401(k) Plan has failed the ADP test for 2015, 2016, 2017 and 2018.

We have a Safe Harbor 401(k) Plan client that currently has a three percent nonelective contribution and wants to change to a safe harbor match contribution.  I referenced the EOB and it referred me to Notice 2016-16.  Under Notice 2016-16 Mid-year Changes to Safe Harbor Plans and Safe Harbor Notices, I see where this might be possible but don't find any specific examples that address this scenario.  I feel I could argue either way - for or against and would like input from anyone that may have some insight/advice?

I have a question regarding the retirement account for my company which is a Profit-Sharing Plan, 100% employer contribution. I have a former employee who is 100% vested in the plan though has not worked for me for several years. He had elected to keep his money in my profit-sharing plan, without additional employer contribution. At this time, this former employee is electing to have his distribution rolled over to an IRA account. By definition in the SPD, the plan year is 1/1 to 12/31. The valuation date is the last day of the plan year (12/31). The valuation is calculated annually, and this is usually done around October of the following year. Right now, we have the numbers for the valuation up to 12/31/2018. I know that the profit-sharing plan gained money in 2019, but do not have those exact numbers calculated yet. The employee is asking for a partial distribution based on the 12/31/18 valuation and then a total distribution for the 2019 gains once that number is calculated (around October 2020).

What are the rules pertaining to this type of distribution? I do not want this former employee to miss out on the profits earned in 2019. Is it possible to do a partial rollover for the 12/31/18 amount and then give him the final 2019 profits once this is calculated? Thanks.

Single participant with no spouse or dependents dies with large balance in HRA account.  Employer is subject to Davis Bacon Act so funds cannot revert back.  Employer contributions to HRA are held in trust.  HRA plan document does not provide for payment of dependent medical expenses after the death of the participant.  What do we do with the funds in the participant's HRA account after his death? 

Hi to All,

I have been asked to query the group as to whether you fill in the "paid preparer" section of the Form 5330, whether you maintain a PTIN for this purpose, and whether you use the PTIN for any other purpose.

We very seldom prepare this form and every time, these questions come up.

Your advice is appreciated in advance.

It was determined (after year-end) that a large traditional 401(k) plan had a partial plan termination in 2018.  The plan operates on the calendar year.  Additional match contributions (plus earnings) were calculated and deposited to the plan in late 2019 as a correction for the 2018 partial termination. 

The plan administrator had originally calculated refunds to HCEs for failed ADP/ACP.  Now the PA is saying that the plan had to be re-tested  for the 2018 plan year after the correction for the partial plan termination, and additional refunds are due to the HCEs. 

Should the compliance testing for 2018 be re-run as a result of the corrective actions taken for the partial plan termination?

Thanks!

Company merged with Target and now wants to enter into new employment agreement with Target Executive.  The current employment agreement offers $100k severance benefit upon Good Reason termination due to change in employment position, which will occur.  To encourage Target Executive to stay, Company offers new employment agreement with $100k signing bonus and no severance benefit.  Would this be a "substitution" under 409A and thus an impermissible change in the time of payment?  I think not because under the current agreement he does not get the $100k unless he terminates, which he would not do if he signed the new agreement.

Hi, Is there any basis in using a discount rate for the FASB that is determined by taking the effective rate of the 430 HATFA segment Rates (minimum contribution rates---from the Val) ie 5.64%, and the effective rate of the 404 seg. rates (max contribution rates) ie 3.99%, and the average of the two effective rates is the discount rate for the FASB?  Thank you for any insights/opinions on this matter.

We're doing a VCP filing for a client and I have a copy of the adoption agreement, but need to locate a copy of the Approval letter for the Legg Mason Wood Walker, Inc. Standardized Profit Sharing Plan & Trust #03-002.  Any idea where to dig it up? - I've tried the advisor's office, Legg Mason and a call to Citibank.  I wanted to avoid using this particular adoption agreement because it wasn't dated, but it looks like I'm going to have to do that and hope for the best.  Anyone else not be able to locate an approval letter from a large firm like this that obviously had one?  How did you handle it?

