Is there a deadline for the sole prop to deposit his 2018 after tax contributions?  He files schedule C on extension.  Can the 2018 after tax contribution be made on 10/15/19 when he files his return?  Assume, the 401(k) plan allows aftertax.  No other employees.  He is not over his 415 limit.  Just looking at the timing of the deposit.  I think rank and file participants would be ASAP and fall under the same umbrella as other employee contribution timing.   

Can a 401k plan limit pre-59 1/2 in-service distributions to employer matching contributions that are invested in the employer stock fund only?  

The plan currently does not allow pre-59 1/2 in-service contributions at all so there would no anti-cutback rule issues.

The sponsor is considering eliminating the employer stock fund from the plan, but would like to give participants an option to keep the stock if they wish. 

Thanks in advance for the assistance!

Hi all! We're looking at taking over a plan that is a spinoff from a MEP. The MEP allowed for Loans, but the employer does not intend to include loan provisions in the new plan. Would this be able to be treated like a plan termination offset situation for the few participants who have loans, allowing them to begin rolling funds into an IRA to replace the loan offset? Or is there some anti-cutback rule that I am not thinking of that would require the employer to allow the participants with loans to continue their payroll deductions for loan repayments into their accounts in the plan until all are repaid? 

Thanks!

The ASPPA code of conduct reads in part as below.  Let's say someone hasn't paid for the 2018 val, am I obligated to provide it?  If not, am I obligated to provide, say, the 2017 val (which was sent to the client already)...the plan document (also sent to the client already)?  I asked the question about "work product" once and was told that is notes and calcs and stuff that are just in our files.

"B. When a Principal has given consent for a new or additional professional to consult with a Member with respect to a matter for which the Member is providing or has provided Professional Services, the Member shall cooperate in assembling and transmitting pertinent data and documents, subject to receiving reasonable compensation for the work required to do so.  In accordance with Circular 230, the Member shall promptly, at the request of the Principal, return any and all records of the Principal that are necessary for the Principal to comply with federal tax Law, even if the Member is not subject to Circular 230. The existence of a fee dispute generally does not relieve the Member of this responsibility except to the extent permitted by applicable state Law.   The Member need not provide any items of a proprietary nature or work product for which the Member has not been compensated."

In a controlled group where they handle payroll internally, an HCE under age 50 was allowed to defer from multiple companies and ended up with $29K deferred for 2018.  This plan also happens to fail the ADP test (partially because I had to include all those deferrals), and he will need to get an ADP Test refund that exceeds the amount of the 402g violation (yes, I'm only getting the information to do this today)... until I apply the earnings allocation, which is actually a loss for 2018, which brings it back to less than the 402g excess.

So what comes first here?  If I apply the net $10,000 ADP refund, then there's still a $500 402g issue.  What about taxation - 402g violations not corrected by 4/15/19 are double-taxed, so running them through as an ADP correction seems as if it would not make that clear.

Thanks for the last-minute advice...

Unless there is a controlled group issue - is there any reason why an owner/highly compensated employee/key employee  cannot max out his deferrals in each company's plan - as well as  maxing out in each plan in total. (56,000 total for 2019)?  

Not sure which message board to post this. 

Client is purchasing life insurance [contractual protection insurance?] from a Lloyds specialty broker to provide coverage to key executives above what is available in group plan. Client will be owner and pay premiums, but executive will be able to name beneficiary. 

Can the client impute income to executives based on Table I rates, and then the benefits paid would be received tax free? Or does the full premium amount need to be included as taxable income like a 162 bonus plan? Or will death proceeds be taxable to estate, or as income in respect of a decedent, or taxable to the beneficiary? 

Not sure which message board to post this. 

Client is purchasing life insurance [contractual protection insurance?] from a Lloyds specialty broker to provide coverage to key executives above what is available in group plan. Client will be owner and pay premiums, but executive will be able to name beneficiary. 

Can the client impute income to executives based on Table I rates, and then the benefits paid would be received tax free? Or does the full premium amount need to be included as taxable income like a 162 bonus plan? Or will death proceeds be taxable to estate, or as income in respect of a decedent, or taxable to the beneficiary? 

I anticipate the answer is yes but I am wondering if any one can point me toward a citation that states this. I know the form 5500 instructions require plan sponsor to provide accurate information, but I cant find anything that states it has an affirmative obligation to correct a previously filed 5500 that is inaccurate. 

An employee whited out the date next to her signature and the plan sponsor’s signature on a distribution form.  The plan sponsor’s signature was not accurate because this plan sponsor left.  This alerted the investment company who alert the plan sponsor.  The employee did not know there was anything wrong with this.  She was doing it for convenience. She thought that if there was something wrong with this then the investment company would say something.  The employe was fired.  The employee said that she was falsifying a document and she committed fraud.  When the employee challenged these allegations the employer then said it was not them who were alleging fraud but the investment company.  The investment company is denying that they alleged fraud.  They said that the only alerted the employer that the plan sponsor’s signature was not on their approved list so should they proceed with the withdrawal.  The employer said no.  The investment company said they are strictly record keepers.  Did this employee break any laws, rules, or regulations?

