Okay, so let's say I am a one member LLC, and I have one employee. I want to create an FSA DCAP and the FSA healthcare account for the one employee. The employee gets health insurance elsewhere, so all we need is the FSA DCAP and the healthcare fsa. The dcap and health fsa will be the only benefits available. What's the best way to do this? I am a newbie at this. Both of those accounts will be 100% employer funded (by me), is that legal? As in, the employee will receive the same pay as they're currently receiving, and plus I will 100% fund both FSA accounts. 

So here are my newbie questions: 

1. Does there need to be some kind of "plan document", even if there's just one employee? 

2. How do you open these accounts? Do you go to some bank and ask them to open an FSA account? I called a few banks, and they didn't even know what "FSA" was. 

I have a pension plan with a $300,000 minimum funding requirement for 2018. Plan and fiscal year are the calendar year. The client funded $125,000 in Jan 2019 and filed his corporate return without extension. The balance of $175,000 was funded in May. The issue is whether the $175,000 is deductible for 2019 fiscal year.

Rev Ruling 77-82 says... " the rules of this section relating to the time a contribution is made for sec 412 are independent from the rules contained in sec 404(a)(6)".

2011 Gray Book Q&A 7 raised the issue of which combinations are acceptable for a contribution made during the 2010 404 grace period ( 1/1/11 to 9/15/11) as follows:

a) Deduct in 2010 reflect on 2010 Sch SB

b) Deduct in 2010 reflect on 2011 sch SB

c) Deduct in 2011 reflect on 2010 sch SB

d) Deduct in 2011 reflect on 2011 sch SB.

The acceptable answers were a, c and d.

Based on this, I've concluded that I will report on $175,000 on the 2018 such SB and take the deduction in 2019. Any comments? Many thanks...

A large profit sharing plan with pooled account overpaid a distribution in 2018. The participant reimbursed the plan for the appropriate amount (in March 2019), the year-end reports/ participant statements correctly reflect that, and the  5500 shows a receivable  for that amount that was reimbursed subsequent to year end. Lost earnings were paid by plan sponsor to the plan in April 2019, but those lost earnings were not accounted for by the TPA for 2018.

The TPA for the plan agrees that those lost earnings will need to be accrued on the 5500, but asked whether or not they have to re-do the year-end work – participant statements, nondiscrimination testing, etc – for the accrued lost earnings that should have been allocated to participant accounts.

Is it an acceptable practice to allocate the lost earnings in a subsequent year? 

Thanks!

I'm trying to fix a coverage problem and will have to go through EPCRS because of the multiple years involved. Two employers, two separate 401(k) plans. For the deferrals component using the ratio percentage test, Plan A passes coverage (safe harbor plan), and Plan B fails (not a safe harbor plan). I cannot permissively aggregate because Plan A is a safe harbor plan. Average benefits test is less than 50%. No language in plan documents about how to fix this coverage issue.

Question: To pass the average benefits test, the Plan B employer needs to make QNECs but to which NHCEs? Employees who are eligible to participate in Plan B but made no deferrals?

In the controlled group, I have 192 NHCE (172 in Plan A plus 20 in Plan B) and 11 HCE (8 in Plan A plus 3 in Plan B).

Thank you.

Payroll-based SHM is not deposited by the end of the quarter after the deferrals were taken.  

What are the consequences?

Hi everyone,

I'm curious what everyone else is doing for an e-mail retention policy.  We're looking to put an auto-deletion policy in place, but are having a hard time nailing down an appropriate set of parameters.  Seven years is where my mind instantly goes, but in light of cumbersome investigations and producing copious amounts of email, I'd love to trim that back if possible.  What is everyone else using and what are your thoughts on whatever you implemented/considered?

Thanks!

 (we only allow hardship withdrawals from employee deferral and rollover sources of money - yes, we know we can change that but don't really want to and that's not a question in this post )

I am the HR manager in the scenario (and worked in 401k recordkeeping back in the stone age of mainframes and quarterly processing as the recordkeeper and the TPA in one of the top 3 large global HR consulting firms)

Is it now common practice to require the employee to fill out all of the hardship distribution paperwork that must be notarized with proof of need prior to the employee (or HR) being able to find out the amount available? I was told our TPA won't tell us the amount upfront before the form is completed by the employee because "We have found that if the maximum amount available is provided, the hardship requested is exactly the amount available.  Since the IRS states that the hardship distribution cannot exceed the amount of the hardship, the participant should provide the amount of the financial hardship amount and reason."

Does it not stand to reason that an employee is not going to ask for MORE than the amount available if they know that is the maximum they can take and if their need meets or exceeds that amount?    And in the end it's the documentation that is going to rule the day on whether it is an approved reason or not and what amount out of the available is going to be given?  (In both cases this last week, both employees had LESS available than their need)

Just curious if this is SOP... or if this is just that the TPA  doesn't want to calculate the amount only for an employee to decide they do not want to take it. In 15 months with this TPA and employer, I haven't had an employee refuse whatever is available even if it was lower than the need. So it is not like I am calling to get "quotes" and then not following through.

Participant submitted a request for a hardship to purchase primary residence.  The Buy/Sell Agreement lists the buyer as his wife. The mortgage will be in the wife's name.  They are "legally married and will live together in this house.

Question - although the house is in the wife's name, can the participant take a hardship for the expenses incurred regarding this purchase??

(Sorry, I posted this in "other kinds of welfare benefit plans" as well, but I'm not sure that's the right place for it.  So I'm posting it here as well.)

Stumbled on this forum, what a great wealth of wisdom!

