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?

I have a profit Sharing only plan that has Union employees excluded.  We just learned that all the employees became non-union on 10/1/2018.  Does this become their date of hire for eligibility purposes? 

Participant only received severance on his 2018 W2.  He deferred $24,500 from it.

So, the money has to be refunded.  What excess is it?  402(g) or 415?

During our divorce settlement, my ex was granted $100K+ from my teaching pension when I retire.  Although the QDRO was drafted by an outside company specializing in QDROs, my ex refused to sign believing that he should receive more.  Both his lawyer and the mediator tried to get him to sign, but he refuses.  It's been 6 years and he still hasn't signed.  When I retire in a few years, if he hasn't signed it and submitted it to the County Judge, will he be entitled to the pension money?

This is new for me and any insight shared would be appreciated. Our company purchased an organization with a MEP last year and we would like to merge the 20 facilities/employer plans into our single ER Plan.   Can we handle it like a standard trust-to-trust conversion - addressing any protected benefits?  I heard there are special consideration for MEPs, however I couldn't locate any conversation on unique issues we need to consider.   Thank you.

Safe Harbor 401k Profit Sharing Plan provides:

401k+Catch-up for all

3%SHNEC for all NHCEs only

Discretionary PS, each Participant own rate group

25 HCEs, 2 are owners

100+ NHCEs

Employer would like to contribute the following:

2 owners 9% PS

Remaining HCEs 1% PS (Plan is NOT TH)

NHCES only the 3% SHNEC, 0% PS -- this satisfies the G/W minimum

Can this be done or must the NHCEs receive "some amount of" PS?

We have a client who is historically non-responsive and difficult to work with, so we were very excited when they decided they wanted to terminate their 401(k) and Cash Balance Plans. 

To ensure everything took place that needed to take place, we mailed notices out to the participants and gave the client 45 days to return the signed termination amendments.

The client has 2 more days to get the executed termination amendments back to us.

I've never had a situation where a client never signed and returned a termination amendment, and I can't find anything that points to this in particular.  Suppose the termination date comes and goes and we still have not received the signed termination amendments.  Is it okay that the client signs the amendments after the plans' termination dates?  (The Cash Balance Plan is not subject to PBGC by the way).

If a Plan uses the definition of pay that is W2 compensation subject to income tax at the source (code section 3401(a)), and the Plan further has no pay exclusions of any type and the basic document does not automatically exclude any types of pay from the definition of compensation, if the employee is given a gift card with a value of $500 that the Employer has to report the cash value of the gift card on the employee’s W2 for the employee to pay income tax on when the employee files his/her tax return at year-end, is the employee eligible to salary defer on this journal entry to the payroll system?

 This is a taxable fringe benefit that is added-on/provided to the payroll provider at year end for W2 reporting purposes for the employee.

 Does the answer above change if the Plan uses a definition of pay that is based on code section 6041/6051 (which is income reportable on Form W2)?

 I believe the answer is NO using 3401a compensation and YES using 6041 compensation.

 This tends to happen with other taxable fringes that are yearend add backs to the payroll system for purposes of getting onto an employee’s W2.  S-Corp Health Insurance and Personal Use of Company Car as two other examples.

 Thank you.

The employee contribution limits for SIMPLE IRA and SIMPLE 401k is currently - $13,000 for Employee Contributions and an additional $3,000 for employees over 50 years of age.

Does anybody know whether this limit applies individually to Simple IRA and Simple 401k or combined. Example is if the employee is over 50 and contributes to both Simple Ira and Simple 401k in the same year. Is the overall limit still $16,000?

We are looking to implement PTO charge back and PTO buy up but we are looking for numbers to present to the board for approval. Anyone know where I can find any sort of statistics with numbers. Something that we can define. We are a manufacturing and technology group. It would help to know what level of employees use this kind of benefit. Any help would be appreciated.

Thank you

Potential client has ownership interests in a few management companies.  Each company was set up to manage one operating company that has employees.  Each management company receives 100% of its business from the operating company it manages.  Client has no ownership of operating companies and management companies have no employees.

Each pairing is a management affiliated service group.  Payments from operating pass through the management company to an equity holding company.  Equity holding provides client with K-1 self employment income.  This income reflects on 1040 SE.

The management companies are disregarded where the client has self employment income with regard to the management companies? 301.7701-2

Tracing the income to a company within an affiliated service group, does that designation attach to the income , precluding client from adopting a 1-man DB plan in his sole proprietorship with the net earnings?  Or would the client sole proprietorship fall outside the affiliated service group, as the income comes from enough operating companies that the 50% management business is not met?

Executive terminates 12/31/17 and is paid a 2018 W-2 for $800,000 distribution from a nonqualified plan for payment in Feb 2018.  Plan defines comp as W-2.  For 401(k) deferral purposes is this eligible comp based on the 2 1/2 months post-severance rules or is it severance pay that is not eligible comp?  Thanks!

Hello,

We are implementing a 401k match with year end true up next year.  For those of you with this in place, what percentage of overall match happens during the year vs. the year end true-up?   I realize this will vary from company to company but looking for some general numbers.

Thanks,

Ryan