Plan A and Plan B (profit sharing plans) are in a controlled group (ok, their respective employers are).  I am running rate group testing with cross-testing for both plans.

Plan A has an NRA of 62 and Plan B has an NRA of 65.  I can see in the regs (1.401(a)(4)-12) where the rule is that you use the latest NRA available (in this case 65) for testing, but the language of the reg seems to all speak in the context of one single plan.

Can somoene point me to the language that you would apply that definition in the way I have described when the testing is being performed at the controlled group level for 2 separate plans?

Small company with a 401(k)/PS plan as well as a pension plan. 

Pension plan is written as an offset so that 100% of the NHCE benefit is provided as PS in the defined contribution plan. The two owners (husband and wife) have their benefit in the DB. 

Would this plan be PBGC covered? It does not meet the small service professional exemption. 

Would the answer be different if it wasn't written as an offset, but as a stand alone plan that is tested with the profit sharing plan? Assuming 401(a)(26) passes of course. 

I have a client that acquired a company with a SIMPLE and we are now outside of the transition period and the SIMPLE was not terminated.  There is no other 401(k) plan in place yet, but the client wants to start a 401(k) plan as they were not a part of the SIMPLE.  

For 2019, could the employees (only 4) of the acquiring employer just begin contributing to the SIMPLE IRA?

Alternatively, since we are in January, very few contributions have been made so far to the SIMPLE IRA.  Should I suggest the client go through VCP and claim an Employer Eligibility Failure for 2019 and state that all contributions cease the day after the NEW qualified plan is signed into place? 

Is that it?  Will the IRS just approve this or will the January contributions be subject to repercussions as a result of the SIMPLE becoming disqualified?

Any other suggestions greatly appreciated!

Plan sponsor has an existing ERISA plan document for its self-insured medial and RX drug plan. Plan sponsor endorses multiple fully-insured ancillary benefits (LTD, STD, AD&D, etc.) and never adopted a wrap document for such benefits. 

It has come to our attention that plan sponsor had been filing one Form 5500 for its "welfare program" (combining self-insured plan with fully-insured benefits) without a plan document properly "bundling" all benefits. 

As I see it, Plan sponsor has the following options:

1. Maintain 1 plan: Adopt a mega wrap document that bundles both the existing self-insured medical plan with the fully-insured ancillary benefits 

2. Maintain 2 Separate Plans: Wrap the fully-insured ancillary benefits under one mega wrap document and maintain the existing self-insured medical plan as a separate document. 

3. Amending the existing plan document for the self-insured medical plan to include the fully-insured ancillary benefits. 

My gut tells me to go with option #2 (thereby maintaining two separate plans...the existing self-insured medical plan document and a wrap for the fully-insured benefits) as I feel there could be complications with bundling an existing ERISA plan document with ancillary benefits under one plan. 

Any pros/cons to either of these approaches? Thank you! 

We have a small segment of our new comp plans that insist on making profit sharing deposits during the year even though they are cross-tested and even though we have told them repeatedly in writing that this is a Bad Idea and a Royal Pain.  Mostly, they give a small percentage (~1.5%) to each staff employee with each payroll to approximate the gateway minimum and none to the owners, so we figure that even if questioned, it could be shown that the deposit is non discriminatory.  Or they give the 3% safe harbor to each staff employee with each payroll but don't for the owners (though that's usually only for sole props and partnerships, which makes sense).

Today, someone here had the idea to ask if the receivable deposit, if tested on it's own, would be discretionary in favor of the HCEs.  Sure, if you look at all the information for the entire year it passes testing, but if you look at that one after-the-end-of-the-year deposit, it's almost all for the HCEs and would fail miserably.

Looking at this on the "receivable" is something I had never considered before.  Is this an even bigger issue than I realized?

Client started with 401k in 1986 (001), then merged into ADP MEP (filed 5500 on ADP EIN) then now wants to spinoff to 401k.  Is spinoff document 001 because they started with 001 prior to merger or 002? does predecessor service or prior year service apply in this case?  Is original effective date 1986 or 2019? 

One of our clients received a call from the "DOL" to the effect of claiming that their plan is "not recognized" by the DOL because they're not in compliance with 408(b)(2), and they'll call back in a week to confirm they've taken appropriate actions. The client says it sounded like a robot.

It seems obvious this is some sort of scam (like the IRS, the DOL would only initiate contact by mail, and they have no way of knowing if a plan complies with 408(b)(2) unless they audit it). If they call again, we're asking our client to request a return phone # and agent ID # to call them back with.

Has anyone else experienced this, or have any insight?

Another client recently received a letter from an advisory firm trying to scare them into hiring them for a "free" 408(b)(2) compliance review.  

Thanks.

Have an  antique integrated DB plan of .75% of average comp +.50% of average comp > $10,000, max 35 years.

Sponsor wants to increase benefits by not more than 10% while keeping it simple and maintaining safe harbor status.

Thinking about amending the plan to add to the existing formula effective 1/1/2019 2% of average comp x Years of service prior to 1/1/2019 limited to 5 years.

