Client is told from prior TPA that while they deduct pretax as a % of gross, they withhold Roth  based on Box 1 W2 (or at the least,  Gross - pretax 401k).

Per Document - definition of wages = wages, tips and other forms of compensation (W2 box 1)

Is this common?   Any thoughts or concerns I can advise on? 

Is there anything that prevents a plan sponsor from Lowering the age requirement to age 14?  I know max is 21.  He wants to let his kid participate...not sure he'd work 1000 hours but I guess if he changes it to NO eligibility  requirements -....as long as every employee is treated the same - can he do this?

A participant rolled over his entire balance to an IRA in 2019 without taking his RMD prior to the rollover.

He will be taking the RMD now as it was just discovered.

Is the only course of action to remedy the missed RMD by filing through VCP?

Here is my situation. A sponsor left a PEO but hasn't yet established a single employer plan to accept money from the previous plan. During this time the sponsor continued withholding deferrals from paychecks based on deferral elections related to the PEO. Would a new single employer plan be able to accept these deferral contributions if new enrollment forms with deferral elections and investment choices hadn't yet been completed???

Hi

Looking to set up a combo plan (CB+DC) and I now was informed that the client has a SIMPLE.

Scenario 1: Not yet funded the SIMPLE for 2020, can I set up both plans? No deduction issues, correct?

Scenario 2: Funded SIMPLE for partial 2020, what can be done if anything?

Thank you

Company owner and plan trustee wants to lend part of his asset in plan to a person who will co-own a private home for the 2 of them. Does the purchase make this person a 10% or more partner or joint venturer?

I would be interested in receiving some good advice on what to do with this eroding situation since early February of this year.  I did create an initial post on the issue and at the time, the fix was weeks away and results unknown as to how my boss would handle the entire situation.  And to true form he let me (and others) down terribly, in my opinion.  So I'm turning to the board for "expert" advice based on my telling of what I perceive to be fairly factual evidence of wrongdoings and misdeeds and he should certainly be held accountable in some way.  I have questions about the attorney's responsibilities in this as well.

I will try to be concise with what has unfolded.  We have 6 current employees affected by the lost IRA contributions as of 2/1/2020 that were "overlooked" for every current employee except one apparently.  An ERISA attorney was hired to move forward with the VCP and as of 3/25/2020, we all had our new IRA amounts deposited into our accounts, fixing the error.  My years affected were from 2013 - 2020 and others were very similar to that time frame.  However the one co-worker who has been with the company for 15 years was not given anything during the VCP for reasons we are not aware of.  The ER sat us down with a memo (attached) in hand and read from it verbatim, explaining the entire situation and what he planned to do about it.  This is the part of the memo that shines a light on the ER's intentions:  "However, if an eligible employee was given an opportunity to make an election to defer into the Plan (and chose not to do so), no corrective contribution will be due for that employee."

This individual was offered, what appeared at the time to be the SIMPLE IRA plan, by the plan representative in 2008 (the first year it was offered).  The EE turned it down due to another investment that he was provided by the ER a year or two earlier and thought this was one of the same and didn't want to contribute from his check at the time.

What has come to certainly be known as the company SIMPLE IRA plan was never again offered in any way, shape or form to this EE and also to our current employees.  This is why we all received our lost IRA for this lengthy time period, no questions asked, but this one EE was left out and he thinks it has something to do with the initial ask and decline in 2008.

Fast forward to the dust settling on the VCP and this EE drafts a 4 page letter explaining and pleading for some explanation as to why he was left out.  Silence for quite a while until ultimately the ER decides it best that he go ahead and deposit his IRA portion, 5 months after the closure of the VCP.

Just to be clear, the ER did speak briefly to the EE shortly after the closure of the VCP and everyone else had received their "fix email".  He was sorry that he couldn't do anything for the EE and he had the "document" with his signature (guessing the one from 2008 where he declined the deductions for that year).  The EE asked to see the document and any evidence proving he had been asked each year and declined each time, to which none have been provided to this date.

Now, if this isn't bad enough with the ER trying to conceal and basically steal the money from the employees over the 12 year period, he tried to do it again to the one CURRENT employee AND still has not contacted any of the FORMER employees.  I know of at least 4 former EE's that had worked for this company for 3-4 years each during this time frame (2008-2020).

How can this be?  How can both the ER and the ERISA attorney have an opportunity to fix this egregious error and make the final decision to look over the 1 EE (with no investigation or even a question as to his status) and also not contact 1 former EE about this error and appropriate steps to fix their situations?

Something is terribly wrong here or I am terribly misunderstood how a VCP is supposed to unfold or at the very least, the requirements that the ER and ERISA attorney need to meet to finalize the VCP.

Please offer advice/suggestions as to what would be the next step in holding this ER/ERISA attorney accountable?  I feel he purposely left everyone out the first time around (year after year) and when he had the opportunity to fix it (after getting caught), decided to screw some people over once again, including an EE who has been with the company since day 1 (2005).  Also as a side note, the ER has ample opportunity to reveal the company IRA plan at the time of hire for us past 4 employees but never, not once, did the EE mention the IRA to any of us during the hiring phase.

Thanks!
DR245

p.s. I'm attaching the actual MEMO, read verbatim by the ER at the company meeting on 2/25/20.  I brought the entire IRA situation to his attention on 2/1/20.

We;re just listening in on the Corbel/FIS training for documents and they are telling us about these new "Flexible" vs "Rigid" discretionary matches.  Basically you have to provide notice within 60 days of funding if there is any discretion related to the ALLOCATION of the match.e.g.., discretion regarding excluding deferrals in excess of x% of compensation, discretion regarding the computation period, etc).

