Client went through high turnover this year.

2 HCEs

1 NHCE > 1000 hrs

3 NHCEs terminated - 1 > 1000 hrs, 1 900 hrs, 1 < 500 hrs.  All left months apart, voluntarily.  Two were partially vested.

2 HCEs defer

3 NHCEs defer

HCE owners want to max his allocation.  Profit-Sharing has last day/1000 hr condition.

I think I have to add back 2 terminated NHCEs to pass 410b

Wrinkle - Plan has "New Comparability" checked as allocation. Historically, allocation has been Integrated.  I think I can allocate as if "integration" was check on the AA.

Just want to make sure my "bad news" is solid.

Greetings:

Plan sponsor is in the process of winding down and terminating all of its benefit plans. All plans have 100+ participants. It came to our attention that over the past number of years, plan sponsor had been filing only ONE Form 5500 for ALL of its ancillary benefits (AD&D, LTD, Life Insurance, PPO, etc) in addition to its partially-insured health plan (medical & RX drug). Meanwhile, a (mega) wrap plan document was never in place bundling these benefits.

It is our position that a retroactive wrap document cannot be used to retroactively bundle benefits which were previously and incorrectly reported under a single Form 5500 (although it does permit a single filing under DFVCP and help with a single $4,000 penalty).

That said, is it possible that this is an Form 5500 amendment issue (since a Form 5500 was in fact filed each year, just incorrectly and for the wrong plan name) and thus inappropriate to be filed under DFVCP? I am more inclined to recommend correction under DFVCP since I see this as a non-filer issue (Form 5500 that was filed was under a non-existent plan name) and client would rather pay the $4,000 filing fee and rest assured that the matter has been put to bed. 

Lastly, since only one Form 5500 was filed covering both (a) the partially-insured benefit plan (which has an ERISA plan doc), and (b) The fully-insured ancillary benefits (which does not have a plan document), which do you think is the better course of action:

(1) Include both the partially-insured benefit plan (which has its own plan document) and the filly insured anciliary benefits into a mega wrap plan document and file only one Form 5500 under DFVCP

(2) Exclude the partially-insured benefit plan from the mega wrap document (so just bundle the ancilary benefits) and file 2 seperate Form 5500s. 

Thoughts and Feedback would be most appreciated. Thank you!

i have a doctor client who is a minority owner in a dialysis center. they send patients to the center for treatment. it seems to meet the definition of an A-org/FSO affiliated service group but this is problematic for me.  the center does dialysis for many other doctor groups. it is also owned by a majority owner. what if there were other doctor groups that owned a piece?  how could the center be part of two affiliated service groups?  am i missing something?

Did the IRS issue some sort of guidance or notice in 2017 effective for 2018 that restricted what assumptions could be used in a beginning of year valuation? Specifically did they state that for a participant you must assume 2018 expected compensation and expected hours must be the actual 2017 compensation and hours?

Tax-exempt employer established 403(b) plan effective 7/1/1998, and amended and restated effective 7/1/1999 on a individually designed plan document.  Document was not updated to comply with final 403(b) regulations, EGTRRA, PPA, HEART, and WRERA.

What corrective action should the employer take to address these document failures?

Background: Client is in the middle of selling a division and will be keeping those employees in it's medical plan for the rest of the year to avoid disruption, thus creating a self-insured MEWA with two employers for this short period. 

I'm trying to determine the potential risks and requirements of keeping these employees in the plan for the rest of the year under Tennessee law.  So far I've found the applicable rules and regulations (Tenn. Comp. R. & Regs. 0780-01-76), but I'm a little confused as to if these regs apply to a two employer MEWA because 1) the regs say they apply to "self-insured qualified" MEWAs and 2) then go on to define a qualified MEWA as consisting of ten employers.  

Anyone have any insight here?  Would really appreciate it - feel like I'm just spinning my wheels at this point. 

