Hello, 

I am looking for sample policy language that would guide trustees in conducting interim valuations for a pooled plan that has been annually valued in the past.  This topic was discussed in 2012 (see below), but I was curious if anyone has come up with a policy since that time. 

Some posters in the 2012 forum discussion advocated for not adopting a policy and instead leaving interim valuations up to the discretion of the trustees via broad interim valuation plan language.  The thought being that the policy would potentially force the trustees to take action when it practically does not make sense.  

If no one has policy language, has anyone seen any triggers of interim valuations that were helpful, or mechanisms that would help mitigate loss in the case of large distributions taken after a substantial market drop?  

I am not so concerned with nondiscrimination issues at this point in the analysis. 

Thanks!

We have a plan that experienced a partial plan termination that resulted in some participants being made 100% vested.  The employer has since rehired one of those participants made 100% vested.  The question is does that rehire remain 100% vested in contributions going forward, even though the accrued years of service to calculate vesting does not add up to enough to be 100% vested?  I cannot find anything that specifically addresses this situation.  Comments would be most welcome.

http://stockshield.com/

this company apparently insures against the risk of bankruptcy of the plan sponsor.  Sounds too good to be true.  Why wouldn't the bankruptcy trustee get the insurance proceeds? Wouldn;t the proceeds inevitably be an asset of the business?

Curious if anyone has seen this before or has any thoughts.  If it works, heck I'll mention to all of my clients, let them decide if the premiums are worth it.  You would think this company would have done their due diligence before they came out with a whole product line...

Our client is a controlled group who acquired a new entity last year. The client determined they can operate the new entity as a QSLOB.  Who should be listed on the Form 5310-A as "the employer""? The parent company or the new entity?

I need some guidance on an RMD for 2020 for a terminated defined benefit pension plan.  The plan year end was 9/30/19.  As of 9/30/2019 the plan held assets that produced a $100K RMD for 2020.

However in October 2019, the plan sponsor (1 man plan) rolled the remainder of the DB assets to his IRA.

I know that under CARES DCs and IRAs can waive RMDs for 2020.  But what about this situation?  Does he need to take the $100K from the IRA to satisfy the RMD requirement for the DB Plan for 2020?

I'm sure the CPA will be asking for a reference to the answer.  Any help is appreciated.

What are everyone's thoughts on whether a company that provides investment advisory and asset management services would be a "service organization" under the ASG rules?

Under the regs (which I recognize are still just proposed), while such a company would not appear to fall within any of the enumerated fields in 1.414(m)-2(f)(2) (except maybe "consulting," but I think that is a stretch), it seems to me that it would easily qualify as a "non-capital intensive organization" under the general definition in 1.414(m)-2(f)(1), according to the last sentence (i.e., the gross income of the business consists principally of fees, commissions, or other compensation for personal services performed by an individual).

However, there is a specific carve out in 1.414(m)-2(f)(1) for "banks and similar institutions," which are deemed to be capital intensive.  So, I guess the ultimate question is whether an investment advisory and asset management business constitutes a "bank or similar institution" within the meaning of 1.414(m)-2(f)(1)?

I tend to think yes, but I could be persuaded.

If a Safe Harbor plan (Plan B) merges into a non-safe harbor plan (Plan A) mid-year due to an acquisition, does Plan B receive the benefit of a "terminating" plan under the safe harbor regs from the first day of the plan year through the merger? Then as of the merger date, the Plan A tests the plan with the full year information for the employees of Plan A and then from the date of the merger through the end of the plan year for employees of Plan B?

I know there is no guidance on this, but how are others handling? 

With the CARES Act increase in plan loan limits, it seems more likely that a deemed distribution (rather than a loan offset) will be necessary when someone terminates employment with an outstanding loan and can't pay it off. That's because, if someone borrows 100% of their account balance, there will be little or no funds in their account to offset the loan balance against. Do you agree with that?

Also, does anyone believe whether a plan that adopts the CARES act loan repayment delay provision can (or must) extend the cure period when there is a deemed distribution of an outstanding loan?

Thanks for your help.

Terminated employees who meet certain requirements are given a stipend to be used to purchase their own medical coverage from one of several designated insurance providers.  (if one provider is more expensive ee covers the difference).  They are then treated as being within the same group by the provider. At what point is it determined that this is a group plan subject to erisa?

Someone is asking if a traditional match safe harbor plan can have different definitions of compensation for employee deferrals and employer match. Specifically, they want to know if the definition of compensation for employee deferrals can include bonus but exclude bonus for match eligible compensation. In addition, the plan pays match on a payroll period basis and does not provide a true-up.

