Background: I have a relatively young doctor who has one older >1000 hours employee, another older <1000 hours employee, and two younger <1000 hours employees.  Already has max 401(k) elsewhere (no CG, ASG or 415 aggregation concerns), so looking at doing PS only and getting $56k max. Including all and cross-testing doesn't work well because only one of the two younger employees are substantially younger than the owner.  The one >1000 hours employee is fairly low paid, so an integrated formula at the lowest threshold, excluding the <1000 hours people, works very well. HOWEVER - and hold onto your hats because how many times have you seen this with a doctor - he wants to include everyone. In that scenario, whether integrated or cross-tested, the contribution rate required for employees is substantial, not an issue with one low paid employee but a different story including everyone.

Questions: I know I can include in the Plan and essentially carve out from testing the <1000 hours people as otherwise excludable employees, but can I have the integrated formula for the >1000 hours people and something else, TH minimum or greater, for the <1000 hours people? If the only way to do (or mimic) this is individual rate groups and testing on contributions with permitted disparity, must I use the SSWB? I assume I cannot arbitrarily pick something lower even if allowed formulaic if designed that way, but wanted to confirm. 

Any other thoughts are appreciated.

I've talked myself in circles about this so I'm hoping for some guidance.  I'll throw out some rough numbers to hopefully help.  2017 Schedule C of $250,000 after 1/2 SE tax is taken out, owner only DB plan.

Assuming that no contribution is made, there is a minimum required contribution of $50,000 for 2017.  

They make a contribution of $60,000 on 10/12/2018 (late). The 5500 was filed 10/10/2018 showing an unpaid min of $50,000.

If I take the $60,000 out of comp, the new min required is only $30,000.

Do I refile the 2017 5500 and SB showing an unpaid min of $30,000?

When do I show the $60,000 contribution, the revised 2017 5500 and SB or on 2018 5500 and SB?

I feel like I have more questions, but I don't remember them right now.

Is it possible to find out if a plan has ever filed with the PBGC?

I am thinking the Plan Sponsor would have to call the PBGC and identify himself - thus begging the question, "why do you ask?"

Dealing with about the worst situation I have ever seen a Plan Sponsor in.

Thanks for any ideas on this. 

The employer sponsors 2 retirement plans - one is a regular 401k and the other is a 457 Plan for which has no 5500 filing requirement - when filing the 5558 to extend the 12/31/2018 filing due 7/31/2019, the 401k was intended to be extended but the 457's plan name and number were used by mistake - is fixing this as simple as sending correspondence to the IRS in advance of them sending any late filing notice to bring the issue to their attention?    On the IRS website, it addresses getting a late filing notice and at that point realizing incorrect incorrect info was entered on the 5558 and just responding to that late notice indicating your error... I'm figuring, it's always best to get in front of the issue as soon as we know about it and not wait for a late notice from IRS...    and when / if we do get a late notice, being able to point to correspondence that brings the issue to their attention... anyone's thoughts would be greatly appreciated

This was originally discussed in October, 2018 when the participant could be said to be at fault for not getting in their application on a timely basis before the window closed.

Now, it's the plan sponsor and/or the vendors administering the window that are at fault.

A sponsor has a calendar year plan and is working hard to take advantage of the interest arbitrage to take GAAP/IFRS gains for lump sums before December 31.

We anticipate that due to the tight time frame remaining in 2019 the trustee will not be able to cut checks in time for payments to be made by 12/31- anytime the week after is more likely due to the plan sponsors inability to verify some vital data before it's processed by the actuary, etc.  W.e are roughly talking about 100 people out of 1,000.

With 417e interest rates dropping, a strict application of the governing 417e rules will result in payments that could be significantly higher for these 100, resulting in a PR problem.

Can anyone rationalize the continued use of the 2018 interest rate basis for January 2020 payments?

HI ~ Looking for some guidance- amount on line 3b of 5300 for penalty?

I have a client with late deferrals for 1 participants from 2018.  The amount is small and we are not filing through VFCP.  I have calculated the lost earning using the participants rate of return.  I am completing the 5330.  Line 3b is a 100% tax on the failure to correct.  If I'm reading this correctly, if the prohibited transaction is not corrected within the taxable period, an amount equal to 100% of the 'amount involved' is imposed.  If my lost earnings are $50.  My excise tax is $7.50.  Since it was not corrected until 2019 the penalty is $50.  Total due with 5330 $57.50 .

Thanks!

A fire district governmental 457(b) plan operates under the SunGuard plan document.  The plan defines NRA as age 65.  Employer wishes to change to age 50 and 20 years of service.  Also, for police/fire personnel, NRA will be age 50.

Couple of concerns.  First plan document only establishes an age for NRA.  Second, and most important, new NRA may impact participants in a negative way considering the new age and service requirements.

What do you think?

When Withdrawal Liability Receivable is due and should be recognized/recorded in accounting?  There are some cases that employers are reluctant to start paying their withdrawal liabilities when assessment has been completed and they are notified with a payment plan schedule. Should it be recorded as Receivable in anyway or should it be waited until the employer accept it and start payments?

Thank you.

Because deferred deductions were taken out with FICA already considered so that when we pay distributions we only take Fed W/H. What about when the participant has passed? 

We have a plan that allows for two loans. A participant was mistakenly allowed a third loan. The loan policy specifically states that loan re negotiations are not allowed. Assume the participant cannot pay the third loan back  in full nor do they want to default and claim on taxes. Are their any other options available? Can we still merge two loans together since it is for a correction despite the loan policy? Could we amend the loan policy to allow loan renegotiation? then amend again "to go back" say a month or two later? VCP? 

