I'm not familiar with these - (other than hearing them advertised on the radio) - blurb from IRS included in link. Are these expenses allowable as "premiums" under a cafeteria plan? If not, can the expenses be considered an allowable expense under a Health FSA?

https://apps.irs.gov/app/IPAR/resources/help/acamnstry.html

A church plan employer is looking to exclude bonus from compensation for salary deferrals.  Are church plans subject to 414(s) testing.  I've received mixed responses.  Thanks.

This question is a piggy back question to the one posted by ratherbereading back in December of 2019.  I have the same situation, and understand that the ADP and ACP testing is applicable to the plan for 2019 since the Safe Harbor Match was suspended mid-year.  The Safe Harbor Match was funded to the point of suspension.  Are the Safe Harbor Match contributions that were funded to the point of suspension considered SH contributions, and thus can be used in the ADP test since they are fully vested?  Or are they to be considered "regular" match (non-Safe Harbor) for 2019 ACP testing purposes (as if the Safe Harbor feature was not in place at all for the entire year)?

Thank you.

I’m a 35 year old physician with his own practice. I’m about to hire a physician into my practice and pay them a salary of $400k. This physician would be my only employee. 

I want to start a DB and know I can exclude highly compensated employees. However, would that exclude me too since I make over $125k? Even though I own the corp 100%, I w-2 myself.

I want to start a DB but not include my employee for the duration of the DB. Thanks 

I have a solo 401(k) account that was set up in 2003 when my business was a sole-proprietorship.  A few years later I switched our company plan to a Simple IRA since at that time we hired employees and were no longer eligible for the solo 401(k). 

 I neglected to formally close the plan and in 2017 the balance grew to over $250,000 and I am now delinquent on 2 years of filing form 5500ez.  Penalties of $250 per day up to a $150,000 maximum penalty. 

My plan is to file for penalty relief for 2017 and 2018(reduces penalty to $500 per delinquency, roll the account balance into my TIRA and possibly close the plan.
The balance grew solely from investments; no contributions since switching plans.

Alternative plan:

I have read that as long as no contributions have been made, the plan can remain open in a "frozen" state.  
I was considering keeping the plan open If I can still take out a 401(k) loan from the account while the plan is in this frozen state.  I'm just not sure if this is allowed or even advised.

Any knowledge and recommendations would be appreciated. 
Thanks!!

I have an interesting situation.  The adoption agreement in question only has a last day requirement waiver for normal or early retirement.  I have a Participant that has met Normal Retirement Age but is not employed on the last day of the Plan Year due to death.  Would this person get an employer contribution?  I definitely admit this is a gray area and could be argued either way.  My thinking is leaning towards no since there is a separate waiver for death as an option in the adoption agreement.

This is on a Relius Document.

Our client maintains a safe-harbor matching 401k plan.  A long-time employee (HCE) transitioned to a part-time role and is now working less than 1,000 hours per year. (The eligibility requirement listed in the plan document.)

Is this employee still eligible to make 401k deferrals and receive the safe-harbor match or excluded because he no longer meets the eligibility requirements?  The document does not address this situation - only that the eligibility requirements are Age 21 and 1000 hours of service.

Thank you for your feedback!

Hello,

I have an HCE who mid year started to make employee contributions.  The documents states HCE's can not participate.  I know I need to refund them their contributions, my question is we are refunding  the 2019 contribution in 2020, do we treat this like a 402g refund and the 2019 contribution would be taxable in 2019 and earning in 2020, or is everything taxable in year of distribution, 2020

Would a QACA match of 100% of the first 6% be classified as safe harbor to avoid ADP/ACP testing on an automatic enrollment/increase plan.  I know safe harbor formulas can't match on anything over 6%, but I generally only see QACA matches quoted as one of these 3 options:

• Match 100% of first 1% and 50% of next 5%
• Match 100% of first 3.5%
• 3% non-elective for everyone (not a match)

Some sources I've found say 3.5% is the max possible QACA match, which seems like a fairly low limit for some employers that want to do more.

Plan has a traditional automatic contribution arrangement (no EACA or QACA).  

Eligible participant states that he signed an election form for 0 deferrals, which plan sponsor did not implement.  Plan sponsor continued to deduct and remit deferrals.

Is there a fix for this?  Can the deferrals be distributed to the participant if there has not been a distributable event?  I’m not seeing this in EPCRS.

Would appreciate opinions/comments on this.  Going through §112 of the SECURE Act referencing elective deferrals for long-term part-time employees.  Section 112 (a)(1) references §401(k)(2)(D) which is the Code Section that allows for a cash or deferred arrangement.  Section 112 does not reference §402A relating to Roth contributions.  Therefore a long-term part-time employee can make elective deferrals but not Roth contributions.  Is this an oversight?  Or am I missing something?  Thank you.

I just wanted to make sure of the timing.  I know the Secure Act now allows you to adopt a plan up until the filing of your tax return, as opposed to December 31 of the Plan Year.  Is that in effect for employers looking to start a Plan for 2019 or does it begin with Plans starting 01/01/20?

I believe it's 2020 Plan Years, but I wanted to be sure.

Thanks!

