ok -manufacturing client added COVID withdrawals to their 401k Plan but only up to $3,500 of the participant's vested balance.  Employees have been back to work full time for months.  (Furloughs were very brief for this particular client.) Can the Employer put an "end date" on these withdrawals so long as participants are properly notified?  They are seeing a dramatic increase in requests "all of a sudden" and surmise that word is getting around from those who took distributions early on and fear now it's just being used to get funds out. 

I'm thinking the answer is "no" and that they must keep this in place until 12/31/20.....  

For obscure reasons, an employer provides health insurance through a funded welfare plan arrangement (i.e., through an ERISA trust).

The employer inadvertently used plan assets to pay non-health plan expenses and therefore engaged in a prohibited transaction.  The employer repaid the amounts to the plan plus appropriate interest within the same plan year as the prohibited transaction.

The employer disclosed the prohibited transaction on Schedule G to Form 5500. 

In addition to repaying the amounts, does the employer also owe an excise tax to the IRS for the prohibited transaction?  If so, is the mechanism for paying the excise tax through Form 5330?  Even if there is no excise tax to pay, should the employer file a Form 5330?

The instructions to Form 5330 seem to indicate that the Form is inapplicable to this situation and Schedule G's instructions provide that Form 5330 should be completed if the filer is a pension plan. 

I do not have any experience and wonder if anyone else has come across this. 

Thanks!

We had to go back and amend a 2015 filing for a Plan.  FT automatically:

1) Converted the filing to the 2019 form (per the DOL's requirements).

2) Converted the 2015 Schedule R to a pdf and added it as an attachment (again the per DOL's requirements).

Myself and another consultant were absolutely in shock that they did that.  We thought we were going to spend an hour rekeying everyhing.

I'm telling you, FT William is one of my favorite companies to work with.  OK maybe other vendors software would do the same thing, I don't know. If they do, then kudos to them as well.

Re new 402(f) Notices. How quickly do you think these (or similarly updated Notices) need to be utilized? For distributions as of today, or are we realistically ok for a couple of weeks, etc.? Doesn't take long to manually copy the IRS model into a Word document and do this manually, but takes a little time to update systems/procedures, etc.

Curious as to how quickly folks are implementing this. Of course, sometimes these are produced by the recordkeeping platform, so that's a separate question.

Final Divorce Decree included QDRO, it was ordered that it be sent to VRS for implementation when either I or my ex retires. My ex retired August 31, 2019. Didn't tell anyone and didn't file the QDRO with VRS. I found out he retired several months later, I sent the Divorce Decree with QDRO to VRS. It was approved and implemented and I started receiving the regular amount calculated in February 2020. Question is, from the time he retired and started receiving payments to the time I finally started receiving payments, do I have to go to court to receive the payments that weren't sent to me due to him failing to submit the QDRO when he retired? Any other information would be appreciated. Thank you.

We have a client that failed to sign their DB restatement prior to 7/31/2020 - despite numerous requests from us to do so. Am I reading the IRS website correctly that, since this failure occurred after April 19, 2019 (EPCRS Rev. Proc. 2019-19 update) and will be corrected within the SCP 2-year timing, that correction for this failure is eligible under SCP? An article I've read seem to interpret this expansion to exclude restatements since, due to the late restatement, the plan sponsor may no longer rely on the prior restatement period opinion letter, but that does not appear to be how the IRS is describing correction here. 

Assuming the plan is eligible for SCP, should the document be dated as of the current date with a notation that the adoption is late but the plan is taking advantage of the correction method under SCP??  

https://www.irs.gov/retirement-plans/401k-plan-fix-it-guide-you-havent-updated-your-plan-document-within-the-past-few-years-to-reflect-recent-law-changes

From article (my highlighting added):

Correction programs available:

Self-Correction Program:

Some, plan document failures may be corrected on or after April 19, 2019 under SCP if certain conditions are met. The conditions are:

• Plan document failures must be corrected within the two-year correction period specified in Rev. Proc. 2019-19, section 9. The failure begins in the plan year that includes the end of the applicable remedial amendment period.
• Plan must have a favorable letter as defined in Rev. Proc. 2019-19, section 5.01.
• SCP is not available to correct a failure to timely adopt an initial IRC 401(a) plan document.
• Corrective amendments to resolve demographic failures that were not timely adopted are not eligible for SCP and must be resolved under VCP or Audit CAP.
• The late adoption of discretionary amendments is not considered a plan document failure.
• Refer to Rev. Proc. 2019-19, sections 4.01, 4.03, 4.04 and 4.05 for program eligibility requirements.

Example 1:
The Carrot Stick Company has sponsored a 401(k) plan since 1997. They use a pre-approved plan document.  On May 3, 2019 the plan sponsor realized that they failed to timely amend their plan for EGTRAA by the April 30, 2010 deadline and for PPA by the April 30, 2016 deadline respectively. The EGTRRA document was adopted on June 30, 2015 and the PPA document was adopted on December 5, 2018. Can these failures be considered resolved under SCP per Rev. Proc. 2019-19?

