We filed an 8955-SSA for 2010 reporting 1 participant that was paid out (code D).  We were just notified by the Participant that he was informed by SSA that he had benefits due him.  Debating whether we should send a letter to SSA with a copy of the return previously filed or add said participant to the next SSA.  Has anyone run into this before and/or what are your thoughts?

We have a plan that was terminated 12/31/2017. IRS considers a plan terminated if all assets are distributed within 12 months of the termination date. 

There are two participants who could not be located and the client directed 100% of each participant account payable to an eligible rollover institution that accepts and establishes IRA rollovers for missing participants.

The checks were prepared last week and mailed to client, payable to the financial instution.  If the checks are mailed ASAP to the rollover institution, is the plan closed since the money came out of the plan; or is the plan considered when the rollover institution establishes the IRA accounts?

Medical practice sponsors 401(k) plan. A nurse practitioner terminated employment in early December, and has not worked for the plan sponsor since termination.  However, the NP will receive commissions on collections through the end of December.  What is the impact on the retirement plan if the NP receives a paycheck (with employment taxes withheld) as of 12/31 even though the last day worked was several weeks prior to that?

Thanks!

An employee has submitted paperwork to show he has experienced a divorce as a Qualifying Event.  However, he didn't submit a divorce decree, but, rather, other documents such as a Partial Mediated Settlement Agreement.  Is this sufficient?  Even if it is, is it OK for me to require an actual divorce decree instead?

403(b) plan sponsor identified errors in adoption agreement dating back to 2014 resulting in differences between the operation of the plan and the document. We plan to submit a VCP proposing a retroactive amendment to the plan. 

Question is this - should plan sponsor adopt an amendment NOW (by 12/31) to make these changes for the 2018 plan year and file the VCP for 2014 - 2017, or wait and include 2018 in the proposed amendment submitted in the VCP?

403(b) plan sponsor wants to adopt an amendment on 12/31/18 to change vesting of employer matching contributions from immediate vesting to 3 year cliff (100% vested after 3 years) , effective 7/1/18, for all employees hired on or after 7/1/18.   

Is this a violation of the anti-cutback rules?

Hi everyone!

On the annual information questionnaire we send to clients, we ask if their company shares the services of any employee with any other business entity.

Their bookkeeper has responded that he works for 3 other companies, 2 that pay him as a W2 employee, and one as an independent contractor.

The owners of the company do not have any ownership in the other businesses in which this employee works.

My question is - do I care?  Would I only have an issue if any of these companies had common ownership?  Is there anything else that I should be asking?

Thank you very much!!!

I have a client with a 401(k) plan which will be merged into the 401(k) plan of their parent company on April 1, 2019. The parent company has asked the client to freeze contributions (but not loan payments) effective January 1, 2019. Is the client required to provide the plan participants with any advance notice of this freeze?

Asset sale occurred 11/2, plan termination effective date is 11/3, seller (sponsor of plan being terminated) says employees were terminated on 11/1. This is a tested plan but only owners are HCE's. There are no Employer contributions.

Can non-owner employees be paid out on 11/30 before any year-end work is done technically on the basis of being terminated employees vs. for the reason of the plan termination?

DBP amends its final pay formula as of 12/31/2012 and provides a new/better final pay formula effective 2013. The accrued benefit as of 2012 is frozen - benefit service and final average earnings - so total accrued benefit is A+B. However, the plan also limits benefit service to 25 years but does not specify how that limit applies with respect to the pre-2013 and post-2012 benefit formulas. The prior actuary (it's always a takeover case) applied the limit on the latest service. 

Extreme theoretical example, a person hired in the 1980's could hit the service cap under the old formula, work another 25 years (so 50 in total) and not accrue another cent, while a new hire in 2013 could work 25 years all under the new formula and have a substantially higher benefit than the 50-year employee.

Putting the fairness argument aside, are there any statutory issues of concern here? If so, would it matter if the pre-2013 FAE was not frozen so that the service-limited person's benefit could increase for salary increases?

Thank You and Happy New Year!

We are in the process of splitting a plan into 2 plans so that there is no longer an audit.

The intent is that the effective date of the new plan and the amendment to the old plan (removing some employees) is 1/1/19.

We know that audits are determined based on the number of eligible employees in the plan at the beginning of the plan year.  So if count on 2018 Form 5500 at end of year is 130 and on 1/1/19, 60 of these participants are now participants of plan 002 and no longer participants of plan 001, am I correct that as of 1/1/19 the counts in both plans are now less than 100 and no audit is required? 

A client is the majority owner of Company A and a minority owner of Company B. He will acquire majority ownership of Company B in January of 2019.  The ownership will be enough to establish an A+B controlled group.

