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?

We offer AFLAC as part of our benefit plan. The reps insist that all eligible employees must be seen and see all the products offered, sign an acknowledgement form or a waiver even if they do not want to make any changes or cancel coverage during open enrollment. True or False

Question about the interaction between the 401(a)(17) limit and a 401(k) Plan that has one or more exclusions from its definition of compensation -- e.g., bonuses are excluded.  In figuring out Plan compensation, which applies first – the Plan’s definition or the 401(a)(17) limit? Example (for 2019, in which the 401(a)(17) limit is 280,000). Total compensation is 300,000, which includes a bonus of 10,000. If I first apply the Plan’s definition and then apply the limit: compensation is 290,000 and compensation for the Plan is the lesser of 290,000 and 280,000, so: 280,000. If I first apply the limit and then apply the Plan’s definition: compensation is the lesser of 300,000 and 280,000, so 280,000, then back out the bonus, so comp would be 270,000. I have looked for guidance/authority and the only thing I have found so far is one ASPPA Power Point that says apply the Plan’s definition first, then apply the limit, but no citation for that. Anyone?

I know this is a basic question, but I've got differing answers for some recent.  Can a Cash Balance Plan have a 6-year vesting schedule or is it just a 3-year cliff?

Thanks in advance

Dropped working may10 2017;  had $18000 401k loan;  defaulted this year; no earned income at all this year just WC;  how much taxes will I pay on defaulted loan?

Hello,

Our group plan carrier messed up and failed to enroll an employee back in April when we submitted her application. However, because we didn't know that until September, she has been enrolled on our group HRA since April. So, we were/are out of compliance for the five months she was not covered by our group health plan.

The carrier has since enrolled her onto our health plan as of 9/1, but our broker doesn't think they will consent to back-enrolling to April. If they don't, what do you think we should do? Fortunately, she didn't have any medical claims until September, but she did use her HRA for some dental/vision charges prior to September. We would like to make the employee whole, since it wasn't her fault, and ideally get back into compliance. Should we:

1. Report her HRA employer contributions as taxable for those five months she was not covered and give her a bonus to cover the taxes;
2. Reset her HRA active status date to 9/1 and give her a (taxable) bonus to cover the HRA contributions for those five months;
3. Not even bother asking the carrier to back-enroll her to April and just ignore the fact she was not covered by our group plan for five months (what are the risks here?);
4. Or something else?

Of course, if the carrier won't back-enroll her to April, we will also reimburse her premium payroll deductions. 

Thanks for any advice!

Does anyone know if the ASP system is down today?  This is awful.

Client is terminating his profit sharing plan, and is retiring at current age of 75.  We have calculated the RMD for his employer account.  I assume (?) since the voluntary account has already been taxed, the only amounts he would be taxed on and would be subject to the RMD would be the earnings?

He also wants to rollover the voluntary contribution account.  We're talking somewhere in the area of $250-$300K, which I do not believe he can rollover?  If that is the case, what is to happen to the account?

My question concerns the 5500s.

My client owns two companies, obviously a controlled group.  He is the only employee in each company.

Since they are two employers, do we need aggregate the assets for purposes of the $250K threshold for filing.

Wouldn't that be nice.  We have seen two letters come back so far showing the tax period as 2/28/19 (for CALENDAR YEAR plans) and granting extension until 12/15.  What's going on with the iRS anyway?

Has anyone dealt with filing corrections for entities that filed Form 1095-Cs under the wrong entity? For example, entities A and B are part of the same controlled group. B pays this group of employees (and provides their Form W-2s), but their Form 1095-Cs were filed under entity A. This means that entity B has filed Form W-2s but no corresponding 1094-Cs or 1095-Cs, which is likely to trigger a letter from the IRS. 

Is there a way to correct this before the IRS sends the penalty letter? I read the Publication 5165 correction rules to say no - you need an original record to correct. In this case, there's no original record to correct. 

Anyone have experience with this? TIA!

I have an issue with a case involving 2 concurrent pension plans covering an employee who is 72 years old and has 6 years of service and 5 yrs participation ( at NRA). Both plans are being terminated in 2019.

Plan A was started 1 year before plan B. Both have the NRA = 65 +5 participation.

Plan A NRA for this employee is 69 1/2, Plan B it is 70 1/2. High3 is about $170,000 so the C Limit will apply. In order to compute the dollar amount  and equalize the benefit and retirement ages, I actuarially adjusted the 69 1/2 benefit in plan A to age 70 1/2. Then computed the LS for both plans with the  age 70 1/2 APR and the distributions were made earlier this year. I think I blew 415 since I actuarially increased the benefits before the LS payment and under C limit which doesn't adjust; not sure what to do to correct them. Have any of the actuaries faced this before?

Key Questions--1) How do I avoid blowing the C limit if I have to compare both benefits as of the same age? 

2) Also, since a forfeiture occurred by not paying out the LS at the NRA, do I have to produce a benefit notice? Is there a sample notice others have used?

A married participant in a DB plan retired and elected a Joint & 75% Survivor annuity. Several years into retirement, he and his wife divorce. I was retained to draft the QDRO, which split the participant's monthly payment 50/50. If the participant dies first, the alternate payee receives the survivor amount of 75%. If the alternate payee dies first, the participant reverts to his full benefit. Pretty simple. The plan administrator supplied the language and of course pre-approved the QDRO.

The participant won't sign it, saying it is unfair. The plan administator now says that the J&S can be removed. The participant and the alternate payee would each receive a higher monthly benefit, which sounds like a life annuity. If the participant dies first, the alternate payee continues to receive the same amount for her lifetime. If the alternate payee dies first, the benefit reverts back to the participant, which doesn't sound like a life annuity. I recognize that none of this is my business and I should revise the order as directed, but I'm curious.

1) I has been my understanding that an elected DB benefit can rarely be changed once in payment status, especially by QDRO. Am I missing something?

2) Does my rough description of the single life payment for the alternated payee but an increase for the participant if the alternate payee dies first make sense? I'm not an actuary or anything, so thought I'd ask.

Thanks.

Is there a specific exception to the rule that an ESOP participant must have the right to receive a stock distribution that applies to an ESOP termination related to a merger/acquisition?  I feel like I've seen this before, but can find nothing on it.

Here's the situation - ESOP plan sponsor was acquired in a stock purchase transaction and merged into the buyer. ESOP was terminated prior to the close of the transaction. Stock of plan sponsor was exchanged for stock of buyer. Question has arisen as to whether the shares owned by ESOP can be liquidated following the plan termination and all plan participants paid distributions in cash?

Thanks in advance for any insight.