Let's say there are 2 companies in a Control Group. One of them is Safe Harbor, the other one is not. What happens if they fail coverage on their own and must aggregate?

I understand that you generally cannot aggregate Safe Harbor and non-Safe Harbor plans, but what would be the way to run testing if this scenario were to happen?

Hi, 

1.Are all employees included for the 25 count or can we exclude union.employees. ?

2. Are employees that work less than 1000 hours included for the 25 count? 

Thank you.

Hi.  We have a 457(f) plan.  An executive with a lot of PTO banked has asked whether the unused PTO can be transferred into his 457(f) plan account.  Is this permissible?  Currently the plan is silent to this, but I imagine it could be amended (if it is legally permissible).

Thanks for any guidance.

Client has a safe harbor 401(k) profit sharing plan with a cash balance plan.  Plan and tax year are calendar year; 2018 return on extension.

The 2018 required contributions are the 3% safe harbor, the minimum cash balance, and the minimum profit sharing to pass nondiscrim.

Client does not have the cash to fund everything.

What are the ramifications if the client uses all available cash to fund the cash balance to reduce the penalty, but misses the deadlines for depositing the safe harbor and PS.

I know the deadline for safe harbor is 12/31/2019, but not so sure about the PS.  I know that the PS can be deposited up to 10/15 and still be allocated as 2018 for 415, but what are the ramifications if say both safe harbor and PS are not deposited until after 2019, especially with respect to the 2018 nondiscrimination testing.

Compounding the issue is that most of the SH and PS goes to the non-highly.  The majority of the CB goes to the owner.  So by not funding the SH and PS and using any available cash to fund the CB does that create nondiscrim issues in itself?

Thanks very much.

Assume that a plan participant is a minor with legitimate plan compensation.  The minor’s parent makes the decision for the minor to make an elective deferral contribution to the plan without the minor’s consent (or even their awareness).  Would this create an operational failure where the plan document requires the election be made by the participant and doesn’t provide for proxy?  Or, would parental rights control here and allow for the parent to make this decision for their child?  If the parent has the ability to cause the contribution, would the child have the ability to override the election their parent made?

A vested terminated participant has been taking RMDs the last few years from the qualified DC plan using the ULT table (the one that assumes a 10-year younger spouse). Suppose this year we are told that, all along, their spouse (and designated beneficiary) is actually 20 years younger than they are.

Does that mean the joint table (with its larger divisor factors) is required to be used for determining the RMD?

If so, was 20% mandatory withholding missed on the non-RMD portion of the amount distributed for the prior years because those amounts could have been rolled over?

We are looking for some clarification. The way we are reading the guidelines, the effective date of the restatement period is the later of January 1, 2010 or the plan effective date. 

Example: 403b plan that was effective 10/1/1991 and restated 10/1/2012. Are we now restating effective 1/1/2010 or 10/1/2012? 

Our innital reaction was to use 1/1/2010, but we are second guessing that because of the later 10/1/2012 restatement. 

A self employed owner only 1 person plan has mortgages as investments within the plan.  The owner died and his wife continues to take RMD after his death.  The plan has not been terminated as the wife beneficiary wants to keep it open until all of the mortgage investments have been repaid.  The business still has activity at this time.  The wife beneficiary would like to purchase one of the mortgages from the plan personally.  Since this is a 1 person owner only plan, is it subject to the prohibited transaction rules?  (The mortgage is $150,000 and the RMD is roughly $40,000 each year.)

Small plan (< 10 participants)

>On Form 8955-SSA, participant w/ vested balanced who terminated in prior year is required to be reported in current year filing. 

>Current year filing is being prepared during following year, during which said participant takes distribution

(to be specific, 2017 terminee to be reported on 2018 form being prepared in 2019, takes distribution in 2019 prior to filing form)

I'm curious the general approach - required to report as 'A' only to report as 'D' in following year, or just ignore?

Hi, my husband was notified that after several years, the “pension” portion of his Prevailing Wage Rate is required to be contributed to the company’s 401k program. We have our own savings plan independent of his company and do not want to use them. The employer says there are no exceptions. So now 26% of his wages have been deducted for this reason. Is this legal? They will not allow him to lower the percentage of contribution either.

403(b) Plan has been operated as if it allowed involuntary cash outs of small amounts without consent, however plan document does not include this provision. How is this corrected? 

