I just wanted to make sure of the timing.  I know the Secure Act now allows you to adopt a plan up until the filing of your tax return, as opposed to December 31 of the Plan Year.  Is that in effect for employers looking to start a Plan for 2019 or does it begin with Plans starting 01/01/20?

I believe it's 2020 Plan Years, but I wanted to be sure.

Thanks!

PC left employment and attempted to rollover employer sponsored 401K to private account.  Due to an administrative error, one by the employer and one by the TPA the rollover did not occur until about 70 days after it was originally scheduled.  PC alleges that due to the error he lost a significant amount of money because he was unable to pursue the investment strategy recommended by the private account manager.  I don't see any relief available under the plan document; the loss he claims is speculative and occurred outside the terms of the plan.  Is this a 502(a)3 claim, a nothing claim, or something in between?  I'm trying to get ideas because I think I'm getting a little tunnel vision on it.  Thanks for any ideas, suggestions.

Top Heavy requirement says employed on last day

is this waived if you are not employed on last day due to death or retirement?  doc waives LDR on all contributions due to death, disability, retirement but I do not know if this applies to a top heavy minimum.

We are a non-producing TPA firm strictly fee based with the clients.  We have an existing financial advisor who is inquiring whether he could bundle his fees with ours, we get paid annually both our fees and his fee, and then cut him a check for his portion at year end.  We would 1099 him for the amount. This is what he is proposing.  Does this sound A-OK for both us as the TPA as well as for him?  

Participant has an outstanding loan from roth source.  Roth contributions have been in the plan for more than 5 years.  However Participant is not yet 59 1/2 (will be in Sept 2020) for a "qualified" roth distribution.  Plan is terminating.  Participant elects not to pay back outstanding loan balance.

How is that reported on the 1099-R form? 

The plan is an "old" balance forward plan.  Pooled funds that will be liqudated to cash and all participants paid out this year.

Thank you in advance for any and all comments!

Should have carefully read 1099-R instructions first...this gets reported/coded like any other roth distribution since the loan will offset, just as a pre-tax loan offset would be reported/coded as a distribution in this instance.

Good afternoon to all,

We have a profit sharing plan that accumulated quite a few terminated participants who had not been paid out.  The plan did not have automatic cash-out provisions until we amended them into it last year.  The plan is also very odd in that it has a provision that accounts of terminated participants do not experience gains or losses.  The accounts are frozen at the value as of the end of the plan year preceding the date that the person terminated employment.  So over the last couple of years, I have been working diligently to find as many of these people as I can and get them paid.

One of them has me stumped.  The gentleman only worked for the employer for about a year and a half back in the early 90s.  However, it was just long enough to get a little contribution that has been sitting in the plan ever since.  The amount is just under $400.  The employee quit and moved to CA, whereupon he had a fatal automobile accident which also killed his named beneficiary, his wife.  

We can't find anyone related to him, so far.  They were in their 20s when they died and do not seem to have had children.  The plan document indicates that the money would go first to the spouse (dead), then the kids (nonexistent) and finally the "estate".  It's all very well and good to talk about an estate when a death is recent and the deceased actually had assets.  After 25 years, for a couple that likely had nothing, what kind of an "estate" is there to pay the sum to?  None.

What have the rest of you done with assets under such circumstances?  

As always, your thoughts are much appreciated.

I think I know the answer to this but wanted to ask to be sure I'm not missing anything.

Company A is a large property manager.  They have a contract to manage a particular facility among others.  The owners of the facility are selling the facility and the new owners intend to engage a different property manager, Company B.  Company A must fire most of the employees that worked at the facility.  Company B is new to this particular area and plans to immediately re-hire most but not all of the terminated employees who will continue doing their same jobs as in the past.  Those employees will have a clear termination of employment with Company A and so should be afforded COBRA rights.  (Company B has a relatively weaker and expensive health plan than Company A's plan such that COBRA coverage may be found worth the cost to some of the former employees, at least for some period of time.)

I don't think there is any exception to Company A's obligation to offer COBRA coverage to all terminated employees under this scenario, including those that are immediately hired and offered coverage by Company B.  That presumably would be different if there were a sale of Company A (or Company A's assets) and Company B was a legal successor (or deemed to be a successor employer for those immediately hired).  However, in this case, Company A was simply hired to manage the property and is losing that contract.  It's not being sold or selling or transferring any assets to Company B so I don't see any COBRA M&A exceptions here although it has some similarities. 

Anything I'm missing that might reduce Company A's obligations here?  Thanks.

End of year valuation for cash balance plan. Document requires 500 hours for a pay credit. Interest is credited through the ASD. For people who left during the year(fully vested), is it reasonable/required to value  them independent of where their distribution is in process. I think I have heard this argued as a requirement for traditional db plans, but not so sure about a cash balance plan. The rule would be if no distribution has been reported, I value them similar to an active life..that is with projected interest to NRA discounted back at the relevant segment rate.  Whether one would generate  benefit statement on this basis is perhaps a separate issue.

When an HCE defers over the 402(g) limit we use the full deferral amount in the ADP test.

If the plan fails the ADP test, does that mean the plan must return the excess deferral and the excess contribution (which ends up including the amount over the 402(g) limit)?  Essentially returning the excess deferral twice?

Example:  HCE under age 50 defers $21,800.  402(g) excess deferral of $2,800 plus earnings needs to be refunded.

The full $21,800 is used in the ADP test which fails.  The refund required is $3,135.58 plus earnings.  If we used $19,000 in the test (which we can't), the refund would be $335.58.

We think that is correct that the participant would receive a refund $2,800 plus earnings for the excess deferral and $3,135.58 plus earnings for the excess contribution, but wanted to make sure.

