Good afternoon to all,

We have a prospect that has about 1800 employees, mostly in lower paid jobs, in the service industry (think restaurants as an example).  Of the 1800, only 600 would be eligible if we use 1 year of service, dual entry, age 21.  There are 12 HCE employees.  All these employees are spread out over several corporations, but they are all owned by one man, so it's a controlled group.

They have been presented a standard 401(k) plan with a safe harbor match to cover everyone and have rejected it.  What they say they want is a deferral-only 401(k) plan for the NHCEs and a separate "carve out" plan (their terminology, not mine) that benefits only the HCEs for which the company would be willing to provide a match.

We are somewhat aware of the existence of Non Qualified Deferred Compensation plans but our understanding of them is that they have so many drawbacks that they are not very popular anymore.  We don't really think that the 12 HCEs will appreciate their contributions being a general asset of the employer, being subject to taxation if they leave and take the funds, etc.  We understand that the contributions could be put into a Rabbi trust, but even then, they are still subject to the claims of creditors if the company experiences bankruptcy.  All that makes this look like a doubtful solution.

Are we missing some cutting edge, new plan design possibilities within the world of qualified plans?  How have you addressed such requests, if you can share?

As always, your comments and experiences are much appreciated.

The default benefit under an money purchase plan is a joint and survivor annuity.  As a defined contribution plan, it cannot pay this benefit straight from the account; it must acquire an annuity from an insurance company.  What insurance company will sell an annuity contract to a plan trustee without a participant signature on the contract application?  MetLife already has its hands full trying to find participants on contracts it sold to willing buyers.  An MPP with a retirement once ever so many years cannot buy a group annuity for just this.  With investments all in mutual funds for active participants, there is no insurance company involved in the administration or normal investment.  Does anyone know of an insurance company taking this business?

Does anyone know where I can find old revenue rulings online? I am specifically looking for Revenue Ruling 80-155 which is the one that talks about money needing to be allocated if deposited by the end of the plan year. 

We are having a (hopefully brief) disagreement with an IQPA auditor, and I'd like to provide them with a copy, not just secondhand sources. 

I should know the answer, but I see conflicting answers.

EOB mentions all service must be counted for vesting purposes; although I noticed the following when I queried online:

"Although all service from date of hire must be recognized for eligibility, a plan can be written to ignore years prior to its effective date (or the effective date of any previous plans) and/or years prior to attainment of age 18 for vesting purposes."

I was asked to look into having a new plan drafted under the second criteria, now not sure.

If you could create a beneficiary form that allowed participants to check the box for applying this primary bene for ESOP and/or 401(k) and this secondary bene for ESOP and/or 401(k) or check the box for "same" and could work it all out in a logical electronic format, can one beneficiary form (actually two within one) cover 2 qualified retirement plans?  

Apparnetly in the bylaws to the condo association it says non-payment can result in a foreclosure on your property.

Has anyone approved a hardship based on a delinquent condo fee? They have the nasty collection letter from the condo associations attorneys threatening that foreclosure is one of the remedies they will pursue.

This is a first for me...

I need a little help from anyone who has some reference material from way back.  What year did the eligibility requirements drop from age 25 to 21.  In a plan termination audit by the PBGC I was asked to provide an explanation as to why someone did not enter the defined benefit plan until 4 years after their initial employment date.  I do not have census information for the early 1980's so I can only speculate that it had something to do with the change in eligibility requirements.  This individual was only 20 when he was hired.  I do not have a copy of the original plan document.

"S" corporation shareholders are wife. Husband and daughter. They opened a self directed 401k with profit sharing for the business. In lieu of making salary deferrals they want to contribute real property (land). This land will come from a  partnership which is same husband, wife  daughter ownership. How can this be done. Then they are wanting the "s" corporations match to be land that the "s" owns.  How can they make contributions without a salary deferral? How are they going to put land into three different 401k accounts? 

A TPA who is not responsible for providing payroll services sets up a 401k plan and instructs the employer more than once in writing that deferrals are taken from/come from participants' paychecks and are tax deductible.  The employer, being a thrifty sort, does her payroll herself on Quickbooks and does not indicate such to the TPA. 

A few years down the line, after making deferrals most years, she figures out that they were incorrectly contributed from her corporate account rather than from her paychecks and her accountant never deducted them on the business returns.  She also paid federal and state income taxes on her unreduced W-2s.  Now she is blaming the TPA for just assuming that she was using a professional payroll service and not specifically instructing her how to process the deferrals on Quickbooks.  The accountant, who probably put her up to this since he must now charge her to make it right, is also taking the same stance.  The TPA believes the accusations are inappropriate for various reasons, including the belief that it's on her since she decided to do her own payroll without realizing all that's involved.  I am curious as to what TPAs think about all of this and what details they usually provide on this matter during the installation process.  Thanks in advance for any assistance.     

Completing a Form 14568-D for a VCP submission. My question is, do I leave the box empty that is asking for the plan number?

