Plan document included an auto-enrollment feature of 2% starting 7/1/2018, no matching contributions. Employer never implemented the auto-enrollment feature. Now the employer intends to terminate the auto-enrollment feature effective 7/1/2019. Under EPCRS, the Employer can fix the errors under the special safe harbor correction method (no QNEC required, but correct deferrals must begin). Are the "correct deferrals" the amount that is in effect at the time of correction (now 0% because the ACA was eliminated), or 2% (because that's the deferral that would have been in effect at time of correction if the error had not occurred)? 

Facts:

A Safe Harbor 401k PSP currently permits all participants including terminated participants with vested account balances to take participant loans, with repayment via cashiers check (actives via payroll withholding).  In the course of permitting such loans, they have come to realize the difficulties in collecting payments and the resources used to follow-up, and, as a result want to modify the Plan's loan provision to permit loans only to Active Partipants and Parties in Interest going forward. 

Question:

Will an Amendment eliminating loan availability to terminated participants violate a BRF provision? Are they a protected BRF? Any existing loans will continue repayment as per there current terms. And as I said above, loans will continue to be available to Actives and PII. Or must the Amendment include a provision stating vested account balances as of the Amendment date must be protected and available for loan purposes even if termination occurs at some later date?

Thank you.

Does anyone know if the IRS is actually assessing late filing or failure to file penalties on an ALE if the ALE 1) timely responds to the Letter 5699 indicating they will file within 90 days, and 2) files 1095-Cs and 1094-C within the 90 days?  

I know they may assess penalties in this situation, but am trying to find out if they are actually doing so if the employer comes into compliance.  Has anyone seen this?  

Lets say a plan has 10 employees, and all employees have enough service to basically enter a plan on day one if a plan were to begin. If an elective deferral only plan was established effective 1/1/2018 but elective deferrals were not effective until 10/1/2018 would my beginning participant count for 5500 purposes include 10 employees or 0 employees since elective deferrals weren't effective till 10/1?

Is age 65 or 62 to be used when cross-testing a DB/DC plan?

If the DB Plan doc. states NRD "The later of age 65 or the fifth anniversary of Plan participation, or if earlier, the later of age 62 or the 10th anniversary of Plan participation"

The DC plan doc. states NRA means the "Later of age 65 or 5th anniversary of the date the participant commenced participation in the plan

Just want to make sure I have this right.  Have a Top Heavy Plan but the only contributions made during '18 was Employee Deferrals (Key Employees all maxed out).  Is a 3% Top Heavy required or is it not since they didn't receive any Employer Contributions?

Thanks in advance!

Does a plan need to be terminated since there is no longer a business and the solo owner is retired

Owner has 4 hourly employees and the plan was set up with safe harbor match. None of the NHCE hourly ee's has enrolled in the plan although they are all eligible. So only the owner has a balance and he continues to put in the maximum 401k and s/h match for himself.  Plan has no profit sharing component, so no top heavy minimum required. Just not used to seeing a plan with owner only having a balance and thinking about the implications.

Plan has decreasing tiered profit sharing formula based on compensation:

• 2% of the first 30k in comp
• 1% of the next 10k in comp
• 0.5% of the next 25k in comp
• 0.25% of the next 35k in comp
• 0.1% of the next 65k in comp

Would this require General (Rate Group Test)?

Thanks!

Small plan - 8 participants including 1 HCE (owner), total assets around $175K.

Plan sponsor made a deposit of EE deferrals, and check bounced.  Sponsor replaced bad check and funds are in the plan.  However, asset custodian charged small fee ($25) for returned check.  Must plan sponsor reimburse plan for the returned check fee or can it be netted against earnings?  What do the regs say?

Thanks!

There were late deferrals in 2017.  The late deferrals were deposited into the plan during 2017 as well.   The earnings on the late 2017 deferrals were deposited in 2018.   The late deferrals were reported on the 2017 5500-SF.  Should they also be reported on the 2018 5500-SF even though the late deferrals were deposited in the prior year (2017)?  Is the deposit of late deferrals only considered corrected when the late earnings are deposited?

