Plan sponsor has both a DC and a cash balance plan.  I know that DB plans have to be funded within 8 1/2 months after the end if the plan year.  Does the plan sponsor still have until the extended date of the tax return (10/15 in this case) to make the DC contributions?

Thanks for  any guidance. 

Can a bank holding company make an "exempt loan" (i.e., a loan that will be used by the ESOP to acquire newly issued stock from the bank holding company) to its own ESOP?  

Cross tested plan is not set up with individual rate groups for each participant, but rather rate designations (ie 5%, 10%, 15%).

Rate group fails for one HCE. We see two options for correcting, but neither one fits cleanly into the rate group designated percents, is it still okay?

1. Reduce failing HCE from 15% to 14% (preferably than to 10% since 14% passes)

2. Increase 1 NHCE from 10% to 12.35%

I know if a plan fails the 414(s) test, we have to use compensation that satisfies the test.

Say that plan excludes bonuses and the 4149s) test is failing.

Instead of just including the bonus and move on, could I perhaps exclude HALF of the bonus if that would then pass the 414(s) test?

For example, only NHCEs get a bonus.  This year, they all got a 6% bonus.  test fails; difference is 6%.  Could I exclude only half the bonus, so now my difference is the widely-accepted 3%?

Since I see DB plans so infrequently, I want see if I've got this straight...

DB plans using pre-approved docs need to be restated by the deadline next year.

DB plans using IDP documents, that already have a prior D-letter from the IRS, are not required to restate, (and generally can't apply for a D-letter) but do need to keep up their amendments required by the IRS annual list within the appropriate timeframes.

I realize that D-letters are now available in certain situations where they weren't previously, but I'm just confirming what MUST be restated. Thanks.

If a plan sponsor has already paid the CPA for their 401K Plan audit, can the plan reimburse the plan sponsor for those costs from the forfeiture account?

Or must the fees be paid from the plan's forfeiture account directly to the CPA firm that audited the plan.

A participant has an Employee (Voluntary) After Tax Account in a qualified 401(k) retirement plan of $100,000, which represents $10,000 of Post-1986 after-tax contributions (basis) and $90,000 of investment earnings. This $100,000 After-Tax Account was attributable to After-Tax Contributions he made to the Plan in the 1990's and he has not made any After-Tax Contributions since then. Generally, if he takes a distribution of a portion of this $100,000 After-Tax Account, it is my understanding that 90% of such distribution will be taxable under the basis recovery rules of IRC 72(e)(8).

He makes $500 of new After-Tax Contributions on January 15, 2019 which he intends on converting to a Roth Account inside the plan pursuant to the In Plan Roth Rollover provisions of IRC 402A(c)(4). Assuming he makes the election on January 16, 2019 to convert $500 of his After-Tax Account to a Roth Account under the Plan, what is the taxable amount  (if any) of the conversion? In other words, can he elect to convert just the $500 of After-Tax Contributions deposited into the plan the day before, or must the In Plan Roth Rollover take into account his entire (previous) After-Tax Account, in which case about 90% of the $500 converted would be taxable?

My understanding is that the after-tax "contract" under 72(d)(2) applies to all amounts under the Plan (the sum of the old After-Tax Contributions from the 1990's and new After-Tax Contributions made in 2019) and thus he would not be able to designate just the new $500 After-Tax Contribution as the portion subject to the In Plan Roth Rollover (and thus approximately 90% of the $500 converted would be taxable). I hope I am wrong, though....

I am running an ADP test for a short plan year 1/1 to 5/31.   Can I use $6,000 for catch up to offset my ADP refunds?

I have an employee out on STD. He is being paid through our 3rd party provider, not through our payroll company. He is paying his pretax medical deduction via check to the company. Are fica taxes owed back to the employee since there are no wages to take this deduction from and this is a pretax deduction?

Plan was written with an effective date of 5/1/18.

However, in the SH effective date section, someone put 4/1/18.

Since the plan wasn't effective until AFTER the original SH effective date, can we amend the plan to properly reflect that without messing anything up?

Can a Plan be amended to have the In-service Distribution amount less than Age 59 1/2?  In speaking with one of the the "big" payroll companies, they stated they could not change this provision but I also received a different response that a special provision can be written into the Plan (like Age 50 and 10 years of service) to allow for the In-Service withdrawal.  Thank you.

A retirement plan, to tax-qualify under Internal Revenue Code § 401(a), must meet all conditions not only in the written plan but also in actual administration according to that written plan.  The Internal Revenue Service’s Employee Plans Compliance Resolution System presumes the point; the Revenue Procedure defines an Operational Failure as one “that arises solely from the failure to follow plan provisions.”  Rev. Proc. 2019-19, 2019-19 I.R.B. 1086, 1099 § 5.01(2)(b) (May 6, 2019).  (Thank you, C.B. Zeller.)  Unlike some other points made in the Revenue Procedure, this one cites no Treasury regulation as support for the point.