This provision seems to violate the 133% rule.  Or is it ok because it is due to an amendment and would be ok for every year of service starting 1/1/2019?

If not ok, any other ideas (within the objective of a safe harbor formula)?

Does anyone have any idea of the percentage of plans that have 3(38) vs 3(21)?

Thanks!

Has anyone ever heard of a DB plan not having trustees? I'm being told only 401k and 401a plans require trustees.  Is that true? and if so, what is the authority for this?  Thanks

Plan facts:

3%SH to all

discretionary PS to all

3 HCES, 3NHCEs, young owner, mixed age staff

each participant is in own allocation rate for PS

Can the employer "cherry pick" a particular participant - who happens to be youngest and new ppt mid-year w lowest eligible pay - such that his own RG passes (a)(4)? The remaining NHCEs will receive at least GW minimum. Doing this passes all (a)(4) testing, 410b easily.  My hesitation is because of perceived bottom up allocation... would it be better to "cherry pick" an existing but younger ppt who earns $100k (obviously more expensive to do so)?

FYI, the other 2 HCEs are receiving the 3% SH plus 1% PS, their indiv RGs pass easily.

Thank you.

Please tell me if I am missing something.  Plan is TH first year 64%.

3% is around $9,000.

Discretionary non-elective of $1,400 would make the TH percentage 59.9 %.

TH test is Accrual for the first year ....isn't it? 

Am I missing something?

Under ERISA and the tax Code, a retirement plan may allow an alternate payee’s QDRO distribution before the participant’s earliest retirement age.  ERISA § 206(d)(3)(E)(ii); IRC § 414(p)(4)(A)-(B); 26 C.F.R. § 1.401(a)-13(g)(3).

For individual-account (defined-contribution) retirement plans, many plan sponsors permit an immediate distribution to an alternate payee, perhaps because a practitioner or service provider suggested that to do so is simpler than keeping a court order open for many years while waiting for the participant to reach an earliest retirement age.  (That’s been my advice.)  Yet some plan sponsors might prefer to provide for not paying an alternate payee before the participant becomes entitled to receive a distribution or reaches age 50.  (I’m not advocating this choice; rather, I’m curious about whether it’s even practically available.)

Does an IRS-preapproved document afford a user an adoption-agreement or other choice for not providing a QDRO distribution until the participant’s earliest retirement age?

Does the document your firm uses afford a choice on this plan-design point?

I'm trying to find the table of rates that reflect the salary increase table S-5 that supposedly is in the Actuary's Pension Handbook.

Pooled funds balance forward Profit sharing plan has an active owner who took his RMD for 2018 and then rolled the rest of his balance to his IRA account.  He still takes a small salary so there will be a new balance in 2019 due to the 2018 profit share allocation/deposit done in 2019 (some time between now and 03/15).  I believe that RMDs can be computed on a cash basis and his balance as of 12/31/2018 was $0.00, so in theory the 2019 RMD would be $0.00.  He will have a balance as of 12/31/2019, however, so RMD would again be required for 2020 anyway. OR - because the plan is reported on an accrued basis including the 2018 profit share allocation is the RMD required for 2019 as he has an accrued balance as of 12/31/2018?

I assume if he rolls his 2019 balance once the ps deposit is made, then the RMD would have to come out prior to the rollover?

We have someone who deferred 26,000 in 2018.  Obvious 402(g) excess.

But do I include the $1500 excess amount in 415?  In other words, what is the maximum PS:  $35,000 (incl excess in 415) or $36,500 (do not include it if it is distributed)?

I believe it is counted, but I cannot look it up in the EOB at the moment.

Hi all,

I have a 401k plan where participant terminated employment in early 2018 and received a taxable distribution in  2018.  His pre tax deferral, Roth contribution and match  exceeded his compensation for the year resulting in 415 issue.

In looking at EPCRS per our VS in 415 excess situation, it seems the correction is to distribute the funds plus earnings to him.  We already did this.  Client wants to self correct since the total excess is under $100. Am I missing something,  Is there anything we need to do other than document?

Thanks for any help!

We are in the process of taking over a plan that is currently a QACA Safe Harbor plan. Client would like to switch to a traditional safe harbor. Can this be done?

I work for a large employer with a DB plan which bases benefits on up to 45 years of service.  Our participants also seem to love their jobs too much to retire.  Therefore, we have several active participants (who are NOT highly-paid) who are over 70 1/2, continuing to work full-time, and whose accrued benefits have exceeded 415.  We have been advised by our attorneys that the appropriate way to handle this is to begin periodic payments, even though the participants continue to work.  This is a new concept for me and I think I missed a regulation change somewhere along the way.  With previous employers our practice was to stop accruals as necessary and make distributions from a non-qualified plan. to make the participants whole.  Can someone provide a little history on this and direct me to the appropriate regs?  Thank you!  

Participant enrolled and deferrals withheld and timely deposited.  In September the employee reached $18,500. Payroll stopped his deferral. The  participant was over 50. Due to a  payroll glitch, the catch up contributions were not withheld.  In January the employer realized the error.  They have corrected the payroll issue.

Any action required by the employer for these "missed" deferrals?  The employer does not make a match contribution.