Dental benefit is provided for management, under 100 persons.

It is offered as a fully voluntary benefit for staff.

So total covered persons are over 100.

I'm trying to figure out if this makes it an ERISA covered benefit, among other things requiring a Form 5500 be filed.

Good afternoon to all,

I have been asked to research a question presented by a referral source.  I do not have any more information that what is presented below:

"I have a client who was a W2 employee January - September of this year. His employer did not have a 401(k) plan and he made no contributions to other plans. As of October 1, he changed his status to 1099 contractor for the same company. When he changed his status it triggered deferred compensation, a lump sum of $400,000 which he will receive at the end of this year. For October - end of the year, he will receive approximately $60,000 of 1099 income from the new consulting business.

Both the owner and the spouse are over 50 years old.

He wants to max out his Owner K to help defer some of this very large tax bill. Can he use some of the deferred comp? Or can only the 1099 income go into the Owner K? Same question for the wife. It was previously stated that she could receive a contribution, but is her limit subject to the 1099 income, or can the deferred comp dollars count?"

This is not my area of expertise and while I have a general notion that deferred compensation is not able to be used in retirement plan contribution calculations, someone out there may know of exceptions to this.

Any help will be appreciated.

Barber operates a barber shop as a Sch C.

He has another barber also working in his shop and pays her as contract employee (for past two years).  She has reported her income on her own Sch C, and contributed to her personal IRA.

Barber owner marries barber contract employee, but working arrangement remains the same.

Barber contract employee is considering starting her own SIMPLE IRA for her Sch C.

Can they really maintain two Sch C's when she's working in his shop?  And are there any controlled group issues that would affect a SIMPLE IRA due to attribution?

Thanks!

Scenario - A pension plan was joined to a divorce back on June of 2016; after the case was filed back on July of 2015 .

In August of 2016, alternate payee receives an audit letter from the plan , to put up her community share in an interest-bearing account, until the divorce is final.

The plan received a certified QDRO in July of 2018. 

Do the plan hold the funds that were set- up in the interest-bearing account mentioned in the  audit letter, back in 2016, in a 18-month segregation period, required by erisa , or when they are joined to the divorce ??

If so, 18- months will expire soon ... under ERISA when are they required to release the retroactive benefit to the alternate payee ?

Thanks kindly,

Destiny 

Sole proprietor adopts SEP, contributes in compliant manner for a few  years. Has no employees. Later ceases to operate as a sole proprietor and becomes member of partnership and gets K-1. Keeps contributing to SEP as if K-1 were Schedule C income for several years. His only business income after joining the partnership is from the partnership, reported on the K-1 (i.e., individual does not have any non-partnership related Schedule C income after joins partnership). Assume partnership had no qualified plan and no non-5% owner employees. Partnership (i.e., other partners in their capacity as such) had no knowledge of SEP or that sole proprietor turned partner had continued to contribute to it. Assume also that SEP documents show individual's sole proprietorship as only adopting employer.

A couple of other practitioners have looked at this and opined that the contributions based on the K-1 income are simply excess contributions to an IRA (i.e., they exceed the individual's contribution limit), IRC sec. 4973 6% excise tax is owed, contributions must be withdrawn to stop further excise tax, individual will owe ordinary income tax on distributions reportable on 1099-R, and will be subject to 10% premature distributions tax under IRC sec. 72(t) because under 59-1/2, and IRC sec. 4972 tax on nondeductible contributions also applies.

However, EPCRS seems generally to treat SEPs analogously to qualified plans, and it seems that there has been a violation of 415(c) and we have excess amounts that under EPCRS need to be distributed to employer (which, admittedly, is the same individual) as a return of an excess amount, and that the returns for prior years should be amended to reflect nondeductibility, and the 1099-R will show "$0" as the distribution amount to individual. The IRC sec. 4972 tax would still need to be paid. See Section 6.11(5) of Rev. Proc. 2019-19. I don't see why the rule would apply differently just because a single participant sole proprietor SEP is involved. VCP would be required, since SEPs qualify for SCP only for insignificant failures, and anyway this is more than two full plan years old.

Anyone ever dealt with IRS on this or a very similar issue? Any other thoughts?

A sponsor wants to amend their plan to require employees who defer to defer at least 4%. Employees cannot elect a lower percentage unless it is zero. 

Other than needing to be tested under 401(a)(4) - how would we even do this?

Is this permissible? It seems like it would flagrantly disfavor NHCE. 

