Company A acquired Company B in an asset sale in late 2018.  Company B maintained a 401(k) plan that was not assumed by Company A as part of the sale.  Nonetheless, following the closing date, Company A has continued to make contributions (both employer contributions and elective deferrals) to Company B's plan, which were accepted by the TPA.

It seems to me that this scenario results in countless technical violations, but little (if any) harm to participants, and that the least problematic solution would be for Company A to assume sponsorship of the plan, retroactive to the date of close.  I'm aware that such an approach should involve a VCP application, though I doubt the parties will be interested in the time and expense involved in such an application.

Any problems with that proposed solution (aside from the risk associated with not going through VCP) that I'm missing?  Alternatively, are there cleaner approaches that people have used or seen?

Plan document calls for safe harbor matching contribution to be determined on a payroll v payroll basis (with no true up).  True up calculated for 2016 and 2017 and deposited by Plan Sponsor.  How do we correct?  

We were going to forfeit the excess amount due to true up with earnings and file under EPCRS.  

Anyway to avoid this?  Suggestions greatly appreciated.  

My apologies if the answer is obvious and I'm just not seeing it.

The plan provides for a discretionary match which the plan sponsor may make after the plan year has ended (1000 hours and last day required).

The plan sponsor wants to wait until later in the year to decide whether or not to make the match, let's say after March 15th.  The plan fails the ADP test, and if match is allocated pro-rata over deferrals will most likely fail the ACP test as well.

If the match is discretionary, is it possible to allocate the match by reducing the match to the HCEs sufficient to avoid an ACP failure and possible excise tax?  I do not see anything in the document that indicates one way or the other.

Appreciate the assistance.

Is anybody aware of a publication that has a good discussion of the difference in taxation between annuities in general and the simplified method of taxing annuity payments from a qualified plan under IRC Section 72(d)?

Plan acquired entities with 400 new participants during the course of 2018 - all hired 2/1/18

Plan is recognizing service from date of hire for the 400 new participants

In 401k testing, I am excluding all those who do not meet statutory eligibility

Do I count the participants I'm recognizing past service for in the non-excludable test

It seems like I would not since their hire dates with the employer do not meet statutory eligibility regardless of the past service that is being recognized

Thank you

We have a client that wants to add a Voluntary After Tax component to a Safe Harbor Match plan (not Roth).  The SHM will be the only employer contribution.

The top heavy regs say if a plan consists SOLELY of a CODA and the SH, then the plan won't be top heavy.

Does the addition of the VAT mean top heavy is back in play?

An employer wants to terminate his 401k plan in 2019 and start a SIMPLE at the beginning of 2020.  Can the employee 401k accounts be rolled immediately into the SIMPLE or is there a 2 year wait?  If a 2 year wait, then if the owner and/or participants wanted to have their 401k money in the SIMPLE, they would have to park the money in an IRA, wait to years, then move it to the SIMPLE, does that sound acceptable?

Thank you

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)??