Plan has 3 year cliff vesting

Employee A

Hire 4/28/16

Term 4/26/19

two days shy of 3 years but did work 1000 hours in 2016, 2017, & 2018.  I say they get credited for 3 years.   

From document:

1.109 "Year of Service" means the computation period of twelve (12) consecutive months, herein set forth, and during which an Employee has at least 1,000 Hours of Service. However, the Employer may amend the Plan to provide a lesser number of Hours of Service in a Plan amendment for eligibility purposes, vesting purposes, or accrual purposes without adversely affecting the Plan's reliance on the IRS advisory letter.

For purposes of eligibility for participation, the initial computation period shall begin with the date on which the Employee first performs an Hour of Service. The participation computation period shall shift to the Plan Year which includes the anniversary of the date on which the Employee first performed an Hour of Service. If there is a shift to the Plan Year, then an Employee who is credited with the required Hours of Service in both the initial computation period and the Plan Year which includes the anniversary of the date on which the Employee first performed an Hour of Service, shall be credited with two (2) Years of Service for purposes of eligibility to participate.

A Year of Service for eligibility purposes is not credited until the end of a participation computation period.

For vesting purposes, the computation periods shall be the Plan Year, including periods prior to the Effective Date of the Plan.

The computation period shall be the Plan Year if not otherwise set forth herein.

Notwithstanding the foregoing, for any short Plan Year, the determination of whether an Employee has completed a Year of Service shall be made in accordance with Department of Labor regulation §2530.203-2(c). However, in determining whether an Employee has completed a Year of Service for benefit accrual purposes in the short Plan Year, the number of the Hours of Service required shall be proportionately reduced based on the number of full months in the short Plan Year.

Looking for some confirmation on my thought train here:

Client has a cash balance plan and a safe harbor 401(k) plan.  Because the owner is over 70½, he's been taking in-service distributions of his entire vested benefit so that he can use the DC method and have a smaller RMD while the rest of his benefit goes to his IRA.

The plans are general tested - DB plan has a $100k credit for the owner against 3% of pay for the staff, so the staff gets the rest of their gateway on the PS side (and the owner's also getting maxed out there in this PBGC-covered setup).

Now, because of all the great deductions they've been taking, they've got basically no room for a contribution for 2018.

Of course, an -11g amendment would allow the plan to increase benefits, but they must be done in a nondiscriminatory manner. 

I think that means, if they want to dump more money in, then the corresponding benefits must pass 401a4 on their own - meaning there's going to be a brand new additional gateway requirement to pass, just on the new amounts, such that anything they may have already received doesn't count.  I don't expect the new gateway to be an additional 7.5%, but depending on how much more the owner's benefit might be, could I be looking at such a second minimum?

And, does an amendment like this actually open up new deductibility on the DB side?  Isn't there something where the deduction rules are determined by the plan's provisions as they already were in effect on 12/31, rather than what they're being amended to?
 

Oh right, and basically I need an 'amendment for both plans, right?  Is it okay to increase benefits in one plan that are discriminatory, if the other plan's increased benefits take care of the overall 401a4?

Thanks in advance for any insight or experience with this.

--bri

A law firm client maintains a 401(k) plan with 21/1 eligibility and semi-annual entry.  The plan excludes attorneys other than those specifically named.  We just found out that they allowed a NHCE attorney into the plan on what would have been her otherwise correct entry date of July 1, 2018.

The Appendix B correction method by plan amendment doesn't seem to fit this since it's not a case of the early inclusion of an employee who did not yet meet the age/service requirements.  Any chance it would come under the new retro amendment SCP provisions of Rev Proc 2019-19?  I would characterize it as an increase in a benefit, right or feature (albeit for one individual)...but what is meant by the requirement that such increase "applies to all employees eligible to participate in the plan"?  All employees who are otherwise eligible to participate already participate.  Since no attorneys (other than those specifically named) are eligible to participate in the plan would that sentence be satisfied without extending participation to them?

I know VCP would always be an alternative, but is SCP possible? 

Thanks for all input.

We have a safe harbor 401(k) with employee, SHNE and EE voluntary contributions.  Of course the owners are the only participants who did the voluntary contribution

ACP tests have been met; however, each owner seems to have over-shot the maximum $61K 415 limit.

I suppose that if the excess was contributed in 2019, all is OK; but what if not???

Say a client has had 3 welfare plans under their cafeteria plan, filing separate forms. Then for 2018 changes to a "wrap" document, so only one 5500 will be required. Do you go back and amend the previously filed 2017 forms for the welfare plans to show them as "final" forms? Seems like if you just file the one new wrap plan, you'll get DOL inquiry on why you didn't file forms for the plans that get wrapped...

Two partners are only employees in a business and want to start 401k / psp.  In reading 5500EZ instructions they can file 5500EZ if the partners are the only employees?  Just wanted to confirm this.  Thanks.

A one participant plan is late in filing 2016 and 2017. The prior TPA always filed a Form 5500-SF for one participant.

In reading the instructions on the DOL website, they make it clear that non-ERISA plans cannot file under its DFVC program. Under the Non-ERISA delinquent filer program, they only accept forms 5500-EZ. I suppose we could file 2016 and 2017 as 5500-EZs even though SF's have been filed through the life of the plan.

Anyone see problems with that?

Taxpayer found out that his AGI was too much to make a Roth contribution for 2018 and has an excess contribution of $4,000.  He filed his 2018 income tax return on time, but there wasn't enough time to get the excess out by 4/15/19. Trying to decide to take a distribution or change the contribution to 2019.

If he takes the distribution there is no 2018 income tax affect because he already paid income taxes on the $4,000. I think the earnings would be taxable in 2019, year of distribution. In this case I think he needs to re-file his 2018 income taxes to show the $4,000 excess.

