Good morning to all,

Last year I did a massive review of all of our clients and got the 8955-SSA reporting ship shape, going back as far as we had records and being sure everyone was reported correctly.  (These are all DC plans, mostly 401(k)s).  On page 2, Part III, Item (g), I reported the vested account balances of those who had not yet been paid out.

I am now reviewing a 2018 report for a colleague who has done an 8955-SSA and has reported the participant's total account balance instead of the vested account balance.  The instructions for 2017 and 2018 are not specific, just saying ""For defined contribution plans, enter the value (in whole dollars) of the participant's account."  It really doesn't address the fact that their total account balance and their vested account balance are (often) not the same thing.  

What are the rest of you doing?

Thanks for your advice and tips as always.

Plan sponsor currently does not impose any last day/hours of service requirement to receive a match.  Match is discretionary and is only made at the end of the plan year.

Plan sponsor wants to add a last day/hours requirement for 2019.  Can that be done effective March 1, 2019 if it only applies after March 1st?  For example plan sponsor wants to apply current rules for all contributions for January and February, but impose the last day/hours requirement for any match made anything after March 1st. 

Thanks in advance for any guidance.

Reading through the new publication 560 just released and I'm struck by how they seem to go out of their not to call attention to the fact that Section 125 premiums reduce eligible compensation.

It seems the only reference to this rule is that when it describes those pre-tax contributions that do not reduce compensation, 125 deductions are not listed.

And of course it's stupid that your EMployer should be rewarded for making you pay more for health insurance premiums, or that you should be penalized for being older because your deductions are increased as premiums increase.

Does the IRS not want me to follow this rule?  It seems if they did they would say "hey, watch out - 125 deductions reduce comp!"

A plan participant has provided a copy of his divorce decree to the plan administrator. The divorce decree stated that 100% of the participant's account balance under the plan is to be transferred to his ex-spouse. The plan administrator determined that the divorce decree is a qdro (approved), and as such, has transferred the employee-participant's account balance to his ex-spouse.

My question: Was a separate qdro document required? Or was the plan administrator correct in processing the qdro (balance transfer) based only on the divorce decree?

company started SIMPLE IRA plan beginning 10/1/2018.  The company operates on a calendar year.  When calculating the SIMPLE IRA match, can you use compensation for the full year, or only from October - December?

Thanks!

Participant elected in 2015 to contribute Roth 401(k).  From 2014 through June 2018, the participant contributions were inadvertently set up as pre-tax in all respects (w-2 reporting, deposits at recordkeeper, withholding calcs, etc). 

What to do?  Note: The participant has since rolled his entire balance out to an IRA, but if it helps we can start by assuming the money is still in the plan...

Current plan document allows for in-service distribution for participants who are over 59.5 and employed for 5 years. The withdrawal is restricted to once a year. The client wants to amend the plan to allow multiple (periodic) payments of in-service distribution for participants who are over 70.5 and leave the restriction for once a year for participant who is 59.5. is this allowed?

We have a 401(k)(12) ???? harbor 401k plan with the basic match that we want to restate to a QACA safe harbor match 401(k) plan under 401(k)(13). Can the QACA match have a 2 year vesting schedule not just for new hires but also for existing participants with a traditional safe harbor match account that is 100% vested? Our document sources these accounts separately- there is a separate definition of QACA match in the document. Any thoughts would be appreciated!

Plan is self-insured.  I've been told a plan administrator can override a denial and authorize payment be made for claim previously rejected.  IS that accurate?

I am representing a client who is being offered a job with a new company, except that the company does not offer a 401(k) plan. She is likely to accept the offer but thinking of funding a traditional IRA as an option to replace the 401(k) her new employer will not provide. She also has a side business which she hopes to continue to maintain and is considering a solo(k) to help her fund her retirement through that business. Would the maintenance of the solo(k) result in her being treated as an active participant in a retirement plan for IRA deduction purposes? I did some preliminary research on this and nothing I have seen specifically addresses this. Since active participation is reported on the W-2 issued to an employee, I would tend to think that the answer should be No but wanted another set of eyes to back me up. Thank you.

Any word yet on proposed changes to hardship withdrawals?  Is anything final?

Running the ADP test for a traditional 401(k) plan based on compensation net of salary deferrals. A participant has compensation of $300,000 so she is being limited to $275,000. When we reduce her compensation for $18,500 of salary deferrals, is it subtracted from $300,000 or the $275,000 of limited compensation?

Thanks.

Hello,

When the document states compensation is only counted while a participant and entry is 01/01 & 07/01. Can you estimate compensation by dividing full year compensation in half or must I go to client and ask for 07/01 - 12/31 Compensation. I have a payroll report for the full year but not quarterly and client isn't great at responding. 

Thanks!

Participant leaves the company and requests distribution of plan balance. Broker processes a payout without consulting TPA. With plan sponsor consent the participant is paid out 100%.

Problem is the participant wasn't 100% vested. Any experience getting funds returned so proper amount can be withheld?

When a plan is top heavy, it is sometimes useful to amend the plan to set a $0 limit on elective deferrals for Key employees. This allows the Key employees to make contributions which will be automatically reclassified as catch-up contributions (provided they are eligible to make catch-up contributions) because they exceeded the plan-imposed limit of $0. Since catch-up contributions are disregarded for application of 416, this is a way to allow the Keys to contribute without triggering the top heavy minimum.

I am wondering if there is a way to specify that the $0 limit automatically applies in years when the plan is top heavy, and only when the plan is top heavy. In our adoption agreement (FT William) there is a checkbox in the "Minimum and Maximum Deferral Amounts" section for "Other limitations on Elective Deferrals (specify): ________". I am thinking of putting in that blank something along the lines of, "If the Plan is Top Heavy for the Plan Year, the maximum Elective Deferral contribution for Key Employees shall be $0 for the Plan Year." Possibly also adding "The application of this limit shall not restrict the Key Employee's right to make Catch-up Contributions, if they would otherwise be eligible to make Catch-up Contributions" just to be clear.

Any thoughts or opinions on this approach? Are there any issues with determining the plan limit based on the top heavy status? In theory, the plan administrator could know by the first day of the plan year whether or not the plan is top heavy for the current year, and so can adjust the keys' limits if needed.

Would this kind of language jeopardize the plan's preapproved status?

EIN does NOT change. Plan name changes, and name of plan sponsor changes, but no change in EIN, nor is there any change to the Trust id#.

This doesn't call for filing an 8822-B, since neither the address nor the "responsible party" is changing. No SS-4, since Trust id # doesn't change.

The name change will be reflected on the 5500 form when filed.

Am I missing anything here? Client's attorney is telling client IRS needs to be notified of this. If so, how? Maybe when they file their tax return?

Client received an EBSA letter today that the Plan's 2017 5500 form filing was rejected for lack of the Accountant's opinion.  I went on the EBSA website and the filing is there and contains the correct forms and Accountant's report.  The letter tells the cient to file an amended filing including the report and then notify them that the amended filing has been posted. 

Anyone else hear of such a thing?!

(edited for detail)

Does plan document with a three month eligibility specifically have to exclude part time employees if Company will not ever have any? Or can it be left blank since it is a moot point? 

Client paid out a participant in 2018 as she terminated employment and was age 65.  The only problem is that the NRA in the plan is the later of: 65 or 5th year of participation.  Employee only had 4 years of participation at termination.  She terminated one week after reaching age 65. Client does not want to ask for the unvested funds back.  Can the client adopt a retroactive amendment to change the NRA to 65 only? 

Ongoing debate regarding whether a safe harbor 401(k) plan can impose different eligibility requirements for deferrals than for match.  Opinions please!