So my questions concerns Restorative payments and tax deductibility for defined benefit plans -

I'm currently dealing with a situation where the DB plan trustee (employer) invested in an investment in which the investment became bankrupt and is now worth $0. The trustee later found out that the investment was a ponzi scheme and sued for recovery. As a result of the lawsuit, the trustee was able to recover a $100k settlement check, which the trustee had made payable to the plan.

My question is the following:

Can the employer contribute a restorative payment to make the plan and the participants whole?

Does a restorative payment by the plan sponsor qualify as a deductible contribution?

I found language that if a fiduciary commits a breach of his or her responsibility in picking good investments, then the fiduciary is PERSONALLY liable to make restorative payments. Everything talks about if a fiduciary has done some due diligence in selecting investments – and given that most plan sponsors are not investment professionals, it’s not like they would know everything or all the questions to ask – then it would generally NOT be the case that the fiduciary would be personally liable to make any restorative payments. I would think if the sponsor relied on the advice of someone who IS presenting him or herself as a professional, the fiduciary could not be personally blamed for the losses.

Thus, based on the above, I believe the amount could not be deposited into the DB plan but, rather, could be used to fund future contributions which, one would assume, would be greater due to the loss in the value of the plan’s assets.

The PBGC finally made a determination that the plan sponsor (Investment Advisor) is considered a professional service employer under 4021(c)(2)(A).  Further, the sole-owner is a professional individual under 4021(c)(2)(B).  It only took the PBGC three years to make the determination since our request.

We are designing a new DB plan.  Company been in business for quite awhile.

Effective 2019, document signed prior to 12/31.

There is one employee that terminated in 2019 and had 692 hours.

If service for vesting was defined as service from effective date, obviously not vested, but would she get an accrual for 2019 as she worked >500 hours??

Is there any possibility that SIMPLE IRA deductions can be reversed in January so that it can be replaced by 401(k) for 2020?

I know the rule that both can't be maintained the same year. However, does the employer really need to wait another year to put in a plan with higher contribution benefits? Is there a fix or way to correct? Seems like it could still be done this early in the year.

I am having a debate with some other actuaries about what would be considered a reasonable discount rate for accounting purposes. If we use a strict yield curve matching approach based on FTSE above median curve, we are getting an effective rate of roughly 3.25%. Client wants to use 4.00%. They used 4.50% last year and rates have dropped about 100 bps. My understanding is that for accounting purposes, the assumptions belong to the client. I know the rate is subject to auditor approval, client approval, etc. but I am interested in the actuary's requirement to assess the rate. ASOP 27 requires that for assumptions set by another party, the actuary must state whether or not the prescribed assumption significantly conflicts with what, in the actuary's professional judgement, would be reasonable for the purpose of the measurement. 

Reasonable for one actuary may be very different from another. So what leeway do we have in determining what is reasonable? What items can/should be considered (for example, historical market bond rates relative to current? Impact on plan results? Impact on overall company results? Whether the company is publicly traded or not? Discount rate relative to other plans? etc.)

A  participant was deferring prior to a leave of absence without pay.  Participant  was on leave from April 1 to June 30th.  Employer forgot to resume participant's deferrals after participant returned to the company.  Is the corrective deferral from July 1 through December 31 based on the participant's original deferral election or  50% of the participant's deferral election.

I have been reading summaries of SECURE published by various sources, but one I came across recently said something I had not seen before regarding the elimination of the safe harbor notice requirement for nonelective safe harbor plans:

 nonelective contribution safe harbor plans that have matching contributions intended to fall within the ACP safe harbor must still give notice.

This would mean that even if a plan is utilizing a safe harbor nonelective contribution for the year, if you are providing a discretionary matching contribution as well, the notice is still required each year?

The reasoning is that Code Section 401(m)(11) was not amended by SECURE Act. Code Section 401(m)(11) defines the ACP test safe harbor and says the plan must meet the contribution requirements of 401(k)(12)(B) (match) or (C) and meet the notice requirements of 401(k)(12)(D). 

Again, this is the first time I saw someone point this out so I am curious if this is everyone's understanding as well. Thanks!

If a participant that is required to take an RMD and wants to roller over a large portion of their account balance to an IRA, can they do this and take the plans required RMD out of that IRA account to cover the amount of the RMD due from the plan?  They want to make the whole RMD as a charitable donation, would this be allowed as the donations they want to make will be larger than the allowable amount to process from the plan as the donation?  Or is there any other ways around it so they can make the donations they want to make?

A QDRO alternate payee has left their transferred balance in a qualified group 401k plan, essentially becoming a non-contributing participant.  assets were transferred during 2018, and the alternate payee was already over 70 1/2.  does the alternate payee take a 1st RMD from the plan for 2019, by 12/31/19 or by 4/1/20?  thanks for any guidance!

Hi

My apologies if this subject was discussed before.

Taking over 2 plans for the same sponsor and requested the past 3 years of information as well as documents etc, the standard information which are all available in PDF format. Sponsor cannot locate them all.

Sponsor contacted the prior TPA and asked for the information. In return they asked for a payment to provide the information that already belongs to the sponsor and was paid for in the past.

Sponsor is very unhappy about the amounts and wants to complain to an institution about this.

Is this a common practice i.e. ask for money to provide the information already belonging to the sponsor? I have dealt with this many times and unless it was some very specific calculation etc, it is usually customary to provide the information without any money.

Is there a customary amount?

Your comments are appreciated.

Regards,

I have it in my mind that a Schedule A is not required to be attached to a 5500 for a service provider of a welfare benefit plan where the service provider did not pay any fees or commissions to an insurance agent.  Am I thinking correctly?  Thank you.