I don't work with cash balance plans, so please forgive me if this is a simple question. 

1.411(a)(13)-1(d)(4)(I)(C) says "If a variable annuity benefit formula adjusts benefits by reference to the difference between a rate of return on plan assets (or specified market indices) and a specified assumed interest rate of 5 percent or higher, then the variable annuity benefit formula is not treated as being reasonably expected to provide a smaller total dollar amount of future adjustments for the participant than for any similarly situated, younger individual who is or could be a participant in the plan, and thus such a variable annuity benefit formula does not have an effect similar to a lump sum-based benefit formula."

What is the significance of this exception, other than that a plan with this type of formula wouldn't be a statutory hybrid plan? The 2010 preamble mentions that people wanted this exception widened to apply to more plans, so it seems there must be some advantage to fitting within the exception. 

A participant’s salary-reduction agreement called for $961.54 per pay.  The employer did this for all 26 pay periods, with no change to December’s last pay.  The participant’s deferral limit for 2019 is $25,000 [$19,000 + $6,000 age 50].

Assume the employer/administrator is unwilling to use the plan’s provision for a return of a mistaken contribution.

Must the plan’s administrator instruct the plan’s trustee to pay the participant a corrective distribution of $0.04?

Is there any non-frivolous argument for treating this as so small that a correction is unnecessary?

We took over a plan and discovered that a participant died ten years ago and her balance is still in the plan.  Had she still been alive, she would have hit 70.5 a few years ago.  All the plan sponsor has for beneficiary information is a few names and phone numbers, and when they were called, all are no longer in service (and there was no SSN information, so any detailed search is out).  The old plan document (before we restated it when we took it over) said that all benefits would have to be paid out within five years of death... and that clearly wasn't done.  The prior TPA was just one person at a CPA firm who was doing bare minimum (calcs, 5500s, amendments/restatements), so it seems this never was discussed.

I don't think that our usual  rollover partner, Millennium Trust, takes distributions for deceased participants (at least, not knowingly).  And it seems a little late to try and pay it to an estate now.  Any suggestions for the best thing to do with this $1,600?  Thanks.

Distribution requested at $1,000

Related Fees are $100

Would the 20% withholding apply to $1,000 or $900?  (So would 1099-R reflect a $900 or $1,000 distribution?)

Reviewing prior TPA contract, there is a 45-day notification requirement to terminate. What rights does TPA firm have to provide billable services in that time period when Plan does not want it?

On a recent takeover, we found that the account for one of the two participants is an IRA. The plan is a profit sharing plan and not a SEP or SIMPLE. Contributions for this participant are being recorded in the IRA as rollovers, however no distributions were reported on the Form 5500 and the value of the IRA was being included in plan assets.

The obvious correction is to transfer the IRA assets to an account which is under the trustee's control. Whether this can be self-corrected or needs to be done under VCP would depend on whether the failure is significant, as it has extended well beyond 2 years.

It could be considered significant in that it affected 50% of plan participants and a substantial portion of plan assets. It might also be considered insignificant as there was no impact to any participant's financial or tax situation due to the failure.

Has anyone ever encountered this type of failure before? How did you handle it?

Does anyone know if Datair will calculate a QNEC for a failed test?

If so, how?

H?ave never really seen much on these, probably because I haven't looked. I'll have to do some reading! But suppose you had a business with only 5 employees, who only wants to make employer contributions to an HSA for their employees, because they (employer) can't afford to pay insurance premiums. All employee/insureds are under a HDHP.

Is there any reason why a "SIMPLE" 125 plan wouldn't be appropriate here? Employees would presumably also contribute to the HSA.

Participant is living in her car due to being evicted last week. The plan uses the IRS safe harbor hardship standards which list a hardship may be taken to "prevent eviction or foreclosure". Is there a way for the participant to qualify  for a hardship on account of an eviction that has already occurred? She received a Court order of eviction for a date in the past - last month - but is just now applying for the hardship. Of course now she does not have rent, but needs money to live! Is there any way she can get a hardship at this point? Thanks!

We took over a plan recently, Form 5500-SF was filed, mistakenly checked the box "DFVC"

The form was filed late, we have EFAST receipt; and IRS would have charged $425 had not the DFVC box been checked.

I called EFAST and was told all I had to do was refile an amended return without checking DFVC.

Just a bit concerned about IRS.  Client has no problem paying the $425, but I'm sure they will assess a penalty for "late payment"?

Just wondering which way to go.

Is statuatory w2 income excluded for a sole proprietor in calculating income for the purposes of salary deferral or ER contribution?

Am I correct in thinking that a previously Cycle D individually designed defined benefit plan must be restated by April 30, 2020?  

Thanks for the help...

We have a  company that did not remit it's 12/31/2019 deferrals on time.  Using the 7-business day rule, they were due 1/10/20.

So do I use a 2020 Form 5330?  Can I use a 2019 form?   They had 2 other late payrolls during the middle of 2019, so I'm filing a 2019 form anyway.

I just don't want to forget about this at this time next year.

Has anyone been denied a determination letter for an IDP cash balance plan?  I have a client that restated an IDP to a preapproved plan.  The original  IDP had never obtained a DL, so they wanted to get a DL for the original plan.  We sent in the application last May (2019) and just received a letter stating that due to Rev Proc 2019-4, section 12 they are not able to issue a determination.  Has anyone heard this before?  The IRS agent stated that they are notifying a lot of applications of this.  Any input would be appreciated, even if you just let me know it happened to you.

Sole proprietor has net income of $25,000 and maintains a solo 401(k) Plan (please ignore the self-employment tax issues here)

Want to maximize the amount put into the Solok.

Is the amount that can be contributed for 2019 $25,000 (sole proprietor is over 50), or $30,000 ($25,000 deferral plus 20% of net income of $5,000)?

Reading the IRS publication on this does not provide a definitive answer.

Thanks for any replies.

Participant W2 as follows:

boxes 1,3,5   53,140.23

Roth deferral   1,840   

Is not the Roth deferral contained in the above?? 

Accountant adding the Roth deferral to the above.

Plan definition of compensation W-2 plus all deferrals.

Which calc is correct?

Which date is the actual final date to make the refund sans penalty?

Also... Folks gonna be mad with their refunds with the market correction

A large (5,000+ participant) 401(k) plan has a 30-day wait for deferral and SH match for full time employees, and a 1-year wait (1,000 HOS) for part time employees.  The plan sponsor acquires an entity with 100 employees (most of whom are NHCEs) in November 2019 in a stock deal.  The plan sponsor wants to bring the new entity into the plan during 2020 for deferrals only, and then start match contributions in 2021.

Is there any problem with the new entity adopting the plan mid-year (it doesn't currently maintain any 401(k) plan) with 30-day wait for deferral contributions (granting service back to date of acquisition) and 1-year wait for match?  Will this in any way affect the safe harbor status of the plan?

thanks.

We had a participant in a plan take a loan, paid three installments and defaulted on the loan.

The the plan terminated, we have paid out all but three participants and I noticed that the investment company is carrying an accrual for the unpaid balance of the loan.

This makes no sense to me, the loan is out of the plan, the participant terminated employment prior to the plan termination, the participant defaulted and was issued a 1099R.

What am I missing here??

I realize that the HS withdrawal regs expanded the money sources and include earnings in the amounts now available for hardship.  However, if the plan document still says "deferrals only' do they have to allow distributions from safe harbor monies, etc.  Or is that going to continue to be an optional choice?  I know they don't have to take loans anymore or stop the deferrals as in the past.  Just wondering what to tell this client.