I'm a union rep and we are considering starting a healthcare plan for our members.  Instead of the various employers having their own healthcare plans for our members, the employers are going to give us the money and we will provide the healthcare plan for our own members.

I believe we will need to start a VEBA and a MEWA, but I am uncertain as to how much we will need to allocate for start-up costs (e.g. legal advice, documents, etc.).  We have 10-15k local union members.  I'm assuming it will cost $500-$1mm to start up and at least 1.5 years before we can go live.  Am I even in the ballpark?  

Anyone know how much it will cost us to get this started?  Any help is much appreciated!

Stumbled on this forum, what a great wealth of wisdom!

I'm a union rep and we are considering starting a healthcare plan for our members.  Instead of the various employers having their own healthcare plans for our members, the employers are going to give us the money and we will provide the healthcare plan for our own members.

I believe we will need to start a VEBA and a MEWA, but I am uncertain as to how much we will need to allocate for start-up costs (e.g. legal advice, documents, etc.).  We have 10-15k local union members.  I'm assuming it will cost $500-$1mm to start up and at least 1.5 years before we can go live.  Am I even in the ballpark?  

Anyone know how much it will cost us to get this started?  Any help is much appreciated!

I have a (small) client with a couple of retirees that are interested in the new lump sum window that the IRS has recently started allowing for participants who are already in receipt.  One of these retirees was a High 25 and was not allowed to select a lump sum when he retired originally.

The client is also making steps towards terminating the plan.  

If they were not terminating, the plan would need to fund up so that they were 110% funded for this High 25 retiree to receive his lump sum.  Since they are terminating, does that 110% still apply or does it go away?  Logically it doesn't seem to make sense and it seems like they should only fund to pay out the benefits for the plan termination, but logic and the regs don't always agree.  

Does timing matter?  We can't terminate the plan and then create a  window to pay out the lump sums.  If we create a window for the lump sums, then does the 110% apply since we haven't yet terminated.  If we can't do it before or after, how can we do it "at the same time" - feels slightly impossible?

thank you for any insight!

Anyone have any experience using EPCRS to correct defaulted loans?

(d) Defaulted loans. A failure to repay a loan in accordance with loan terms that satisfy § 72(p)(2) may be corrected by (i) a single-sum corrective payment equal to the amount that the affected participant would have paid to the plan if there had been no failure to repay the plan, plus interest accrued on the missed payments,

This is pretty cool, but I am getting stuck on details…

I have a 2018 deemed loan with a 1099R, the participant and employer do all they should to self correct -- done.  How does the participant handle the 2018 1099R? Don’t report income and wait for the IRS to ask?  Must the custodian issue a corrected 1099?  Or??

What if QDRO done & approved, but participant never collects their retirement funds? Does that affect the alternate payees ability to collect?

A safe harbor match 401(k) plan currently has a six month eligibility (no hours per month requirement).  

Due to some part time students who work on an as needed basis, the Employer would like to amend their plan to require 200 hours per month as part of their 6 month eligibility.  They would like this amendment effective date 1/1/2019.

I believe the amendment is permissible, but only PROSPECTIVELY with a 30 day notice.  

A coworker believes the amendment can be effective retroactively to 01/01/2019 because it will only apply to those hired on/after 01/01/2019.  

I'd appreciate some input.  

using just today's CPI factor (256.092), I have the following

(far column hce limit unrounded 130,192)

As an ERPA, do you put a Circular 230 blurb at the bottom of your correspondence?

Just e-mails?  I can't remember ever getting any paper correspondence with that disclaimer on it (nor can I remember I got any paper correspondence from an ERPA).

I have a sole prop DB plan where the benefit is limited by the 415 comp limit.  The Comp limit is still being phase in over the 10 year period.  Question: Can the 404 "Cushion Amount" include the increase in the 415 comp limit during the year?

A calendar year plan was created with a short initial plan year 7/1/15 - 12/31/15.  It had a 3 year cliff vesting schedule and the plan's vesting computation period is calendar year.  Service prior to the effective date of the plan (7/1/15) is counted.

We have an individual who was hired 1/1/15 and has 1000 hours in 2015 and 2016.  Then he terminates employment in early 2017 without 1000 hours.

So, does this participant have 2 or 3 years of vesting service?  It would appear to be only 2.  But because of the short plan year, does the participant get credit for all of 2015 and then also for the short plan year as well, giving him 2 years of vesting service as of 12/31/15?

Another question:  The plan amended to a 2/20 vesting schedule as of 7/1/17.  This was after the participant had terminated.  If the same participant was 0% vested at termination in early 2017, would he now be 20% vested due to the new vesting schedule, even though he was not employed at the time the new vesting schedule was adopted?

Thank you

We terminated a DB plan, that was effective 1986 and froze all benefits as of 1/1/92 for all participants, in 2015.  

Now, in 2019, the participant comes forward asking about the plan.  She was terminated in 1996.Plan sponsor send out notices, certified, return receipt in 1996-7-8.  All came back unable to forward. 

All assets had been distributed and Final 5500-SF as well as Post Distribution Certification have been filed, showing the plan had $0 as of 12/31/2015.

What should be done here??

So, suppose you have entity "A" which sponsors a Section 125 Plan. Entity "A" is now changing their name, and will become entity "B." Same employees, but new name, EIN, and management roles.

Can the new entity simply adopt the existing plan assets and liabilities, via a resolution and amendment, similar to what happens in a 401(k) plan, or are there different requirements for this situation for the 125 plan?

I have no details whatsoever, other than that they do have an FSA - don't know if there are other types of benefits as well. Assuming they have premiums paid through this plan, do you have any experience with whether the insurance carriers just allow the policies to "transfer" to the new entity, or will they have to re-apply, etc.?