If he changes the contribution to 2019, I think he would still need to re-file his 2018 income tax return because it would still constitute a distribution. 

Is there a way to fix this without having to re-file his income taxes. Thank you.

I have 5 policies that are written to me and my siblings and the company in which it originated from has been merged, shut down, and umbrella-ed into so many companies till no one now wants to give us our money for our father's policies; or they are claiming they can't find the policies because each company has originated new policy numbers.  I got in touch with Alabama Department of Insurance, and they claim that it was merged or umbrella-ed into Colorado Department of Insurance.  They are 14,000 to 16,000 policies; each one on outside of policy has American Prefered Life Insurance . Profit sharing life insurance contract. How and who can I contact?  I really could use some help.

We don't do a lot of large plans so sorry if this is something we should know.  But here's the situation:

We've handled a MassMutual plan for quite a few years.  Their fee and compensation report used to include an item for Indirect Compensation paid to the broker/dealer firm, so we would include them on the list of those receiving eligible indirect compensation.

Somewhere along the line, they started to report fees paid to themselves as direct comp, and stopped showing the indirect comp paid to the B/D.  We kind of shrugged our shoulders and didn't include the B/D at all on the Schedule C.  

So now I'm wondering if that is correct (if B/D comp isn't indirect comp I don't know what is).  I have exchanged emails with our service rep and she punted to their compliance department, which means we may or may not get a response, and it may or may not be adequate.  

Anyone else completing things differently, or otherwise have comments?

We had a company acquire another in 2018 and they both maintain separate plans. They now are a control group. The one that acquired the other utilizes top-paid group while the other plan does not. I know we are supposed to be uniform in how these are tested but wasn't sure if it's okay to test separately during the acquisition year.

The series of events is as follows: 1) the parties divorce, 2) a QDRO is filed with the court, 3) the parties re-marry each other, 4) participant dies, 5) widowed alternate payee  submits QDRO to the Fund for the first time after his death.

My only question is: does the existence of a valid QDRO nullify the J&S benefit to the AP?  Does she get both? 

Thank you

Just looking for an opinion on this.  The Plan states that an "actively employed" participant is eligible for an in-service definition once every 12 calendar months.  If the employee is currently out on disability, would he/she still be classified as actively employed (assuming they are expecting to return to work)?

Thanks in advance!

I have a one owner company with K-1 income and the CPA is calculating the maximum that can be contributed on the IRS SEP,401K worksheet.  The Plan document says that the contribution is integrated with SS at 100% of the TWB, 4 tier.   There is one non-owner is under the SSTWB.  When calculating the contribution for integration, can the contribution % to the non-owner be less than what the maximum that owners contribution calculation is? For example, owners maximum contribution calculated is $29,000, which is 20% of his net earned income.  The employee is getting 6%.  Is that allowable?

Trying to learn what software providers are available to import client census and produce a side by side comparison of contributions to participants based on plan and contribution types for use in proposals.

Have already found one with EBG Systems that I haven't reviewed yet, and also one for a Pension Online, that I signed up for a 14 day free trial.

Does anyone know of others used, and which ones are the most preferred based on ease of use, most features, and lowest costs?

Thanks

We want to combine a match source and a profit sharing source that are frozen and have not been used for a long time. There is also an old ESOP source that has no employer stock in it , it's all OIA account. Is there an issue with combining that with the other too?

Can a plan make a profit sharing allocation, for 2018, after they've filed their taxes for 2018?

The calendar year plan has no intention of amending their 2018 return, so we'd be looking at deducting the 2018 allocation for the 2019 tax year. I know they'd be subject to the 25% deductibility for 2019 (considering all employer contributions for 2019 plus the 2018 profit sharing allocation).

Is it possible to allocated the PS for 2018 but deduct and report it in 2019? If so, what other compliance tests would the profit sharing need to be included in?

This may be a dumb question, but does the grace period for SIMPLE employer eligibility apply if an eligible employer started a plan mid-year but then employed over 100 employees with compensation over $5,000 later that same year?  For example, the employer had fewer than 100 employees with compensation exceeding $5,000 in 2014, started a SIMPLE in the middle of 2015 (eligible for 2015 based on prior year employee numbers), and by the end of 2015, had over 100 employees with compensation over $5,000.  The employer would be ineligible to maintain a SIMPLE for 2016 in the absence of the grace period.  Does the grace period not apply because the plan was maintained by an "eligible employer" for less than a 12 months (due to the mid-year start date)?

The statute says, with regard to the grace period -- "An eligible employer who establishes and maintains a plan under this subsection for 1 or more years and who fails to be an eligible employer for any subsequent year shall be treated as an eligible employer for the 2 years following the last year the employer was an eligible employer."

So in other words, my question is does the requirement to have maintained the plan as an eligible employer for 1 or more years mean that the employer must have maintained the plan as an eligible employer for at least 12 full months, or is it possible that this one-year requirement really refers to more of a "plan year" concept such that maintaining the plan as an eligible employer for a short plan year (as a result of establishing a plan mid-year) would qualify as maintaining it as an eligible employer for "1 year"?  

Has anyone ever run into this?

What is the deadline for a nonprofit organization to make an employer match or nonelective contribution to a 457(b) plan for a plan year?  

I had to file a rule to show cause to get my ex husband to sign the first of 2 Qdro’s. He is on record with the courts (Delaware) saying he will sign the second Qdro, however he is refusing to sign it. 

Am I correct in thinking he is in contempt of court?

Do I have to file a second rule to show cause or can I file the final Qdro with my signature and note he refused to sign. 

The divorce is final and the stipulation resolving ancillary matters filed. 

Thank you.