Say you have an employer with less than 50 employees - they have no intention of ever having 50 employees. Their cafeteria plan offers an opt-out benefit for those who don't elect the employer's group health coverage. As I understand it, there can be three types of opt-out arrangements, unconditional, conditional, or an "eligible opt-out arrangement" - which is a conditional arrangement  that also meets specific additional criteria.

If the employer is a non-ALE, what is the downside, if any, to having an "unconditional" opt-out arrangement, other than possibly affecting the affordability calculation for purposes of whether an individual is eligible for a subsidy for policies purchased on an exchange?

Seems like a conditional opt-out arrangement, for a small employer, may unnecessarily restrict the employee from choosing to buy individual coverage?

I'm sure I'm missing something here. Would appreciate any thoughts.

Fringe Benefits - Can I use Special Accounting Period?

Our HR department just brought over a list of employees that received vouchers for Fitbits. They received the vouchers in late December. Are we able to use the Special Accounting Period for vouchers? I keep seeing it can only be used for Noncash fringes, but was wondering if someone had experience correctly applying that rule to cash/gift cards/vouchers for wellness initiatives.

-John

If a small business has an existing 401(k) but then sets up a cash balance plan, could they use the tax credit for the cash balance plan?  Is the tax credit per employer or plan?

Thank you 

When employed with my previous employer I took a 401k loan(2015 nov) . Then I quit the employer and joined my current employer in  Jan 2018 . Then I setup a auto-debit  with my fund manager (Fidelity) , for monthly deductions from my bank to pay off the loan.

When checking my bank account this Dec 2019, I find that my account has not been debited from January 2019 and doing the research I find that Fidelity had sold it to transAmerica in Jan 2019.

I got a postal mail about the transfer from my old employer  but nothing about the loans, which made me assume that the loans were taken care of.

When I called transAmerica, they say they had defaulted my loan and sent the note to IRS, because they did not receive payment.

They said they sent me a postal mail notifying me of the initial transfer and the  default, which I did not receive. They emailed me a copy and I see the postal address is wrong in their mail.

They do have my correct postal address in their records. But the address in the mail was wrong.So I did not receive it.

The person handling is not very knowledgeable and  everytime after being on the call for about an hour or 2, she says she will check with someone else.

I do see some contradictions in what she says:

1. She says once transferred transamerica does not allow monthly payment of loans and one time  payment of remaining amount should have been made. But  the default letter says the monthly amount was not payed.

2. She says transfer notice and default notice was sent to my house  , but after I requested her to email me the sent default postal mail, I see it has the wrong address 

3. First she said nothing can be done as they have notified IRS. But now she said their research team is researching.

What are my available options. I did not intend to default and I'm also ready to pay the total amount  now to avoid taxes and penalty on remaining amt.

Remaining amount is abt 13000. 

How do you file enforcement of Quadro to plan manager with judge?...ex is deceased.  

Deferred comp plan provides that benefits accrued will vest based on a rolling vesting schedule.  The sponsor and the Participants want the money to become vested if the sponsor is bought.  Any words of advice and/or caution? 

Hello, looking for some guidance on who can sign 401(k) plan documents, specifically in this case the initial adoption agreement & the initial consent/resolution.  This is a new (and first) 401(k) plan for the business.  My wife and I own/operate an S Corporation, but due to the rules and regulations of medical corporations in California, I am not allowed to be an officer or shareholder of the S Corp.  She is technically the sole shareholder and the sole officer of the corporation.  Our 401(k) TPA told me that a simple board of directors resolution giving me signing authority is sufficient, but I can't seem to find any legal info to back that up.  I'm thinking of just having her sign documents for sake of simplicity (even though I will doing all the day to day work).  Any advice or information is much appreciated.  Thanks...

What are people doing for paperless binder solutions?  i.e.. saving all of the workpapers...  We currently have an Access program that we are using but may be outgrowing it.

Hello

Doing a little reading of the new ACT and wanted to see what others think:

RMD related: Have a DB plan and the owner will turn 70 1/2 in 2020, does that mean, the RMD is not due until the calendar year he turn 72 i.e. 2021?

In-service age of 59 1/2: As the new ACT lowered the in-service distribution age to 59 1/2 under defined benefit and money purchase plans (target benefit plans too), can we restart designing the DB plans with normal retirement age less than 62?

Thank you

A defined contribution plan currently provides that death benefits must be paid out over 5 years generally, but allows for extended payments to a participant's spouse.  The client wants to remove extended payments and apply the 5 year rule to all beneficiaries, including the spouse.  The plan does not allow annuity distributions.  Are the extended payments protected or may they be eliminated as an optional form of benefit?

