Took over a plan that the document excludes highly compensated employees from receiving the safe harbor match.  The plan now wants to change and give the safe harbor match to everyone.  Can I amend mid year or do I need to wait until January 1, 2020.  Thanks.

A non-governmental 457(b) plan is terminating.  However, the plan document was never updated for PPA, HEART, and WRERA.  I understand that any plan correction cannot be through VCP, but the plan sponsor has option for the IRS to review their 457(b) plan document or consider any other document form issue by requesting a private letter ruling?

In a related issue, in distributing assets upon plan termination, what procedures can the plan sponsor implement when distributees cannot be located?

Our document software creates an SPD for delivery to participants.  I know it's not required but of course it is a good and thorough explanation of the plan so I would typically have clients distribute (whether exempt or not).  I have a new client where the provisions are quite complex and vary depending on which group of employees you are "disclosing" to, which makes production and distribution of the SPD's a bit more challenging.

So I know they are not required to use an SPD (they have informal informational sheets).  But are there benefits to distributing a complete SPD to all Participants which clients may wish to avail themselves of?  One thing that comes to mind is reducing the risk of an employee saying "Geeze if you had told me that.."

A single participant retired from a qualified, ERISA DB plan at age 55 with a life annuity with 10 years of payments (120 months) guaranteed. He named his sister as beneficiary. 3 years after the annuity starting date, he got married.

I presume the spouse has no right to the guaranteed benefits if the retiree dies before 120 payments have been made, correct? Any guaranteed payments will go to the named beneficiary (the sister).

Are there any issues if the retiree wants to change the beneficiary? I presume he could contact the plan sponsor to make this change - but I'm not certain if it would violate a code or regulation. I don't believe it would change the benefit amount - as the calculation of the life annuity with 10 years guaranteed does not factor in the beneficiary's age/sex. Does it create a new annuity starting date?

We're assuming the plan document is silent on the matter. It doesn't prohibit a retiree to change the beneficiary after the ASD, but it doesn't specifically allow it either. 

I am having difficulty interpreting part III. What is a lay-man's understanding of the difference between part 9 experience rated and part 10 non-experience rated? Are experience-rated fully insured while non-experience rated self insured?

Many thanks!

supposedly this is to be voted on this week. some of the provisions in the modified Bill are

Min Distributions increases to 72 in 2023 and age 75 in 2029

‘‘(I) for calendar years before

2023, age 701⁄2,

 ‘‘(II) for calendar years 2023, 2024, 2025, 2026, 2027, 2028, and 2029, age 72, and ‘‘(III) for calendar years after 2029, age 75.

I guess this overrides the DOL by saying if you self correct too bad DOL 

(b) LOAN ERROR.—The Secretary of Labor shall  treat any loan error corrected pursuant to subsection (a)  as meeting the requirements of the Voluntary Fiduciary

 Correction Program of the Department of Labor.

You can be late by 6 months for min distributions  

(d) REQUIRED MINIMUM DISTRIBUTION CORRECTIONS.—The Secretary shall expand the Employee Plans

 Compliance Resolution System to allow plans to which  such system applies and custodians and owners of individual retirement plans to self-correct, without an excise  tax, any inadvertent failures pursuant to which a distribution is made no more than 180 days after it was required  to be made.

 catch up may start at age 50 but if you are 60 you get even more

SEC. 121. HIGHER CATCH-UP LIMIT TO APPLY AT AGE 60.

(a) IN GENERAL.—

(1) PLANS OTHER THAN SIMPLE PLANS.—Section 414(v)(2)(B)(i) is amended by inserting the following before the period: ‘‘($10,000, in the case of an eligible participant who has attained age 60 before the close of the taxable year)’’.

 don't have to keep giving notices to people who aren't deferring, etc

‘‘SEC. 111. ELIMINATING UNNECESSARY PLAN REQUIREMENTS RELATED TO UNENROLLED PARTICIPANTS.