I'm leaning strongly towards no on this but haven't found anything that specifically excludes this design. I'm worried that the match for an NHCE could be lower than the match for an HCE when compared to deferral eligible compensation. The only way I could see this as allowable is if you only look at match eligible compensation when determining match percentage and you completely ignore deferral compensation. But administratively this would be difficult with a payroll period match and no true-up.  There would need to be some kind of mid year true-up after the bonus was paid to make sure those deferrals were taken into account for purposes of match.

Any thoughts on this?

How is the match allocation limit determined for mid-year match changes with respect to the compensation limit?

For example:

Match is funded per pay period. Match formula changes July 1 from 100% of 10% to 100%  of 4%.

Pt earns 30k/month and contributes 10% for 1st 6 months and 4% for last 6 mo.

  Jan - June - match allocation =  18,000  (180,000 x 10% )

  July - Dec - match allocation =  4,200 (105,000 x 4%)

Total match allocation = 22,,200.

Option 1 - The  per pay period match total of 22,200.

Option 2 - is the match limited to (10+4 )/ 2 = 7% x 285,000 = 19950

Option 3 - Something else?

Thank you for your responses.

I work for a single employer who has a a 401k plan with Nationwide Trust Company. How do I know if our plan invests in a master trust agreement and need to comply with FASB ASU 20116?  

Reading a description from Nationwide, it looks like our plan has it's own trust which then invests in assets, here is the description they provide

How unit value reporting works
Individual mutual fund investors purchase shares. To obtain their market value, they take the number of shares they own and multiply them by the net asset value (NAV) of the mutual fund.
It works differently with a trust program (like your company’s retirement plan). The trust is created as part of the qualified retirement plan to own and manage the plan’s assets. Plan participants do not own individual mutual fund shares, rather they own units as a proportionate interest of the plan’s assets. 

Any input is appreciated.

Thank you

If a business owner legally disowns and/or disinherits his adult son, would his son still be considered a Highly Compensated Employee?  The son has no direct ownership of the company and is well under the compensation threshold. 

Is anyone hearing anything that the October 15th extended deadline will be extended to 1/1 due to Covid-19?

Here's hoping...

Thanks!

I know governmental plans don't have the typical spousal consent requirement.

But if there's a plan that had it, is it considered a cutback to eliminate it? 

Someone's prior TPA used an ERISA document when they shouldn't have.  Anyway it's a closed-to-newbies defined benefit plan with a handful of actives left.  The plan offers various term certain annuities as well as SLA, which in ERISA-land would require spousal consent.  The sponsor is now getting a governmental-entity-specific adoption agreement and I'm wondering if leaving "spousal consent still applies" blank nevertheless requires me to grandfather it as any sort of protected benefit to the spouse.

Thanks.

-bri

Client's plan document has entry dates of 1/1 and 7/1, and it says that changes to deferrals can be made on entry dates.  Several participants stopped their deferrals during this COVID pandemic, and now what to re-start them before 1/1/2021.  Has something changed on this topic, and CAN they start again next payroll?  I don't see anything in their document that says they can re-start at any time, but is that a given?  Thanks!

A client intended for their 401(k) plan to exclude bonuses from the definition of compensation for purposes of both deferrals and matching contributions. The plan document includes bonuses. The client wants to amend the plan's definition of compensation effective 1/1/2020. It is a calendar year plan. It is not a safe harbor plan. Can the amendment be retroactive to the start of the plan year? I do not think so but the client received advice to the contrary. 

Any thoughts appreciated. Thanks. 

Just looking for discussion.

We have a client that has a Solo-K  (Larry, don't yell at me, I'm using the term for clarity.)

No contributions since 2013, the last year an EZ was filed. (under 250k since then).

We find out today that he retired and took his money out in February.

Do I really need to terminate the plan?  What's the harm in leaving it "open"?  He will file a final EZ.

Assume that I do the three-year spread of my CRD. I understand that Notice 2020-50 (the carryback option) allows me to amend my 2020 tax return if I repay more than 1/3 of my CRD before timely filing of my 2021 return. In that case, the first 1/3 is applied to 2021 income.

But what if do the three-year spread but decide, after filing my 2020 return, that I want to reduce my 2020 taxable income -- not my 2021 income. Notice 2020- 50 doesn't seem to say that I can apply repayment to 2020 and amend my 2020 return in that situation. It seems to require that repayment be applied to 2021. Or, am I missing something?

Also, what happens if I repay more than 2/3 of my CRD before the timely filing of my 2021 return. I assume the first 1/3 of the repayment is automatically applied to 2021. For the remainder, can I allocate it any way I want between a 2020 carryback and a 2022 carryforward?

Thanks for your help.