I am trying to determine if interest on a 401(k) account is available for someone eligible for a Qualified Reservist Distribution.  Our document language (which mirrors what I am reading in the Code) says that the distribution may be taken from "amounts attributable to elective deferrals described in Code §402(g)(3)(A)…"

So my question is - does that mean the whole 401(k) deferral account can be withdrawn, including earnings?  I don't see anything specifically prohibiting earnings, but I am not entirely sure if "amounts attributable..." is only referring to contributions?

Thanks!

Had a quick question on the withdrawals for birth or adoption section of the Secure Act.

Is this intended to be another in-service withdrawal option, or does the participant need to have a distributable event available? 

Also, in reading the section of the Act it does not appear to say anything similar to "If the Plan permits", or something to the effect so I'm wondering if this is available even if the Plan does not otherwise allow for withdrawals until, say normal retirement age, for example.

Thanks very much.

Hello and Happy New Year. I have a controlled group of two companies. Company B isn't a participating employer. For what purposes is compensation aggregated among controlled group members and for what purposes is it not? When performing the ADP/ACP test, do I only use compensation paid to participants by Company A since compensation paid by Company B isn't eligible for deferral? Thank you.

We have a company that is owned by several trusts at 20% ownership each. Each individual is the primary beneficiary of their respective trust, so they are considered 20% owners of the company. 

However, are the children of the beneficiary of the trust also attributed 20% ownership of the company? 

This scenario has come up due to key employee determination for Top Heavy. 

My initial instinct says yes, but I would appreciate any feedback and/or reg citations. 

Thank you! 

Traditional large 401(k) plan (not safe harbor) with 9/30 year end - original effective date 1987.

Volume submitter adoption agreement defines compensation as W-2 wages and does not exclude bonuses.

This is a new client for us; our firm is doing the audit for the 9/30/2019 plan year end, taking it over from the prior auditor (who recommended us).

We see that various bonuses were paid to employees for performance, safety, etc. at year-end.  However, the plan sponsor did not calculated or withheld deferrals from bonuses.  As far as we can tell, they have never withheld deferrals from bonuses, and did not realize they were supposed to do so.  They are restating the plan to give employees the option to elect out of deferring from future bonuses.

The question is: what to do about the past?  The plan sponsor has been operating in a manner that would have been permissible under law but not in conformity with their plan document.  Does their consistency for the past 20+ years show that they never intended to include bonuses in the definition of 401(k) compensation?  Will that consistency protect them from penalties and sanctions?

If not, what is the fix for this?   How far back would they need to go to "make it right"?  Do they need to include all plan participants who have deferred or can they elect to exclude the HCEs from the fix?

Thanks!

Based on my reading of the ICHRA regulations, it would be mathematically impossible for an employer with, hypothetically, one full-time employee and nine part-time employees, to establish an ICHRA for the part-timers because the "class" for purposes of the ICHRA is fewer than 10 employees.

Is this correct or am I missing something?

Thanks and happy New Year!

A 100% owned ESOP company has some outstanding debt with an unrelated bank.  A outside director of the ESOP Company is willing to refinance the loan at a lower rate.  What legal authority prevents this transaction from being an indirect prohibited transaction between the plan and a party in interest?  I'm thinking the ESOP exception to the plan asset rule set forth in 2530.3-101(h)(3).

This morning when looking at my "unread" message list like I do almost every day, it was automatically showing the expanded view (title and first several lines). I clicked the condensed view to change back, but nothing happened.

Not the worst thing in the world, but not sure why it changed and can't be corrected.

Thanks.

WCP

If a participant and his primary bene are deceased. There are two contingent benes with 50% allocation. If one of the contingent bene passes away, would the surviving bene gain 100%?

Has anyone seen verbiage about a person who took their first RMD in 2019 (when they turned 70 1/2) but now under the SECURE Act  are they required to take their RMD in 2020 or can they skip and take this RMD when they turn 72 (in 2021)? I have seen several articles that contradict each other about what is allowed.

Thank you

Hello all.  I have a question regarding SEP IRAs.  My current employer provided all of their employees with a SEP account.  We have small contributions made monthly, and once taxes and profits are figured for the year, we usually get a larger contribution around March that brings total contributions to 25% of gross income.  
 

I will be leaving said employer in a few days and wanted to make sure I’m eligible.  I worked the entire year, as well as the previous 4.  My only concern is that they are using the monthly disbursements and a work around in case someone leaves.  Any input?