Complicating matters is the plan presently has a Safe Harbor match, and plans to keep it for the foreseeable future. 

Thoughts? 

Plan uses Prime + 1% normally.  We made a boo boo where we did a loan for someone but just forgot to add 1% to Prime (Prim was 5.25%).  I've never run into this before.  What would the correction look like?  OR I am also floating a threory that Prime is not an unreasonable rate so maybe there is no correction at all.

Or maybe we need to pay him 50% of the additional interest he would have accrued from inception to date?  What about going forward?  Why should he agree to a refinancing to "fix" the rate if his promissory note says 5.25%?

Fascinating topic!

Hello, Employer A owned 100% of 3 other companies.  Employer A sponsors a 401(k) plan in which the 3 companies signed Participating Employer Agreements.  I found out today that Employer A sold the 3 companies a few years through an Asset sale. 

1. Can I amend plan now to indicate that a controlled group no longer exists?
2. Should cessation agreements have been generated for each Particpating Employer?  Or does the type of sale negate the PEA?

Plan suspended their safe harbor match as of 9/1/2019.   PY is 12/31.  There was no other match made for the year. Do I need to do both the ADP test, and the ACP test for the safe harbor that was made during 2019 prior to suspension?

After 3 years of chasing the Participant (ex-husband) to sign the QDRO the draft was signed and submitted to Calpers on 05/04/2002. They approved it and the final was sent back to the administrator signed on 4/24/2003. The Order reads that all contributions from 6/15/1991 ( Date of Marriage) to 11/09/1997 (date of Separation) added to his 457 Deferred Compensation Plan be divided by 50% adjusted to reflect the investment earnings or losses on such share from 11/09/1997 to date of transfer of alternate payee's share to a separate account. 

 After about 4 months a letter was received from ICMA-RC (He changed jobs before the QDRO was completed) stating "ICMA-RC received a domestic relations order and we are not able to act upon the order as its valued the assets for a date prior to ICMA-RC receiving the funds. (Assets rolled to ICMA-RC from a prior administrator on 11/30/1998).

I was told that the funds would be put aside and I would get any and all profits that my portion would bring. So I left it there due to the fact I did not want to deal with rolling it into another account and the funds were not needed. 

Now after 16 years I want to transfer my portion to an IRA what will I have to do?

Just because he rolled it into a new Plan with ICMA-RC with a job transfer will I lose my portion?

Is there anything I can do without paying an attorney all over again.

Thank you

Hello, my company has a non-safe harbor 401k plan. In the adoption agreement it is provided that the match formula is discretionary, but the limit(s) apply per Plan Year. The limits are not specified. But the company communicated verbally (only verbally) that it will match 50% on the first 6% of elective deferrals. The company  also always communicated that the match is discretionary and that it may stop it at any time. The company deposits matching contributions into participants' accounts quarterly. The company did so for the first 2 quarters of calendar year 2019. The company clearly communicated and announced that due to financial hardship the match will be temporarily suspended and that there will be no employer match for the 3rd and 4th quarters. 

Now it is the end of the Plan Year and time to calculate the true-up. If we take annual compensation and multiply by the match that was in Q1 and Q2, this would mean we still need to provide match for Q3 and Q4 even though we communicated that there will be no match in Q3 and Q4. 

What are our options other than paying the match for Q3 and Q4? Paying the match for Q3 and Q4  is absolutely NOT an option at this point. What is the best way to mitigate the risk? 

What would be the least riskiest way? 

(1) calculate salaries as  follows:

X = (2019 W-2 wages plus Elective Deferrals from only Q1 and Q2) / 2      (the plan indicates that Compensation is W-2 wages plus Elective Deferrals as to All Contribution Types  ;

   and then calculate true-up as follows:

(X * 6% ) /2

This option at least ensures that we are doing true up to people who changed the percentage of elections within Q1 and Q2

(2) Amend the Plan to remove the true-up election? Can we still do it? Is it not too late? How do we amend the adoption agreement? Can we still amend the plan retroactively so that there is no true-up and contribution since 1/1/2019 are done on a quarterly basis?

(3) Cut the match in half (50% on the first 3%) and calculate the true up on this new matching formula and the FULL W-2 salary plus Elective Deferrals from all 4 quarters

(4) Just accept the notion that there is no uniform formula, so no need to do any true-up, people received Employer Match based on non-uniform formulas. I understand the risk here is the ACP test as we have a couple of executives who maxed out in Q1 and Q2

Can someone explain from 30,000 feet how I would go about filing a VCP on behalf of a client through that pay.gov system?  Do I need to have them send me a check for the fee, so that I can pay with a credit card?  Is there another way?  We used to just have them sign things and send everything back to us.  I certainly don;t want my clients data entering an 8950 and following a 15 step set of instructions to file.  I appreciate any help y'all can provide. 

