Client has a DB plan that has a DC component where certain participants have plan accounts. I am trying to figure out if it is possible for those participants to receive an in service distribution of DC component. Would this be prohibited since the DC is a component of an overall DB plan? 

Thank you for any clarification you can provide. 

I apologize in advance if I've missed something in my cursory research of this, but here goes. Also, for simplicity I am assuming the employer in question only has DC plans, but I don't think that makes a difference.

Clearly, to determine whether a plan is top-heavy for a "plan year" you use account balances as of the "determination date," which also quite clearly is the last day of the plan year preceding the plan year for which the determination of top-heaviness, or not, is being made. E.g., to determine whether a plan is top-heavy for a calendar year 2019 plan year, you use balances as of 12/31/2018. There are potentially also certain addbacks to determination date account balances of keys and nonkeys for distributions that were made during the plan year preceding the year for which the top-heavy determination is made (i.e., in my example, during 2018 for the 2019 top-heaviness determination), or potentially during a 5-year period in the case of some distributions. See IRC secs. 416(g)(1), (3), and (4)(C). And of course you have aggregation rules.

So the above gives you your key and non-key participant balances for purposes of determining whether more than 60% belong to keys. But then you have to figure out whether those balances belong to keys or non-keys. IRC sec. 416(I)(1) [Note: the "I" in 416(I)(1) should be lower-case, but I can't make that happen; sorry]  tells you that the keys are the folks who meet certain requirements, e.g. percentage of ownership of the employer, "at any time during the plan year." Just looking at 416(I)(1) [see previous note], it would seem that the "plan year" being referred to for identifying keys is the current plan year, i.e. the year for which you are making the top-heavy determination, i.e. 2019 in my example. At least, that's what I think, because 416(g)(1) tells you that a plan is top-heavy "with respect to any plan year," and to me, when 416(I)(1) says "during the plan year," they are talking about the same plan year. So it seems to me that based on the statutory language you would use ownership and compensation in 2019 to determine who are your keys and non-keys, and then you would go back to 12/31/2018 to see what those folks' determined to be keys based on their 2019 facts had in the plan for purposes of the "more than 60%" test.

But Treas. reg. 1.416-1, T-12 seems to say pretty clearly that the "plan year" being referred to in 416(I)(1) is not the plan year for which you are making the determination (i.e., 2019 in my example), but rather 2018. It does this by adding "containing the determination date" to 416(I)(1)'s simpler "plan year." I guess when, before EGTRRA, you looked back 5 years to determine who were your keys (i.e., the keys were participants who at any time during "the plan year or any of the 4 preceding plan years" met one of the status tests), and under pre-EGTRRA Section 416(g) you were also dragging back in all distributions made during the 5 plan years ending on the determination date, it may have made sense for the IRS to want the same 5 year period for both purposes, i.e., the IRS may have been trying to simplify. But if that was the reason for departing from what otherwise seems the very plain statutory language of 416(I)(1), it no longer seems valid, since using balances as of the end of the previous year, and status as of any time in the current year, seems just as easy to do now.

Has anyone else had an issue with this? To anyone's knowledge, has the IRS ever commented on this, formally or informally?

Co. ABC is acquiring Co. 123 in an asset acquisition.  Co. 123 currently sponsors a 401(k) plan.  There will be a few week period after the acquisition date where the employees remain on Co. 123's payroll and they will be leased to Co. ABC during that time.

Co. 123's 401(k) plan will be terminated.  The employees will participate in Co. ABC's plan.

My inclination is that Co. 123's plan should be terminated prior to the acquisition date.  However, if Co. 123 continues the plan for the few weeks that the employees are leased to Co. ABC is there then a potential successor plan issue?  My inclination is yes that the "leased" employees are really common law employees of Co. ABC at acquisition.

Thanks for any guidance.

Would you be permitted to have two matches where the first match would go to everyone but the second one would only go to employees employed on the last day (meaning the active employees would get both matches).

I am trying to think if there are any discrimination issues.

Does the primary beneficiary requirement that a spouse must be named unless spousal consent is provided also apply to "common law marriage" or common law spouse?  The particular participant resides in CA as does the Plan.  

Thank you

Company A sponsors a MEP with unrelated company B adopting. During 2018, participant X, who is a non-owner employee of company A and over age 70.5, transfers to company B, .e.g they are terminated from company A and hired by company B. Is this person required to take an RMD by 4/1/2019?

I have a client ALE who has not offered coverage to any of its FTEs or FTE equivalent.  Of course they have now received a 226-J letter for 2016 because 8 ees have received a PTC on the Exchange.  Their argument is that they could not afford to offer coverage because 2018 is the first year they turned a profit (they took over a company in 2015 and never offered coverage).  I'm just curious to know if anyone has successfully made a hardship argument on behalf of a client who has never offered coverage to their employees.  Of course I am requesting W2s from the client to make sure the IRS did not mistakenly offer the PTC to these employees, but I'm afraid that they are going to get hit with penalties for the past 3 years and likely go out of business.  Thank you!

Owner of the company passed away.  Was Age 85.  Money was in pooled account and funds are requesting be disbursed to his charitable trust per beneficiary form.

Questions

1. Does the pooled account have to be revalued to date of death?  It is audited plan with 250 employees and multiple brokerage accounts.

2. How is the rmd handled before the disbursement to the charitable trust?

Thank you.

Hello,

Is the administrator allowed to change past paid COBRA premium rates (and without notice)?

