Participant "P" dies with no beneficiary designation.  There is no spouse. Participant had two children, son "S" and daughter "D".  S and D have both been located, but they have added a twist.  

S and D both acknowledge that P is the father of both children, but D's birth certificate does not name the father.

My understanding is that D would not be a beneficiary unless she establishes paternity through the courts.  D does not want to go through the trouble for her share of an account that is worth about $10K.

If S makes a claim and the plan pays him the full amount of Ps account, the plan should be in the clear right?   Even if D decides down the road that she does want to establish paternity, the plan would have paid the benefit to the only beneficiary at the time of the claim.  Whats throwing me off a bit is that both S and D acknowledge that P was the father of D, even though its not official.  

Has anyone dealt with this type of situation before?

What is a prudent response to a participant who is 'formally' requesting their employer add an ESG fund to the 401k lineup so they can invest in alignment with their moral principles?

Met with a prospect, currently have a CB plan.  They also need audited financial statements so their actuarial firm provided an ASC 715 report.   Question from the employer - the benefit obligation figure on the ASC 715 exceeds the CB hypothetical account balances.  

I suppose it is a matter of assumptions, and what is reasonable.  Is this typical of what CB plan sponsors are dealing with?  This is a small plan,  for IRS funding the assumption is lump sum distribution of the HAB.  I see ASC 715 assumption is the benefit in the form of a life annuity, which I suspect is the reason for the difference.

Thanks.

Following the passage of the Bipartisan Budget Act, plan sponsor agreed to adopt recordkeeper's recommended best practices, which included offering an option to any participant who is on hardship withdrawal suspension to end that suspension early. However, no one ever notified the one participant who fell into this category. Is this a missed deferral opportunity that needs to be corrected?

Dog

Company A will acquire Company B in an asset purchase ( company B will now be Company C).  A and C will be a controlled group. Company A has a safe harbor match. company C wants traditional 401(k) like they had before the sale.

1. As long as they each pass coverage independent of each other they can have their own plan correct?

Company A 10 HCEs   50 NHCES

Company C    5 HCES   35 NHCES

 2. Does Company C's traditional match have to be the same as the match for Company A?

3. Does Company C have to vest 100% immediate like Company A or can they maintain a 6 year graded schedule?

Client really wants to keep Company C on their own.

Participant pays gym membership.  He has a Letter of Medical Necessity and it has been determined that it would qualify for reimbursement. He paid the 2019 membership in December 2018.  Can that count as reimbursement for 2019 if it was actually paid in 2018?

An employer maintains a retirement plan that provides no involuntary distribution except as required to meet Internal Revenue Code § 401(a)(9).

The employer has a non-owner worker, older than 71, who works in only one month of each year.  The work is real, not a subterfuge.

Should the employer/administrator treat that worker as “retired” to compel a minimum distribution?

Why or why not?

Does it matter whether the worker is or isn’t available to work in the other eleven months (if the employer wanted services of the kind the worker performs)?

The client is a small medical practice.  It's an LLC taxed as a partnership.  The partners have entered into an arrangement with a large medical group which is also an LLC taxed as a partnership.  For 2018 each partner received guaranteed payments from the large medical group.  The guaranteed payments equal the amount of self-employment earnings in box 14 of the large group K-1s.    Can those earnings be treated as part of each partner's compensation for the small medical practice's money purchase plan?  (The large plan has it's own plan that the small practice will be affiliated with in 2020.)

Can a CEO of a company sign PBGC Form 500 Filing in the Plan Administrator line - Standard Termination Notice Single-Employer Plan Termination?

If this was Form 5500, I believe the answer will be yes under normal circumstances.  A CEO of a company can sign the Form 5500 representing the employer as long as the stated plan administrator is the employer in the plan document.

When an employer's group medical plan does not utilize at least 80% of the premiums for healthcare in a given year, the insurance company must provide a "refund" to the employer. This "refund" is then allocated to those employees who paid insurance premiums, and it is reported as taxable income on W2.

Question: Is this "refund" received by the employee included in plan compensation the year the refund is received? The particular plan uses 415 Comp excluding reimbursements or other expense allowances, fringe benefits (cash or non-cash), moving expenses, deferred compensation (other than deferrals specified in k. above) and welfare benefits. 

thank you

I see a 403(b) plan document that allows for cross testing. The definition of Highly compensated employee just refers to any employee who earned in excess of $120k in the lookback year.

Question: what if no employee earned in excess of $120k in the lookback year?

Thanks.

Employer has a  Money Purchase Plan.  Participant named her children as her primary beneficiary and the spouse consented to waiving his rights.

The employee has now terminated and wants to take a distribution.  Does the participant's spouse have to consent to the payment?  Since he waived his rights when he signed the beneficiary form, does he still have to consent to the distribution?  I am thinking the beneficiary waiver does not  apply when a distribution is requested.

