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?

Say you have the following scenario:

Plan sponsor is being acquired mid-year and terminates its 401(k) plan, say, November 1. For administrative/payroll reasons, employees of the acquired company will not participate in the buyer's 401(k) plan until January 1. Plan has a safe harbor matching contribution. The plan sponsor wants to make the participants whole for missed matching contributions during the two-month gap, but profit-sharing allocation provisions would not allow a PS contribution targeting only people who deferred.

If the plan sponsor paid the participants a bonus (outside the plan) in the amount of matching contribution they would have received for the rest of the year at their deferral rate in effect on the date of plan termination, does this violate the contingent benefit rule?

It arguably does because the cash bonus is contingent on the employee having had a deferral election in place at plan termination.

What if the bonus is paid after the plan is already terminated? No one has any further deferral right or election, so it's hard to make something "contingent on" an election that no longer exists. 

If it does violate the contingent benefit rule, what would be a correction?

Appreciate any thoughts. 

Client has both a 401(k) and a PS plan.  401(k) previously had SH match to NHCEs only.  We are amending to no SH, with provision that SH NEC will be paid to another plan - the sponsor's PS plan.

Q:  Does the PS adoption agreement have to state somewhere that it will receive SH NEC contributions to cover the 401(k), or is it all okay just as long as all 401(k) eligible participants receive at least 3% in the PS?

(we can't seem to find any provision in the PS adoption agreement)

DB Plan has 2 yr eligibility & DC Plan has 1 yr eligibility.

EE enters the DC Plan 7/1/2018.  He has not entered the DB Plan.

Key EE has no DC Plan account addition for 2018.

Is this employee required to get Gateway (or any contribution)?

If Key EE had made a 401k contribution, EE would be required to get DC TH.  Would any additional contribution (i.e. Gateway or 5% TH) to this new DC Participant be required?  

Thank you

We have had several clients receive rejection notices related to our Forms 2848 recently.  All were related to DFVC filings.  The notice stated the plan number was not included.  However, the plan number was listed on the Form 2848 in the top right hand corner in the applicable box as well in the table on line 3.  Has anyone else been receiving these?  Are they being sent in error?  Thank you!

Company A based overseas, has wholly owned subsidiary in US with a plan.  Several employees from parent will be working for the US company.

1) Do they HAVE to recognize service with the parent company?

2) if yes, do we even have to do an amendment?

3)  Is the same controlled group testing done for foreign companies (in case this parent owns some or all of other companies not based in the US)?  If not, I guess we would list the companies for which service would be credited.

A sponsor is required to fund a safe harbor match for 2018. They changed their formula from basic to 200% of 5% in 2018, however they only funded the basic amount.

They are now saying that they can't afford to fund the SH match for the difference between the basic and the updated formula.

What would be the consequences for not funding the full amount which was included in their safe harbor notices?

Company A and Company B are part of a controlled group that sponsor a safe harbor profit sharing plan. Both companies are sold midyear to unrelated. Assume acquiring entities do not own any other companies. Can Company B create their own plan midyear AFTER the transaction? I know transition rules provide some relief for mergers, but I am having trouble finding guidance on when a controlled group of employers becomes unrelated midyear. the safe harbor provisions makes me lean towards that this has to be a MEP until years' end. Thoughts?

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.