For example, if our plan year runs Sep - Aug.  Premiums had been $1000 per coupons/notice.  Faithfully paid for the past year 2017 Sep year thru Aug 2018.  Everything is fine, insurance is fine.  New COBRA premiums are noted for Sep 2018 going forward, say $1500, okay. 

But can they/administrator also change the past premiums?  That is, they now, along with new forward rates, say COBRA premiums for past "2017 Sep - Aug 2018" is changed to $1100.  (without notice, just changed history in online billing)

And then either (a) ask for top-up payment for the past year of paid premiums, or (b) reassign your past payments and claim you were thus short a few months back and attempt to cancel your health insurance back to that date?

Yes, this happened to us.  And seems just wrong.  So, are past paid premiums allowed to be changed?  A pointer to any relevant official documents/paragraphs on this is appreciated to.

Thank you.

My question is about the alternative wellness credit rule and how that impacts biometric screenings in remote work locations. 

We would like to use a national Lab to do our Biometric Screenings. Unfortunately, some of our job locations do not have a national retail lab nearby them. The national lab could send electronic interfaces that would allow wellness credits to be provided to employees without using to much of the benefit department staff. Are we required to provide an alternative solution for biometric screenings for remote work sites that would not have a national lab near them or could those employees be excluded, unless they are willing to drive several hours to a lab retail location, to avoid manual payroll credit entries. In other words, possibly avoiding giving credits for each employee doctors lab work with manual upload files for small town remote locations. At some point we would like to maybe do mail order kits, but not right now.

Where a trust/trustee is located in one state, but the plan and its beneficiaries and the unrelated business are located in another state, what state law applies when considering taxation of UBIT?  

A state government offers a Section 125 cafeteria plan to state employees.  However, I have the same question even if it's a private employer.  A sales person from another company is approaching the state/employer, saying that his company can offer a second plan that will supplement or compliment the first plan.  I'm very leery of promises that seem to be too good to be true from sales people.  Can the state/employer tack on another plan without running into trouble?  Even the logistics of trying to operate 2 plans seems confusing, but just because it's beyond my scope of understanding doesn't mean it can't be done, I suppose.

In considering whether tax legislation has a realistic possibility in the lame-duck remainder of the current Congress, do we know whether Congress can use budget reconciliation to act on a simple-majority vote?  Or is once-a-year reconciliation used up (so that action in the Senate would require the cloture-granting supermajority)?

I'm skimming the regulations about whether offering different vesting schedules to different groups of employees would need to be tested for benefits rights and features. What I'm reading is that vesting schedules would not need to be tested for BRF. Is this correct? For example offering immediate vesting to HCEs but 6 year graded for NHCEs on the same allocation:

(ii)Exceptions to definition of other right or feature. Notwithstanding paragraph (e)(3)(i) of this section, a right or feature is not considered an other right or feature if it -

(A) Is an optional form of benefit or an ancillary benefit under the plan;

(B) Is one of the terms that are taken into account in determining whether separate optional forms of benefit or ancillary benefits exist, or that would be taken into account but for paragraph (e)(1)(ii) of this section (e.g., benefit formulas or the manner in which benefits vest); or

Proverbial takeover case - loan should have defaulted in 2006 at around $46,000.  Some payments have been made since but not many, and sporadically.  At 8.25%, John Hancock is carrying this at $75,000 now.

I'm referring this to an attorney, but just curious what BL mavens have to say as likely outcomes under VCP, or other thoughts.

Client withdrew funds from IRA, intending to redeposit that amount within 60 days and avoid the tax.  She is not going to be able to meet the 60-day deadline.

Can she withdraw an additional amount, then turn around and deposit it back into the IRA to cover the first withdrawal within the first 60-day period,  starting a new 60-day clock on the second withdrawal?  She thinks she will have the funds to cover it before the end of the second 60-day period.

Thanks!

the following showed up under the category Predictions by 2030

The problem is there are 2 parts to this one. the second part went 'unanswered'.

The first part is easy, Who are the Detroit Lions?

Seems to me a correct response to the second part would be

"No. Never ever. Even if hell freezes over. Even if they gave the Lions a 30 point lead to start the game. Even if the refs were bribed (more so than usual)"

Can an employer REQUIRE employees, thru payroll deduction, to contribute toward the cost of a self-insured MERP?  

I have an employer purchasing a high deductible plan from a carrier with a $2500 deductible.  They are having a TPA make that plan perform like a $500 deductible to each EE.  The 85% of the premium from the carrier is being paid by the employer and 15% is paid by the EE.  The employer wants to use a "Premium Equivalent" for the cost of the MERP, and have the EEs pay 15% of that as well.  

Does this sound compliant?  I've had 3 large TPAs tell me it is not.  Those TPAs don't support self-insured MERP plans either.  Would anyone be able to recommend a TPA in Illinois that support's self-insured MERPs?

thanks.

I recently came across an article (here) which suggested that including independent contractors in governmental 457(b) plans could cause those plans to lose their ERISA exemption.  The author contends that, while independent contractors are permitted to participate in 457 plans, the ERISA exemption applies to "governmental plans," which are defined in ERISA 3(32) as plans that cover employees.  (He acknowledges that plans that cover only independent contractors would be exempt in their own right because they don't cover any employees, but indicates that the governmental employer must maintain separate plans for employees and independent contractors in order for them both to be exempt from ERISA).

While I follow his logic, I can't say that I've seen any other support for (or even discussion of) this position.  Does anyone else agree or disagree with his position?

I have a plan that needs 414s testing.  For coverage purposes the plan is run disaggregated (applying the under 21/1 yos tested separately), for 414s, do I need to run the test disaggregated?