Company A maintains a small plan with a safe harbor match and A21+1YOS for eligibility, Company B maintains a large (audited) plan with a non safe harbor match and A21+3MOS for eligibility.   We are working on a new plan design to fit the needs of both A and B, but we don't have a clear solution yet.  Neither company has adopted the plan of the other company.  B's plan would probably pass coverage no problem with A's employees not benefiting, but A would fail miserably.

We can rely on the transition rule until we have a solution and then make the solution effective 1/1/2020 right? 

Client currently sponsors an ESOP and a tested 401k Plan.  The ESOP owns 100% of the company stock.  Both plans are audited.

Client is interested in breaking their current 401k plan into 2 separate plans to avoid the cost of audit.  The two plans would consist of one safe harbor plan covering salaried employees and one tested plan covering hourly employees.  All HCEs would be in the safe harbor plan as would 32.97% of the NHCEs.  The remaining 67.03% of the NHCEs would be in the tested plan.  Can this be done when the third plan sponsored by the client is an ESOP?  We have not encountered this situation before.  Can anyone provide guidance or reasons this is not feasible?

I have taken over a non-governmental contributory multiemployer DB plan in which employee contributions ceased many years ago but with respect to which approximately 200 separate accounts still exist.  The client has historically obtained a separate audit for these accounts.  Audit and investment fees associated with the separate accounts are paid out of the accounts and the trustees are concerned that these costs are getting too high.  The trustees would like to find a way to get rid of the separate accounts.  My questions are:

1.  Is a separate audit of the separate accounts legally required?

2. Am I correct that a contributory DB Plan is still a DB plan; accordingly, an in-service pre-normal retirement age distribution of a participant's separate account cannot be made available to such a participant because a DB Plan cannot distribute a participant's account before (1) the plan's termination, or (2) the participant's termination of employment or attainment of normal retirement age?

3. Assuming that the segregated accounts can't be paid to participants before their termination of employment or attainment of normal retirement age, can the DB Plan spin off the separate accounts into a new DC plan and then terminate the DC Plan and payout the accounts?

Thanks in advance for any help. 

It appears only current year compensation can be used in determining the contribution credit each year.

If that is the case, are we forbidden from general testing based on average compensation with a cash balance plan?

Thanks. 

A one-man company, inception date 12/1/2018, would like to start a 401k with an initial short plan year, 12/1/2018 to 12/31/2018. 

If the Limitation Year is defined as the calendar year, is it permitted to not prorate 415 and comp, even though the company has only been in existence for 1 month?

Thank you very much.

Sponsor deducted final deferrals from the wrong payroll file, and thus many participants who had increased their deferral elections were missed. The IRS EPCRS guidance states if corrected within 3 months no QNEC is due for the deferrals, a QNEC for the missed match if any must be made and there is a notice. However this is not their concern, they want to know how to correct for the missed deferral deduction opportunity? Is there a W2 or accounting method they could use to fix this like offset some of their pay from the 1st payroll in 2019 so they can make 2018 deferrals? I have not had this issue come up before so any thoughts would be appreciated.

ERISA Section 502(c)(1)(B) allows a court to impose a civil penalty upon a plan administrator if it fails to furnish documents to a participant or beneficiary with 30 days of receiving a written request for such documents absent reasons beyond its control. The dollar amount was bumped up to $110 by 1990 legislation. 2015 legislation imposed a requirement for indexing the dollar amounts for nearly all federal statutory penalty amounts. However, I have noticed that on the four occasions when the DOL has published penalty adjustments, Section 502(c)(1)(B) was omitted from its list. Does anyone know why this is happening?

Hello,

If an employee goes over the 402g limit for the year and the correction is made in the current year,  what would the 1099r look like.  

For example.  John contributes $19500 for 2018.  We correct this in December 2018 but because of loses the refund is only $900(1000(amount over) - 100(loses)

When he gets his 1099r in Jan 2019 will it be an issue if it says $900.   When doing his taxes he will enter $19500 for his 401k contribution and enter $900 for the 1099r.  Will the IRS still he went over $100?

Employer wants to implement a student loan repayment benefit, often erroneously referred to as a "match" but we know is an employer non-elective contribution.

Question is how much of the "program" needs to be addressed in the plan document vs. a much less formal payroll practice or policy.

It would seem that if the plan document already provides (or is amended to provide) that each participant is in a separate non-elective allocation group, and the eligibility and vesting provisions conform to the employer's intent that there would be no requirement to have anything further in the plan document.

When an employer determines in it's sole discretion how much non-elective contribution to allocate to each participant there's no requirement that the basis for the allocation be incorporated in the plan document. If an employer wants to reward certain employee behaviors by non-elective contributions ("you'll get $1,000 if you increase sales by 5%" or "you'll get $1,000 if you have no unexcused absences this year") those policies can be communicated informally and do not require plan amendments so it would seem that a student loan repayment benefit could likewise be crafted outside of the plan document.

Any disagreement?