Is Vested Amount of 401k net of outstanding loans?  Do I subtract the current loans from the vested amount, or are those loans already accounted for the the vested amount?  

Thank you.

I have a participant whose loan was repaid on one payroll, however the loan payment deduction was not stopped for two more payrolls. Can I just refund the incorrect deductions to him?

I don't know why this is bothering me, but it is. ERISA 403(b) plan.

If a plan has a NRD of age 60, and wants to amend it to age 65...

Currently all accounts are all 100% vested at all times. In-service withdrawals are NOT currently allowed other than for hardship or disability. Allocation conditions for employer match/nonelective are NOT waived for termination of employment after attaining NRD.

I don't much see the point in amending NRD to age 65, as it doesn't accomplish anything under the current terms of the plan. But if they did amend, is there any problem? I don't see a cutback of any benefit, but it just feels odd - anything obvious I'm missing?

Plan year end is November 30th.  Plan will be terminating soon after December 1, 2019.  Last favorable LOD dated 4/28/2018 with respect to amendment and restatement signed February 10, 2017 that had an effective date of 12/1/2016.  The LOD states that it considered the 2015 Cumulative List of Changes in Plan Qualification Requirements.

In conjunction with a plan termination soon after December 1, 2019 I  presume that there is an amendment needed that considers a more recent Cumulative List.  If so, what is the year of the latest Cumulative List that must be included?  

Could the Cumulative List amendment requirement be sidestepped by adopting a volume submitter plan by the end of this cycle's end date of 4/30/2020?

Thanking everybody in advance who weighs in.  THANK YOU.

A client terminates her DB plan (non-PBGC) and proceeds to transfer all of the assets to her IRA.  After informing her that she must return the funds over and above her accrued benefit, she refuses.  Participants have not been paid out and the amount transferred exceeds her §415 limit.

If the situation persists, what are our obligations and duties with respect to the client and how should we proceed.

As I see it, we could

1. withdraw and not perform further services to the plan.
2. correctly fill out final Form 5500, knowing it will prompt an audit.
3. report the failure to the DOL as a criminal fiduciary
4. 1 and 3.
5. 2 and 3.

Do professional designations affect the result?  Thoughts?

A couple married on September 7, 2007 and divorced on July 16, 2019. The plan is a cash balance plan with Koch Industries (Georgia Pacific). The Judgment of Divorce awards the Alternate payee 50% of the Participant’s vested account balance under the plan earned during the marraige. I drafted the QDRO according. The plan administrator denied preapproval of the QDRO, stating that a single valuation date is required. To be fair, the QDRO quidelines state as much. However, since this a common J of D provision, I have used the above language successly with other plan administrators. 

I have researched alternative formulas like: Value on date of divorce x months a participant while married/total months a participant x 50% = award to Alternate Payee. Does anyone have a better idea, especially if you have worked with Koch Industries?

We administer a 401k invested with Voya.  Two trustees, husband and wife; the husband died a few years ago and his account has remained open.  Voya has thus far refused to rollover his account into hers since she has requested.

The plan is the beneficiary and she is the contingent; both are over 59 ½.

Voya is telling me she can not rollover his account into hers for RMD purposes.  Neither are close to 70 ½.

Since he is dead, he can't take an RMD anyway, so what is their rationale?

Is the approved interest rate when calculating an EBAR in a Cash Balance Plan still between 7.5% and 8.5%?  I was discussing this with someone and know that used to be the acceptable range, but I wasn't sure if that had been changed or indexed.

Thanks!

So, basic story is plan permitted deferrals from some types of bonuses but not others.  Due to admin / payroll error, all bonuses were considered eligible comp and some deferrals were made from ineligible bonuses.  The amounts were not great and the company caught after a couple of years but a few of the participants have since terminated and taken distributions.  The distributions included the erroneous deferrals tied to the ineligible bonus amounts (that would have been treated as regular wages had the plan been properly administered) plus corresponding matching contributions and earnings.  Some of the terminated participants rolled the amounts over to IRAs or other plans and some just took a taxable distribution when they left.

