I have an employer that has 2 companies that are part of a control group.

In reviewing their plan compliance (while doing something else), I saw that they had one SPD mega wrap that comprised the plans for both companies.  

Thing is, the "parent" company sponsors and administers the medical and dental for both companies.  The "child" company sponsored and administers some different benefits than the parent (pre-paid legal, etc.).  

Correct me if I'm wrong, but shouldn't the plans for the "child" company be in a different SPD wrap (or standalone SPDs) than the "parent"'s mega wrap?  I believe the code says that each administrator/plan sponsor has the requirement to furnish the SPD.  

If this is just going to the "child" company's employees, I guess it is only a technical violation.  Am I picking nits here?  

We are amending a plan to increase the eligibility from 3 months to a year of service.

For employees who never completed a year of service but were previously eligible, they will only be allowed to continue as a participant if they have a balance in the plan on the amendment effective date.

Our document does not restrict us from kicking participants out of the plan due to a plan amendment.

Does anyone see an issue with amending the plan to only grandfather those with a balance?

Mutual funds’ proxy-voting solicitations are much fewer than they were in the 1980s and 1990s.  Yet it’s still not none.

A trust company’s typical directed-trustee agreement provides that the trustee votes the trust’s securities only as the plan’s administrator directs.  That leaves the administrator (usually, the employer) with an unwelcome duty.

An individual-account plan could require participants (and others with accounts) to direct the fiduciaries’ voting.  But often this is practical only if the plan’s administrator has engaged a recordkeeper or other service provider to deliver the fund’s proxy-voting solicitation and collect the participants’ (and beneficiaries’ and alternate payees’) directions.

BenefitsLink mavens, will you share your experiences about which recordkeepers offer or disclaim such a service?

A small CB plan (~25 participants) currently requires 1 hour to benefit for accrual. They want to freeze for 2020. Obviously it is too late to issue a 204(h) notice by 12-31-19. Could they get around this by amending the plan to require 1000 hours for 2020, and then just make sure to freeze before 1000 hours are worked in 2020?

I do understand they could just freeze ASAP and limit the 2020 accrual to be based on comp through, say, the first week of January (assuming it only takes a few days to confirm with them and get the 204(h) issued). But it'd be easier to just have no accruals for the year.

Thoughts? Thanks in advance.

a client who owns a loan-out company sponsors a one person defined benefit plan and has also accrued benefits under the SAG-AFTRA pension plan.  suppose the client is age 70 and her 415 dollar limit is $30,000/month and 415 salary limit is $22,500/month.  she has accrued a benefit of $5,000/month under the SAG-AFTRA pension plan.  do you simply reduce her 415 limit by $5,000/month so that her maximum benefit under her company sponsored defined benefit plan is $17,500/month ($22,500 less $5,000)?

i've read some old threads and don't seem to understand exactly how the offset should be applied.  

I have been at my ESOP company for almost 2 years. and this is my first experience at an ESOP. We are 100% ESOP and 2019 will be the first year eligible for an ESOP contribution. As an Executive, my pay is on the higher end. However, since I have only been there 2 years I have not had the chance to accumulate any shares. We are in the early stagers of selling the customer and I can not seem to find a good source on how funds are distributed among the employees. I have read that the proceeds of the sales would be distributed based on % compensation of on overall compensation (like the normal contributions are). However this does not seem logical as a line and staff employee who has been with the company for say 25 years and accumulated a decent amount of shares would not get as much as an executive who has higher compensation but much less tenure. Has anyone had experience with this. As an executive I obviously want to have financial participation in a sale, but if payment to employees is based on shares I would not be receiving much. What other compensation options are there in an ESOP since the company is 100% employee owned and all money goes to the shareholders? Thank you in advance for the help.

Plan year end is 10/31.

In the calendar year ending 2018 the participant makes deferrals of $24,500. 

Deferrals from 11/1/2018 to 12/31/2018 are $4655 all 2018 catch ups, used in the 10/31/2019 plan year.

Participant defers $20245 from 1/1/2019 to 10/31/2019, with catch up of $1245 for 2019.

For the plan year ending 10/31/2019, I believe I need to consider $5900 as catch up for the plan year.

