A 401(k) PSP plan for a PC has 2 owners, both over age 50, one makes $280,000 the other $220,000. There is 1 staff making $30,000 per year. Each owner defers $25,000 ( 401k + post 50) and the PC makes a contribution of 18% to all participants. Both owners want to get to $62,000 limit. The plan document (FIS  VS) says that an allocation to a participant that would make his total allocation exceed 415 is allocated to other participantslimited to the 415 limit and the excess is allocated to other participants in proportion to salary. 

So for Owner with $280,000 would get $62,000, the PSP portion of $50,400 is limited to $37,000 and the remaining $13,400 he can't get .that gets allocated to the other participants.  that's where I am stuck.The other owner would get his $25,000 plus no more than $37,000 pep and the balance get allocated to the employee.  This seems ok to me but am I missing something here?

Hi.  Does section 112 of the SECURE Act (401(k) plans must allow long-term employees working more than 500 hours but less than 1000 hours per year to participate) apply to grandfathered 401(k) plans?  I don't think so, but would greatly appreciate additional perspectives.

New section 401(k)(15)(A) says the 3 years with 500+ section (i.e., 401(k)(2)(D)(ii)) “shall not apply to an employee unless the employee has met the requirement of section 410(a)(1)(A)(i)” [i.e., age 21].  But governments are exempt from all of 410 by 410(c)(1)(A), and the result is that no governmental 401(k) employee ever meets the requirements 410(a)(1)(A)(i), strictly speaking.  If 401(k)(15)(A) were intended to apply to governmental plans, then it could have specified the age 21 requirement directly rather than through cross-reference.

Governments don’t have a history of excluding part-timers unfairly and plan eligibility is typically very liberal.   As public policy, there doesn’t seem to be a strong argument that SECURE now wants to apply a part of 410 to governmental plans contrary to 410’s blanket exemption and create a new minimum participation requirement for them.  And many government EEs are covered by collective bargaining agreements, so those EEs are clearly exempt.  It doesn’t seem apparent that Congress intends to complicate state and local government plan administration by applying this new part-time eligibility section to nonunion EEs, who are exempt from 410, 401(a)(4), and 401(a)(5).

Thanks!

A situation has arisen where a plan has determined that a participant had been overpaid in her pension benefit payments. The plan intends to recoup the overpayment by asking the participant to agree to have amounts deducted from prospective pension payments over several months. Is there a specified percentage limit of pension benefit payment that must be applied in determining the maximum amount that may be deducted from the participant's prospective pension payments? If so, what is it and what is the statutory or regulatory citation where such limitation can be found?                                                                                                                    

I can't find anything that explicitly states you can do this but I presume the 50% QPSA is the floor and raising it to a 100% QPSA is not an issue via an amendment to the DB plan. Thanks for any info you can provide. 

We have a plan that has different eligibility for deferral and Profit Sharing Sources. The compensation for both is defined from date of entry. Let's say a participant becomes eligible for deferrals on 1/1/2019 and for the profit sharing source on 7/1/2019.

Let's say the compensation from 1/1/2019 to the end of the year is $100,000 and from 7/1/2019 to the end of the year is $50,000. The company allocates 5% to this participant for a Profit Sharing Contribution, so the participant receives $50,000 * .05 = $2,500. However, when performing the General Test, is it the $100,000 compensation that's used or the $50,000?

The DATAIR documents have a separate definition of compensation for "Plan Compensation (including for Elective Deferral purposes)" and "Compensation for Non-Elective Contributions" and I'm wondering if Plan Compensation means that it's the compensation used for all testing (including General Test).

Thanks.

I have a client - a one-physician office, wife manages the office - with SH 401(k).  Plan provides the SH NEC 3%, but has last-day rule for PS allocation.

8 NHCEs, 2 of whom terminated during the year, so they get the 3% in addition to their deferrals, but no PS.  I pass coverage at 75% but I can't get through the gateway because all the terminated are getting is 3% instead of the 5% needed for the gateway. 

I need to allocate 2% to them to get through the gateway using FtWilliam basic plan document.  Can I use  an 11(g) plan amendment to allocate that 2% for 2019?

Thanks!

We have a client who currently has a 401(k) that does a discretionary match.  They have matched for January and part of February  of 2020 already.  They failed ADP for 2019 so want to do a Safe harbor going forward.  Under the SECURE Act,, can they amend now to do the 3% Non-elective for the remainder of the year (as of the date of adoption of the SH plan? )

If so, do they perform ADP test for the months they had the normal match or do they pass for 2020?  

hello!

I have a plan that amended the vesting schedule effective 1/1/2018 from an immediate vesting to a 2/20 vesting schedule.

I have an employee that was hired 9/2017.  She was eligible 1/1/2019 (1 year 1000 hour eligibility with 1/1 & 7/1 entry)

Does she fall under the old vesting schedule because of her hire date or does she fall under the new because of her participation date?

I appreciate your help.  Thank you!

I'm going to preface this by saying I know almost nothing about Puerto Rico rules. 

So if someone has a primer resource that they think has the answer - please let me know. 

Question  existing U.S. mainland plan, owner only. I am unsure of entity type, I suspect it is an LLC. I do not know which state. I will try to find out the details. 

The owner / business is moving to Puerto Rico and wants to keep their existing plan. Are there changes? Is this something that is going to be so complicated I should refer them to a different company? What things should they (I?) be aware of? I've tried some basic googling, but all of you are very quick and smart so I figured I would ask here. 

