A client has a defined benefit plan with 390 participants (all term vesteds, retirees and beneficiaries) and slightly under $2 million in assets. The plan would like to issue an RFP to solicit bids for a single premium group annuity contract for all of the plan's participants. Does anyone have an RFP they could share as a template for creating such a document?

I have a situation that I have not encounted before. A couple's divorce was final on July 16, 2019. I am retained in August by the attorneys to draft two QDROs, one for a cash balance pension plan and one for a 401(k) plan. All parties approve draft QDROs by late September and they are submitted for pre-approval to the plan sponsor on October 9. The plan administrator acknowledges receipt and freezes the participant's accounts, but wants several changes to both QDROs which are made and both are resubmitted on October 22. On November 27, the plan administrator pre-approves the 401(k) but wants one revision to the pension QDRO, which it did not mention in the first revision request. I'm used to this, so I made the minor revision and resubmitted the pension QDRO today. 

Meanwhile, the Alternate Payee dies on November 26th! Both QDROs have language covering this contingency. Because of the alternate payee's health, signature pages were signed the by both the participant and alternate payee when they approved the drafts in September, but before submission to the plan administrator for pre-approval. Since pre-approval is not complete, the QDROs have not been submitted to the court yet. Of course, the alternate payee does not have a beneficiary form filed with the plan sponsor.

1. Are the signature pages valid? I would prefer to revise the pages to reflect the personal representive of estate's signature. I guess it's up to the attorneys since they are filing them, but thought I'd ask.

2. Should the plan sponsor be made aware of the death of the alternate payee before the court signed QDROs are submitted for payment? 

3. Does anyone have advice/thought in this situation?

Thanks.

Plan auditor determined late/timely based on a time frame of 5 business days (apparently that was what the client told them).  All of the corrections were done based on 5 business days and now we are helping with a VFCP.  Would you file a VFCP application using 5 business days as the criteria for lateness?  [They ask right on the VFCP application essentially "when do you think your contributions are due?".  I'm concerned if I file it's going to open a whole other can of worms.  i.e., "Seriously, it takes you 5 days??  Please provide a 27 page memo describing why you are so slow! And let me see ALL of your deposits so I can use it as evidence to disprove your ridiculous assertion!"  I embellish of course, but probably the only question is to what degree I embellish.  There is a kernel of truth I am sure?

Beginning in 2019 by the way their new standard is 2 business days.

Our firm took over a floor offset DB plan a couple of months ago.  The plan's formula provides 4.75% per YOS to the business owner, and 0.5% to each other participant.  The benefit offset from the PS plan is limited to 0.5% of pay.  The participants except the business owner receive a 6% contribution in the PS plan.  The prior actuary was treating this as a uniform allocation, I assume because the participant account offset is limited to 0.5% of pay for all participants.  Essentially, the PS account was bifurcated into the portion which provides 0.5% of pay, and the remaining portion.  Does this fly for the uniformity requirement for 401a26?

A further question, does anybody know what requirements must be met to use a preapproved plan document for the PPA restatement for a floor offset plan?  My document seems to allow this, but doesn't elaborate on what requirements the plan must meet to use.   

5 docs have always gotten w2 income from the PC. This year they are also getting pass through income on a k-1. Is this passthrough income treated as earned income for profit sharing plan calculations?

Hello!  I am new to working with 457(b) Plans.   Per the plan document, a terminated participant needs to make a distribution election within 60 days following termination of employment and distributions can commence on or after the 61st day.  The participant can choose lump sum or installments (annual, up to 3 years).  Separately, they can choose to take the distribution as soon as administratively feasible or can delay payment until a specific date.  I understand that they can change this election ONE time prior to the distribution commencement date.

My questions are: 

1) Can they choose any prospective date for the commencement of the distribution, i.e. Can it be 10 years from now?

2) If the participant terminates today (12/4/19), then the distribution is not available until 61 days later, so the distribution amount would be reported on a 2020 W-2, since it is reported when first made available.  If the participant delays the commencement date until 2021, does the distribution get reported on the W-2 in 2020 or 2021?  Likewise, if they opt for installments, does each distribution amount get reported for the year in which it is paid?

Thanks!

Folks, any help is appreciated!

80 year old participant, still active and employed rolled over to an IRA in 2019 (in-service withdrawal).  Retirement/termination date is 1/15/20.  The 401k vendor automatically sent out a RMD even though participant is active and will not terminate until next year.  

What can be done with this RMD?  Vendor will not take the money back, can it rolled into an IRA within 60 days?  What about the tax that was withheld?

THANK YOU!

We have an employee who used to be full time and qualified for and took our employer sponsored group health, dental and vision insurance.  Those premiums were run through the cafeteria plan as pre-tax.   He is now part time and no longer qualifies for our employer-sponsored insurance.  He wants to know if we can run his outside individual insurance premiums through the plan. 

We only have one other part time employee.  She does not qualify for our group insurance either, but she is covered under her spouse's plan and has no interest in additional insurance. 

Can we do this?  how do we do this?   

My question is if a plan has involuntary cash-out provisions set at $5,000 or less and the timing of distributions in the plan document is immediate (meaning as soon as administratively feasible), will the plan sponsor/plan administrator (in all of our plans the plan sponsor is the plan administrator, we are just a service provider) be in violation of their plan document if they aren't processing involuntary distributions (meaning they aren't reaching out to the participant) and they are just leaving the money to sit in the plan? 