Section 457(f)(2)(E) contains an exception to the normal rules under section 457 for "a qualified governmental excess benefit arrangement described in section 415(m)."  Among the requirements of section 415(m) is that the plan "is maintained solely for the purpose of providing to participants in the plan that part of the participant’s annual benefit otherwise payable under the terms of the plan that exceeds the limitations on benefits imposed by this section."  Given that "this section" is section 415, it appears that a qualified governmental excess plan can provide only benefits in excess of the 415 limits, not benefits that are cut back due to the limitations on compensation in section 401(a)(17).

However, a governmental 401(a) plan is not bound by the rules against discriminating in favor of highly compensated employees.  Would it therefore be possible to say that for everyone except one individual, the benefit is for example 2% of compensation times years of service, but that for a specified individual, the benefit is for example 4% of compensation times years of service?  The 4% would likely be developed in order that the individual's benefit would be the same percentage of total compensation as everyone else's, but it would not directly reference compensation over the 401(a)(17) cap.  At that point, all benefits not in excess of the 415 limit could be provided by the qualified plan, while those above that limit could be provided by the excess plan.

Alternatively, has anyone seen any flexibility on the part of the IRS to allow an excess plan to deal with the compensation limits as well as the 415 limits?

Anyone else attending ASPPA Annual the 19th-23rd? I'll be there as co-chairman and this will be my fifth (and last) year on the committee. We're looking forward to it. Please feel free to come say hello if you see me wandering around.

Can a 401k plan limit pre-59 1/2 in-service distributions to employer matching contributions that are invested in the employer stock fund only?  

The plan currently does not allow pre-59 1/2 in-service contributions at all so there would no anti-cutback rule issues.

The sponsor is considering eliminating the employer stock fund from the plan, but would like to give participants an option to keep the stock if they wish. 

A retirement plan was operating as a safe harbor plan - until they amended their plan as October 21, 2018  to no longer make the safe harbor match.   Do they have to be tested for non-discrimination-- as in the ADP/ACP test for 2018?  I think so, but just want confirmation.  Also, when the top-heavy test is run, it shows that 74% of the account balances belong to the key employees at 12/31/2018.  Do they have to make a top contribution for 2018 or  2019 since they were a safe harbor plan as of 12/31/2017?    Thanks!

Received an inquiry, have no idea how to respond:

Person in question is the spouse of an employee who is a subscriber of an employer offered health insurance plan, so the insurance is held in the employee's name, but it is the spouse with the inquiry.

The spouse has on file with the insurance provider to not provide PHI to the employee subscriber holding the policy. 

The spouse visited a doctor. The insurance company then sent a follow up letter to the subscriber regarding that visit by the spouse to confirm the visit (specific details of the visit apparently not provided).  Spouse felt this was PHI, but upon checking in with the insurance company, spouse was informed that that is not considered PHI.  spouse believes just providing the doctor information to the subscriber is.

To be clear this question is about PHI, not the relationship between the employee subscriber and spouse.

Is there any reason that a cafeteria plan document with a health FSA couldn't (or shouldn't) provide for the automatic inflation adjustment to the dollar limit in section 125(i) rather than amending the document each year to state the dollar amount in effect? This is the standard practice in 401(k) plan documents, but most of the FSA documents I've seen for some reason specify the dollar amount without providing any automatic adjustment for inflation language.  

Is there a guideline regarding how often participants in a non-safe harbor 401(k) plan need to be informed that there is the option to invest in a brokerage account?

In this situation, participants are either in the Pooled account, or can pull out vested balances to put into brokerage account. They receive annual statements of their balances and vested amount.

Information about the investment options is provided in the SPD.

A sponsor deconverted from a MEP (9/1/19) and started a new 401k plan (10/1/19). Generally, we write our plan documents for mid year starter plans to have a Jan 1 effective date and then note effective dates for each plan feature such as Safe Harbor, deferrals that reflect when the plan actually started. We have all calendar year plans and define our compensation as the plan year, writing our docs with those dates allows the sponsor to provide just the one set of compensation (for full 12 months) instead of partial year compensation and statutory. 

Can we date the doc for this plan like that? If the effective date of the plan is when they were actually with the MEP is that a problem? 

A prevailing wage plan is failing ADP and pulls amounts classified as QNECs from the prevailing wage column to assist in the plan passing ADP. The problem is that there are some HCEs who received prevailing wage allocations, and while the QNECs did assist ADP, there were still failures for some HCEs. Some of these HCEs the system is showing need distributions are HCEs who didn't defer anything but only received prevailing wages. Do we distribute this as an ADP failure or is FTW getting it wrong and should only shift NHCEs?

If I can somehow force FTW to only shift NHCEs and not HCEs, wouldn't the plan have to pass general testing on amounts that didn't shift to ADP?

So basically I need to gauge the failure of each test by not shifting HCE QNECs and dealing with the general test vs shifting HCE QNECs and reviewing the failure in ADP?

I HAD POSTED THIS ON THE DB MESSAGE BOARD WITH NO RESULTS, SO I THOUGHT I WOULD GIVE THIS BOARD A TRY.  NOTHING VENTURED, NOTHING GAINED I GUESS.

HI ALL.  I AM  LOOKING FOR 412(i) PLAN TPA FOR 1 PERSON PLAN.  THE PLAN WOULD BE FOR ME.  

THANK YOU,

RAY J. Jr.