Informal poll and query for BenefitsLink readers:

Considering only individual-account (defined-contribution) retirement plans that provide participant-directed investment:

Does a plan with its recordkeeper’s or TPA’s help permit a participant to charge against the participant’s account the fees of an investment adviser unaffiliated with the recordkeeper or TPA?

• Always

• Often

• Sometimes

• Seldom

• Never

When a recordkeeper or TPA allows such an opportunity, what conditions are imposed?

What, if anything, does the recordkeeper or TPA require the adviser to sign to be recognized for a plan’s payment regime?

Does the regime for paying an unaffiliated adviser’s fee allow any rate the participant instructs, or is there an upper limit?

Can a 2019 Contribution be made to a SEP that has not yet been esablished?

We intend to set up a plan for an employee before July 15, 2020 and make a contribution.

Can we postpone to OCT 2020 if we elect an extension?

Comments?  Thnak you!

Ken Phillips

Hi, I am new to this posting board and skimmed  this topic that may have been already been discussed.

We are considering a change in valuation date from 12/31/2019 to 1/1/2019. I haven't checked IRS Revenue Procedure on funding method changes and whether it is eligible for automatic approval, however, one major drawback to this proposed change is that AFTAP certification deadline would have been 9/30/2019 and since this didn't happen then the plan is automatically frozen 10/1/2019 among other adverse operational changes. If they already received credited service for benefit accrual for the period 1/1/2019 to 9/30/2019 then for 2019 the automatic benefit freeze doesn't affect 1/1/2019 funding valuation results right ?

• Can someone point me to the statutory authority (or an IRS publication, etc.) which precludes passive enrollment for FSAs?  
• Can the spousal surcharge roll over?
• What about any tobacco surcharge?

Considering a change to org structure to include Senior Plan Administrator and Plan Administrator (and possibly Jr. Plan Administrator). Did anyone have criteria to make someone a Senior Administrator vs a regular Plan Administrator? Is it just experience in years worked in the industry (after 10 or 15 years?)  or would it be taking on additional roles?

Thanks!

A client who own and runs a small hotel (and is obviously COVID-affected) wants to: 1) take out a $60,000 COVID Distribution, 2) elect to spread the tax out over 3 years, and then 3) repay $20,000 before 12/31/20, another $20,000 before 12/31/21, and the final $20,000 before 12/31/22 so that the entire amount is repaid equally over the 3 year period.

If the IRS follows the Form 8915 disaster rules, this would seem to work, but I can't find any real guidance to say that is how the tax process will work.  Does anyone else have any guidance or educated opinion?

Also, the hardship would normally be subject to 10% withholding.  Are there any ways around this for COVID Distributions intended to be repaid?

Thank you!

Hello all knowledgeable and thinking people.   I was a signing actuary for a client and last Schedule SB I signed was for 2017.   Before signing 2018 SB I have departed from my employer and another actuary of the same firm has signed Schedule SB for 2018.  The Schedule C for 2018 has never reported that there was a change in Actuary and my perspective is that an Actuary is an individual and not the firm.  I have never received a notification from the client that my services as Enrolled Actuary have been terminated.  Here are my questions:

1)  What does it mean from the client perspective?  Do they need to fix it at least by formally informing me that my services have been terminated?  Do they have any exposure from not doing it correctly on 2018 Schedule C?  What are the potential ramifications?  I had (and still have) a very good relationship with the client and would like to minimize any potential negative consequences for them if there are any.

2)  What does it mean from my perspective as an individual Enrolled Actuary who has never been formally terminated?  Am I still formally their enrolled actuary?  Do I have any professional exposure here?   All thoughts are appreciated.

3) If I were to take over the actuarial work for this client and become their Enrolled Actuary "again" would I need to report the "interim" actuary being terminated?  Or would I just let it slide since I have never been "terminated" myself?

Any other thoughts and questions about this situation are appreciated as well.

Seller 401(k) plan is terminated mid-year. The 415 regs provide that in such case the limits are reduced pro-rata based on the plan termination date.  As a result of the reduction, 415 was exceeded for some participants who terminated employment and took their balances (with the excess amount).  EPCRS Section 6.06(4) indicates that if a former employees does not return an overpayment, then the employer or “other person” must put the funds in the plan's forfeiture for use for future contributions.  But here the plan is terminated and so there will not be any future contributions and all funds int he forfeiture account will be used to pay expenses.  Is there an argument that in this case there is no need for the employer to put the funds into plan because this plan is not harmed if the funds are not returned as the other participants will not get the funds?  Thoughts.

So, a situation has been brought up where a public school has a 403(b) plan, elective deferral only. They utilize the 20 hour exclusion (which I'm sure they are botching, but that's a separate item). The PLAN does not exclude any compensation from elective deferrals. On the other hand, the collective bargaining agreement states that elective deferrals will not be withheld from "Summer paychecks." I'm paraphrasing here, because I have no documentation on this - only a phone call from the school's business office.

