Hello , Thanks to all for your time & knowledge in advance ...

25 year Employee of company that started an ESOP in 2007 ,  I was terminated in 2011  60 pct Vested 

Company took out 10 year 32m loan for the ESOP...Loan paid back in 2018  [11 years ]& I am expecting paperwork for first

distribution any day, distribution according to administrator will be over 5 years . 

My understanding from pamphlet from NCEO is that since I was made to wait more than 6 years for my distribution ,

I am now entitled by general rules to get a one time full sum Distribution.  Is this correct ? Where would I find the code ? 

More than 200k involved & prefer to have lump sum ...over 60 years old and on SSDI now .

Pamphlet I purchased was the Participants Guide to ESOP Distributions ...Administrator & I do not speak .

Again thanks for any direction and info I can get . 

Cross Tested Plan, 3% SH non, Top Heavy, Semi Entry at 4/1 and 10/1

I have an employee with a legitimate participating compensation of 163.01.  Participant was eligible 4/1 and terminated 4/5.

Employee is entitled to 3% safe harbor and then a 2% profit sharing for the year. 

So the Gateway 414(s) compensation would show 163.01 with a 401a allocation of 8.15.  So I need to check to make sure the employee is receiving at least 3% compensation on full year comp for top heavy status.  Employee need 516.80 additional funds to receive top heavy minimum.  Full year comp was 17,498.33.

So here is the rub and the question.  The benefit percentage of the employee in question would be like 300% plus based on the 524.95 401(a) total and compensation of 163.01.  Would you leave it this way?  Or do something different?  

On this plan, there are generally 2 to 3 employees that come in mid year and need a top heavy minimum.  Where everyone else would show a benefit percentage of 5%, the 2 or 3 might show as 5.8%.  Gateway then passes, and then I go to the next steps of making sure the other test pass. 

I just haven't seen a legit participating comp scenario skew the percentage this wildly.

Thanks

We have a PS plan with pooled accounts and several terminated participants with small balances (under $200).  We will be sending to PenChecks for check processing and the fee they charge is $35 per participant.  The sponsor would like to pay the charges from the plan's forfeitures.  Is this a legitimate plan expense?

Anyone know?

Hi to All,

This question is about what to report on the 5500 or 5500-SF as a client's bond coverage, depending upon the date one chooses.

I can find plenty of references that say that a bond coverage amount for purchasing purposes should be determined near the beginning of the year and should be based on the greatest amount of funds handled in the previous year.  What I can't find is a reference stating that the bond amount reported on the 5500 should be the amount in force.......as of when?  The first day of the plan year?  The last day of the plan year?

The reason it came up is that a plan had no bond in its first year of operations, calendar 2017.  The employer purchased an adequate bond on 02/01/2018, and renewed that bond on 02/01/2019.  The plan is subject to having an independent audit due to having over 100 participants.  The employer bought a Colonial Surety retroactive bond for the minimum amount possible ($10,000) to cover 2017.  Colonial will not sell a retroactive bond without having the subsequent years as well, so the employer paid for a total of 4 individual one year periods of coverage that run 11/01/2016-10/31/2017, 11/01/2017-10/31/2018, 11/30/2018-10/31/2019, and 11/01/2019-10/31/2020.  

The auditor is advising the client that he needs to decide whether or not to purchase more coverage for 2018 because of the one month, January 2018, for which he (now) has a $10,000 bond.  He actually needed a $150,000 bond on exactly 01/01/2018 and he bought one, from a different company, on 02/01/2018, but the auditor's position is that this is still not sufficient.  The auditor says that one might just let it go and not worry about it, were it nor for the fact that the plan is filing late which already draws attention to itself and reporting an inadequate bond amount would be just one more red flag.

