Hello everyone - is anyone aware of having to no longer complete Schedule D for a large plan with assets invested in a Transamerica group annuity? According to Transamerica, no Schedule D is required because Transamerica is not a Direct Filing Enitity (DFE) and, therefore, the plan's assets should be reported as being held by a registered investment company (Schedule H, Line 1c(13)) rather than being invested in pooled separate accounts. Thank you for your assistance.

I looked around the boards and found some older posts related to Tribes and 401(k) Plans. Not sure how current those discussions are however.  Curious if there have been changes to the application of ERISA, control groups, 5500's etc.

An individual-account § 401(k) retirement plan provides participant-directed investment.

Following participants’ directions, the plan’s trustee engages in transactions with a party-in-interest.  No exemption applies, and there is no doubt these are prohibited transactions under ERISA § 406 and Internal Revenue Code § 4975.

Yet these transactions are not necessarily an IRC § 401(a)(2) exclusive-benefit violation.  Among other facts, each investment has an above-market return, and the plan’s counterparty has strong creditworthiness and liquidity.

The plan’s governing document includes this:  “The Trustee shall not engage in any prohibited transaction within the meaning of the Code and ERISA.”

Does something that might not have tax-disqualified a plan have that effect because the plan’s fiduciaries failed to administer the plan according to its governing document?

Section 657 of EGTRRA amended § 401(a)(31)(B) of the Code to require that mandatory distributions of more than $1,000 from a plan qualified under § 401(a) be paid in a direct rollover to an individual retirement plan (i.e., an individual retirement account as described in § 408(a) or an individual retirement annuity described in § 408(b)) of a designated trustee or issuer if the distributee does not make an affirmative election to have the amount paid in a direct rollover to an eligible retirement plan or to receive the distribution directly. Section 657(a) of EGTRRA also added a notice provision to § 401(a)(31)(B)(i) of the Code which requires that the plan administrator notify the distributee in writing (either separately or as part of the § 402(f) notice) that the distribution may be paid in a direct rollover to an individual retirement plan.

A TPA manages many plans with the $5,000 cash-out feature, notifies affected terminated participants regarding the mandatory distribution, but only rolls over the account balance to the IRA upon direction from the plan sponsor.  Absent plan sponsor direction, the participant’s account balance remains in the plan.

Is there a time factor in which the direct rollover be made to the IRA or can the monies remain in the plan as currently administered?

Client executed a non qualified stock option agreement with an employee, but claims it actually meant to give the employee incentive stock options.  Is there a quick way to fix this? I have not yet seen the actual equity incentive plan (asked for a copy).  Thanks. 

Hi,

2017-56 states that one of the three asset valuation method changes  automatedly approved is:

(2) A change in asset valuation method to a method that determines the value of plan assets as the average of the fair market value on the valuation date and the adjusted fair market value of assets determined for one or more earlier determination dates, as described in § 430(g)(3)(B) and the regulations and other published guidance thereunder.  (See § 1.430(g)1(c)(2) and Notice 2009-22, 2009-14 I.R.B. 741.)  The asset value determined under the method must be restricted so that it is not greater than 110% and not less than 90% of the fair market value, as described in § 1.430(g)-1(c)(2)(iii). 

Based on the above, a change to using a 3 year average as the value of the assets for the val (ie a 3 year average calculated  based on the fair market value of the assets as of the current val date plus the prior two years fair value of the assets)  would be automatically approved?  Thank you.

We have the ability to pre-fill Fund Company distribution forms with names and addresses before sending to terminated participants using an in-house software program.  We would NOT enter DOB's or SS#'s.  Just names and addresses.

What are others doing?  We had been including Names/addresses at one point in time but decided to stop because we felt like once that information was on the form, it was that much closer to being susceptible to theft.  Do others have any insight regarding security audits, etc., that have done studies/analysis on this stuff?  I'm sure others are putting a lot of thought into this.

Part of the discussion of course is that we are mailing them the form, so the envelope and cover-letter does already have their name and address.

Hello.  I'm a lawyer in South Florida desperately trying to obtain an approval for medical treatment needed by my son, and Anthem is refusing to authorize for reimbursment.  Anthem, has indidcated that the insurance provided by my wife's employer is pursuant to a self funded ERISA plan.

Anthem denied the initial request for authorization for the treatment recommended by my son's doctor.  The treatment which requires hospitalization will cost in excess of $40,000.  The denial by Anthem was totally ambiguous.  Anthem's denial letter indicated that the proposed treatment was not "medically necessary."   I appealed the decision and that was denied.  I asked for an external appeal and was told by the State of Virginia Insurance Commissioner,  where I sought the external appeal, that self funded ERISA plans have a different kind of "external appeal."  The external reviewers are not chosen by the State Insurance office, but rather by Anthem who contracts out these external appeals.

