has anyone had a situation where the named beneficiary is not a US citizen or resident?  I'm not sure what to use for a taxpayer ID number or whether I should be advising this person that they will have to file a US income tax return, as the funds being paid out are coming from a qualified retirement plan (not individual) where the participant lived/worked in the US and had an SSN.  unfortunately he passed away unexpectedly following retirement and we didn't have a chance to pay him out directly.  now dealing with a family member outside the US who is non-english-speaking and I have no direct contact information other than thru the prior employer.

I retired early due to COVID and am now on COBRA benefits   If I go back to work for the same company I retired from and get health insurance benefits again, when I leave or reduce my hours would I be eligible for COBRA benefits again from the same company?  

Is anyone aware of a good discussion on whether/when an individual employment agreement will be construed as an amendment to an ERISA plan?  For example, assume a retirement plan provides for 3% employer contribution, but the company signs a contract with one employee promising 5%.  Or, alternatively, a retiree health plan provides that benefits can be discontinued at any time, but the company signs a contract with one employee promising to maintain those benefits for life.

I have to imagine that this issue comes up relatively frequently especially at less sophisticated companies, but I have found surprisingly little guidance so far.  Thanks!

We have a small employer health plan that is maintained in conjunction with a trust.  Therefore, it is funded and we file a Form 5500SF.  We have assigned the filing Plan # 501.  When the plan terminates the trust and switches over to a fully insured product we list Code 4R saying the plan will not file a Form 5500SF going forward.  We believe this is better than indicating it is a final filing.  In other words, the plan continues, but the funding method has changed; but the plan is not terminated.  If we marked the filing as final, then we would have to use Plan # 502.  

Does anybody have any thoughts on this?  Clearly we have to use Code 4R or mark it as final; otherwise the government will expect another filing.  Again, we think the better approach is to use Code 4R rather than indicate it is a final filing when the employer simply continue the plan but changes the funding method.  Thanks.   

How would you administer the 1 year/5 year elective postponement rule for an employee who is a specified employee?

Example: Jill is a specified employee with a payment due at separation. She intends to retire in 7 months, but the payment must be delayed for 6 months. Is the 1 year deadline to make the postponement election measured to the date of separation when the payment would have been made, if not for the 6 month delay? If so, it is too late for Jill to postpone? Or is the 1 year election deadline measured to the date it will actually be paid, 13 months from now in this example, which would make this a timely election for Jill? And, just to be consistent, from which date - termination date when it would have been paid or 6 month delay date when it is paid - does the 5 year postponement clock run against?

I'm thinking that the 1 year and the 5 year periods are each measured against the actual payment date, taking the 6 month delay into account as a plan provision. In other words, Jill in this example could make a timely election, even though only 7 months before the date when the payment would have been made were it not for the 6 month delay. The 5 year postponement period would also be measured from that actual payment date. 

Regards!

The 2019 Form 5500-EZ asks for the Total plan assets at the End of the year on line 6a column 2. The 12/31/2019 account statement shows a 12/31/2019 value of $300,000. In February 2020 a $17,000 contribution was added for the 2019 plan year. Should 6a column 2 show $300,000 or $317,000 for the End of year value? 

I know that the IRS won't announce the new 415, etc., limits until at least late October.  However, in past years, @Tom Poje used to project the limits about now.  Given his retirement, is anyone else doing this?

Does anyone know of a recordkeeper will take a plan with no advisor?  I think Employee Fiduciary mught be one?  If so, what have the sponsors done for an investment line up?  I was thinking the sponsor might choose just offer some series of target date funds...

We have a decent number of clients who won't leave brokerage accounts because they don;t want to pay 50bps to an advisor. And some plans are so small no advisor would ever take them.

Hi

Having a discussion with an agent and attorney for a plan of theirs and I am not in agreement with what they are saying.

Current document's ps provisions are:

-          No last day rule

-          No hour requirement

-          Comp-to-comp allocation

The attorney states that, since no ps contributions were made during 2020, the allocation method can be changed now or by end of year so that, each participant can be their own group. The contribution will be made after the plan year.

Can they? Just want to check others' opinions and see if i am missing something here.

Thank you

Are you aware of any private sector defined benefit plans, not including multiemployer plans, that still occasionally provide for an ad hoc cost of living increase of retiree pension payments?  Or do you know any resource for researching this question?  Thanks for any assistance you can provide.

