Hi all

Sponsor wants to terminate the services of the vendor (or provider/platform) and wants to move another one.

By mistake, tells them to terminate the plan i/o telling them that their services are terminated and assets to be transferred to another vendor (not well informed nor was contacted by anyone - you get you pay for).

Vendor terminated the plan in April 2019 but assets still not distributed - I believe the sponsor signed a resolution for the plan termination rather than contract termination. Can the sponsor still undo the termination with no issues as to the continuance of the plan? It is a 1 year old plan. any other corrective measures that will be required? No idea about what happened to the deferrals, just finding out the facts.

Vendor also tells the client, even if they move the assets to another vendor/platform, they will get a 1099R?? How is this possible there is no distribution?

Your comments are appreciated as well as any insights.

Thank you

Four entities are in same controlled group/affiliated services group.

• 3 of the entities participate in one fully insured wrap welfare benefit plan (medical,dental, premium only plan). All insurance contracts for that plan are signed by the plan sponsor (i.e., one of the 3 entities). Since this plan had 140 participants at start of plan year, my understanding is that we will need to file Form 5500 for it.
   
• The remaining entity has its own separate fully insured wrap welfare benefit plan (medical, dental, premium only plan ). This entity is the plan sponsor and all insurance contracts are signed by it. There are only 22 participants at start of plan year. Does a 5500 have to be filed for this plan too, or is a 5500 not required for this plan until the plan reaches 100 participant threshold at start of another plan year?

Related question: For annual discrimination testing, do you have to aggregate all the participants from both plans together or can you test separately? Thank you for any input .

Plan is a Safe Harbor Non-Elective plan.  Plan has compensation exclusions (ie non safe harbor exclusions-OT, commissions, bonus etc).  The plan does not pass 414s.  Can the plan satisfy the 414s requirement by using General testing?  Or must the amend their definition of compensation to satisfy 414s?

Under the Code and ERISA, spousal consent is not required if the spouse cannot be located. For a participant who is looking to utilize this exception, is the plan required to have the participant submit an affidavit of when s/he last saw their spouse and state in detail what efforts have been made in an attempt to locate the spouse? Or is it simply enough if a participant checks a box on the benefit election form under spousal consent which says. "I do not know where my spouse is currently located."?

I am reviewing a Form 5500 for a Defined Benefit Pension Plan that had a change in actuaries (not the actuarial firm). The actuary was provided notice with the explanation "Reassignment of responsibilities within NAME OF FIRM.

Schedule C is required, if I read the instructions correctly. Question is for the EIN on Schedule C, do you put in the Firm EIN or the actuary enrollment number?

Normal Retirement is currently 65.

Participant did not make the special 3 year catch up election in time.

Can the employer amend the plan and increase NRA to 70.5?If so,  would the increased NRA apply to all participants ( including existing participants)?

This will allow the employee to make the special catch up.

We file 1099-R's electronically through the IRS FIRE system.  As far as we know, there is no actual Form 1096 for this process.

In the last couple of days, 2 separate clients received the same letter from the IRS stating that they can't process any of the information returns because they're incomplete or not in the required format (lists 1096, 1098, 1099,, 5498, and "certain other information returns").

Then the letter goes on to say that there was not a 1096 included in the submission.

Strange thing is that the letter starts off by saying "Thank you for the inquiry dated Feb. 11, 2019".  But we filed electronically on Mar 20, 2019. No one knows who made an inquiry to the IRS on Feb 11.

Anyone else get these?

Thanks...

I know there is a large thread about getting rejected or bad 5500 extensions.  I just got a letter saying a client's 2017 5500 wasn't filed when I can prove it was.  

Not a problem just wondering if anyone else has gotten and if there is an emerging pattern here also?

We are a not-for-profit that is  the plan sponsor of a 401k plan that has a 6 month elapsed time eligibility period .  

A temp employee has had the following service :

worked 3/11/19-5/31/19 or 2.67 months, break in service was 2.56 months, and then worked 8/19/19-9/6/19 or .59 months. (no 1 year break in service)

The next break in service will be around 1-1.5 months if she is rehired in the next week or so. 

If service is 6 months from original hire since her breaks were so small, she is pretty much immediately eligible.  If not, she would need to earn 2.75 more months of time to be eligible.  It makes a difference for costs for funding/grants/etc.  I hate counting pennies, but we must! And honestly I'd like to get it right going in rather than a correction at year end!

Our plan document has a section that states "Rehired Eligible Employee who had not satisfied eligibility : If any Eligible Employee who had not satisfied the Plan's eligibility requirements is rehired after severance from employment, then such Eligible Employee shall become a Participant in the Plan in accordance with the eligibility requirements set forth in the AA and the Plan.  However, in applying any shift in an eligibility computation period, the Eligible Employee is not treated as a new hire unless prior service is disregarded in accordance with" (rule of parity, 5  one year breaks or one year old out rule)."