Employer is self-correcting and wrote letter informing former participants of the errors,  that the excess amount distributed was not eligible for rollover etc., and asked the former participants to return the full excess amount to the plan.  Interestingly, one former participant who rolled to an IRA has indicated he is wiling to return but asking about process.

I'm trying to understand how the deferral portion of the excess amount gets handled here?  The deferral portion should have been taxable wages subject to withholding generally.  Here, the plan will presumably get the full amount back  and will put the match amounts back in a suspense account but how does it get the deferral portion to the participant.  Will the IRA return and issue a 1099-R noting distributions per EPCRS (Code E)?  If the 1099-R is issued, it seems that just reflects the removal of the amounts from the IRA.  How should the employer return the erroneous deferral amounts to the former employee--report on a 1099-R, a 1099, a corrected W-2 for the year deferred? 

As a twist, how would this get handled for somebody that had received a taxable distribution and returned the amount?  Can they just get the matching contributions and earnings back and let the deferrals go then since they were already taxed?

Am I making this more complicated than it is?  The guidance I've seen just seems potentially incomplete with respect to addressing all the possible tax issues.  Thanks.

Good evening:

Not sure the following is right and/or passes BRF.

A floor offset plan - assume 401a26 passes. After all offset are applied, only the owner has a substantial benefit in the DB plan. Only the owner is HCE.

So far so good.

Now the agent wants to provide insurance to the owner under the DB plan, thinking since no one has any benefits and plan passes 401a26, kosher, right? Also, they do not think that they need to provide any insurance under the DC plan.

I am not in agreement for the following reasons (the ones that come to mind - possibly missed a few):

1- Any insurance provided to the rank&file (or NHCE) under the DC plan is not of the same value as the one provided to the owner under the DB plan;

2- For any insurance provided to the rank&file under the DC, the premiums have to be paid thru their benefit i.e. the contributions provided to them by the employer where in the DB plan, only the employer pays as contribution to the plan and does not reduce any benefits;

3- There is BRF issues for DB and combined plans.

4- As per some prior information I heard, even if the DB plan provided a benefit to the rank&file employees (say 2% and the owner gets 10% of pay), the insurance provided is not of equal value (even if calculated the same way, say 50X) due to the discriminatory type of benefit formula. The DC portion would not make it equal due to the reasoning I provided on item 2 above.

5- How is 410b satisfied?

Please let me know your thoughts/comments on this and if I missed anything and/or misunderstood.

Thank you

I must confess, being a qualified plan TPA, I know next to nothing about HSAs or Section 125 plans.

My client has inquired about updating their 125 plan document; are these two plans, an HSA and a 125?

Stupidity is not excuse.

Treasury Official Gives Favorable Interpretation of 401(k) Hardship Amendment Deadlines for Volume Submitter and Prototype Plans

And suggests there may be more to come

At the ASPPA Annual Conference on Tuesday, October 22, 2019, Carol Weiser, Benefits Tax Counsel at the Treasury, discussed recent concerns about the deadline for preapproved plans to amend to conform to the recently published final hardship regulations.  In effect, she said that the deadline is the due date of the employer’s income tax return (e.g., Form 1120), plus extensions, if any, for the tax year which includes January 1, 2020.  

This is true even if the amendment was put into effect in 2019.   This gives us more time than many of us had feared, based on a conservative reading of the final regulation.  She gave three examples to illustrate Treasury’s view.  In each case, assume the employer is a C corporation and the corporation does not extend the return.