I have a prospective client who has a non-Erisa 403(b) for the NHCEs to defer, and an ERISA 403(b) for the charter founders to defer and get a PS contribution.  We've been called in because while the non-ERISA document excludes charter founders and the ERISA document excludes everyone else, a founder had been deferring to the non-Erisa plan and got a profit sharing contribution in the Erisa plan (she did not defer to the Erisa plan).

My questions are - can you set the plans up this way - ie can you aggregate the non-Erisa and Erisa plans to make sure the NHCEs aren't discriminated against for coverage, and if so, does it all get messed up with having the 1 founder deferring into the non-Erisa plan (I know it violates the document but it only happened this year so we should be able to amend the doc to permit it).

Thoughts?

An employee stock ownership plan was most recently amended in January 2017 (and then included everything through the “2016 Required Amendments List for Qualified Retirement Plans”) .

The employer/sponsor/administrator anticipates ending the plan and paying its final distributions in 2019.

Beyond stating the discontinuance and termination, is there any plan amendment needed to tax-qualify the plan for its end?

Can someone provide me some pro's and con's on each type of contribution?

1.  After Tax Contribution to 401k plan

2.  Mega Back Door Roth Contribution

Normally the plans we work on are just pretax 401k and roth 401k.

Thank you.

One person plan for a doctor - for the beginning five years of the plan, the doctor is not vested in the profit sharing contribution. Inasmuch as a plan is meant to be more permanent than 5 years, how to explain to plan owner that the money is theirs even if they are not vested at the current time in the first five years? (in this example, plan started when employment started).

Large nonprofit health systems are being approached frequently by consultants offering proposal to rescind executives 409A/457(f) SERPs in direct exchange for split dollar loan regime arrangement of substantially equal value (but generally a very different "payment" time/form than under the 409A/457(f) SERP).  Push for these proposals now seems to be to help nonprofit employer avoid or reduce 4960 excise taxes where these SERP values would exceed $1M at vesting.  Anybody seeing these along with the legal opinions from the promoters that these "swaps" "should not" run afoul of 409A or 457(f)??  Thoughts on whether this violates anti-substitution/anti-exchange rules under 409A/457(f) and if not - why? 

If an executive and employer bilaterally agreed to cancel SERP in exchange for loan regime split dollar arrangement, should executive insist on indemnification from employer for potential 409A/457(f) infractions/penalties if the promoter's "should be ok" doesn't ultimately align with IRS views on audit - or even at Tax Court?

I appreciate any insight as to how these proposals are being greeted by employer's counsel.

Having one of those days. For a cross tested plan, I know the total contribution cannot exceed 25% of total eligible comp, but what about on individual level? Can I give one HCE say 40% profit sharing it if passes all the tests (gateway, avg benefit, and say rate group using midpoint)? 

Suppose you have a 401(k) plan with a safe harbor match. The plan had a 6/30/18 plan year end. An HCE made salary deferrals of $18,000 from 7/1/17 through 6/30/18 ($18,500 for 2018). However he mistakenly funded an additional $500 on the next pay period on 7/15/2018 (now $19,000 for 2018). 

To correct this, the plan refunded the $500 plus earnings to him shortly after the extra $500 was funded.

That extra $500 was technically funded during the 7/1/2018 - 6/30/2019 year. He funded no salary deferrals for the year ended 6/30/2019 (other than the mistaken $500). Should he get the match on that $500 even though it was refunded to him?

Thanks.

In a plan where everyone is in self-directed brokerage accounts, two of the doctors (of course) have stumbled onto a non-publicly-traded stock that they want to buy.  The financial advisor can't get them access to it through his platform, and the doctors aren't old enough for in-service distributions of any sizable amounts, so they are looking to change brokers to get access to this asset in the plan.

The asset itself has a minimum - I've heard varying accounts of either $25K or $10K to buy in.  Is that in and of itself discriminatory?  If it's $25K, then no one else besides the doctors have that much in their accounts (at least as of 12/31/18).  But what if it's $10K - pretty much everyone has that much.

In general, I am pessimistic about the 3(16) business model, but I get that there are aspects of it that appeal to clients.  My question is, do I have the latitude to pick and choose which things I will offer as a 3(16)?  So for example, I think it rather unappealing to clients to take over the deposit process because most clients want to be involved in ACHing funds out of their own operating account.  But I think in general clients LOVE the idea of a TPA signing off on distributions.

Signing a form 5500 - not a big deal since I already prepare a signature ready form.  But responsibility for sending out notices?  Quite appealing.

So the question is, can I have a "3(16)-lite" offering, charge a little bit more for it, and take over those things that are the most value added (emphasis on the word value).

I already understand the concept behind the full suite of services, so no need to sell me on that!

Hi QDRO Specialists,

In a divorce situation, both parties established 401(K) with new employers after the date of separation (in CA). These 401(K)s are separate properties belonging to each party but opened with marital status as 'Married'. Is a QDRO needed to update marital status and beneficiary post-divorce?

QRDO is needed to divide community property 401(K). But in a situation where both parties decide to retain their respective 401(K) and forever waive rights to this community property (similar amounts), is a QDRO needed to update marital status and beneficiary post-divorce? i.e. Is QDRO needed to waive these rights?

Finally, is it correct to assume that QDRO doesn't apply to IRA rollover and Roth IRA accounts?

Thanks for your comments.

George