I have an ESOP client and here are the facts:

Person A owned >5% of the stock in Company XYZ until 100% of the shares were sold to the ESOP in March of 2018.  The ESOP was effective on the date of the sale of the stock to the ESOP. 

This person was 70.5 in 2018.  He was 70.5 in 2013.   It just dawned on my he got a balance allocated to him as of 12/31/2018.  We didn't get the work done until August of 2019.  So is the 5% rule you are a 5% owner any time during the year regardless if the plan exists or not or do you have to be a 5% owner on or after the effective date of the plan? 

Does this person need an RMD for 2019 because he was a 5% owner in 2018 when he was over 70.5 or does the fact he stopped being a 5% owner on the day the plan was effective change this?

The RMD will be <$30 so the amount is the issue it is a simple compliance question.  I guess the balance could grow to the point the RMDs become more meaningful. 

Hi. I am looking at a 457(f) plan that permits after-tax contributions.  Please help me - why would a person want to give their already-taxed compensation back to the employer?  Deferral of taxation on earnings for a few years does not seem to warrant the risk of the sponsor's bankruptcy.   What am I missing?  Thanks!  This board'S moderators and contributors are the best!

P.S. All I could find on Google and elsewhere was a GuideStone plan adminstrator's guide that had a reference to 457(f) plans that permit after-tax contributions. 

A 401k plan allows for plan loans for any reason.  However, a participant who is requesting a loan recently declared bankruptcy, which the company is aware of because they receive a court order to terminate his wage attachment for child support.  Can or should a Plan Administrator deny the request for the loan since they have reason to believe (bankruptcy) that the plan loan would not be paid back?

Thanks

I have 3 companies, each company is owned 100% by the same person. Two have their own separate plans, one does not (all non key employees). Each plan will pass coverage on it's own, so I don't believe I have to test them together for ADP/ACP, but I do have to perform combed coverage testing. They will fail combined coverage when we include the company that does not have a plan.   We are going to create a plan for the one company that does not currently have a plan. Can the plans have different eligibility -  two have 60 days and one have 1 year?

Can I rely on the otherwise excludable option to carve out anyone who does not meet age 21, 1 year with semi-annual entry into their own "plan" and test them separately for coverage? 

Folks, any help is appreciated!

 

My friend works for Company A (LLC). Mr. X, the firm's partner, owns 100% after Mr. Y passed away a few years ago. Mr. X has a separate company (Company B), a C Corp, into which he transfers the earnings from Company A. The employees in Company B are himself and his wife. He set up SEP IRA in Company B. 

 

From my understanding SEP IRA is under ERISA and when a brother-sister group sets up a pension plan, all employees within the brother-sister group have to be covered in order to satisfy the coverage testing. 

 

In this situation, can she get the same benefit (SEP IRA)  from Company A?

If yes, under what law.

 

Has anyone death with the indemnification clauses that have been added to the plan checklists that require the customer (not the adopting employer) to indemnify Relius in the event Relius fails to notify the customer of required amendments? If you use Relius and haven't seen this language, pull up a checklist and see Section 3.

I'm looking at a situation where I THINK incorrect information was given, but I want to see if y'all agree.

Situation is this - Employer A sponsors a Section 125 plan, that offers various options, including contributing to an HSA. Participant "X" does not participate in A's HDHP, but is covered under the HDHP plan of her spouse, at Employer B. "X" is eligible for all options offered under A's 125 plan.

"X" is being told that she cannot contribute to an HSA under her employer's (A's) 125 plan, as IRS regulations prohibit this - because her HDHP coverage is under her spouse's (Employer B's) Plan.

I don't think this is correct. Agree/disagree? Am I missing something?

I have a off-calendar plan 9/30/19 pye. They started contributing a Match (100% up to 1% compensation) per pay on 4/1/19.  Their Plan Document is a discretionary ER Match & the Period of determination is the Plan Year.  I provided the client with a Match Calculation using Plan year compensation (not 1/2 year) and they do not feel they should have to pay the true-up. Is there anyway around this? I don't think there is because the document indicates plan year compensation not "per pay or 1/2 year compensation, etc.".