Considering the $56,000 415 limit, with the $5900 that are considered as catch up for the plan year, am I permitted to allocate a profit sharing contribution for this participant of $37,400?  That is the total plan deferrals of $24,500, plus the profit sharing of $37,400 for a total addition for the plan year of $61,900, which is $5900 over the 415 limit for the plan year.

Could the participant then defer the additional $4755 from 11/1/2019 to 12/31/2019, which would then be catch for the 10/31/2020 plan year?

Thanks very much!

Hello

Have been filing 5500EZ for a few years as assets exceed 250k.

Q1: Portion of the assets are rollover. If takes out of the rollover and rolls over into an IRA, assets will drop to 100k. Can they stop the filing?

Q2: If allowed in-service distribution and rolls out all the assets into an IRA, can they stop filing?

Thank you and happy holidays

Existing Money Purchase Pension Plan has 7% allocation.  Eligibility is age 21, 1 year of service - dual entry dates.  You will receive an allocation if you have met eligibility and are  employed on the last day of the year OR have worked 501 hours.

The plan sponsor is considering lowering the contribution percentage.  What is the deadline for doing that?  Can the plan be amended prior to the beginning of 2020 to reduce the contribution percent to 3%, effective 1/1/2020?  Could it be lowered during 2020 if the plan sponsor chooses to do so?

Thanks!

An employer has a number of sites in NJ at which it employs a number of employees. NJ has a temporary disability benefit which is payable for up to the first 26 weeks of short-term disability. An employer can either use the state mandated benefit level and get the administration through the state labor department or purchase insured coverage which provides an equal or better level of benefits than the state mandated benefit with administration provided by the insurance company. Let's say this employer chose solely the state mandated benefit. The maximum weekly benefit for disabilities beginning and ending between January 1, 2020 and June 30, 2020 is $667 per week (the benefit amount is equal to 2/3 of the average weekly wage). For disabilities beginning and ending between July 1, 2020 and December 31, 2020, the maximum weekly benefit is increased to $881. Thus, let's say an employee who earns $1,321.50 per week goes out on short-term disability, effective June 2, 2020. $1,321.50 x 0.667 = $881, limited to the maximum benefit amount. 

Since the benefit begins in early June of 2020, assuming the employee is disabled for 26 weeks, would he get $667 per week for up to 26 weeks or would the employee get $667 per week up through June 30, 2020 and $881 per week from July 1, 2020 through early December, 2020?

An employer has a number of sites in NJ at which it employs a number of employees. NJ has a temporary disability benefit which is payable for up to the first 26 weeks of short-term disability. An employer can either use the state mandated benefit level and get the administration through the state labor department or purchase insured coverage which provides an equal or better level of benefits than the state mandated benefit. Let's say this employer chose solely the state mandated benefit. The maximum weekly benefit for disabilities beginning and ending between January 1, 2020 and June 30, 2020 is $667 per week (the benefit amount is equal to 2/3 of the average weekly wage. For disabilities beginning and ending between July 1, 2020 and December 31, 2020, the maximum weekly benefit is increased to $881. Thus, let's say an employee who earns $1,321.50 per week goes out on short-term disability, effective June 2, 2020. $1,321.50 x 0.667 = $881. 

Since the benefit begins in early June of 2020, assuming the employee is disabled for 26 weeks, would he get $667 for up to 26 weeks or would the employee get $667 per week up through June 30, 2020 and $881 per week from July 1, 2020 through early December, 2020?

I have a doctor who is considered a statutory employee who wants to setup a plan for himself.  All of his income will be funneled into a Schedule C (there's no 1099 or W2).  Any thoughts on if he could setup a plan based on that income?

Thanks in advance everyone!

My employer notified me that they had mistakenly limited my total eligible contributions at $56,000 instead o f$62,000 (I am 60 and maxing out after-tax) for 2019 and did not withhold my contribution for two pay periods - 11/28 and 12/13.  The first was before the error was discovered, and the second was after the discovering the error and notifying me. Unfortunately for reason I am not aware of,  they did not update the payroll system for the second pay period resulting in the second missed contribution. I have one more contribution opportunity for the year (12/27).  My employer claims that they are only required to make a contribution of 25% of the missed contributions which were mistakenly not made. This amount, combined with a maximum deferral on my part on 12/27 will leave me short for 2019 by $1,049.  I am trying to find which section of this https://www.irs.gov/pub/irs-drop/rp-18-52.pdf applies to my case.  I see some cases that might apply and put them at 40% instead of 25%. Any pointers would be appreciated. 