My TPA contact is out of the office through Monday.  And their backup told me they couldn't give me an answer and were unwilling to look it up or research it for me (yes, another reason to find a new TPA!)

Anyone want to offer their advice/opinion?

As usual, just want to make sure I'm not missing something. I've just seen a couple of plans that did perform the Key employee concentration test and the DCAP testing. However, they did none of the eligibility or benefits testing.

It so happens that even on a cursory glance, they obviously pass eligibility testing, so maybe they just looked at it informally and, reasonably enough, said "it passes." Ditto for the "Availability Standard" test. However, for the Utilization Standard test, the HCP ratio is app. 10%,and the non-HCP ratio is about 5%. And it looks like this has been going on for about a million years, give or take a year or three...

So, - am I missing something with regards to the Utilization test? Is there some special way around this that I don't know about?

And for the past failures, I'm not aware of any "correction" procedure - if audited, they are screwed, right? All they can do is correct this going forward?

Any thoughts appreciated!

Two things in life are ubiquitous.  First, yellow taxis in Manhattan.  Second, the use of the time rule formula for allocating an ERISA qualified defined benefit plan for an employee who is still working, using a "shared" formula, a/k/a "Bangs/Pleasant" formula in Maryland, a/k/a "Brown Formula" in California, a/k/a pro-rata formula re: FERS and CSRS - 5 CFR § 838.621. 

Thus, your standard shared interest allocation for a defined benefit plan:

"The Alternate Payee is hereby awarded 50% of the "marital share" of the Participant's retirement annuity benefit if, as and when paid to the Participant.  The "marital share" is determined by a fraction, the numerator of which is the number of  months during the marriage that the Participant accrued creditable service in the plan, and the denominator is the number of months that the Participant accrued creditable service in the plan at the time of his commencement of benefits."

Now we have Fidelity on it's website, setting forth 10 Northrop Grumman defined benefit plans with respect to which they offer only two allocation options: See page 40, line 3 of the attached. 

" ______% (insert percentage) of each of the Participant’s monthly benefit payments from the Plan.
$_____ (insert dollar amount) of each of the Participant’s monthly benefit payments from the Plan."

Note the absence of a time rule option for defining the amount to be paid to the Alternate Payee.  

I now have another attorney telling me that I cannot change the model QDRO to insert a time rule option AND must wait until the Participant actually retires to prepare and submit the QDRO - likely about 20 years in the future. Say what? 

26 IRC Section 414(p)(2) sets forth everything needed for a valid DRO:

"(2)Order must clearly specify certain facts:  A domestic relations order meets the requirements of this paragraph only if such order clearly specifies—

 BUT, hold on, if the Participant remarries and  then retires,  his new wife becomes irrevocably vested in the survivor annuity and the intended Alternate Payee can never get it....PERIOD.    

See the 1997 decision of the US Court of Appeals, 4th Circuit,  in  Hopkins v. AT&T Global Information Solutions at
http://scholar.google.com/scholar_case?case=9954117838131396049&q=hopkins+at%26T+global&hl=en&as_sdt=2,9

followed by the 5th Circuit in 1999  Rivers v. Central and South West Corporation at   http://scholar.google.com/scholar_case?case=2296953953561556363&q=rivers+central+and+south+west&hl=en&as_sdt=2,9:

“This Circuit agrees with the Fourth Circuit's decision in Hopkins and adopts its rationale. Rivers failed to protect her rights in Franklin's pension plan by neglecting to obtain a QDRO prior to Franklin's retirement date. Consequently, Franklin's pension benefits irrevocably vested in Mrs. Franklin on the date of his retirement and Rivers is forever barred from acquiring an interest in Franklin's pension plan.”

To the same effect see Dahl v. Aerospace Employees’ Retirement Plan, a 2015 case from the U.S. District Court for the Eastern District of Virginia (and cases cited therein) -
https://scholar.google.com/scholar_case?case=3487596170773082469&q=dahl+v.+aerospace&hl=en&lr=lang_en&as_sdt=20000003&as_vis=1

Other cases following Hopkins are collected at:
https://scholar.google.com/scholar?start=0&q="Hopkins+v.+AT%26T"&hl=en&as_sdt=20000006
 
I have changed Fidelity forms like this many times and inserted a time rule formula and it was accepted by the Plan.  

Can anybody cite an IRC/ERISA code provision, or a case decision, or any treatise, that would be contrary to my universal experience that time-rule formulas are acceptable as a method if defining the amount of the Alternate Payee's defined benefit annuity, and that a Plan Administrator/TPA cannot limit the options available?   

Thanks for your insight.   

David 

N-G Shared QDRO Package 42 pages 2019.pdf

Last week I recently became a 2% owner of an S Corp of which I am an employee.

I am participating in Dependent Day Care and FSA to the max amounts.  Also, I participate in an AFLAC type policy.

I understand there will be tax implications but I'm trying to figure out what exactly they are.  Do all of these pre-tax items get treated the same way for this tax year?