PC left employment and attempted to rollover employer sponsored 401K to private account.  Due to an administrative error, one by the employer and one by the TPA the rollover did not occur until about 70 days after it was originally scheduled.  PC alleges that due to the error he lost a significant amount of money because he was unable to pursue the investment strategy recommended by the private account manager.  I don't see any relief available under the plan document; the loss he claims is speculative and occurred outside the terms of the plan.  Is this a 502(a)3 claim, a nothing claim, or something in between?  I'm trying to get ideas because I think I'm getting a little tunnel vision on it.  Thanks for any ideas, suggestions.

Top Heavy requirement says employed on last day

is this waived if you are not employed on last day due to death or retirement?  doc waives LDR on all contributions due to death, disability, retirement but I do not know if this applies to a top heavy minimum.

We are a non-producing TPA firm strictly fee based with the clients.  We have an existing financial advisor who is inquiring whether he could bundle his fees with ours, we get paid annually both our fees and his fee, and then cut him a check for his portion at year end.  We would 1099 him for the amount. This is what he is proposing.  Does this sound A-OK for both us as the TPA as well as for him?  

Participant has an outstanding loan from roth source.  Roth contributions have been in the plan for more than 5 years.  However Participant is not yet 59 1/2 (will be in Sept 2020) for a "qualified" roth distribution.  Plan is terminating.  Participant elects not to pay back outstanding loan balance.

How is that reported on the 1099-R form? 

The plan is an "old" balance forward plan.  Pooled funds that will be liqudated to cash and all participants paid out this year.

Thank you in advance for any and all comments!

Should have carefully read 1099-R instructions first...this gets reported/coded like any other roth distribution since the loan will offset, just as a pre-tax loan offset would be reported/coded as a distribution in this instance.

Good afternoon to all,

We have a profit sharing plan that accumulated quite a few terminated participants who had not been paid out.  The plan did not have automatic cash-out provisions until we amended them into it last year.  The plan is also very odd in that it has a provision that accounts of terminated participants do not experience gains or losses.  The accounts are frozen at the value as of the end of the plan year preceding the date that the person terminated employment.  So over the last couple of years, I have been working diligently to find as many of these people as I can and get them paid.

One of them has me stumped.  The gentleman only worked for the employer for about a year and a half back in the early 90s.  However, it was just long enough to get a little contribution that has been sitting in the plan ever since.  The amount is just under $400.  The employee quit and moved to CA, whereupon he had a fatal automobile accident which also killed his named beneficiary, his wife.  

We can't find anyone related to him, so far.  They were in their 20s when they died and do not seem to have had children.  The plan document indicates that the money would go first to the spouse (dead), then the kids (nonexistent) and finally the "estate".  It's all very well and good to talk about an estate when a death is recent and the deceased actually had assets.  After 25 years, for a couple that likely had nothing, what kind of an "estate" is there to pay the sum to?  None.

What have the rest of you done with assets under such circumstances?  

As always, your thoughts are much appreciated.

I think I know the answer to this but wanted to ask to be sure I'm not missing anything.

Company A is a large property manager.  They have a contract to manage a particular facility among others.  The owners of the facility are selling the facility and the new owners intend to engage a different property manager, Company B.  Company A must fire most of the employees that worked at the facility.  Company B is new to this particular area and plans to immediately re-hire most but not all of the terminated employees who will continue doing their same jobs as in the past.  Those employees will have a clear termination of employment with Company A and so should be afforded COBRA rights.  (Company B has a relatively weaker and expensive health plan than Company A's plan such that COBRA coverage may be found worth the cost to some of the former employees, at least for some period of time.)

I don't think there is any exception to Company A's obligation to offer COBRA coverage to all terminated employees under this scenario, including those that are immediately hired and offered coverage by Company B.  That presumably would be different if there were a sale of Company A (or Company A's assets) and Company B was a legal successor (or deemed to be a successor employer for those immediately hired).  However, in this case, Company A was simply hired to manage the property and is losing that contract.  It's not being sold or selling or transferring any assets to Company B so I don't see any COBRA M&A exceptions here although it has some similarities. 

Anything I'm missing that might reduce Company A's obligations here?  Thanks.

End of year valuation for cash balance plan. Document requires 500 hours for a pay credit. Interest is credited through the ASD. For people who left during the year(fully vested), is it reasonable/required to value  them independent of where their distribution is in process. I think I have heard this argued as a requirement for traditional db plans, but not so sure about a cash balance plan. The rule would be if no distribution has been reported, I value them similar to an active life..that is with projected interest to NRA discounted back at the relevant segment rate.  Whether one would generate  benefit statement on this basis is perhaps a separate issue.

When an HCE defers over the 402(g) limit we use the full deferral amount in the ADP test.

If the plan fails the ADP test, does that mean the plan must return the excess deferral and the excess contribution (which ends up including the amount over the 402(g) limit)?  Essentially returning the excess deferral twice?

Example:  HCE under age 50 defers $21,800.  402(g) excess deferral of $2,800 plus earnings needs to be refunded.

The full $21,800 is used in the ADP test which fails.  The refund required is $3,135.58 plus earnings.  If we used $19,000 in the test (which we can't), the refund would be $335.58.

We think that is correct that the participant would receive a refund $2,800 plus earnings for the excess deferral and $3,135.58 plus earnings for the excess contribution, but wanted to make sure.