A 403(b) plan currently has 3 vendors and would like to move to a single vendor arrangement. However, they are hesitant to make any drastic changes from a participant perspective. Are there any clear issues with them doing a phased approach and moving to a single vendor going forward for new employees only? And is that something that could be amended in their plan document? Any insights would be appreciated. 

If a plan has a per-payroll fully vested match subject to deferral withdrawal restrictions, is the match deemed to be a QMAC? 

A plan sponsor's DB plan has been hard frozen for a few years. It has no early retirement and no subsidized benefits. Last month they changed their 401(k) plan to only provide allocations of deferrals and safe harbor match for 2019. Is the 401(k) plan top-heavy exempt, or does the mere existence of the frozen DB plan eliminate the top-heavy exemption?

We have a new client who came to us.  They were part of a MEP as of 6/1/16 and have decided to terminate their participation in the MEP and want to start their own plan this year.

We have conflicting thoughts in office as to what is the effective date of the new plan.  I say this is a new plan and its effective date should be 2019.  My reasoning for a 2019 date is that this if the first time that the employer has sponsored their own plan.

Others are saying the effective date of the plan should be the date they entered the MEP as a participating employer.  

Can anyone provide some guidance?

Hi,

Our client had an excess matching of $18 to an employee and couldn't contact with him to resolve this problem. The plan admin proposes the following fix.

"The guiding principle is to make the plan whole. You have three options here:

• Recover the assets from the participant to make the plan whole (let me know if you go this direction and I will provide some assistance with the mechanics)
• Make the plan whole from corporate assets and recover the assets from the participants to make the corporation whole
• Declare this to be a deminimis amount, taking no action to make the plan whole, and take your chances on audit with the IRS/DOL that they agree with you that this amount is deminimis"

We really want to treat this as deminimis since it would be troublesome and not cost effective to resolve such small amount. I just want to find some research or guideline from IRS/DOL to back this deminimis.

I did some research and only found Rev. Proc. 2016–51. section 6.02(5)(b) "(b) Delivery of small benefits. If the total corrective distribution due a participant or beneficiary is $75 or less, the Plan Sponsor is not required to make the corrective distribution if the reasonable direct costs of processing and delivering the distribution to the participant or beneficiary would exceed the amount of the distribution. This section 6.02(5)(b) does not apply to corrective contributions. Corrective contributions are required to be made with respect to a participant with an account under the plan." But this only applied to corrective distribution. In this case, the employee owes the plan back $18.

Would some of yall run in to this situation before and have any guideline on this or research regarding how to treat this. ?

Thank you!

I had a client call me with a participant wanting a hardship withdrawal.  All of his money is in ROTH deferrals.  Does he  need to request a hardship, or can he just take his ROTH out ?  He has not been in the plan 5 years however - only 3.  I am not sure of hardship rules as they apply to ROTH....  I can't seem to find anything definitive either.  Anybody know for sure?  He's only 32 and their inservice rules are age 59 1/2.  

He does have  a true hardship.  

Is adjunct professionals a reasonable exclusion from Code 410(a)??

The company I just started with has PTO purchase via 125 plan, the deductions was set up to  hit GL as  CR to PR Liability. When or how is the Liability cleared?  Plan states all time has to be taken or lost.

What should happen when the employee uses the purchased Time off?

Seems to me we will have to do a manual entry to DR the Liability account and CR Wages, to correct the balance sheet.

Currently,When the employee takes any PTO, this is paid out to them as vacation time , or wages in effect and taxed as such.

I  need to confirm I am understanding  the DR and CR of this transaction. 

Where is the benefit , other than extra week off, with pay, they in effect purchased from the employer.

They have never reconciled the balance sheet , I am attempting to do that for EOY 2018 and this one item has me confused.

Thank you to anyone that will reply and explain this in clear T accounts 

Pauline

Say a 5% owner is well past 70.5 and starts a plan effective 1-1-19. Vesting is excluded prior to 1-1-19 and NRA is 65+5. 3-year cliff vesting is used, so the owner will first have vested benefits in 2021.