EPCRS calls for a 50% QNEC for failure to implement a participant election.

What if the ER wants to make the person "whole" and contribute 100% of the missed deferral?

I'm guessing that would be ok, because EPCRS are suggested corrections, and the participant will definitely be better off with 100% vs 50%.

But what about 415?  What year would that apply to?  If the 50% QNEC was supposed to be $5,000 and they put in the full $10,000, what year(s) do these QNECs affect?

What about for ADP testing.

Hi.  We have an employee that approached us with the following request and situation:  she is the stepmother of a child.  She and the father are no longer married.  She has a court order awarding joint legal custody to the mother, father, and herself (stepmother).  Primary physical custody has been awarded to her (stepmother).  The employee (stepmother) wants to add the child as a dependent beneficiary to her employer-provided life insurance policy.  Our policy language requires that the non-biological parent be a legal guardian or that the step-mother be married to the natural parent.  The court order is a custody order and not an appointment of legal guardianship.  

Any thoughts?

I have a TCC for the IRS FIRE site and file the 8955-SSAs for our clients after they review them. 

Can I use the same TCC to file the 1099-R forms for the few that we do?  I wasn't sure if that same TCC code will work or if I have to prepare a 4419 and get a different TCC to file the 1099-R forms.

Still have some small balance forward plans and have been preparing paper forms.

Thanks in advance and hope everyone has a Happy New Year!

Client has various levels of ownership in a variety of businesses, and was operating a single 401(k) plan for all of the companies under the assumption that it was a controlled group. Well, SURPRISE!! It is not a controlled group. Now what? I understand that we will have to re-run coverage and non-discrimination testing for the years in question.  But, any thoughts on how to handle this going forward? Form a multiple employer plan? The companies are all in the same industry. 

Everyone is aware that Plan Sponsors have a fiduciary duty to periodically benchmark service providers, such as recordkeepers and advisors, that are paid from their 401(k) Plan. However, if a large company has outside counsel that they use for all corporate activities, but also pay sporadically from their 401(k) Plan when they perform work that can be paid as a qualified expense, do those services have to be formally benchmarked?

I think the selection of the outside counsel would be considered a settlor function since the fiduciaries are not involved in the decision. However, since they sometimes are paid from the Plan, does the Committee need to perform some sort of benchmarking on legal services? Any insights are appreciated. 

When I initially joined my employers 401K , (three years ago) I elected to contribute 30% of my pay. This would put me near the maximum dollar amount allowed. My employer will only deduct 20% of my pay for my 401K .  I did some research and found that they are allowed to do this. Apparently there is a rule to keep a few employees from contributing way more  than the rest of the employees. So I am contributing $15k a year. My age allows me to contribute up to $25k. What can I do to make up for  this shortfall? I already max out my IRA contribution.

General Rule: We have a plan where the sponsor wants change the pension formula from (Z x comp x service) to (1/2 Z x comp x service).  Employee R did not have the 1,000 hours needed to accrue before the amendment and only accrued 500 hours during the year.  Since Participant R has not yet met the 1,000 hours needed to accrue a benefit for the current year, it seems that anti-cutback does not apply and Employer can reduce his current year accrual.  No problem there.  However, the amendment will be adopted next week and will also reduce the hours required to accrue a current year benefit from 1,000 to 100.  Since Employee R completed 500 hours, so he then get an accrual.  The question is: which accrual is he entitled to receive?  My interpretation is the reduced accrual under the 1/2 Z formula because he didn't gain the right to an accrual until the very day that the benefit formula had changed.  Since both the formula and hour change occurs at the same time, it is confusing.  Better to amend the formula first, then the hours requirement in the following day?  Appreciate any comments here. 

I have been trying for two days to pay online a $750 payment under delinquent filer and the page does not come up.  Anyone else having issues?

Thanks.

This question goes to the definition of "active participant" in the f5500 instructions for a pension plan. My client received a $2 mill age 70 415 lump sum in 2012 under the C-limit, but he continues to work and is still accruing service and comp credits, BUT it is unlikely that he will ever be able to accrue additional benefits. His comp is $350k per year. I ran a MASD analysis and he is still about 10% away from ability to accrue. My question is: should he be listed as a participant on the Form 5500CR. On the SB he would not be listed as a participant since he has no current benefits.

Hi

This is a 2019 related question to confirm if my understanding is correct:

2019 w-2 is $30,000

Can I do the following:

PS contribution $7,500

401k Deferral $19,500

Catch up $6,000 - not limiting to 100% of pay

OR

2019 W-2 is $20,000

Can I do the following:

401k Deferral $19,500

Catch up $6,000 - not limiting to 100% of pay

Thank you and happy New Year and holidays