We took over a traditional DB plan and 401(k) plan with 5 participants. Both plans are sponsored by the same employer and have whole life insurance. It appears each plan meets the incidental benefit rule. DB benefits are under 100 x expected monthly benefits and 401(k) plan premiums are less than 50% of aggregate contributions. In addition, it appears that all participants in both plans have comparable coverage.

Is there a problem with participants having this much life insurance across two plans?

Thanks.

I have a SIMPLE 401(k) Plan, one active participant.  My contact reported to me that there were no deferral or matching contributions during 2017 or 2018.    My contact left the company two weeks ago.   The new contact has been reviewing files and it appears that the former contact did not fund the 401 (k) Plan.     I'm not sure where the money went, but it didn't make it to the plan.    Can this be corrected by self correcting?  or should they file through the VCP Program?   I'm not sure the best way to fix this would be.   I've never come across something like this.     

As I understand, if I want to make a VCP Filing for late deferral deposits, Form 8950 is used when filing with the IRS and a User Fee applies.  Is it true that filing this same VCP Filing with the DOL has no User Fee and Form 8950 does not apply, if filed with the DOL?

Is anyone aware of any authority that would support  a view that a defined benefit multiemployer pension plan could exclude retirees from a mass distribution of an updated SPD?   Even though the language in 29 CFR section 2520.104b-2 is somewhat inconsistent, it appears that retirees in pay status are not excluded from a mass distribution of an updated SPD.

Is a Simple 401(k) considered a successor plan to a 401(k) plan. 

We have a client who wants to terminate their 401(k) plan as of 12/3/19 and start a simple 401(k) plan as of 1/1/20.  Is this allowable under the successor rules?

Certain unfunded deferred compensation plans maintained by non-governmental tax-exempt organizations (in existence on and not modified after August 16, 1986) are grandfathered and are not subject to Section 457(b) limits. Does anyone know how deferrals under these grandfathered plans are reported on Form W-2? is it still Code G of Box 12 or another Box and/or Code?  Including grandfathered amounts in Box 12, Code G may cause an apparent exceeding of the 457 deferral limits.

Organization has no employees, only 1099 contractors. The contractors can purchase vision, dental and disability insurance through the organization. Is the organization required to file a 5500?

It's July and I would like to file a final 5500-EZ for 2019.    Do we still just cross out the 18 on the form and put 2019 or is there a preferred method these days?

Have a situation where a missed deferral opportunity was corrected in such a way that very closely resembles the EPCRS pre-approved correction.  They calculated the "missed match" in such a way that some participants will end up wth slightly more than a 4% safe harbor match.  

The specifics are not relevant to my question so I'll forego a detailed explanation. The question is EPCRS Section 6.02 (Correction Principals) says "(a) The correction method should, to the extent possible, resemble one already provided for in the Code, regulations, or other guidance of general applicability."

The correction method they used is resemble, and does resemble very closely what EPCRS says (including notice requireements, making up for missed match etc).  It is just that the method of calculating the missed match provides them with a little bit extra than the EPCRS methodologies would have.

Is this still a suitable correction under EPCRS SCP?  Or is their essentially a "Do it this way or it's or you don't get any reliance"?

We are capping anyone over $275K (in 2018) at the maximum match based on the normal formula.  So this new approach will not allow anyone to get more than the match based on max comp. For whatever that is worth.

For the 2018 Form 5500-EZ:

QUESTION RE LINE 6a2
11/30/18 - Solo 401k participant loan taken; $50k; no loan repayments made in 2018.
12/31/18 - Solo 401k total plan assets in brokerage account $340k (390 - 50 = 340).
Which amount should be reported on line 6a2… $340k or $390k… which one?

QUESTION RE LINE 7a
2/1/19 - Employer contribution for 2018; $3k.
Even though the contribution occurred in 2019 (and was for the 2018 year), $3k is reported on line 7a, correct?  Yes?  No?

QUESTION RE LINE 9
The plan had a participant loan during 2018.
What amount goes on line 9… outstanding loan principal as of year end… outstanding loan principal plus interest as of year end… some other amount?

Thanks for any help you can provide… much appreciated!

I have a plan that deposits their 3% SHNE per payroll.  Due to prior year calculation errors and numerous turnover at the plan sponsor they have asked me to check their deposits quarterly for accuracy. 

