29 C.F.R. § 2520.104-46 provides its excuse from an audit of a plan’s financial statements only if, among other conditions, at least 95% of the plan’s assets are qualifying plan assets—much of which involves regulated banking, insurance, and securities businesses.

Imagine a small-business retirement plan with 100% of its assets in non-qualifying assets.  An officer of the plan’s sponsor serves as the plan’s trustee.

If a TPA goes about its work normally, how likely or unlikely is it that a TPA would see information from which the TPA would know that the assets don’t qualify for a § 2520.104-46 waiver?

Can I allow union employees to make elective deferrals but exclude them from the safe harbor match or do I have to set up a separate plan for them?

Company A sponsors a Safe Harbor ( 3%) auto enrollment plan.  They recently purchased another company via a stock purchase. Purchased company is also a Safe Harbor (3%) auto enrollment plan. They intend to merger (not terminate) the acquired company's plan  into Company A's plan.

Trying to figure out if merger can occur mid year, or if  it has to wait until 1/1/2020.

Thanks you.

Hi to All,

If you saw the John Hancock webinar today on the EPCRS program and how to use it, you will understand where my questions originate.  There was a lot of coverage of enrollment errors and the corrections seemed quite complex.  Actually I should have said that the corrections themselves are not that hard, once you can identify what kind of error it is, what kind of money is involved, how long ago the error occurred, whether or not automatic enrollment is a factor, etc.  That's the harder part - figuring out which kind of error you have.  My question is, how would I even know an error had occurred, and ultimately, who is responsible for figuring it out and correcting it?

Our non-producing TPA shop does traditional, annual reporting for retirement plans of small employers.  We are not usually involved in periodic enrollment meetings after the plan is established. Unless the employer volunteers the information or the participant complains to us, we would never know if someone was enrolled late.  If the employer distributes an enrollment kit in May to someone who was eligible on January 1, and that person starts deferring on June 1, all I will ever see is the total deferred for the year and the total compensation for the year from the return of the annual census data.  I don't ask and I am not given any data about when participants begin deferring.  I suppose I could go look at each new person in the plan, if a platform like a John Hancock is involved, and see when deferrals commenced but even then, I wouldn't know if the person initially declined and then changed his mind later on.

What are the rest of you doing?  Are you closely involved with the enrollments of your client's employees?  Do you collect copies of the enrollment forms or the forms declining the opportunity?  Is this your responsibility as a TPA?  Do you rely on the investment advisor to be on top of this?  Outside of informing the client and the HR department (if any) of their responsibilities when the plan is first installed,  do you follow up to see if procedures are actually being followed?

My colleague here says he has done these corrections a number of times over the years, but it was because a savvy participant complained about not being enrolled properly, not because he as the TPA discovered the error or because the employer let him know there was a problem.  I could probably count on one hand the number of times I made these calculations and it was so long ago I don't even remember the circumstances.

We would like very much to know how other firms are handling this issue.  Thank you.

The DOL penalty for failure to distribute auto enroll notices is $1700 per participant per day, if I am reading things correctly. This failure is not eligible for relief under the Voluntary Fiduciary Correction Program, so was hoping to find an overall penalty cap, at least. Is anyone aware of a cap on this penalty? Since VFCP is not available, simply provide the notices ASAP, include the error as an operational error in a VCP, and hope for the best?

I am looking for opinions if I have a an affiliated service group.  Owner A  owns a practice 66%.  Client also owns an office building and that company provides rental space to the practice and a few other clients.  Rental Company is 100% owned by Owner A.  

I do not believe so.

Would the opinion change if the sole client renting the space was the practice?

A follow up to the above is a transaction occurred mid year that reduced his ownership to 66%.  I am thinking the determination of a control group or affiliated service group is a snapshot determination date and that Owner A could set up another 401k plan for the leasing - rental company for the current year?

Hello, 

Has anyone ever drafted a legal opinion for a TPA?  I am having a hard time finding a sample/template specifically addressing EB services provided by a TPA. Thanks in advance!

-Rena

We’re reviewing our medical evaluation process for assessing disability benefit applicants, and we would appreciate feedback from other jurisdictions regarding their practices. Does a third party manage the evaluation process or a panel of doctors? If a panel of doctors oversees the process, how many serve on your panel? What is your method of compensation (flat monthly amount, paid per case)?

Two questions:
I have/had two employees, (employee A) one that has been with me for four years and has just quit in June and another one that will have been with me for 3 years (employee B)  in August.

1. I have only just been made aware of the 401k rules, and it seems as if I should have made a plan available to employee A. What do I do now he has quit. Am I liable for any past payments?

2. I have spoken to employee B, and he says he would rather have the money in his pocket than in a 401k, in other words opting out. I have told him that I will give him the amount of what his contribution would be as a pay raise but not my matchable amount, unless he agrees to the 401k rules, and signs up. Is this allowed? Does he have to sign up?

