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.

A plan has a tiered match formula. Each participant is eligible for one of the tiers (30%, 40%, 50%, or 75%). We understand we have to do a Benefits, Rights, and Features coverage test on each tier of match. Our understanding is that anyone who is benefiting at the same or greater level of match as the tier being tested, is deemed to be benefiting in that tier (i.e. if you get a 50% match, you’re considered benefiting in the tests for the 30%, 40%, and 50% tiers).

In this plan, only the 30% tier passes. As would be expected, the 75% tier fails the worst. We are going to bump up an additional 17 participants from their current level of match to 75% to pass coverage.

We believe that these 17 participants, who are now benefiting at the 75% level, should be considered as benefiting in all the lower tiers, which would make those tiers pass as well. However, the provider doing their BRF testing believes that different participants must be used to make each tier pass; i.e. even if someone was bumped up from 30% to 75%, you would still not consider them benefiting in the 40% and 50% tiers.

What do you think? Can you find anything in the regs (or elsewhere) that addresses this situation?

PS plan effective 1/1/2017 added 401(k) and QACA SH on 3/1/18.  

What comp am I using for the SH?  Plan comp says full year and not participation comp.

Total senior moment right now.

An ERISA 403b plan where we merrily have been excluding a few participants from the 5500 count for the past few years because they terminated in 2004 and 2005 and had their balances only in old annuity contracts is looking to terminate.  All of the other participants with balances are active on the mutual fund platform so we were all excited to have an easy plan termination... and then someone remembered these stragglers.  Is there any way to consider these few people already in possession of their accounts so that the plan can be terminated and paid out?  Maybe with a notice to them to give them a heads-up that the plan is officially terminated?

Good morning to All,

Have you ever had a case where no DRO or QDRO was ever done, yet the participant is demanding a distribution?  This is a first for me.

One of our clients has a 401(k) plan with a participant who was an unwilling party to his divorce.  He says his ex wife "did it all" - hired the lawyer and paid for the divorce.  The lawyer made a one paragraph passing reference to the participant's retirement account in the Marital Settlement agreement.  "Respondent has a retirement plan with XX Company.  Upon distribution of the funds in this plan,  Respondent will direct the Plan Administrator to divide the funds equally between the Respondent and the Petitioner, that being 50% to each party, however distributed."  That's it.  

The participant has now terminated employment and claims to be in very dire straits and wants his half of his money RIGHT NOW so he can move in two weeks.  He does not know or care how a DRO or a QDRO might eventually be created and he does not particularly care about the rules and regulations we are all trying patiently to explain to him.  He has stated that he most certainly is not going to pay any lawyer to do a DRO.

His HR department knew enough to call me as the TPA, send me a copy of the marital agreement and question whether he wasn't supposed to have a QDRO before anybody could get paid.  I knew enough to alert John Hancock not to process any termination requests from this person and effectively "freeze" his account until we can get this all sorted out.

What the participant wants is for the Plan Administrator (the employer/ Trustee, effectively) to liquidate his account, send half to his ex and half to him, tomorrow if at all possible. 

I do not know of any legal way to accommodate this participant, but I thought I would run it up the flagpole to see if any of you have ever processed a marital division of an account without a QDRO.  I have certainly never heard of any such thing.

Your advice is appreciated, as always.

We TPA for a small 401k plan whose parent company is actually from the UK.  The plan only covers the US employees.  We had three trustees for the plan, 2 of which were not US citizens while 1 was a based in the US and was a US citizens.  The US trustee left the company a few days ago.  He will be removed as a plan trustee.  Is there a problem if there are no US trustees for this plan?

Thank you

A financial advisor has reached out to me about a 403b plan at TIAA.  The plan has an employer contribution, and TIAA acknowledges that it is an ERISA plan... but they then say that because all the investments are in annuities that the plan sponsor does not control the investments, so the plan sponsor can't decide to move the plan in one fell swoop to another platform - it would have to be up to each participant because they control their own accounts.  Is this just TIAA being TIAA, or do they have a leg to stand on here?  Thanks.

Two employees previously working for a law firm started their own practice 7/1/2019 and want to set up a safe harbor 401K by 9/30/2019

I believe the plan would need to start as of the date the practice started, have a short plan year as they were employees of another firm prior to that date. No eligibility and all employees that started with the firm, whether part time or full time need be included.

I also believe the only safe harbor available at this point, judging from the clients' goal, would be a safe harbor match, with the hopes that the employees not defer?

Am I off track here?

I have a sole proprietor Money Purchase plan.  Is the funding deadline 9/15?  The accountants says since it is an individual it should be the extended date of the return, 10/15.   Thank you!

I am aware of Datair and FT William as qualified plan document providers. Are there any others that you would recommend? Thanks. 

Hello, I have an executive who is being encouraged by his advisor to allow for in-service withdrawal before age 59.5 so that he can roll his balance into an IRA.  Is that allowable?  I believe if the plan were amended to allow such a thing, the IRS still regulates that a participant would only be able to withdrawal vested company contributed - pre-tax employee deferrals would have to remain in the plan.  Am I correct about that?  

Here's the situation. I'm a fee-only financial advisor who has a few small business owners, mostly individuals, as clients. These clients would benefit greatly from opening Solo 401(k)'s.  They want to max out the contribution limit, with the 25% profit sharing, and would like the ability to make after-tax contributions. The custodian I use has a Basic Document but it does not allow after-tax contributions. The custodian said to open a trust and create the plan document myself.

Yes I'm a CFP® and EA, and I'm smart enough to know I have no business creating plan documents myself. I see a business opportunity to provide the after-tax options to clients, but cannot do it myself. Can anyone recommend a TPA that can work with an advisor to provide a Solo 401(k) in a cost effective manner? That seems to be the problem. We've attempted to work with a few TPA's but the cost to this just to add the after-tax option, made the client say the heck with this we'll just use the custodians simple basic plan document and forget the after-tax option. Even if you explain the long-term tax benefits, they usually shy away. Again, I see the need for a niche here, but need help.

How did all you folks in the coastal sections make out? Is everything ok?