While reviewing the 2nd quarter deposits there was a participant that entered the plan on 4/1/2019.  I did the SHNE calc based on the comp provided from 4/1 - 6/30.  When I advised the client that  there was a true-up due I was told that the calc was incorrect because the comp that was provided to me included pay that was earned from 3/17 - 3/30, but paid on 4/5/2019 and should not be included because it was earned before they were eligible on 4/1 even though it was paid on the 4/5 paycheck after the participant was eligible.  I've never ran into this before because we have always asked plan sponsor to provide us comp from date of participations since we are a balance forward TPA and not daily val.  The client contact wants something in writing from the document that tells her specifically what compensation to use.  If I read the document under Adjustments to compensation is says that "compensation paid while not a participant in the component of the plan for which compensation is being used will be excluded".  This reads to me that it should be calculated on compensation "paid" after the participants entry date and not "earned".   Coming from a daily val TPA firm previously we did everything based on paycheck date so now I'm questioning what the right answer is.  Has anyone else ran into this and can provide any advice or site from the Regs to help me appease the client?

Any thoughts would be appreciated.  Thank you!

I know I can add a discretionary match to a safe harbor plan mid year.  But can I add a stated match?  We have a client that wants to make a big match on top of the 3% SH.  More than the discretionary match constraints would allow.

For a plan that chooses to pay in the Safe Harbor 3% Non-Elective contribution on a payroll basis, are they required to "calculate" the contribution based on annual compensation and thus need to do a "true-up" each year?  I seem to be finding evidence that for the Safe Harbor Matching contribution you can choose to calculate and deposit it based on a payroll basis (as long as it's chosen/defined in the plan document).   I've read the Treas. Reg. 1.401(k)-3(c)(5)(ii).  I would like to confirm that for the Safe Harbor 3% Non-Elective Contribution the IRS currently does not allow an employer to calculate it on a per payroll basis?

Thanks for your help!

I have a publicly traded U.K. company with 5,000 employees in 17 countries with a U.S. subsidiary that is trying to join an open MEP. From what I have read from another post that "Legally a foreign employer can maintain a qualified plan for a U.S. employee if the plan complies with U.S. laws". I assume that because this is a publicly traded company on the London stock market that if there is another U.S. subsidiary that we don't have to worry about control group issues and can just have the U.S. subsidiary become an adopting employer of the open MEP. Because this is a MEP,  we will have already met the requirement that the trust is sited in the U.S.

Any advice will be appreciated.

Seems like every few years, there's a thread about whether a plan sponsor can enforce the loan policy to have loan repayments only be deducted from payroll.  Here's one good one from about two years ago:
https://benefitslink.com/boards/index.php?/topic/61537-stopping-loan-payments-while-still-employed/

Let's go with the premise that if someone wants to cease their loan deductions while still employed, you cannot stop them.  If the loan policy says that loan repayments are through payroll deductions only, do you then have to allow the participant to repay the loan through some other method?  Or are they voluntarily dooming themselves to default?

Thanks.

Have a plan that is wanting to change their fiscal year end from 6/30 to 9/30 and I have a question about entry dates.  1 year, 1000 hours service and semi entry (7/1 and 1/1) are eligibility requirements.  (Entry dates will change to  4/1 and 10/1)

I understand that eligibility computation periods are created from 7/1/2019 to 6/30/2020  and 10/1/2019 to 9/30/2020 because of the short plan year. 

I understand that the plan may not use the short plan year as the computation period and prorate the hours of service requirement, unless the overlapping period alternative is provided to employee who cannot satisfy the proration requirement.  This alternative is not the subject of my question at this point, but I know it's available if employer would like to go that route.

1.  Employee A has been excluded from the plan for several years because he could not satisfy the 1000 hours requirement.  He is on the 1000 hours watch from plan year to plan year.  However, the employee went full time May 2019 and is expected to satisfy the 1000 hours requirement during 7/1/2019 to 6/30/2020.    If there was no plan year end change, the employee would be eligible 7/1/2020.  It doesn't seem right to me that the employee have an entry date of 10/1/2020.  Is there an implied entry date of 7/1/2020 still because of the eligibility computation period of 7/1/2019 to 6/30/2020? 

I'm missing something.....

2.  What pitfalls should I be conscious of?

What do you do when terminated participant doesn't return election forms in 401K plan?

Hi,

I just need to confirmation on this event: we have an employee who is married and was covered by his parent's employer. His coverage ended on 6/30/19. He wanted to use his special enrollment period to enroll not only himself, but also his spouse (who has no qualifying loss of coverage). I told the employee he could not enroll his spouse, at this time, but am getting some push back and just wanted to make sure I am not mistaken.

Thanks!

Partnership Plan, one Partner essentially has retired but his final K-1 for 2018 is a negative number.  

Should he still be in the 401a4 testing for the year?

Would the relevant question be, "Did he perform any service in 2018?"

Thank you

I received a phone call from a relatively small plan saying they sold their business and one of the requirements was the 401-k plan needed to be terminated before change of ownership.  What notice and in what time frame must be given to participants?  Is it possible to terminate even a small plan in a relatively quick period of time?  Any help is appreciated and any sample documents would be appreciated as well.