Under Rev. Proc. 2019-19, it appears it should be corrected according to Section .07 of Appendix A, which addresses failure to obtain participant consent under 411(a)(11).  But the correction method described is to offer participant a choice between consenting to the distribution already made and receiving a QJSA. Receiving a QJSA makes no sense in this situation.

Any thoughts?

I have a client that recently came to us with a 457 Plan (deferral only) and from what I can see, they are a 501(c)3 non-profit. At this point, I do not know if they have any government funding or oversight. The Plan has allowed catch-up contributions for the last several years. My knowledge may be limited, but I think catch-ups are only allowed on government entity plans. Does anyone know if this is that black and white, or if there are any other factors they may be relevant?

Does anyone have experience with 'post-Appeals mediation' with the IRS? I am wondering if the mediation might possibly result in over-turning the Appeals Office position altogether or would it only be likely to reduce the liability assessed by Appeals (or affirm the Appeals position). 

I came upon an interesting situation here. Governmental (Indian Tribal) 401(k) Plan is using an FIS VS document. The FIS VS document removes all ERISA items, but DOES NOT remove the IRS requirements normal for private plans. So, even though normal nondiscrimination testing, for example, is not REQUIRED by the IRS, the document requires it. To overcome this, the TPA did an "omnibus" type of amendment that, to paraphrase, says that notwithstanding any other language in the document to the contrary, the requirements of the IRC and regulations from which Governmental plans are exempt, shall not apply to this plan, specifically including but not limited to 401(a)(4), 410(a), 401(b), etc., etc...

Now, this probably works ok, but it would clearly take it out of pre-approved VS status and the corresponding automatic reliance, so they should have applied for a determination letter, right? Or am I missing something?

Company A sponsors a plan with several participating employers - all companies are a controlled group.  The plan allocates a basic safe harbor matching contribution that is based off of annual compensation.  There is an employee who left Company A to work for Company B.

While employed with Company A, the employee contributed and was receiving the safe harbor match.  With Company B, the employee no longer deferred and therefore was not receiving the match during this time. 

When calculating the true up, is the safe harbor match calculated using total compensation from both companies, or using only the compensation from the time at Company A when contributing?

If somebody is making both pre-tax and Roth deferrals, what's the hierarchy for the SH Match?  If they are deferring 5% pre-tax and 5% Roth, does the match go 2.25% pre-tax and 2.25%  Roth?

What if it's like 8% pre-tax and 1% Roth?  4% pre-tax match and 1/2 % Roth?

Would it be in the document?

In calculating whether the plan has $250K, does one count receivables??

A brokerage firm holds SIMPLE IRA accounts for a firm.  The employees' 2018 deferrals were deposited timely, the owners' (married couple) deferrals were withheld in a 12/31/18 payroll but not deposited by 30 Jan 2019.   They went to deposit them in February and brokerage firm won't take them, says it is too late.  Showed them the IRS "fixing mistakes" website which discusses a correction by depositing lost earnings, but it doesn't explicitly say the actual contribution has to be deposited.  So they won't accept it.

Yes, seriously.  Anyone have experience with a better informed brokerage firm they can transfer to and still make their 2018 contributions that were withheld? 

Plan covers only the 100% owner and his wife.  The Plan has to be aggregated with another plan to pass coverage (i.e., the other plan covers nonexcludable employees).  What's really happening is that there are leased employees who are benefitting in a plan that has an identical design (which is why we can aggregate).  But is my plan a one-participant-plan eligible for the 5500-EZ? i.e., is it exempt from ERISA?

We have a long term balance-forward client plan where we, as TPA prepare the distribution paperwork and subsequent reporting (ie. 1096, 1099-Rs, 945 etc.).  The client handles the actual payout from the investment funds based on the completed distribution form when returned.  Said plan is now terminating. 

The client has valid contact information for the vast majority of the participants - address and such - so we'll prepare distribution paperwork for those folks.  There are a few former employee participants, however, where the client has no valid contact information and only "old" addresses.  Let's say there are 5 people and the total of their balances is only about $13k.  (Each individual balance is over $1,000.)  We're hoping to be able to send those funds to a vendor and they will set up the IRAs and take it from there.  

I have contact information for Penchecks and plan to call them, but am more or less wondering if others have experience with Penchecks or any of the vendors that have these services and what is the opinion on the process?

Don't have many balance forward plans left and plans that have terminated with the usual large 401k vendors (i.e Nationwide, AF, John Hancock, Empower, etc) have a pretty straightforward process for these types of "lost" participants to get them into an IRA or cashed out as applicable so that the plan can close down.

Thanks in advance.