Anyone have experience requesting a "minor" modification of a VCP compliance statement? The only example in IRS guidance of a "minor" modification is a compliance statement that listed 200 affected participants; however, after recalculating the failure affected 225 participants. 

In our situation, the applicant got an IRS compliance statement approving a retroactive amendment adding back in a provision missing from a 2015 restatement. The compliance statement was issued over 150 days ago.  The applicant recently discovered an inconsistency between the retroactive amendment and the plan's historic administration, and believes additional clarifying language (no more than a phrase or two) should have been added to the retroactive amendment to achieve the intent of the VCP filing and conform the plan document to the plan's historic and ongoing administration.  

At bottom, we think the fix of the document could have been better, but this is a document issue only; the plan's always been operated as it should have been.

Has anyone had success requesting a "minor" modification of a VCP compliance statement under similar circumstances?

I've got a plan with a participant over the dollar limit late in life - this participant wants a lump sum benefit. 

i don't generally deal with anything other than compensation limit issues, but advanced age (late retirement increase) and generous plan features (subsidized lump sum) are the culprit here - the basic plan is not intended to be generous enough to create limit issues. 

My question is, if the participant in question is something like 69 and 6 months, is there any guidance on what is acceptable for non-integer ages in terms of calculating the increased (post-65) dollar limit. 

E.g., if the age 69 calculated limit is $3.2MM and the age 70 calculated limit is $3.4MM (for a lump sum payment form):

1) Is interpolation appropriate/allowed/required?

2) if so, is anything reasonable OK (pro rata in this case vs. a direct calculation at actual age yields a tiny difference. let's say for the sake of discussion that one would be 3.3MM and the other might be $3,301,000)

Sensitivity is heightened since the payment form is a lump sum and the participant's separation of employment is far from amicable.

(the plan document only has boilerplate language, so method isn't specified, and there is no precedent set administratively because this is the first participant in a very large plan who has ever tripped the dollar limit).  

No pre-termination issues with lump sum size, the plan is far too large for that.

Good morning!

I have a plan in which the only employees/participants are a husband/wife and 3 children.

The plans assets are held in FBO self directed accounts for each, but there are also non-qualified assets (mortgages and some other real estate) which are segregated in the owner (husband's) name so his account is the only one affected by their value.

Is he required to have a fidelity bond for the non-qualified assets?  I am not sure as there are no employees other than family members.

Thank you very much!

Is there any permissible situation where a 401(k) can exclude employees that work less than 1,600 hours in a year? 

I am well aware of the IRS guidance on excluding part-time employees that work less than 1,000 hours, but I am so flabbergasted to see a 1,600 hour participation requirement  in a plan restated in 2018 that I feel I must be missing something...? 

Hi all,

Am I reading the regulations correctly?  A 401(k) plan can eliminate their 3% nonelective Safe Harbor contribution mid year, without showing that the company is operating at a loss, as long as the notice that was distributed in December of the prior year included language that the Safe Harbor may be suspended?

Thank you!!

safe harbor 401(k) plan for medical practice has 3% SH NEC only to NHCEs.

During 2018, physicians over age 50 deferred $24K rather than $24,500 due to clerical error by payroll person.  Can they designate $6,000 as catch-up, leaving $18,000 to count toward their maximum annual addition of $55,000?  Or do they have to count the first $18,500 as regular deferrals before counting any as catch-up?  Trying to make room for increased profit sharing.

Thanks!

To date I have successfully passed the ASPPA RFP and DC-1 working toward the QKA designation.  However, I am hung up on the DC-2 test.  The odd part is I pass the practice test but not so successful on the actual test.  I have been through the materials and taken many practice test.  Not sure how to proceed at this point.  

Suggestions?  

Thanks!

We have a client with a 401(k)/profit sharing plan with prevailing wage contributions. We just discovered that in 2018, they increased the rate of prevailing wage contributions, causing a large nondeductible contribution amount. We can reduce it a bit by pushing a post-year-end deposit into the 2019 fiscal year deduction. 

Another option to further reduce the nondeductible amount may be to retroactively amend the plan to bring in an excluded class, and employees who had not met initial eligibility, and give them a profit sharing allocation (the plan is not Top Heavy). I know this would require approval under VCP to be sure it's acceptable. If the client were to do that (assuming waiving the VCP submission), what would likely be considered a "meaningful benefit"? Would 1% of compensation work, or should be more conservative and give them 3% (to match what the IRS considers the minimum for Top Heavy)? They will still have a nondeductible amounts, with a 10% penalty and offset to the 2019 404 limit.