The answer is no. The failures can’t be resolved under SCP. The correction of the failures occurred before April 19, 2019, the effective date of the revenue procedure. Prior to 4/19/19 the correction of these failures needed to be accomplished via VCP or Audit CAP. Even if the failures had been uncorrected they would still be ineligible for SCP under Rev. Proc. 2019-19 because correction would be occurring after the end of the 2 year period for correcting significant failures under SCP. That period would have ended on 12/31/12 for the EGTRRA failure and 12/31/18 for the PPA failure.

Hi

Cannot seem to find if for 2020 20% withholding is waived on distributions (not hardship/Covid related, just regular distributions), it is still required, correct?. I am aware of the 10% waiver for 59 1/2.

Thank you,

Hi

My apologies if this was asked before/missed it.

PS plan terminating now. Have a 75 year old participant receiving RMD (none withdrawn for 2020 yet).

Because of the plan termination, do they need to receive the RMD or can waive it?

Thank you

Does a DB Plan with 10/31/19 YE get the extension?

this case involves a rollover to a qualified plan. we think the plan was never qualified and therefore the rollover was improper. i am thinking the tax consequences would be the entire rollover would be taxable and also subject to the 6% excess contributions excise tax.  anyone have any thoughts? 

as a side note i wonder if the IRS would allow  the TP to back out the rollover and roll it into an IRA which and them allow him to start taking RMD's and maybe pay the 6% excise tax for the years the contribution was in the plan.

per Secure Act, safe harbor nonelective plans no longer need to provide the annual safe harbor notice every year.

So, for plan that provided notice in 2018 for 2019, no notice will be provided in 2019 for 2020. Question is - does that make the safe harbor nonelective contribution optional because no notice was provided that it is indeed being contributed? Or am I totally offbase here.?

Plan currently has a dollar for dollar match on first 10%.

I think I can have a dollar for dollar match on the first 4% as safe harbor, and then dollar for dollar on the next 6% as a discretionary match.  I would still get to keep my ADP Safe Harbor, but obviously no ACP Safe Harbor.

My understanding is that this does not create any problems at all, right?  i just have to run my ACP Test.

We have a client who would like to allocate a Top Heavy contribution to both Key and Non-Key employees. 

The language in the document regarding Top Heavy allocations is as follows: Each Non-Key Employee who is a Participant, or was eligible to be a participant in the plan year, and is employed by the Employer on the last day of the Plan Year will receive a top-heavy minimum allocation for that Plan Year, irrespective of whether he or she satisfies the Hours of Service condition under the Employer's Adoption Agreement...

Based on this language, is it permissible to allocate to Key employees? 

Any feedback is appreciated! Thank you

I have a one-person Profit Sharing Plan that wants to name his daughter as a "contingent trustee", just in case something were to happen to him.  How would we go about that, or is it really more of a beneficiary (or just add her as a second Trustee)?

Thanks everyone!

Small DB plan just husband and wife. Husband is age 73, so has been taking RMDs. The annual annuity date is April 1st, so husband has already withdrawn his 2020 RMD. Now both husband and wife want to withdraw $100,000 each as CRDs. Is there anything wrong with that?

I was trying to find something in EPCRS that says that in certain situations if impractical you can use the DOL Lost Interest Calculator to adjust a corrective allocation for gains).  I routinely see attorney drafted VCP apps take this approach and have never seen it questioned.

Can anyone shed some light on this for me?  IF we're depositing a $100 into someone's account, we don't want to charge the client $250 in fees.

I haven’t seen this addressed anywhere, and I’m a little surprised. IRC section 6055/6056, as a result of ACA, requires reporting of health coverage. When the health coverage is provided under a single employer plan, is the cost to do this reporting an employer or plan cost? I think I know the answer; I just wanted to see if DOL, or anyone else for that matter, has addressed this question publicly. Thanks.

We have a client who is splitting off one location as a separate entity/company. We'll now have Company A and Company B. Each will sponsor its own 401(k) Plan. There is no common ownership for controlled group purposes, but may be as an affiliated service group due to management functions and/or as the 65% owner of Company B is the father of of the 50% of the owner of Company A. This will be passed by the company's attorney.  The intent of the companies/plans is to have zero liability to/for one another.

Question - an employee of Company A (non owner) acts as the Plan Administrator/Employer Sponsor for Company A's 401(k) plan. The plan uses a turnkey provider as Trustee, but names two individuals as Administrator/Sponsor in the Plan's documents. This person signs off on plan resolutions/amendments, approves distribution requests, handles payroll and contribution deposits to the plan, etc.  If new Company B uses the same individual in the same capacity, acting as Plan Administrator/Sponsor named in the docs, performing all of the same functions, wouldn't there be liability or a common tie there?  I have concerns for this person that would be named as Administrator on both plans.

I am trying to reconcile the rule under 424(h)(3)(C) with the accounting rules for share-based compensation. 424(h)(1) provides that if an ISO is modified, then it is a new grant. 424(h)(3)(C) provides that "the term “modification” means any change in the terms of the option which gives the employee additional benefits under the option, but such term shall not include a change in the terms of the option in the case of an option not immediately exercisable in full, to accelerate the time at which the option may be exercised." So far so good.

But the accounting rules say that acceleration of vesting is a modification that leads to a new grant. Are both things true in that one refers to status as an ISO and the other refers to accounting treatment? 

Any thoughts appreciated. TIA.