I found no instructions for the Form 14568 Series.

(Instructions for the Form 8950 submission say to enter 990 as the plan number.)

A plan is transitioning into our platform from another provider.  We provided blackout notices to (mostly) everyone.  Due to a census snafu, a terminated participant was not included in the notice distribution.

Now he is calling the broker saying no one told him his money was moving.  The broker is yelling at us saying we are in violation of ERISA.  (BTW, we provide 3(16) Administration)

What is the remedy besides sending out the notice and typing up a mea culpa?

The violation isn't self-reporting is it?  Do you think we are not he hook for $131/day?

If a plan document allows forfeitures to be used to fund corrective contributions for missed deferrals and associated match, may forfeitures also be used to fund the attributable earnings on those contributions?

Took over a client - whose 5500-SFfor 2017 was filed using an incorrect EIN.  They have terminated the plan after only two years... (no money) and I assume I need to amend 2017 before I file the FINAL 5500 for 2018 using the correct EIN.  I am just wondering if I only  fix 2018 and mark as FINAL if that will be confusing to the DOL/IRS.  

Opinions?  

How is 5 years of participation figured if a plan restricts in-service distribution to age 59 1/2 and 5 years of participation?

What little information I could find seems to indicate using elapsed time, 60 months.  Is it permissible to count 5 years for someone with a 7-1-15 entry date as 2015, 2016, 2017, 2018 and 2019 to consider this 5 years of participation?  The plan document says 5 years, not 60 months participation.

Partnership has a calanedar year plan  putting deferrals for 2018, for partners in on July 1st.  How do you think the IRS would view this on an audit?

If an ESOP adopts an amendment and switches from forfeitures only after a 5 year Break in Service to forfeitures effective immediately if a participant takes a cash distribution, how do you treat prior terminated employees? It seems you can’t forfeit their shares until the 5 year BIS even if they earlier took a distribution. 

Attorney X had a one-participant profit sharing plan at Fidelity for his one person law firm until he established a partnership with attorney Z on Jan 1 2018.  The merged company adopted the plan (as successor employer) of the attorney Z (who is our client) as he already had a cross-tested 401k with a number of employees (all of whom were employed by new partnership).

Anyway, attorney X , unaware as to how all this worked, made a $15,000 contribution in May of 2019 to his OLD plan, despite the fact that he had no income from his prior sole proprietorship in 2018 or 2019.  A contribution for the new partnership for 2018 is still being determined.  Attorney X wants to fix his mistake before rolling over old plan assets to new plan - but I'm not sure what kind of mistake or error this should be classified as in order to determine the proper correction method.  Any help greatly appreciated???

Thanks

A 501(c)(3) Employer maintains a 403(b) annuity with employee contributions only as well as a profit sharing plan with a fixed formula of 3% of compensation.

Apparently the two plans were never coordinated and one has recently learned of the other.

As far as 5500s, since the 403(b) contains only employee contributions, no 5500s have been filed; 5500s have been filed for the profit sharing plan each year of its existence.

We do not handle any 501(c)(3) organization plans, but something seems a bit "off" here, and think it should be corrected, but how???

Hi to All,

We just got a phone call from HR lady of our client to say that a certain participant who has a participant loan is in the process of dying of pancreatic cancer and has been out on medical leave for the last 6 months.  He's not really expected to ever come back to work, but she hasn't really officially declared him to be terminated, either.

The participant took out a participant loan on 12/18/2018 in the amount of $11,650.00.  He made two bi-weekly payments of $119.40 on  01/14/2019  and  01/22/2019.  He went out on medical leave at that point and has not made any more payments.  This quarter ending June 30 is his cure period and so far he hasn't made a payment.

HR lady wants to know what his options are.  Can he make some little tiny payment like $100 and get another cure period running July 1 to September 30th?  Could he do that twice and thereby keep his loan from going into default in 2019?  I think she's asking if he can just keep this thing running until he actually passes away and then it becomes someone else's issue at that point.  All the situations I have seen so far were "all or nothing" - the person was either making payments, or stopped.  I don't know what happens when someone pays a little something but not enough to bring a loan up to date.  Of course I know that the loan is supposed to be paid within 5 years of the loan initiation date, but does it get re-amortized each quarter, with higher payments, such that it would still be paid off theoretically within the original 5 year period?  Is that even permissible?

He could, of course, just let it default and pay the taxes on the deemed distribution at the end of 2019 if he's still alive and has the money to pay them.

Any of your thoughts and experiences will be appreciated.  Thanks in advance!

401(k) plan has designated Roth accounts. Participant receives a QUALIFIED distribution - over 59-1/2, over 5 years.

Reported as a 7 B on 1099-R. IRS is saying it should be a code "Q." When you look at the 1099 codes, "Q" specifically states that it is for a Roth IRA. There is no letter code for a qualified distribution from a designated Roth account.

Are we wrong? I can find nothing to indicate that this should have been reported as a code "Q."

Thanks.