When calculating an RIA's fees, can/should the value of accrued interest on bonds be included in the portfolio value?  Is there guidance written anywhere on how to value an account for charging fees?

I have been asked to assist in a situation where a solo 401k plan had loans taken from the plan without promissory notes, pledges of account balances, etc.  The loans at one time years ago exceeded $50,000.  Repayments have not been made.  The sole participant now wants to withdraw what benefits there are and close the plan.  It has been a couple of years since I prepared any corrections under EPCRS for any plan failing, much less one like this.  Any insights and suggestions will be greatly appreciated to get me started off in the right direction.

Hello,

I'm new here and was hoping to get some clarification on a question regarding 401K and deferring the Audit. 

From 2016-2017 we had 3 401K plans with common ownership... starting September 2018 we merged all the assets from those 3 prior plans into a new plan with new plan number. 
For the three prior plans the group has always filed a 5500SF... Now that we have merged those assets into an entirely new plan with new plan number on September 2018 our eligibility has climbed we think to more than 100 eligible....My question is since the plan is a new plan starting on 09/2018 -12/2018 can we defer the audit to the next year? 
I keep getting mixed answers on this with some CPA's saying that it isn't a new plan it is an offspring of the 3 prior plans so it wouldn't qualify to defer the audit the following year. 
Any input is appreciated as I keep getting answers saying we can and some saying we can't defer the audit...

Thank you all! 

In filling out the 5500 where one company has moved all of the plan assets to another company with that same Multiemployer plan, do you mark that the plan has terminated as the ending assets for company A are at zero and then fill out the information for the termination and say that it is a final 5500 and indicate the name of company B as the recipient of those funds?

Good day to all:

A doctor (of course) signed the documents to set up a new 401(k) plan in December of 2018 that was effective 01/01/2018.  It was to cover only her, at least to begin, because she had no employees.  She signed everything, we did the document, she paid the bill, and it died right there.  No investment accounts were ever opened; no deposits were ever made.  All requests for information have been completely ignored.

Does this plan really exist?  There is nothing to file because there would only be an EZ if she had over $250,000 in the plan.  It makes me nervous, though - I can't quite wrap my head around a client for whom there is nothing to do, if she really is a client at all.

Have any of you had this happen?  If she ever answers us and says she changed her mind and doesn't want the plan after all, do we need to terminate it as we normally would (resolution, amendment) and file the first, final, and only EZ for it?  Can an employer sign all the papers and pay for a plan and then just walk away from it without further ado?

Thanks as always for your advice.

When you think you've heard it all...

Non-profit ERISA 403(b) plan. The business decided to install a 457 plan so that they could contribute for the lone HC executive. Fine.

Due to a new and inexperienced Human Resources person, they not only didn't timely adopt the 457 plan, but the employer contributions were just sent to and deposited into the 403(b) plan! This happened for several months until it was finally noticed.

Now, I know about PLR 9144041, etc., and although this situation doesn't clearly fall under the stated "mathematical errors", etc., it does seem like there should be some latitude to consider a contribution to the wrong plan (even though other plan not yet established) as a mistake of fact. For example, if a client has a DB plan and a DC plan, and the DB contribution sent to the DC plan, I'd feel comfortable having that refunded under a mistake of fact.

Thoughts on this situation? I know this interpretation may be pushing the envelope, but it doesn't seem that far-fetched to me.

Companies B & C are domestic subsidiaries of foreign parent A and in a control group. B is not profitable and sponsors an under funded frozen defined benefit plan for its employees. 

Can sponsorship of this plan be transferred from B to profitable company C such that C can make (tax deductible) contributions toward funding benefits for B's employees? If they were unrelated, I think clearly the answer is no (exclusive benefit rule), but OK for a control group, yes? First thought is why would C be allowed to make contributions for another company's benefit but as part of the control group, if B goes under then C is also on the hook with PBGC for under funding, so why shouldn't C be allowed to fund. If B did fail, or was sold (asset sale) with plan staying behind, C could pick up sponsorship, right, so why not now?

Should B remain as a participating affiliated employer, since it still exists and its employees are the participants? I would think so. I also think language should be clear that all contributions from affiliated employers are available to fund benefits for participants employed by any and all participating affiliated employers.

We had a transaction occur and as part of the transaction, our employees with Options and RSUs were required to be paid out.  However, as part of the transaction, we had to put money in an escrow account for a year to cover if we violated any representations.  So, instead of receiving the full $100/share the employees were entitled to under there Options and RSUs, they only received $80, and the additional $20 was put in the escrow account.  It's been a year, and we didn't violate any representations, so we are now releasing the additional $20, and we're wondering whether it should be included for 401(k) purposes?

Our Plan's definition of compensation specifically excludes payments from Options and RSUs, but we're wondering if this compensation should be treated as something different because it was held in an escrow account -- does that change the nature of the compensation somehow?