Writers often say a plan must tax-qualify not only “in form” but also “in operation”.  There are Treasury regulations and court decisions that support the in-form point.  But I’m not (yet) seeing a regulation, court decision, or other law source that clearly states or supports the in-operation point.

I’m hoping BenefitsLink mavens will teach me.  Will you please help me?

I have a (former?) client with a national payroll company that also sells a 401(k) plan and service.  He remits weekly payrolls to the payroll company and they calculate and mail the paychecks.  They debit a company account. 

The client has never been able to keep other than a catch-up contribution and tiny match in the plan because of non-existant NHCE participation.  He's finally having the best business years of his life and agreed to share his company's success with the employees and also solve the 401(k) deferral puzzle with a 3% SHNEC in 2019.

His desire is to fund the 3% SHNEC on a weekly basis along with payroll so as to avoid a big deposit requirement at year's end and to have his employees start seeing money go into their 401(k) accounts.  (They all have some money there since moving from a pooled account into individual accounts.)

He's (I'm) getting push back from the payroll company saying that this can't be done without amending the plan document.  They site two Adoption Agreement sections:

2. ADP Test Safe Harbor Contributions
For the Plan Year, the Employer will make the following ADP Test Safe Harbor Contributions to the Individual Account of each Eligible
Employee as described in item 1(b) above, in the amount of(select one):

Let me start by saying that I don't work on SIMPLEs - this was a call I took from a desperate advisor, and while I told the advisor that I don't know the answer (and he is now going to check with the company's accountant), now I am genuinely curious...

A small business has a SIMPLE, and all participants have signed on to have their SIMPLE accounts through one financial firm (let's say Merrill Lynch).  Now one participant brings in paperwork that says he wants to open his SIMPLE account somewhere else instead.  Does the plan sponsor have the authority to limit where the accounts are?  From what I can see, I don't think so, unless maybe the SIMPLE document is specifically a SIMPLE document from ML that specifies that all accounts will be held there... and even then, I'm not sure that would hold up.  Am I even in the right ballpark?

A company is owned 100% by an ESOP. The only contributions are made by the company. The company executives voluntarily decide they want to reduce the executives' compensation contribution percentage to a much lower percentage than is being contributed for other employees. Am I correct in assuming that to do so without a plan amendment to that effect creates a plan failure that needs to be corrected?

I terminated a Cash Balance Plan in 2018.  We were unable to locate two participants so their account balances were sent to the PBGC under the missing participants program.  The PBGC audited this termination and sent me and email stating that the payments made for the two missing participants was not calculated correctly.  Both individuals had benefit values in excess of $5,000.  I was told I needed to use their standard calculation method applicable to traditional defined benefit plans.

Is this correct?

If the lump sum value was less than $5,000 would the account balance be the correct amount to send to the PBGC.

Thanks,

Can an employer offer longer COBRA duration, for example 30 months instead of 18 for a class of employees - executives, or salaried but not hourly? Assume that the employer does not subsidize the premium.

If a plan transfers out of a MEP and into a single employer plan there would be a blackout notice provided to participants upon the beginning of administrative activities to transfer moneys out of the MEP. But when preparing the first year 5500 for the newly birthed plan does the single employer 5500 need to state that the plan went through a blackout period because moneys were being transferred from the prior MEP? I can understand indicating a blackout on say a record-keeper transfer within the same single employer plan, or even the MEP suggesting a blackout occurred when money left its plan, but I'm on the fence about the newly created plan. Thoughts?

Assisting a 403(b) client with a question regarding whether to perform match true-up calculations and what may or may not need to be done for prior years.  Their Recordkeeper had prepared their plan document and the language is not as clear as one would prefer (Adoption Agreement or Basic Plan and Trust).  The client has been paying in their employer match on a payroll basis each year.  This year during the plan audit, it was determined that the plan document language bases the match calculation on Plan Year compensation and the Recordkeeper indicated that a true-up would be needed.  

This had never been mentioned to the client in the past either by the recordkeeper, prior plan auditor or their TPA that was hired on a limited-scope basis to perform certain additional tests that were not handled by the recordkeeper.  

The client is trying to determine if they do have to calculate and pay in the required true-up match, how will this impact all of the prior plan years that they have NOT done this or is there any other options available for correcting this problem.

Before getting ERISA counsel involved, I wanted to explore all possible options for the client.  

Everyone's comments are greatly appreciated!  Gotta love the Friday projects....

Trying to get a sense of what I'm up against before purchasing.  Only one of my coworkers has taken this exam and it was quite some time ago...  I have 3 years of experience in the retirement industry (got my QPA in February 2018) but would like to tackle this sooner than later. 

Specifically, how long do the modules alone take to complete? How much time should I allot to study for the written exam afterwards? Would it be beneficial to purchase all 4 elective modules?

Any help would be great..  Thanks!!