1. IN GENERAL.—Notwithstanding any other provision of this title, with respect to any individual account plan, no disclosure, notice, or other plan document (other than the notices and documents described in paragraphs (1) and (2)) shall be required to be furnished under this title to any unenrolled participant if the unenrolled participant receives

 you may have to let long time part timers into the plan to defer but no top heavy, etc.

‘‘(i) NONDISCRIMINATION RULES.—In the case of employees who are eligible to participate in the arrangement solely by reason of paragraph (2)(D)(ii)—‘‘(I) notwithstanding subsection (a)(4), an employer shall not be required to make nonelective or matching contributions on behalf of such employees even if such contributions are made on behalf of other employees

eligible to participate in the arrangement, and‘‘(II) an employer may elect to exclude such employees from the ap1 plication of paragraphs (3), (11),(12), (13), and (15), subsection

(a)(4), paragraphs (2), (10), (11), (12), and (13) of subsection (m), and section 410(b).

‘(ii) TOP-HEAVY RULES.—An employer may elect to exclude all employees who are eligible to participate in a plan maintained by the employer solely by reason of paragraph (2)(D)(ii) from the application of the vesting and benefit requirements under subsections (b) and (c) of section 416.

.............

I didn't see anything in the Bill that eliminates 3% safe harbor notice or allows you to add safe harbor after the fact, but maybe that is buried elsewhere.

Is the Plan Sponsor required to provide to a participant the specific funds or stocks they are investing in for a pooled Profit Sharing Plan?

New DB plan set up and client funds corporate contribution into an ambiguously defined savings account.   What makes this a retirement account or not?    Is intent relevant?  Is it automatically not a valid deposit if the account was identified in the name of the business owner (and later corrected)?   Or does it specifically need to be identified in the name of the plan or owner as Trustee?

Hello all, Had a client that didn't start an employee's deferral on time back in 2018. Since the missed contributions cross two plan years, how are the QNEC, missed match, and earnings  tracked in testing with the 2018 testing being completed already. The entire correction is being made in 2019. 

Also just wanted to clarify that the missed match goes in as match source and not a QMAC since it's corrective. Thanks! 

Hello! Long time lurker, first time poster. I'm still relatively new to the game but I've completed the requirements for my QKA and I know enough to know there's still a lot I don't know yet. 

We've taken over a plan and the plan contact informed a member of our admin team that their prior TPA had warned them of a penalty for the plan failing ADP testing for three consecutive years. I've not come across this in any of my studies so far, and I cannot find anything about it anywhere - not on ERISApedia, not on tag, google, IRS site, nothing.

Now, I know that the layperson generally has no idea what we're talking about when we discuss ADP/ACP testing or coverage or anything else, so the likelihood of the client having misunderstood something that the prior TPA said is certainly present. But have any of you ever come across this? If so, could you point me in the right direction?

Thanks!

This is a cash balance plan for a sole proprietor with employees.  We completed the annual contribution calculation, client asking if contributions must be made in cash or he can transfer some personally owned securities into the plan as contribution.

I'm leaning towards "no"; the doc makes no mention.

Short version: we took over a pooled profit sharing plan a few years back... all pooled except for a few participants with life insurance.  No one new has purchased policies (we've made the plan sponsor give each participant a form to sign off saying that they don't want to purchase a policy), and all those with policies have terminated and gotten paid out except the owner, so his is the only policy left.

Can the plan be amended to no longer allow life insurance going forward without causing a nondiscrimination issue?  Or are they doomed to be stuck in CYA-mode until the owner gives up his policy?  Thanks.

Another question on this. The corrective amendments to conform plan language to actual operation - I'm guessing that this will not override the normal timing requirements for advance notice in a safe harbor plan? Or, is it meant to allow self-correction n such a situation?

If an employee works less than 1000 hours for the past 5 years and in 2019 they work over 1000 hours, when would they enter the plan?  1/1 or 7/1 - 1 year - Age 21 - Actual hours.  Thanks.

A small, calendar year cash balance plan purchases life insurance in November 2018.  The insurance company says a Schedule A will not be completed until November 2019.