Thanks,
RP

Hello everyone - should the check mark column after the participant's last name on Form 8955-SSA be checked if one does not verify that the name being reported matches the name on the participant's social security card or is the check mark column to only be used for the two stated reasons? Is an "unverified" name considered to be part of an incomplete record?

Line 9, column (c). Enter each participant's name exactly as it appears on the participant's social security card. Do not enter periods; however, initials, if on the social security card, are permitted.
After the last name column, there is a check mark column. Check the box for each participant whose information is based on incomplete records. Information for a participant may be based on incomplete records where more than one employer contributes to the plan and the records at the end of the plan year are incomplete regarding the participant's service. Check the box next to a participant's name if:

1. The amount of the participant's vested benefit is based on records which are incomplete as to the participant's
covered service (or other relevant service), or

2. The plan administrator is unable to determine from the records of the participant's service if the participant is vested in any deferred retirement benefit but there is a significant likelihood that the participant is vested in such a benefit. See Regulations section 1.6057-1(b)(3).

We have a SH plan that was effective 5/1/2019.  We generally write plans with a full initial year, but this one slipped through the cracks.

Can we amend the plan to be effective 1/1/19 (with a deferral start date of 5/1)?

Could I interpret this as an allowable amendment because it is increasing the SH benefit (12 months of compensation compared to 8)?

An IRA holder is age 66.  His siblings are his beneficiaries (he is not married).  He wants to start taking life expectancy distributions, but I noticed that the Uniform Life Table starts at age 70.  Must he use the single life table to determine life expectancy distributions?

We have a number of plans that use "End of Plan Year" for F.3. Time of Payment (other than Death) - but want to waive that waiting period in cases of hardship.  We propose to use 3.d. to write in the language from b.(End of Plan Year) followed by "Acceleration of timing allowed for cases of Hardship (per safe harbor rules)."

My question is - in order to use Hardship as a criteria for allowing acceleration of distributions for terminated participants - must the plan allow Hardships as an in-service distribution option?  It was my interpretation that this section of the Basic Plan Document (Timing & Form of Payment -  Section 7.02, Article 7) is separate from Article 8 (In-Service Distributions and Loans).
(FTWilliam declined to answer)

Appreciate hearing others' experience. Thank you

-DB Plan is frozen

-Short Plan Year from 10/1/18 through 12/31/18

-Plan has a shortfall of $100,000

Question - For the purposes of minimum funding, do you pro-rate the shortfall amortization charge for 12/31/118?

Please provide source/link/site.  Thank-you

do not have a lot of details but A and B are merging. B is the survivor. the transition rule states that acquisition or disposition could be a merger involving a change in employer of the employees.  See the Reg below:

(f)Certain acquisitions or dispositions. Section 410(b)(6)(C) (relating to certain acquisitions or dispositions) provides a special rule whereby aplan may be treated as satisfying section 410(b) for a limited period of time after an acquisition or disposition if it satisfies section 410(b) (without regard to the special rule) immediately before the acquisition or disposition and there is no significant change in the plan or in the coverage of theplan other than the acquisition or disposition. For purposes of section 410(b)(6)(C) and this paragraph (f), the terms “acquisition” and “disposition” refer to an asset or stock acquisition, merger, or other similar transaction involving a change in employer of the employees of a trade or business.

so what exactly does a transaction have to look like to be considered a merger.in this case two medical type groups merging with one becoming the survivor but i don't think any money or stock is changing hands.   if the term merger is a term of art what would you want to know to determine if a merger occurred?

An accountant posed this question, and I'm not as strong on health benefits as I am on retirement benefits.  A small company that currently doesn't offer any group health plan acquires the assets of another small company, along with 3 employees from that company.  Those 3 employees had group health coverage and the acquiring company is continuing that benefit for them.

Does the company have to offer group health coverage to it's other employees?  Can the company create different classes of employees and offer some classes but not others?  Can the company have different employee contributory rates towards premiums (to be done through a 125 plan)?

The company has fewer than 50 employees, and all the employees are NHCEs.  The owner would not be included in the health plan.

Thanks for your input. 

Generally, plan termination resolutions will state that plan participants become 100% vested on the plan termination date.  If a termination is later rescinded by the plan sponsor or falls through due to say PBGC disapproval, is the 100% vesting locked in? Has anyone seen or used  language in a plan termination resolution stating  that should the plan revert to an "ongoing" plan status such 100% vesting will be inapplicable and the vesting schedule under Section x.x will apply?

Does anyone know of a site similar to BenefitsLink that solely focuses on PBMs and Rx plans?

A 401k plan is on a calendar year and ceases contributions in March. However, the effective date of the termination is in July. Which date is used to determine the prorated 415 limit?

If the employer had already ceased contributions with the intention to terminate, but did not make the effective date until several months after, aren't they essentially increasing the contributions allowed by the prorated 415 limit? 

Any guidance is appreciated! 

Does anyone have a sample participant fee disclosure for an FBO account option?  Participants can xfer balances between the main recordkeeper and "external" FBO accounts (still part of the Plan).  

If you'd be willing to share I would appreciate it!