Prior to submitting the external appeal file, Anthem asked whether I wanted to supplement the file.  I asked several times whether the denial was based on a decisiion that my son was not suffering the medical illness diagnosed by his doctor or whether the denial was based on the recommended treatement (this was never clarified in the inital denial letter).   I needed to know this in order to determine what kind of additional records to be submitted in support of our claim; to wit:  records suppporting the diagnosis or records supporting the appropriateness of the treatment.   I received several responses that continued to cover both basis.  I questioned how Anthem could challenge the diagnosis based only on the clinical office notes and lab results submitted by my son's treating physician without Anthem's "deciders" conducting a clinical exam of my son.  No response.  Anthem's "external review" folks, have recently declined my request that they speak directly with my son's doctor on the teleophone before making a decision.

I have no hope that the external reviewers selected by Anthem will reverse the decsion denying benefits.  Accordingly, I am going to have to pay for the treatment myself and seek reimsbursment by way of litigation.

This is where I need help.  Who would be the defendant in a lawsuit seeking reimbursement?  Anthem?  The self funding employer (Virginia based).  Both?

Could I file the lawsuit in Florida where I live since I would be the Plaintiff seeking reimbursement?  Would it have to be in Federal District Court?  If not, Florida, would I file it in Virginia where the self funding employer is located and could I leave the employer out of the lawsuit (preferable to me since the insurance is through my ex-wife's employment and wouldn't want to create litigation that would harm her relationship with the employer).  If the suit is only against Anthem, could I file and keep the suit in Florida, state court or more likely, Federal Court?

I am pretty sure that Anthem is doing this with all  children suffering the same ailment as my son.  His treating physician says that a number of other insurance companies approve the treatment based upon her diagnosis but she always has denials from Anthem.  Apparently, Anthem makes the insured parents jump through the appeals process hoops in the hopes that a lot of parents of kids sick with the same ailment as my son will not have the resources or knowlege to get through the process.  

Im quite comfortable that in litigation I have experts who will support both the diagnosis and recommended treatement as appropriate.  One of them would be the Chief of the Pediatrics & Developmental Neuroscience Branch at the US National Institute of Mental Health  Can I bring a class action for declaratory releif to establish that the diagnosis and treatment recommended is appropriate for all similarly situated children who are diagnosed with the same ailment and are fighting for the same treatment and join in any insurer who has been routinely denying reimbursement for the recommended treatement?

Any help will be greatly appreciated...

Reed

CPI was released this morning for June

256.143

April was 255.548 and May was 256.092

so this 3 month period = 767.783

(last month I only used the May value *3

plugging in the formula yields a catch up limit of exactly 6500 and a deferral limit of exactly 19,500. quite amazing.

so if those numbers hold for the 3 month period Jul/Aug/SEpt

Participant has an extension on his personal taxes.  He had a 402(g) violation--he had two jobs in 2018 and deferred $14,000 to each.

Does the personal extension also extend the 4/15 deadline for removing the 402(g) excess?

If a company changes from the ERISA qualified defined benefit plan to a cash balance plan, the Participant and the Alternate Payee have the option of taking an annuitized payout as a shared interest allocation, if, as and when, using a coverture fraction based formula, or as a lump sum from the cash balance component.  See https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/fact-sheets/cash-balance-pension-plans.

But the question I have is whether there is an option under a cash balance plan for the Alternate Payee to take separate interest allocation?  The attached article seems to say "yes".    

What do you think?  

David

AdministeringCashBalancePensionPlanstoConformWithQDROs.pdf

Client maintained a SIMPLE IRA at the time of acquisition of an employer with a 401(k) plan and both plans will remain through the transition period of the end of the plan year following the year of the acquisition transaction.  The SIMPLE IRA still only benefits the participants originally eligible for it and the same with the 401(k) plan. Can the 401(k) plan be amended and not destroy the transition period that allows the 2 retirement plans to exist simultaneously through the transition period? 

Hi,
I want to start a DB plan for 2019 and received conflicting advice from 2 TPA firms.  If you could provide clarification or guidance it would be very much appreciated.  Should I be looking elsewhere?

1.  Firm 1 gave a contribution range range of $74k - 390k for 2019
      Firm 2 gave a contribution range of $153k - $167k and said they never saw such a large range for 1st year as it is typically very narrow.

2.  Firm 1 said my existing individual 401k 5500SF would be incorporated into DB 5500 that they will do
      Firm 2 said they cannot be combined into 1 filing.

3.  Both firms have an exiting document with IRS#. I'm guessing that it is somehow customized to meet my needs?

I am 64 and will fund for at least 3 years and possibly 5.
I am only employee and business is S Corp
3 highest consecutive years of W-2 were $120k
I do not intend to take any salary this year or any year going forward
I would like to fund $175k this year and would like flexibility on the downside going forward as not sure what future income will be.