Assuming this is correct, how could one reconcile this? Could the collective bargaining agreement be deemed to be  an "election" by all members to stop deferrals for Summer pay, and to restart them again when school resumes in the Fall? Failing that, or some similar interpretation, it seems like an operational violation (which has apparently been going on for anywhere from 10 to 25 years).

Going forward, since they didn't restate their document, could this "piece" of compensation simply be excluded for purposes of elective deferrals, without violating the universal availability requirement? I'm not sure that 1.403(b)-5(b)(2) prohibits such an exclusion, but it also seems as though it could be read that it DOES prohibit such an exclusion. Sort of a gray facts an circumstances issue.

Has anyone ever dealt with this issue?

As an ancillary issue, has anyone ever seen a situation where the collective bargaining agreement prohibits union members from deferring in the plan? What happens then - you apparently have a legal collective bargaining agreement that is presumably enforceable, yet this is a plan disqualification issue? 

Plan Entry Requirements are: 21 year of age, 1000 Hours, Entry-01/01 & 07/01. Break in service- 5

Mr.xz  is employed on 01/05/2018 and terminated on 08/29/2018, in the mean time he did 1000 hours. After that he rehired on 09/11/2019.. What will be his entry date? 
I'm so confused about rehired. Please guide me on this issue.
 

Does participation in a state Medicaid program subject a healthcare provider (specifically, cognitive behavioral therapist) to ACA Section 1557 under the new final rule?

It has already started!! Just got the first panic call from someone who ignored the June 30 deadline. So, anyone have any "pipeline" to the IRS re some sort of special offer for reduced VCP filing fee for a nonamender if they submit within, say, the next year or whatever, similar to what they did for PPA nonamenders?

Hi,

Can I still keep my coverage under COBRA if I'm moving abroad? My company offers coverage, and I'll only really need this when I'm visiting the US for work (month and a half a year). I'm moving to a country with a weaker healthcare system, and ideally would like to keep getting looked after my doctors in the US when I do make the short visits back for work.

The insurance plan my employer is offering me locally in the country I'm moving to does not cover international so money wise, it makes sense for me. My underlying health condition cost way more for checkups and tests than the cost of paying for annual coverage under COBRA.

Thanks,

Processing a divorce and in the final stretch.  Have to file the FL-345 again so I can get processed and go to the judge.  Section e speaks on the QDRO(for 401k).  The Respondent is not involved.  Does that mean that I still need to check that option and informed the judge that I will he getting a QDRO done?  Or could i leave it blank?

I don't usually worry about $5 or $10 in earnings in forfeiture accounts, but recently I am seeing large plans with $3500 and $5000+ in annual earnings. The employer is using forfeitures and their earnings to offset discretionary contributions. It feels wrong - the earnings part, I mean. Wouldn't this be a prohibited transaction? I feel more confident that it would be a PT if it were Safe Harbor/QNEC/QMAC contributions they were using earnings to offset. Your thoughts and guidance will be appreciated! 

A plan participant asked me if they could cancel their plan loan because they were finding it hard to make the payments.  I wonder if the loan balance could be considered a distribution... a COVID distribution not subject to the 10% excise tax.  Thoughts?  

Note:  this participant does qualify for the COVID Dist... works for a dentist and has not worked for months at this point.  

Hi all,

I'm a little confused regarding partner 401K contribution calculations and how to report this on the Form 1065, K-1, and Form 1040.

The situation is this: I have a partner in a general partnership with $200K self-employed income and they want to make the maximum allowable contribution to the partnership 401K ($62K since they are over age 50). I use the deduction worksheet for self-employed provided on Pub 560 and lo and behold they are allowed to take the full $62K deductible contribution. I believe at this point the $62K should be reported on line 13d of schedule K (code R), $200K self-employment income should be reported on line 14a of schedule K. The schedule k-1 should show the same thing: box 13, code R will be $62K, and box 14, code A will be $200K. These amounts then go on the 1040 and the $62K deduction is reported on schedule 1.

The CPA is telling me that the amounts in excess of $25K are the partnership matching contributions and that they'll need to pay SE taxes on the excess. Is this the case? I don't see anything on Pub 560 talking about adjusting self-employment earnings, so this just threw me in a loop.

I think I explained the situation well, but let me know if I've missed out on any crucial details. Appreciate the help!

Checking if the following eligibility condition could be used in a plan.  The employer wants to keep PTimers out of the plan and those who are PT will work less than 1000 hours.  But the employer also wants to bring FTimers into the plan after they meet 1000 hours, but bring them in immediately or the month following they get to 1000 hours, even if they meet that in less than 12 months.  

Using a prototype document, if we use less than 12 months for eligibility, we cannot have an hours requirement and the PT would be able to enter the plan.  So we need eligibility to be 12 months and we want the 1000 hours with it.  

While our prototype does not have this specific eligibility condition as an option, it does have an "other" eligibility allowance and we could state this in that section.  But is this eligibility condition allowable othewise? 

Thank you

Are Health Care Sharing Ministries subject to ERISA if the benefit is endorsed by the  employer/Plan Sponsor? Many, many thanks for your help!