Is a final lump sum payment of vacation pay eligible for 401k an match? We match each paycheck

Our plan excludes pay after termination

We did allow the employee to defer but no match

we discovered an issue in our HRIS system wasn't calculating match for certain employees and are doing an audit of those who deferred but no match 

thanks, alexa

We initiated a large profit sharing deposit into the 401k accounts via our bank like we have in the past. It was in limbo for a couple of days then rejected missing deadline for September 15 - corporate filing deadline. I have looked to see if the IRS allows for such errors but have not found any to put the money into the account after the 9/15 failed attempt. 

Anyone know of a rule or process or ... anything that might allow a deposit after the 9/15 date?

We have a plan that has no assets.  The proceeds were distributed in 2019.   The company dissolved and the prior signer is claiming there is no one to sign the final 5500.  Any thoughts of how this should be handled.  

A safe harbor 401(k) plan has a 30-day wait (with entry first of the month coinciding with or next following) for full-time employees, and one year of service for part-time employees.  For 2019 the plan fails 410(b) ratio test even with disaggregation of statutory excludables.  The employer does not want to bring any part-time employees into the plan who would not otherwise satisfy the one-year eligibility.  They could bring in those full-time employees hired after November 1, 2019 through an 11(g) amendment and make a QNEC to cover the auto enroll deferral percentage of 4% plus the safe harbor match of 4%.

I'm concerned about using these short service employees to satisfy 410(b) because the 8% QNEC will be such a small amount.  I know the IRS issued guidance many years ago restricting the use of short service employees to satisfy 401(a)(4).  Would the same prohibition apply for 410(b) purposes?

BTW, we're also checking out average benefits testing for coverage, but it looks like it will be very expensive.  

Thanks for your input.

We have a plan that is receiving excess DB plan assets in the Profit Sharing plan.

How do I show that on the 5500?  Other contribution?  Transfer in?

For an insurance company’s fixed annuity contract (or fixed-interest element under an otherwise variable annuity contract), what is a typical credited interest rate?

And for such a contract issued recently, what is a contract-guaranteed rate?

Owner's wife is under age 50, made total of $23K deferrals to SHNE plan. $17K to Roth, $6,000 pre-tax. 

Accountant asking even though Roth is not deductible, can be used to satisfy SHNE contribution.

I don't see how this is permissible as document does not distinguish excess Roth v excess pre-tax.

ABC Co is part of a PEO MEP and they are operating their plan as a 401(k) QACA with a 100% vesting on the first 1% of deferral and 50% on the next 5% of deferral.  Prior to joining the MEP, they never had a plan.   

They have not had a great PEO MEP experience, and have found someone else to take over most HR duties, including payroll.  They want to break away from the PEO MEP as soon as possible.   

They want to keep a 401(k) and simply move the assets over, but make slight changes (like adding loans, in-service, no auto enroll).  They are unsure if they want to keep the same match formula or go to something different, but I think they’re leaning towards something different. 

We’ve reviewed the SPD, but still waiting on other documents.  From the Q&A I've read in ERISAPedia, it sounds like it's very important to review the actual plan document for possible "gotcha" moments. 

They apparently have had issues with the Auto Deferrals and the Advisor has told us that they have removed the Auto Enroll feature at some point in 2020.  We are not sure if they sent notice about that or changed the match feature, but we're assuming they did.  WE don't know if this occurred in the 

They’d like to get this all done in 2020, but we’re running out of time.  We know it would be cleaner to stay in the MEP through the end of the year, and start the new plan effective 1/1/21, but they don’t seem to want to go that route. 

I’ve found nothing in 2020-52 that addresses how the QACA is effected, if the Automatic Deferral feature is removed.

 Questions:

1.   Since they removed the Auto Deferral feature, what challenges are now faced with the discrimination testing (ADP, ACP, Top Heavy)?  Does it have to be done for 2020?  IF so, do we use Current Year Testing?

2.   If it’s determined that we have to do Current Year Testing and fail a test, how do we correct it?  For example, if they fail ADP, do the refunds or QNEC have to be done/made in the PEO Plan?  Or can it be done in the new Plan?

3.  How important is it to review the fine print in the Plan Document to see what challenges are faced with removing itself from the MEP PEO?

A client just asked an interesting question.

If an employee was hired pre-COVID and furloughed/laid off for a spell, when would the initial one year eligibility period start?

Obviously there is no break in service for a non-participant.

Hey, fellow old-time pioneers! You'll enjoy this file.

one-you-will-remember.mp3