• Assume a plan sponsor with a calendar year fiscal year implemented the mandatory changes of the regulations in 2019. The deadline is the due date of the 2020 return (April 15, 2021).
• Assume a plan sponsor implemented all of the changes on June 1, 2019 and has a fiscal year and plan year that ends June 30. The deadline is the due date of the employer’s return for the tax year ending June 30, 2020 (October 15, 2020).
• Assume a plan sponsor delays implementation of the mandatory changes of the regulations to the latest possible date, which is distributions made on or after January 1, 2020. If the plan sponsor has a tax year that begins on February 1, then the change to the plan would be effective for the fiscal year beginning February 1, 2019 and ending January 31, 2020. (May 15, 2020).  

She added “We are still looking at whether there is anything else we should be doing to consider whether [the third situation] is perhaps too short a time frame given when we were able to issue the final regulations – so something that we are still looking at, so stay tuned for that.”  This offers the prospect of a later announcement of a later, or perhaps fixed deadline, unrelated to tax return due dates.

While Ms Weiser prefaced her comments that this was not an “official” pronouncement of the Treasury, the context of the statements put to rest the concerns of those in attendance that the deadlines for calendar year taxpayers might be in early 2020. 

https://www.erisapedia.com/static/HardshipAmendmentDeadline.pdf

As BenefitsLink this morning reported, tomorrow’s Federal Register will publish notice of a proposed rulemaking under which fiduciaries of an ERISA-governed retirement plan could furnish some ERISA-required communications under a notice-and-access regime with a notice that the communication is available at a plan-maintained website.  Relying on the new regime would require, among other conditions, having an electronic address for the person entitled to the communication to be furnished.

If that electronic address is an e-mail address (rather than a smartphone number):

Is there a reason why a plan’s fiduciary should not attach to the e-mail message a .pdf of the document to be furnished?  (One could do this besides posting the document on a website.)

Is there ever a situation in which attaching a .pdf could be harmful to the e-mail’s addressee?

A dental practice was sold and the new doctors who purchased the practice took over payroll.  I was not made aware of the sale until after it was finalized .  As a result deferrals were not withheld or paid in.  Employees paychecks were bigger as a result and no one spoke up.  Is there a cure?  Instead of making everything right with one correction to an employee's next paycheck, can the missed deferrals be spread out over a few paychecks?

Thanks

A participant signed a distribution form requesting a large lump from his DB plan, then dies the next day.  His spouse predeceased him.  At this point, I don't know if the distribution form is still on somebody's desk, or if the check is in process.  I'm hoping his children can at least get the benefit of inherited IRAs.  Any thoughts?

What are our options for handling low or small balance accounts (between $0.01 and maybe $10) where the participant or family member in death cases does not want the funds. The individual(s) are voluntarily forfeiting the funds. Do we forfeit funds back to employer or do we automatically disburse the small balance (i.e. to the estate). How do we distribute small amounts out of the account (403b, 457 and 401a)?

I filed a VCP request on behalf of a client over eight months ago but we have never received even an acknowledgement form from the IRS. Does anyone have a telephone number that they call to speak with a live person to determine the status of the request and possibly, to which agent the request has been assigned?

Thanks.

I have a plan in which a participant (Owner) passed away 10 years ago.  She was receiving RMDs from the plan.  The beneficiaries are her son (employee) and daughter (non-employee).  They each have been receiving RMDs every year from the plan.  The distributions started by 12/31 of the year following the mom's death.  Daughter now wants to transfer her portion of the remaining account balance to an inherited IRA.  Is this possible?  I looked over Notice 2007-7 as well as other regulations and my thought is yes but getting disagreement in the office here.  RMDs would have to continue under the IRA as they now do in the plan.   

Thanks for the help.

Mike

I know this seems like a silly question, but a plan sponsor has closed his business (physician) and the only 2 participants left with a balance are the physician and his spouse, are they required to receive the annual Safe Harbor and QDIA notice?  Thanks.

I was a contacted by a CPA that has a recently deceased client with an IRA. There are several beneficiaries for this IRA and they are all foreign nationals. Can these beneficiaries set-up rollover IRA's in the US to avoid having to pay taxes? Are there any other options for these beneficiaries to keep the monies tax-sheltered?