That led to another question, one of general procedure.  We typically report on the 5500 the amount of coverage in force as of the end of the plan year, even though the amount is determined based on assets as of the first of the plan year.  During the year, our clients will increase their bond coverages if we have advised them to do so based on the prior year's annual report.  For example:  A client has a $20,000 bond for all of 2018.  We produce the annual report for 2018 sometime between 01/07/2019 and 09/14/2019.  At that time, we advise the client that based on their assets at the end of 2018, they need to increase the coverage in 2019 from $20,000 to $30,000.  The client dutifully complies and by 12/31/2019, the client has a $30,000 bond.  When it's time to prepare the 2019 5500-SF, do we report $20,000 as the bond amount because that's what they had on 01/01/2019, or do we report $30,000, because that's what they had by 12/31/2019?  Every place I have worked so far, we would report the $30,000 figure.

So the questions are:

1. Does this client really need to go to the extra expense to increase the Colonial 2018 bond for that one month (January) that they were out of compliance and 

2. When doing the 2018 5500, do we report the amount of coverage they actually had as of 01/01/2018 ($10,000) or the amount of coverage they had in force as of 12/31/2018 ($160,000)?

Thank you as always for your ideas.

I was entitled to half of my ex's 401K and IRA's, including a REIT. The REIT was moved into my account pursuant to a QDRO, along with another REIT. I learned in August that one of the REIT's disappeared from my account and is now in my ex's account. The financial advisor has been allegedly working to move it back into my name where it belongs, but it has taken months and has not gotten anywhere, along with no explanation on how this happened in the first place. I am ready to file a complaint with the appropriate agency to move this along. Any thoughts on how this happened or how I can resolve it?

Is it correct that if a participant takes a plan loan from their pre-tax 401k deferral account that they are essentially double taxed when they make the payments back on an after tax basis.  Taxed once when the deferral is made and then taxed again when they take a distribution from the plan?

I'm trying to figure out how it would be a good idea to take a plan loan if the taxation on the money is detrimental to the employee?

Discovered Solo K excluding nonowners had statutory employees during 2018.   We are now past October 15th 11(g) amendment deadline.   Does latest EPCRS Rev Proc regarding self correcting retroactive discretionary amendments help us without having to go through VCP?

Parent Company 1 owns 100% of Company A which has a standard 401k plan with no match or SH at platform X (200 employees). Parent Company 1 purchases 100% of Company B which has its own 401k plan with a match and safe-harbor at platform Z (with 20 employees). I understand there is a period of transitional relief. In what circumstances could each plan operate individually on their own platforms without any combined testing or BRF issues? Is there something about "separate lines of business"?

I have an issue that just arose, I was notified by my previous employer plan sponsor that I was overpaid when I left my 401k.  I was overpaid roughly $6000 due to an error by the plan administrator back in 2016.  I have since rolled those funds into my own personal IRA and now Vanguard is requesting I give those funds back.  I dont feel that I am obligated to return those funds as I was not the one who made the mistake and in most lines of work you are held accountable for mistakes and not allowed to pass them off to someone else.  Additionally I dont feel I should have to pull those funds from my IRA which would be an early distribution (additional tax consequence) and I would then need to amend my tax return from 2016 which is time and resources spent when that would not be necessary had this error not occurred.  I am curious if anyone has insight into what my rights and options are?  I can obviously not respond but dont want to have a law suit on my hands and dont want to have this issue come up in 20 years when they claim some crazy thing like I now owe them $50,000 because of inflation and interest.

I have a non spouse beneficiary.  did not start taking payments so he is on the 5 year clock to have the monies out.  No response and cannot verify a good address

since it has to be out of the plan in 5 years, can it be forced to an IRA?  or, can it be forced to the state unclaimed funds?

cannot find any real guidance on this situation

We administer a 401K that allows for employee after tax contriiubtions.

The client over-shot 415 by $18K.  Since voluntary, will remove from the plan, but be taxed on the earnings.

In the past, we have used the VFCP calculator to calculate interest from the date of payment to the plan through the date the funds are removed from the plan.