I would think they wouldn't be following their plan document; however, I read the following in Notice 2005-5:

Q-9. If a plan that provides for mandatory distributions does not make a distribution to a participant who fails to affirmatively elect direct payment or a direct rollover for a mandatory distribution on or after March 28, 2005, because the plan administrator has not sufficiently established administrative procedures that allow the plan administrator to accomplish the automatic rollover of a mandatory distribution by that date, will the plan be treated as failing to operate in accordance with its terms?

A-9. No, a plan will not be treated as failing to operate in accordance with its terms (including the automatic rollover provisions) with respect to mandatory distributions merely because it does not process mandatory distributions for which the participant does not affirmatively elect direct rollover or direct payment due to a lack of sufficient administrative procedures for automatic rollovers, including establishing individual retirement plans to accept automatic rollovers, provided the mandatory distributions are made on or before December 31, 2005.

any insights?

An accountant has asked if a new 401K with no employees, non-safe harbor, can be set up for 2019 for three partners under the following circumstances:

Three attorneys set up their own PLLCs 7/1/2019, no eligible employees, so safe harbor not needed. Accountant wants them to have a 401K for 2019.  Each worked for the same law firm prior to 7/1 and one made contribution to another 401K, one to a 403(b).  Obviously, the 402(g) limit comes into play.  I don't see how a 401K can be set up by 12/31, either with an effective date of 1/1/2019, 7/1/2019 or even 12/1/2019, but the accountant is telling me another TPA firm says this will fly.

I don't see how.

Code Section 401(d) provides that contributions on behalf of an owner-employee (someone who owns 10% or more of a business) must be made with respect to his/her earned income from the employer that sponsors the plan.  Do contributions on behalf of a self-employed individual who is not an owner employee (i.e., who owns less than 10% of the business) also have to be limited to earned income from the employer that sponsors the plan? Under Code Section 415(c)(3)(A), compensation for 415 purposes is "compensation of the participant from the employer" but under 415(c)(3)(B), compensation of a self-employed individual is determined by substituting the participant's earned income for "compensation of the participant from the employer".  415(c)(3)(B) doesn't say earned income "from the employer", and I can't find anything else suggesting earned income of a self-employed individual must be only from the employer that sponsors the plan.  Any thoughts?

maybe strange but the client terminated his cash balance plan and paid out a few participants who also terminated employment. a couple of years later they want to revive the plan. is it possible to un-terminate and restate the plan or just restate the plan effective January 1, 2019?  trying to avoid having a totally new plan if possible. 

A participant wants to make an after-tax contribution to the plan and then, roll that out the next day to a Roth IRA.  It would sit in a holding account and have no earnings for the one day.  The 401(k) plan does allow after-tax contributions and Roth deferrals.  The participant is over 59.5 and the plan allows in-service of after-tax money at any time.  Assume the plan does not have a testing issue with ACP.  I believe that is possible using a code G on the 1099R and none of it would be taxable b/c no earnings.  Is this right?  Seems too easy to go around the Roth IRA limits. 

Safe Harbor 401(k) with SH match, Roth and pre-tax deferrals; PS contributions allowed but none made. 
Plan assets are held in a pooled account with annual valuation.

100% owner has 2/3 of plan assets allocated to him as of 12/31/2018; 2019 deferral contributions show roughly same percentage being contributed by owner.
Owner/plan sponsor wants to amend plan document to add plan loans, so that he can take out maximum loan.  He is aware that this opens the door for plan loans to other participants.

My question:  In an account with separate accounts, interest from loan repayments would be allocated to the participant who took out the loan.  In a pooled account, is the loan considered just another plan asset, so that the interest is allocated across all participants?  Or is it allocated only to the participant who took out the loan?

Also, are there fiduciary issues related to the fact that the owner has 2/3 of plan assets allocated to him?

Thanks!

We have a client who owns a small business. The small business operates a SIMPLE IRA with the 5305-SIMPLE form being the governing document.  She wants to move her account to our firm to manage the investments, but not force the other partners & employees to move their accounts.  Obviously this would mean amending the plan to be governed by a 5304 document. Can she amend the plan to be a 5304 whenever, or would it be subject to the 11/2 (60 Day) notices?

Are there any other issues I am not thinking of that could be of concern?  I thought about the two year rule, but this is SIMPLE IRA to SIMPLE IRA so we are good and I think her account is older than 2 years. 

Hello everyone - I'm double-checking my understanding of the nondiscrimination testing rules with respect to separate plans maintained by members of a controlled group. Each spouse has a separate business and sponsors a plan. Husband receives compensation from his wife's business. When performing nondiscrimination testing for the wife's plan , I believe you only use the compensation paid to the husband from the wife's business, correct? In other words, you don't aggregate compensation paid by two different business even though those businesses form a controlled group. Thank you for your comments. 

What happens if a plan has a termination date of 12/1/2018, but not all the assets have been distributed by 12/1/2019?

It's a DC plan.  401(k).

When there is a reduction in fees (paid from plan assets), what is the required timing to inform participants/sponsor?

I own my company (100%) and have my parents as employees (no ownership). My company sponsors a pension plan.

Under 318 attribution rules, my parents are 5% owners therefore RMD's are required.

Please let me know if I missed anything.

Thank you

The plan document has a cash out provision at age 62 for balances that are greater than $5,000. 

"Involuntary cash-out of a terminated Participant's Account balance when it exceeds the cash-out amount specified in F.11a ($5,000) is deferred under Section 7.03(b)until: Later of age 62 or NRA - payment made in lump sum only". 

Some participants have money purchase and their balances are greater than the $5,000 cash out threshold. As the money purchase is subject to J&S and spousal consent is required, does this mean that I cannot cash out those participant who have a balance greater than $5,000?