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

I’m considering selling my TPA practice. I’d like to hear feedback on the process from anyone who has gone through this experience. 

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I'm taking over a plan that has immediate force-outs in the document for VAB <$5,000.  I suspect that provision was not followed by the prior TPA, and based on how the assets are set up (individual brokerage accounts) and the fact that we won't be monitoring the plan on a daily basis, it doesn't seem like the right fit for this plan.  Is it a cutback to change this to happening after the end of the year of termination in the document?  Thanks.

Hello, will someone please provide me with an IRS direct Email address or Address. This is regarding a Tax-, qualified plan, under [(401(a) that is subject to 401(a)(13)(B) and to 414(p). Seems like a simple question, but I just cannot find the appropriate Address nor email address.  

Thought I'd throw this question out there: Non profit has started a new 401(k) plan for contributions moving forward. The legacy 403(b) is being left as is with no new contributions, but there remains a large forfeiture account, which exceeds payable fees.  Can such forfeiture account be transferred directly to the new 401(k) account to be used for employer contributions over there?

I am trying to figure out if the Scorp HSA contribution for a more than 2% owner is subject to UI / SDI in CA on quarterly forms.

I am aware that the S-corp HSA contribution needs to be entered on W2 in Box 14 and that Box 1 and Box 16 (State) needs to have the HSA amount of $6900 included .

I have contacted a CPA and was told that Health insurance and HSA are only subject to FIT / SIT not UI / SDI .

Is this correct for CA ? 

The payroll provider did not include the HSA to be taxed for UI/SDI only PIT wages on Ca Quaterly DE9c.  Is this correct ? 

The Edd information sheets states employer contribution to HSA is subject to UI/ SDI is the info sheet referring to non 2% employees who have the contribution reported in box 12W instead of Box 14 for 2% shareholders? 

I would like to know that payroll is correctly paying my taxes . 

Plan defines comp as W-2 comp, but does not include post-severance pay for Deferrals, match or non-elective contributions.

Terminated participant received severance pay, but we don't know yet exactly what constituted the severance pay.  Would assume at least part of final check was unpaid vacation, sick leave, etc., and possible customary 2 weeks "severance pay".

Question is, do we include all or part of the severance pay in calculation of SH NEC or not?

I’ve been out of the business for a few years, in that time QDIAs came into being. My employer (a TPA) is telling me the QDIA notice requirements fall on the fund companies we work with (examples: Transamerica, Nationwide, Voya, Hancock) and the Plan’s financial advisor. We as TPA do nothing with the QDIA notice. This doesn’t seem right to me. I had a financial advisor tell me he expects the TPA to take care of it. How do other TPA firms handle the QDIA notice requirements? 

Ten-year-old ESOP, loan is now paid off.  We're planning for 2020 and trying to determine how much to pay the terminees.  Plan provides for typical 5 installments for distributions over $5,000 in the year following the year in which the loan is paid off.  For example, a participant retired in 2017 with a $100,000 benefit was supposed to begin receiving distributions in 2018, but did not due to the outstanding loan.  In 2020, does he receive $60,000 ($20,000 for 2018, 2019 and 2020)?  Or does he receive $33,000 (1 of 3 remaining installments due)?

We need some insight...my husband had a major medical emergency earlier this year. He was fully covered at the time. I have found out that his company's health plan is self funded and BCBS is the administrator. Fast forward to several months later, his company abruptly closed, now filling Ch 11. His claims are high-dollar, about 900k and it took BCBS a while to finalized the claims due to the complexity of the claim. BCBS send payment over to the hospital, which they confirmed to me that the payment has posted. However, now, we are being told by his HR that they never funded the account for BCBS to issue payment and the HR is confused on how a payment was made. The BCBS reps told me that they would never send over payment if there were insufficient funds in the account and when they issued the payment, there was sufficient funds in the employer's account. So, my question is, can BCBS ask for that payment back from the hospital and then we will be liable that bill even though he was insured during the time of hospitalization? BTW...the EOB (which I saved) says we owe $0.  Or what how do you think this will play out?  We are worried sick.  Thank you.

I had a feeling this one could get bad and stocked up on water and supplies last weekend, which was good because the line was snaking around Sam's Club at 7am this morning...

I hope you all stay safe and dry!

Grrr.... I thought I understood this, but some discussion recently now has me questioning myself.

Calendar year plan. Participant terminates employment 12/31/18. Receives final paycheck - just normal wages only - on 1/4/19. Plan uses W-2 compensation, and the determination period is also calendar year.

Plan uses the "defaults" for 415 post-severance compensation purposes - that is, normal qualifying post-severance compensation categories are included for 415 purposes, and the plan does NOT utilize the "administrative delay" rule - also commonly referred to as the "first few weeks rule."

For PLAN compensation, the plan includes,  for all contribution categories,  the allowable post-severance compensation categories - regular pay, leave cash-outs, etc..

So, the payment of wages received on 1/4/19 should have deferrals withheld, and the participant should receive a 2019 safe harbor nonelective, and therefore, for a cross-tested plan, also receive gateway. But since 1000 hour/last day, receives no other PS allocation.

Participant Included in all other 2019 testing.

Am I off my rocker on this?

I know Tom is in Florida, and many others as well. We'll be thinking about you - best wishes for all of you and your family, friends, and neighbors, and hopefully you will be relatively unscathed by the hurricane. Good luck!!!

this is a really long story - but to just cut to the chase, I had a loan deem on my 401K account about 6 years ago due to my employers' error to make the necessary payments from my paycheck.   I had tried every which way to have them fix this and was told there was no way to fix it - I paid the penalty and taxes on it back then - not realizing, of course, that this would stay on  my account FOREVER (until I retired, etc.) and would limit any other loans I could take.  I am now wanting to do a early partial distribution in the amount of $50,000 (I know about the penalty and taxes since I am not 59 1/2 yet)  - my question is - will the deemed loan have to be paid out of that early distribution that I take or since there will still be plenty in the account to cover the loan - can that be done when I turn 59 1/2 and get a full distribution?  Hope all of that makes sense.  thanks in advance!