or advice would be greatly appreciated. Thank you!

[Note: I have found PLR 200007025 [ https://www.irs.gov/pub/irs-wd/0007025.pdf ]  which deals with another issue but notes that the self funded plan discussed has the following structure

"All premium payments (including the portion of the non-partner employee premium paid by Taxpayer) will be deposited into a dedicated account from which administrative expenses and eligible medical expenses under the Plan will be paid on behalf of all Plan participants. If the total premium payments are in excess of the claims and expenses incurred for a plan year, the excess will be used to pay claims and expenses of the Plan incurred in the following plan year and thus reduce premium payments for all participants in that following (or subsequent) plan year."

The PLR ultimately concluded that the plan qualifies as a health insurance arrangement, but this is a PLR and nearly 20 years old.]  

A client has a money purchase plan in which distributions are permitted for the following reasons: normal retirement after 25 years of service, or at age 62 with at least 10 years of service or the later of age 65 and the fifth anniversary of commencing participation in the plan; early retirement at or after age 55 (but before age 62) and completion of at least 10 years of service; deferred retirement after 5 years of service; disability retirement contingent on at least 10 years of service and a Social Security determination of disability. If Social Security denies a benefit award, the trustees shall make a determination of disability in their discretion based on proof of disability through a physician of the employee's choice. The employee has stage 5 kidney cancer. While he could qualify for a trustee discretionary determination of disability, he only recently applied to Social Security and he might not live until after it has made its determination. The only other possiibility is a deferred disability. Could the plan be amended to allow any participant in imminent risk of death to apply for a distribution of his full account balance?

Has anyone had any luck with an owner-only plan VCP submission to retroactively initially adopt a plan?

My apologies if this has previously been covered.

It is my understanding that 10% withholding is the default on ADP refund distributions, as a non-periodic payment.  Most of the recordkeepers we work allow the participant to elect the default, no withholding, or withhold an amount other than 10%.

My question is, is the Plan required to allow the participant to make an election? 

We are working with a new recordkeeper whose process for refund distributions is a spreadsheet that has no option for withholding.  Upon questioning they have responded that 10% applies with no other options for withholding.

Thanks very much.

Is there any creative way to establish an executive deferred compensation plan for a partnership.  I totally understand the flow-through issue but this firm is adamant that there has got to be a way to create such a program for partners that are retiring and getting a return of their capital contributions (all seven figure distributions).  If they are recategorized as income partners instead of equity partners, would that make a difference or would the capital distributions still be treated as K-1 income?  Any thoughts are welcome!!

Hi

A DB plan covers  the retired owner (a corporation) and also his spouse who is part of the plan as an additional employer (sole-proprietor). Their children are over 21, for 1563 purposes.

Retired owner has both DB and rollover assets in the DB plan and wants to transfer the rollover portion into the new PS plan. Eventually they will terminate the DB and will want to rollover all assets into the PS plan, may be this or next year.

According to the vendor for the PS plan document, the document does not allow any new participants who are already terminated/retired thus the retired owner cannot transfer his rollover portion from the DB into the new PS plan because he can never be a participant (nor the eligibility provisions allow/have anything on it). According to the vendor, the only way out is to change some language in the document which may take out the document from pre-approved status.

Has anyone seen this before and was able to find a solution?

Thank you

401(k) plan, sponsor has bi-weekly payroll, every other Friday.  Deferrals are withheld from payroll Friday, the 10th of the month.  The due date, seven business days, would be Tuesday, the 21st.  Plan sponsor writes a check for the deferrals and mails it on Monday, the 20th.  It is received and posted to the brokerage on Thursday, the 23rd. Just looking at the activity in the plan brokerage account it appears the deferrals were late, but the payment was mailed timely.  Does the check date count?  The postmark on the envelope?  

Help appreciated to resolve a discussion here.

Thanks!

We are in the process of terminating a clients' cash balance plan.  The sum of the account balances will be equal to the value of the investments once the 2019 contribution is made. I realize that as a DB plan, we must give each participant a relative value disclosure of their options, ie lump sum, annuity, 10YC, etc. ,etc.

I have never administered a DB and a participant elect any sort of monthly benefit. They have either elected a lump sum to rollover, or a lump sum to be cashed out.  My software vendor's program provides the options and those dollar amounts that must be offered to each participant

The client is asking what does he do if one of the participants does in fact elect a monthly benefit. If the plan is terminating, where do those options come from?  I could understand an on-going plan paying an annuity for the life of one of the participants out of the plan investment account; if the plan is terminating, the monthly payments can not come from the plan.  If the participant takes the lump sum and buys an annuity, depending on interest rates, the lump sum very well will throw off a different monthly annuity amount than what is shown on the relative value disclosure.

Question from one who has not dealt with this issue in the past, how is this to be addressed?

I am often asked, outside of a divorce context, whether or not a Participant in a defined contribution plan needs to notify and/or obtain consent from his spouse before: (i) making a loan; (ii) taking a hardship distribution; (iii) rolling over Plan benefits to an IRA or other qualified Plan account; or, (iv) taking a taxable distribution.    

I know how it works with a Federal TSP Plan, but I cannot find a definitive answer or a reference to any applicable statute as it relates to 401(k), profit sharing, 403(b), ESOP, or other form of defined contribution plan, or with respect to an IRA. .  

Much of what I see says that it depends on the Plan documents.   

Any ideas?  

David