Assuming the 2018 commissions will be listed on the Nov 2019 Schedule A, is it acceptable to wait until the 2019 5500 to enter 2018 commission amounts on Line 10e Part V of the SF?  Or do we press the insurance company to provide the commission amount paid in 2018?

Thanks very much.

A non-ERISA 403(b) plan was amended to include an automatic contribution arrangement.

1. Does that amendment make the plan subject to ERISA?

2. If so, if the plan is amended to terminate the ACA, does the plan again become a non-ERISA plan?

Facts: I have a non safe harbor 401k plan that's been in effect for 10 years.  Initially, the Employer adopted an "owner-only" plan that had no eligibility service or hours requirements, but he also owned another Company,  that (surprise!) had employees.  While not one of these employees ever worked 1,000 hours in a plan year, they were never excluded under the terms of the original plan document. 

There are no matching contributions, and the Employer deposited a 25% profit sharing contribution each year into his and his wife's accounts. the profit sharing allocation method is prorata under the terms of the document, and there are no allocation conditions (of course).

We had planned to submit under EPCRS, as the violations don't meet the requirements for self-correction.

Question: Assuming the ADP of the two HCE owners is 30%, I assume the correction for the "missed deferral opportunity' is 50% of an ADP for NHCEs that will pass the ADP test.  That is, do I take 50% of 30% divided by 1.2 to arrive at a correction percent of 12.5%? This seems like a really burdensome correction, especially since I need to give everyone a 25% of pay profit sharing contribution!!!

Has anyone tried to use a lower % for correction purposes?

Doctor who was 100% owner of his practice sells his practice to new owner (not related to the original owner), who is now the sole 100% owner.  The old owner continues to work as an employee in the practice now.  The 401k plan was top heavy before the sale.  The sale took place in 2018 (it is now 2019).

(1) since the sale, for the 2019 plan year, is the account balance of the prior owner now excluded for top heavy calculations.?  If so, does that continue for.....how many years?  forever?

(2) the adult son of the prior owner is also a plan participant and also continues to work after the sale.  He was a key by attribution before sale.  Starting in 2019, is he a key employee, non-key, or excluded from the top heavy calc?

Thank you.

QDRO - Alternate Payee died before receiving payment from a 401(k) QDRO

QDRO - states that if alternate payee dies - it is to be paid to the alternate payees estate. 

Mother of the Alternate Payee I guess has control of the Estate per the court.

Alternate payee has a 4 year old child.

If paid to the Alternate Payees Estate - does that mean that their are no rollover options and we have to withhold taxes?

We have a client with a self-funded health plan. Ex-spouse of employee in Nebraska claims he should still be covered for 6 months (until divorce decree is final for purposes of health plan per Nebraska statute). 

Question: because the plan is self-funded would ERISA preemption apply? Would the answer be different if the plan was insured?

Nebraska Statue Below:

42-372.01. Decree; when final.

(1) Except for purposes of appeal as prescribed in section 42-372, for purposes of remarriage as prescribed in subsection (2) of this section, and for purposes of continuation of health insurance coverage as prescribed in subsection (3) of this section, a decree dissolving a marriage becomes final and operative thirty days after the decree is entered or on the date of death of one of the parties to the dissolution, whichever occurs first. If the decree becomes final and operative upon the date of death of one of the parties to the dissolution, the decree shall be treated as if it became final and operative the date it was entered.

(2) For purposes of remarriage other than remarriage between the parties, a decree dissolving a marriage becomes final and operative six months after the decree is entered or on the date of death of one of the parties to the dissolution, whichever occurs first. If the decree becomes final and operative upon the date of death of one of the parties to the dissolution, the decree shall be treated as if it became final and operative the date it was entered.

(3) For purposes of continuation of health insurance coverage, a decree dissolving a marriage becomes final and operative six months after the decree is entered.

(4) A decree dissolving a marriage rendered prior to September 9, 1995, which is not final and operative becomes operative pursuant to the provisions of section 42-372 as such section existed immediately preceding September 9, 1995.