Was this new requirement imposed on all document providers?  i assume it was, but would be curious to know what else is out there. IT's a pretty onerous requirement... 

Is there anything going on out there for these plans?  I keep hearing "theyre coming!".  Are they?  I haven't heard anything.  I would expect the Empowers and John Hancocks, etc. to be the ones leading the charge, but I don;t hear anything.

This is a 2 part questions:

Prospective client has Life Insurance in his account.

Plan was established 1/1/2016

Current Account Value -  $137,447 (Zero contributions made in 2020?)

                      Less 2019 Employee Contribution -  $25,000   

                      Seasoned Money Estimate -  $112,447.

 Max LI premium for a whole life policy: $56,223.50

 Current policy: $26,100

 New policy premium limit: $30,123.5 (assuming this is whole life policy subject to 50% cap)

Plan rules for LI are in seciton 7.5 (page 57)

Do those calcs seem correct?  

Also, the same client then wants to borrow $50k from the 401(k) plan.  Not from the LI policies but the non-LI balances.  This shouldn't cause any issues with the 50% limits correct?

Any help or insight would be greatly appreciated.

401k PS Plan Volume Submitter DC Plan Document.pdf

A controlled group each adopted a separate SIMPLE plan.  Together the companies are over the 100 ee count.  Does each employer/plan in the controlled group have to file a VCP separately and pay a separate user fee?

What are the pros and cons of merging an esop with half the shares unallocated into an existing 401k compared to a termination of the same esop??

Great case study! Anyone want to weigh in???

Client has 2 Schedule C's, shows profit on both Schedule C's, can the client have a Solo 401k plan for 1 Schedule C, and a SEP or Profit Sharing Plan for the other Schedule C?

Can they maintain both plans and fund them both to the IRS Limitiatons?

Group:

Forgive me if this has been answered . . . 

Can the IRS enforce a tax levy on 403(b) plan annuity contract payments?  Does it matter if the 403(b) plan is an ERISA plan? Finally, are these answers any different if the levy is imposed on the 403(B- contracts before they are distributed?

Any help is appreciated.

IF a plan document excludes overtime for example from the match calculation, does that present a Benefits rights and features issue?  How would that test even work?  People with no over time are treated as benefitting the same as HCE's?  My brain starts to melt down.

I would hav thought that if I passed testing based on a 414s definition of comp I was ok.  I have never heard of this before in 20 years...  

I have a significant amount of $ in an ESOP plan for a company where I terminated my employment in December 2016.  Their fiscal year runs through 9/30.  Finally in 2019 - I was eligible to request my first distribution - which I did - and requested the full amount paid out - as I just want to be done with all of this...  They chose to only pay out a partial distribution (~ 1/4 of what was in the account) - never informed me of how or why or anything else - just made a partial payment and closed the window of opportunity, so to speak.

Fast Forward a year, and it is now that the window to request a distribution is open again - and I would like to make another request for my $$ - as COVID has significantly affected our family and business financially, and there are some tax benefits to requesting it now.

I contacted the company who is handling my account (As this is what I am told to do by my former employer - not to contact them).  I was told that I "may not" be eligible to request a distribution this year - as the company can pick and choose who may or may not request one?!  How is this possible?  They already have the choice as to whether or not to pay me when I do request one...  Now they get to decide whether or not I can even actually make the "request"??  

Is it possible that since i requested a full pay out last year when I was eligible - they are considering that as a "request" for payment however/whenever they decide to give it to me?  At this point, I separated from the company nearly 4 years ago, and just want to roll this $$ into my IRA so they no longer have control of it..

Thanks for any help!

I have a significant amount of $ in an ESOP plan for a company where I terminated my employment in December 2016.  Their fiscal year runs through 9/30.  Finally in 2019 - I was eligible to request my first distribution - which I did - and requested the full amount paid out - as I just want to be done with all of this...  They chose to only pay out a partial distribution (~ 1/4 of what was in the account) - never informed me of how or why or anything else - just made a partial payment and closed the window of opportunity, so to speak.

Fast Forward a year, and it is now that the window to request a distribution is open again - and I would like to make another request for my $$ - as COVID has significantly affected our family and business financially, and there are some tax benefits to requesting it now.

I contacted the company who is handling my account (As this is what I am told to do by my former employer - not to contact them).  I was told that I "may not" be eligible to request a distribution this year - as the company can pick and choose who may or may not request one?!  How is this possible?  They already have the choice as to whether or not to pay me when I do request one...  Now they get to decide whether or not I can even actually make the "request"??  

Is it possible that since i requested a full pay out last year when I was eligible - they are considering that as a "request" for payment however/whenever they decide to give it to me?  At this point, I separated from the company nearly 4 years ago, and just want to roll this $$ into my IRA so they no longer have control of it..

Thanks for any help!

An participant in a 403b was fired and has requested distribution of her retirement plan accounts.  She has also filed a grievance of wrongful termination through her union and wants to be re-employed.  Although I'm told it is not likely she will win, Should the plan act on the distribution request, even though there is a chance she would be rehired soon?

Thank you

Our client's document says deferral election applies to irregular pay.  However, they often issue very small second checks for some reason.  (like under $100); an issue arose when the payroll company withheld FIT on a small check and no 401k deferrals....they quoted the OHS (OFFICE of HUMAN SERVICES) that FIT withholding takes precedence.  Anybody seen it handled differently?  The plan was audited by a CPA firm and they took issue with no deferrals being calculated prior to FIT.   So an impasse.....