Moderator - My multi-part story/question got deleted from the forum, I guess because I posted it in 3 different forums as it has multiple topics to it....I will keep this question limited to the QDRO issue, so hopefully you can keep this post active in this forum

Situation -  Pending Divorce, and QDRO has not been filed yet.  Husband owns 100 percent of company with 4 employees in pension plan.  Husband (age 70) owns about 90 percent of pension plan's total vested benefits.  Employee #2 has about 10% of vested benefits.  Employee 3&4's shares are nominal.  A dollar amount about equal to Husband vested benefits is owned by the pension plan that is not applied towards anyone's share, which is the "overfunding" (this number is substantial, in the 7 figures).  

Question - Does anyone know if any portion of this "overfunding", whether in cash or pension plan assets can be transferred to the wife via her QDRO?  Can it be done either voluntarily by the Pension Plan trustee or by court order?  

Any help or thoughts are much appreciated

-Rich

Client is a single member LLC (disregarded for tax purposes) and we're exploring a retroactive S-election to be taxed as an s-corp.  The LLC name, EIN, and address will all be the same.  We're getting advice that the plan documents need to be retro-amended, but I'm finding conflicting information.  Questions are:

1.  With the LLC name, EIN, and address staying the same, will any plan documents need to be amended?

2.  If the s-election is for the entire year and no wages are paid (nor distributions taken), how should the prior year contributions be treated?  Withdrawn as excess?

I have a plan that has quarterly entry for participation.  (no age requirement)  The plan excludes Part -time, Temporary, and Seasonal employees.

In the Corbel document, 1,000 hours of service was used to describe the PT, temp, and seasonal employee.

Here is my dilemma, because the plan has only the Qtrly entry requirement, the Subsequent eligibility Computation Period was not completed.  Plan year and Anniversary year are the common choices. 

If an excluded employee would happen to not work the 1000 hours for the next year, that's fine, they would not become eligible.  But what subsequent eligibility comp period do I track next?  I cannot find anything in the master plan to default to plan year or anniversary year.

The plan needs to choose plan year or anniversary. 

Am I missing another provision in the document that might clear this up?

Are premiums paid to medicare an acceptable safe harbor medical expense for a hardship distribution?

Payout provisions of 457(f) plan state that deferred amounts will vest on July 30, 2019, provided Exec is employed on that date, and the vested amount will be paid by March 15, 2020.  Plan goes on to state that this payment is intended to be a short-term deferral under 457(f) and 409(A). 

The payment is taxable to the recipient in 2019, even if paid out in 2020, right?  The law seems very straightforward on this to me, but I am confused about what relevance the short-term deferral language has (if any)?

Any input would be appreciated!

Hi, I'm hoping to get feedback for this non-paying business topic, although it is definitely benefits-related.

I'm the treasurer for a small non-profit.  We had one employee for many years, and she was paid under the payroll system of another non-profit - you could say there is a casual/friendly relationship between our organizations but no way is there any common control or commonality of any kind.  We reimburse the other employer for all wages, taxes, etc.  (I'll come back to "etc." later...)  This all set up way before my time, BTW.

Is this arrangement legit at all?  I was thinking it was ok for the other organization to be a common paymaster and process payroll as a convenience, but as I'm looking at more closely it seems there needs to be some common control or close relationship between employers, which does not exist here.

Back to the "etc." part - she's been participating in certain benefits of the other employer - LTD, life, and a 403(b).  Health was even offered but declined way back when.  I feel very strongly that she was NOT an employee of the other organization - they did nothing but cut her checks - and she should not have been covered under any of these benefit plans (weirdly enough, we are participants in a pension plan through yet another organization, legitimately, so she's been in a pension through one org. and a 403(b) through another).  

Unfortunately she died recently, and we are in the process of hiring a new person.  I want to make sure we do it right, and am advocating strongly to NOT have anything to do with having the new person paid through the second organization (although they remain perfectly happy to do it).  It's...downright fraudulent, IMO, and yet, I guess because "we've always done it," no one seems to grasp the severity of the situation.  

So - I'm looking for confirmation that I'm right, or if I'm not, say that so I can adjust my thinking.

I am just trying to gauge how other companies handle 5500's.  Does anyone work for a company that automates 5500's or has them somehow pre-filled with information provided during the annual compliance review? If so, what software is used? 

Hi Everyone - so I'm in the process of updating agreements and such for my clients.  Was wondering if anyone would be willing to share privately what they provide a new client as far as agreements, required fee disclosure.  Trying not to recreate the wheel but want to make certain I'm sending something reasonable.  I would not copy your template just want an idea of what other TPAs send.

Thank you.