H & W were divorced on July 16, 2019. W was awarded 1/2 of Hs cash balance pension and 401(k) plans. I was retained by the attorneys to draft the DROs. I did so and submitted them to the plan administrator for preapproval on October 9, 2019. Minor changes were requested, made and resubmitted. Preapproval letters were issued on November 25 and December 9. The court approved the QDROs and they were submitted to the PA for processing. The PA now wants another minor change in both QDROs. Normally, wouldn't be a problem, except for resubmitting them to the court, which PA requires. 

I just learned that the AP died on November 25, so her signature is not available for the revised QDROs. My thought is to made the requested change but keep the QDROs otherwise as drafted. The only form modification would be to have the personal representative of the AP's estate sign in the place of the AP. Does this sound like a reasonable solution?

An organization wants to give retirees a monthly allowance to help them pay for medicare premiums. This is a not-for-profit organization that wants to provide a specific dollar amount to former employees that meet the 'retiree' criteria. They currently make a monthly deposit into each retiree's bank account. Is this the proper way to do so? Thank you. 

Does the son-in-law of the owner get attributed the ownership percentage of father in law?   I have daughter as HCE based on Dad's ownership.

Good afternoon,

We have an employee who is looking to voluntarily default on his $50k loan that he initiated in 2018.  He's paid back about $15k but now says the payments are too much and he'd like to stop payments and have the remaining amount defaulted and treated as a deemed distribution.  The employee is still contributing to the 401(k) and receiving match.  He also has about $12k he can take as a distribution.  The participant is 67 years old.  We've talked to our general counsel and they've informed us that we should allow the voluntary default because the employee resides in California.  The IRS doesn't seem to keen on allowing employees the opportunity to circumvent the law.   Has anyone heard of this?

Hello All - I have a question regarding 401K rollovers from a previous employer to a current employer:  I have $50K of funds in my previous employer's 401K program that I want to rollover to my current employer's plan.  $40K of the funds are Taxable and $10K are Non-Taxable.  I have the option of rolling over the total ($50K) to my current employer but also have the option of rolling over the $40K Taxable to my current employer and getting the $10K NonTaxable distributed directly to me.  If I were to pursue this option of rolling over the $40K Taxable to my current employer and getting the $10K NonTaxable distributed to me, would I be on the hook for any early withdrawal penalties/additional taxes on the $10K once I cash the check?  I understand it would be beneficial to roll the NonTaxable over, too, since I confirmed my current employer's plan would accept it AND I wouldn't pay taxes on it later but I could also use the cash right now.

Appreciate any input from the forum members.  Thank you.

So I'm a pretty junior tpa (I've been doing this for about 3 years) and while I've learned *a lot* I recognize that there are things (probably many of them) that I still don't know. This is one of those things.

So I was asked to do a profit sharing calculation on a plan that is just starting up, it's a calendar plan year with the first year being 2019. This plan has fairly average eligibility rules all around (18, 1 yos (1,000hrs), dual entry) but the business was not started until 7/6/2018 so not surprisingly most everyone won't be eligible until 1/1/2020.

Now the way the census is looking the two owners have a DoH of 7/6/18 and most everyone else has a DoH of 7/20/18.

Here's where my question arises. I was asked to write in a waiver of eligibility for the Profit Sharing source for employees employed on 7/6/18, which obviously will only be the owners. Meaning they'll be able to receive a profit sharing in 2019 and everyone else will have to wait until 2020 when they're eligible This should pass testing as well (it's a fixed class based pro-rata) as long as the owners stay under 25% of the payroll. Now I suspect this is likely perfectly fine, but it sorta "feels" discriminatory in favor of the owners in terms of the waiver of eligibility... so just wondering if this is something that should maybe be questioned or not? Either way I appreciate everyone's feedback and for taking the time to read this.

Over the past ten years I've been helping my disabled mom through a very ugly divorce. While it should be long over, her ex has now popped up and said that he would like her to give up her survivor benefit (he works for the USPS) and in it's place he would get a $25k life insurance policy on himself with her as the beneficary.

I'm assuming this is not in her best interest in any way, and is full of loopholes, but I am trying to figure out as much as I can. I've looked it up and per the QDRO she's entitled to the "maximum survivor annuity benefit based on your Federal service".  

Though also states "the AP is awarded a former spouse survivor annuity under the Federal Employees Retirement System in the same amount as the AP has been receiving or would receive as her share of the P's retirement benefits under paragraph 6a" (she's entitled to 9.6% so he has noted that this pro-rata share would be 55% of $384 (9.6% of his monthly retirement benefit). 

Either way, I'm guessing it's better than a random life insurance policy?

Any advice or feedback? Thank you SO very much. 

With the 10 year payout requirement for non-designated beneficiaries, what are your thoughts on using a charitable remainder trust to facilitate a lifetime (or 20 year) income stream?

Obviously, it does not have all the advantages of the stretch, but it does provide for tax deferred growth and income stream beyond the 10 years.

Thoughts? 

An individual owns is 100% owner of a company sponsoring a non-elective safe harbor 401(k) plan.  After several years the same individual starts a new company in in which he owns 85%.  The new company will not be adopting the existing 401(k) plan and will not adopt it's own plan.

The plan document defines compensation as all compensation paid by the "Employer" and references the controlled group/affiliated service group code sections.

Am I correct that for allocation purposes, if a participant earns compensation in both companies, all of the compensation would need to be included unless the plan was amended to specifically exclude it?  Further, if the compensation from the new company was to be excluded under the plan, the compensation would need to be tested for it to be used for testing purposes and the safe harbor contribution?

Thanks very much.

I have a non-Safe Harbor 401(k) Plan that will be terminating by 04/01/2020. According to the ERISApedia webcast, an Amendment is required for terminating plans ("presumably" - their word). 

I have not seen any Amendment language for this. Anyone else?