Is this still allowed; or if not, what is the generally accepted method?

What are the 415 limits for 2020?

I have a client that wants to allow participants to consolidate loans (take two loans and make them into one).  I don't see my plan document/loan policy software addressing this.  Does anyone have any guidance as to the language to put in to allow it?

What agency has oversight over Governmental DC plans?  Are Governmental DC plans ever audited?  If yes, by who?  

I am restating a traditional defined benefit plan from a prior provider’s document to our pre-approved volume submitter document.  The plan credits all service with related employers (i.e., members of a controlled or affiliated service group) for eligibility and vesting.  However, for purposes of benefit accrual, service with related employers is counted only from the date the related employer adopts the plan (or, if applicable, from the date an employee transfers employment from a non-adopting related employer to the plan sponsor).  The IRS did issue a favorable determination letter on the document prepared by the prior provider.  I suspect the application was filed using a Form 5300, but I do not know for certain.  (The document is in an individually designed format vs. on an Adoption Agreement.)

Under the terms of our pre-approved volume submitter base doc, all service with related employers is automatically credited for all purposes.  (I see this was a required provision under Section 14.03 of Rev. Proc. 2015-36.)

If we move forward with the restatement, I understand the provision limiting credited service for benefit accruals will negate reliance on the IRS advisory letter.  Since the plan already has an FDL, I don’t believe there is an option to file for a new letter using a Form 5300.  The question I have is this:  could we reasonably argue that this provision is a “minor modification” to the pre-approved volume submitter language such that we could apply for a determination letter using Form 5307? 

Trying to get people's opinion of if it makes sense to add 3(16) services as a TPA.  I would assume it is an add on service and not required (more of a convenience for the client.)  I am a small TPA about 180 clients right now and not sure if it makes sense or is a way to prepare for the possible open mep legislation.  Is there certification to become 3(16) authorized and how are people billing clients for this, are a couple of my questions.  

Any input would be greatly appreciated.

Good afternoon,

In a takeover case, the employer would like to do the following in his new document:

1. Annuities are the normal form of benefit in the current 401(k) plan document.  The employer maintains that he did not know this, that nobody has ever been offered an annuity nor have they inquired about one, and certainly nobody has ever taken one.  He was genuinely shocked to hear that this provision is in is current document.  He maintains that they never had a Money Purchase Pension Plan, a Target Benefit Plan or any other plan at all besides the current one, which started life as a profit sharing plan in 1969 and eventually had 401(k) provisions added to it. The incoming account balance report does not have a source where MPP money or related rollovers are being tracked.  It would appear that there never was any reason to have annuities as the normal form of benefit.   He wants us to take out any reference to annuities and put in lump sum only.  

2. Normal retirement age has been plain age 65, and he wants us to change it to the statutory definition of age 65 or the completion of 5 years of service, whichever comes later.  

Does anybody see either of these changes to the document as a violation of anti-cutback rules?

Thank you for your thoughts.

In November 2018, while still employed full-time, I received an early distribution from my Prudential retirement plan that my (former) employer now claims was not available under the terms of the plan.  Subsequently, Prudential Retirement informed me that I "received an overpayment in the amount of $8614.18 that was not eligible for a rollover."  Prudential is requesting that I pay back this amount in full. 

I conacted Prudential to explain that this 2018 early withdrawaI was NOT a rollover to an IRA nor to any other retirement plan.

At the time of my initial withdrawal request in 2018, I explained to Prudential that I needed the money to pay down miscellanous household, credit card, and medical care expenses. This early distribution was processed without delay, and was ultimately reported on an 1099-R for tax year 2018. 

I retired in July 2019, and am now receiving monthly payments from that same Prudential retirement plan. However,  I'm extremely dismayed over this recent issue, and Prudential has been vague about my options or rights. Bottom line: I am unable to pay back this overpayment amount. 

I believe I'm the victim of an egregious clawback. What must I do?  What can I do?