Thank  you for your advice, thoughts and clarification.

Steve

I am fairly certain there are threads on this topic already - could someone help me find some? I'm not having much luck with my searches. 

The plan transferred assets and there were significant surrender charges related to annuity investments. The sponsor is trying to reimburse the plan for those charges. Can they?

I know there was some publication  (maybe a PLR?) that addressed investment losses due to a possible fiduciary breach, where the sponsor was permitted to make up the loss to the plan even if the participant's hadn't brought a lawsuit. I know it's not quite the same fact pattern, but if someone knows what I am talking about, and has a cite on it, I'd appreciate it. 

I think there was a different publication that did directly address reimbursement of plan expenses, and how to treat them depending on the type (annual addition or not). If someone has that cite I'd appreciate it too. 

Thanks!

Plan has short year plan year.  YOS for eligibility  is 1 year using 1000 hours of service.   Document  provides in a short year that both the 1 year and hours are pro-rated (the statutory standards are still maintained as an alternative. )

My question is whether the pro-rated hours must be worked during the pro-rated months or just during the short year?  Document  doesn't  really specify.  My thinking is that the hours would have to be worked during the pro-rated period, but hoping for verification.

Thanks for any guidance. 

We have a small k/cb plan that was once administered by a small local TPA/actuary that was bought by a very large TPA/RK. The new TPA did fine the first year (2017) however we started having problems in 2018 when they kept failing to respond to inquiries or making promises to deliver requests but not getting the work done. 

The client, a sole owner firm with just a couple EEs, had the k/cb plan in place since 2015 and most of the CB contributions go to him (well over 90%). The client found out in early 2018 that his key EE (NOT "key" by ERISA definition, but key to business revenues) was planning to set up shop across town since he had no non-compete, and by Sept he was off the payroll but much of his revenue contributions had long since dried up, so the business saw a profitability shift downwards between by well over 60% through 2018, this after many years of consecutive growth.  

We were trying to get a plan amendment in place for 2018 but the TPA kept dragging feet. Shortly thereafter we were notified the TPA did not file the 2017 5500 in time, no excuse offered. They offered to pay the DFVCP amount and kept promising to complete work in the next couples of weeks. This went on for several months until we terminated the old TPA and hired a new one.

After having the new TPA/actuary working on incompleted valuations going back to 2017, we finally got the contribution requirements which would have been fine when the company was more profitable but it cannot afford it now. Despite our efforts to get the old TPA's act in gear, they never got us those amendments because they never completed the previous work to make the necessary calculations. Now the client has a funding requirement he can't afford and is facing a 10% excise tax of whatever he can't contribute. 

We have frozen the plan in 2019, but is there any recourse, or any action that can be taken in lieu of the fact that the previous TPA failed to complete work in time preventing us from amending the plan to get his 2018 funding requirement down based on the fundamental change in his business by the loss of the only non-owner key EE?  I know it's a stretch, but I'm just wondering if anyone has any specific experience like this and found some option that worked without creating more headache for the business owner?

Thanks

401(k) Plan - A terminated participant was added to Form 8955-SSA in 2016. In 2018, they started receiving their RMD's. The Instructions to the Form, for Code D, states "Use this code for a participant previously reported under the plan number shown who is no longer entitled to those deferred vested benefits. This includes a participant who has begun receiving benefits......"

Do we interpret the above quotation to include former participants that have started to receive their RMD's?

Not sure if it matters, but this Plan does not permit annuity forms of payment.

DB plan was established for 2018 for S corp; accountant called last week to mention that the was no W-2 for 2018 and wants to use Schedule C income.

I would think the plan definition of "compensation" would need be amended as well who would be participating.

Would a Joinder Agreement suffice in this instance?

Good afternoon everyone. Forgive me in advance if this is simple question, but I don't know anything about HSAs except that it is a Health Savings Account. 

I have a HSA from an old job where I had a HDHP. I no longer have a HDHP. I have also since married and had a child.

My question is can I use some of the money from my HSA to pay the medical bills, that are in my wife's name, from having our baby last year? 

I seem to recall that this is permissible, but it has been a long time since I have looked into the matter and I have not been following any changes to HSA legislation to know if anything has changed (assuming my understanding was correct from the beginning). 

Are there any potential issues to look out for if I proceed as described?

Thanks in advance and let me know if you have any questions.

Thanks!! 

Corp sponsors 401(k) SHM plan, definition of compensation is 415 safe harbor, about 10 participants, including the owner.

Box 1 and box 5 of w-2 have different amounts, Code D is $18,500.

Accountant not taking into account medical premiums for the 2% + shareholder.

Getting conflicting answers, isn't medical a fringe benefit?