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.  

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