Is the initial RMD date 4-1-2022 or 12-31-2021?

There are several threads on this topic, but they give different answers, and some are more focused on the benefit amount instead of the starting date. One area of confusion appears to be that people get DC rules mixed up with DB rules. For example, in a DB plan, if an RMD starts at 4-1 with an annual payment, the second RMD is NOT due at 12-31 of that same year. The second RMD is payable at 4-1 each year. 

I think a second area of confusion is that I'm not sure the IRS gives a clear answer.

I can see an argument made for 4-1-22 or 12-31-21. How do others approach this? Thanks.

Is there any website or links that will explain the termination procedure that one needs to follow when the plan is part of a controlled group.  Basically can a plan that is part of a controlled group can it Terminate?

My client is contemplating leaving a multiemployer Fund.  We have two withdrawal liability estimates, one from a few years ago and one very recent.  The recent one is almost triple the one from a few years ago.

We have been told that the Fund changed their withdrawal liability calculation rules, removing a cap on how they calculate unfunded vested benefits.  This rule change caused the huge increase.

This seems suspicious to me that my client could have left the Fund a few years ago for a fraction of the cost based on unilateral action by the Fund.  Is the Fund allowed to make this change?  Should the Fund have provided advance notice before making this change?  Are there any other defenses my client has against this huge increase in withdrawal liability based simply on the Fund changing how the liability is calculated?

Some individual-account (defined-contribution) retirement plans allow a participant a choice of taking a retirement benefit in periodic payments.  Others provide a benefit is paid only as a single sum.  Some reason that limiting payout options doesn’t harm participants because whatever one might choose in an employment-based plan’s payout options can be accomplished with an Individual Retirement Account or Annuity [IRA].)

A recent Pensions & Investments article describes an Alight Solutions survey, which finds 57% allow periodic payments and 43% don’t.

I haven’t read Alight’s report, but I guess the sample is larger plans.  I wonder whether smaller plans have a different mix on allowing or precluding periodic payments.

So informal survey:

Do your clients’ plans allow periodic payments?

About whether to allow or preclude payments, do most clients follow your suggestion?

Is it possible to use a definition of compensation that passes 414(s) testing when the plan's design is using a safe harbor enhanced match per pay?

My fact set is the plan was designed to exclude pay in excess of $125,000.   Since this is a 403b plan, the safe harbor design is used to pass the 401(m) test.  The formula is 100% on 4% salary deferred with comp for employees capped at $125,000.  Since the only employees impacted by the cap are HCEs, the 414(s) testing passes.

But now I am wondering and am getting conflicting answers with some research I am doing that even allows a Safe Harbor plan to exclude any forms of pay even if the exclusions passes 414(s) testing.

I will take any help and feedback.  Thank you.

Brigid

I'm confused by the recently proposed excepted benefit HRA that would allow an HRA to reimburse dental/vision premiums and other ACA exempt benefits if eligible employees are also offered group health plan coverage. 

https://www.federalregister.gov/documents/2018/10/29/2018-23183/health-reimbursement-arrangements-and-other-account-based-group-health-plans

I thought current rules already allow for a limited scope HRA that reimburses dental/vision expenses only (including premiums) as long as they are not an "integral part of a group health plan" or they are provided "under a separate policy, certificate, or contract of insurance" (such as an individual dental/vision policy)? What am I missing?

Treas. Reg. §54.9831-1(c)(3)(i); DOL Reg. §2590.732(c)(3)(i). (special rules relating to group health plans)

See Amendments to Excepted Benefits, 26 CFR Part 54, 29 CFR Part 2590, 45 CFR Part 146, 79 Fed. Reg. 59130, 59132 (Oct. 1, 2014)

Treas. Reg. §54.9831-1(c)(3)(ii)

DOL Reg. §2590.732(c)(3)(ii)

HHS Reg. §146.145(b)(3)(ii).