Thoughts

Thanks

Not a DB person, so I want to see if I've got the gist of this. Assuming a plan has a suspension of benefits (I'll hereafter refer to as SOB) clause, this doesn't prevent a participant from accruing additional benefits, right? But it does mean that benefits can be suspended without actuarial increase for the later payment (but not for retirees who weren't subject to the SOB), and with some quirks, such as actuarial increase still required for active employees over 70-1/2 who are not 5% owners, and taking into account anti-cutback regs for existing retirees, etc...

But in the absence of this SOB, if a participant retires on or after NRD, starts receiving benefits, and is later rehired, then the employee will continue to receive payments, with no actuarial increase in those payments, 'cause payments weren't suspended?

I'm not sure I can properly phrase an example of what I'm thinking, so I apologize in advance! Suppose $$ retires at age 65, and starts receiving normal plan benefit of $1,000/month. Returns to work another year later. Plan has no SOB. Participant continues to receive $1,000/month with no actuarial increase, plus each year may accrue another piece of benefit, which is added to the $1,000.

Now, suppose plan has SOB. In same situation, plan suspends payments of the $1,000. Participant works another 3 years, (prior to 70-1/2) and accrues an additional benefit of $100 monthly for each of those 3 years. Then terminates employment, and starts to receive monthly benefit of $1,300 monthly, 'cause no actuarial increase.

Am I on the right track? Thanks!

Can someone give me some help with participant loan?  Owner wants to take a loan for  $250,000 for the purchase of a primary residence.  They have over $500k in the account so 50% is not an issue.  They will have to amend the plan to add the loan for residence purchase but I am looking for some guidance on if someone can 1) take a loan for over 5 years and 2)can it exceed $50,000 3)what is the process?  Thank you.

Another March 15 come and gone. Hope everyone faired well and I appreciate the folks on here that help us navigate through the sea of complex rules and regs. Kudos.

Two Employers in one control group each have their own 401(k) plan. This year they wished to run ADP and ACP on a disaggregated basis. As a result of this we ran coverage testing the same way. One plan passes, plan "A",  the other just fails the 70% ratio test. I am doubtful that the ABT will pass. Let's call the failing plan "B"

Question- the employers have employees that move between the plans. If a participant ended the year in plan A and was counted in plan A's coverage test but at some time in the year was covered in plan B can that participant also be counted in plan B's coverage test for the same test year?

Aggregating the ADP/ACP would have solved the problem but the results would have hurt plan B so they did not want to re-run the test on that basis.

Client received two 1099Rs 2018 for one excess contribution plus earnings, as follows:

One 1099R shows the excess plus earnings both as gross and taxable

The other is blank in box 1 and $0 taxable.

Have not seen this before.

Our company employees union employees from numerous trade unions.  Each trade offer its own retirement benefits to its members; many of which consist of 401(k) plans administered by the various union trusts.  As an incentive to work for our company, we have offered an additional 401(k) plan to these union employees with a 3% match.  Historically, for nondiscrimination testing, we have only counted employees who participated in our plan.  We did not count eligible employees who did not participate in our plan because they had 401(k) plans offered by their individual unions that they were participating in.  In other words, rather than taking deferrals from pay and adding to their company 401(k) accounts, we were making contributions to their union plans out of our payroll.

This year, we were informed by our TPA that we should have been counting all "eligible" union employees, not just the employees who participated in the plan.   When these additional "eligible" employees were added to the pool of employees tested, we failed the ADP test due primarily to all of the non-participants.

We fixed the problem this year and issued refunds to the impacted highly compensated employees.  However, because we performed the nondiscrimination testing using incomplete data for many years, we are facing the rather daunting task of remedying past failures.  We have been advised that the remedy involves making refunds to highly compensated employees for past failures and making one-to-one contributions to the non highly compensated pool of plan participants.  Besides the financial burden this poses, it leads to several other problems such as deceased participants and participants who retired and pulled their money from the plan.

Has anyone had a similar experience and what recommendations do you have for dealing with the issue?  Is anyone aware of a rule or exception that would justify the way we were counting employees for discrimination testing?

Your comments and suggestions will be much appreciated.

My client is a PLLC, taxed as a sole prop.  His total contribution of $55,000 goes on his 1040.

Participant accounts are in group annuity contracts with buckets for employee, employer safe harbor and employer profit sharing.

He apparently overshot his $18,500 by $3,200.

Since he does not get a W-2, accountant wants to know if the $3,200 would be able to be considered as SH, assuming the fund holder made aware there was some sort of bookkeeping error on how the contribution was coded into their system.

(Facts changed and simplified.)

Employee participates in a self-insured health plan with an HRA feature.

Employee receives medical services from out-of-network provider and is balance billed $1,000 for the cost of services that exceeded what plan paid.

Employee submits claim for $1,000 to HRA and receives reimbursement.  

Before employee pays balance bill, plan reevaluates the claim and pays the provider the $1,000, thus the employee now owes $0 to the provider.  The employee did not initiate or participate in the reevaluation.

What is the consequence of these events?  Can the employer seek to have the employee return the $1,000?  If the employee does not or the employer does not wish the employee to do so, does the $1,000 become taxable to the employee?  If it does become taxable compensation is it the obligation of the employer to treat it as W-2 compensation or is it up to the employee to address?

Anyone come across this situation?