Thanks.

Good morning to all,

Last year I did a massive review of all of our clients and got the 8955-SSA reporting ship shape, going back as far as we had records and being sure everyone was reported correctly.  (These are all DC plans, mostly 401(k)s).  On page 2, Part III, Item (g), I reported the vested account balances of those who had not yet been paid out.

I am now reviewing a 2018 report for a colleague who has done an 8955-SSA and has reported the participant's total account balance instead of the vested account balance.  The instructions for 2017 and 2018 are not specific, just saying ""For defined contribution plans, enter the value (in whole dollars) of the participant's account."  It really doesn't address the fact that their total account balance and their vested account balance are (often) not the same thing.  

What are the rest of you doing?

Thanks for your advice and tips as always.

Plan sponsor currently does not impose any last day/hours of service requirement to receive a match.  Match is discretionary and is only made at the end of the plan year.

Plan sponsor wants to add a last day/hours requirement for 2019.  Can that be done effective March 1, 2019 if it only applies after March 1st?  For example plan sponsor wants to apply current rules for all contributions for January and February, but impose the last day/hours requirement for any match made anything after March 1st. 

Thanks in advance for any guidance.

Reading through the new publication 560 just released and I'm struck by how they seem to go out of their not to call attention to the fact that Section 125 premiums reduce eligible compensation.

It seems the only reference to this rule is that when it describes those pre-tax contributions that do not reduce compensation, 125 deductions are not listed.

And of course it's stupid that your EMployer should be rewarded for making you pay more for health insurance premiums, or that you should be penalized for being older because your deductions are increased as premiums increase.

Does the IRS not want me to follow this rule?  It seems if they did they would say "hey, watch out - 125 deductions reduce comp!"

A plan participant has provided a copy of his divorce decree to the plan administrator. The divorce decree stated that 100% of the participant's account balance under the plan is to be transferred to his ex-spouse. The plan administrator determined that the divorce decree is a qdro (approved), and as such, has transferred the employee-participant's account balance to his ex-spouse.

My question: Was a separate qdro document required? Or was the plan administrator correct in processing the qdro (balance transfer) based only on the divorce decree?

company started SIMPLE IRA plan beginning 10/1/2018.  The company operates on a calendar year.  When calculating the SIMPLE IRA match, can you use compensation for the full year, or only from October - December?

Thanks!

Participant elected in 2015 to contribute Roth 401(k).  From 2014 through June 2018, the participant contributions were inadvertently set up as pre-tax in all respects (w-2 reporting, deposits at recordkeeper, withholding calcs, etc). 

What to do?  Note: The participant has since rolled his entire balance out to an IRA, but if it helps we can start by assuming the money is still in the plan...

Current plan document allows for in-service distribution for participants who are over 59.5 and employed for 5 years. The withdrawal is restricted to once a year. The client wants to amend the plan to allow multiple (periodic) payments of in-service distribution for participants who are over 70.5 and leave the restriction for once a year for participant who is 59.5. is this allowed?

We have a 401(k)(12) ???? harbor 401k plan with the basic match that we want to restate to a QACA safe harbor match 401(k) plan under 401(k)(13). Can the QACA match have a 2 year vesting schedule not just for new hires but also for existing participants with a traditional safe harbor match account that is 100% vested? Our document sources these accounts separately- there is a separate definition of QACA match in the document. Any thoughts would be appreciated!

Plan is self-insured.  I've been told a plan administrator can override a denial and authorize payment be made for claim previously rejected.  IS that accurate?

I am representing a client who is being offered a job with a new company, except that the company does not offer a 401(k) plan. She is likely to accept the offer but thinking of funding a traditional IRA as an option to replace the 401(k) her new employer will not provide. She also has a side business which she hopes to continue to maintain and is considering a solo(k) to help her fund her retirement through that business. Would the maintenance of the solo(k) result in her being treated as an active participant in a retirement plan for IRA deduction purposes? I did some preliminary research on this and nothing I have seen specifically addresses this. Since active participation is reported on the W-2 issued to an employee, I would tend to think that the answer should be No but wanted another set of eyes to back me up. Thank you.

Any word yet on proposed changes to hardship withdrawals?  Is anything final?

Running the ADP test for a traditional 401(k) plan based on compensation net of salary deferrals. A participant has compensation of $300,000 so she is being limited to $275,000. When we reduce her compensation for $18,500 of salary deferrals, is it subtracted from $300,000 or the $275,000 of limited compensation?

Thanks.