Also, are these percentages specific amounts required and that cannot be exceeded, or are employers allowed to make up the missed deferrals beyond the prescribed percentages if they choose?

Thank you - Harry

I've been having trouble finding information about self-funded health benefits plan approval requests under the Service Contract Act. The regulation is only three short sentences, and doesn't give much to go by: 

Quote

29 CFR § 4.171(b)(2) A contractor may request approval by the Administrator of an unfunded self-insured plan in order to allow credit for payments under the plan to meet the fringe benefit requirements of the Act. In considering whether such a plan is bona fide, the Administrator will consider such factors as whether it could be reasonably anticipated to provide the prescribed benefits, whether it represents a legally enforceable commitment to provide such benefits, whether it is carried out under a financially responsible program, and whether the plan has been communicated to the employees in writing. The Administrator in his/her discretion may direct that assets be set aside and preserved in an escrow account or that other protections be afforded to meet the plan's future obligation.

I found a thread from 2004, but I am wondering if anyone is willing to share more recent experience and insight regarding self-funded plan approval requests. 

Thanks!

Is there any transition or grace period before family attribution between spouses applies?   Details:  Business owner A marries Business owner B in a community property state on 5/1/19.   Are the immediately a controlled group for 2019 or could I treat this like an acquisition and apply the transition period for coverage?  

I’m confused.  Plan is a safe harbor 401(k) using an automatic contribution arrangement to satisfy the 401(k) safe harbor requirements.  Plan sponsor failed to implement an employee’s affirmative election.  I’m reading EPCRS.  One part says that the plan sponsor has to make a QNEC.  

Another part says that sponsor does not have to make a QNEC if the failure was corrected within 9 ½ months after the end of the plan year.  Does this  “special safe harbor correction method” apply to traditional automatic contributions only?  Or does it apply to QACA arrangements.

Expected to be passed by Friday!

https://www.pionline.com/legislation/secure-act-attached-year-end-spending-bill

What are the hurdles to changing the vesting percentage computation basis?

A plan currently has 1,000 hours for YOS for vesting.  

Can it easily change from hours counting to equivalancy or even elapsed time?

Facts:

Bonuses being paid today.

Employer failed to withhold pretax deferrals from some (not all) participants' bonus paychecks being distributed today. The Plan affords participants to make a special election wrt bonus pay. If no election is made, zero is withheld.  Upon reviewing the "bonus payroll" process, the employer realized the error but the funds were already "in process" to the participant's banks and could not be reversed/corrected in time.
 

Questions:

Since the error was caught the same day, is the correction to issue a Notice to those affected along with a deferral election form, giving them the opportunity to withhold what would have been withheld from their respective bonus (or some other amount at their discretion) via the up-coming final regular paycheck of the year? I believe all will receive sufficient final paychecks to adequately cover this missed deferral. If not, does this change the correction?

Thank you

Plan has individual accounts with a large recordkeeper (401k and safe harbor) and a pooled, Trustee directed employer profit share investment.

TPA prepares 1099-R forms for the client for any distribution from the pooled Trustee directed PS accounts.

In majority of termination (or retirement) payouts the participant takes the 401k piece at the time of termination and the profit share piece is paid out after the end of the plan year following termination; both per the plan provisions.  However in rare cases the participant may be taking the PS portion first.  Question is - in these cases should the 1099-R form from the pooled accts NOT have the "total distribution" boxed checked?  Does it matter?

Perhaps am overthinking this but it seems to be that if the 401(k) portion remains in the Plan, even briefly, it is not a total distribution until those funds are paid.

Not a fan of these types of plans!

UPDATE:  For anyone else wondering - here are the form instructions:

"Box 2b. Total Distribution
Enter an “X” in this box only if the payment shown in box 1 is a total distribution. A total distribution is one or more distributions within 1 tax year in which the entire balance of the account is distributed. If periodic or installment payments are made, mark this box in the year the final payment is made."

So as long as they both occur in the same tax year I can mark the total box.