Participant does not qualify for a PS (term < 500 hrs).  However, plan fails ADP and he's getting a QNEC in lieu of HCE distributions.

Does that QNEC trigger a gateway?

I think I know the answer, but:

Participant is age 75, non-owner, still working.  She decides to take a full in-service distribution and rolls it to her IRA.

In June, she retires.

Does she have to remove what should have been her plan-related RMD from the IRA?

Hi,

How does one get a statement of sorts or proof of class billing for the future 12 months? Normally you don't know what classes are available for the future semester until around the end of the current semester you're in. To figure out what classes are available in 9 months isn't really possible, nor is it to submit paperwork with correct classes on it if the college doesn't even have the courses posted that far out? Looking at doing a withdrawal since we don't have anymore financial aid loans available before finishing degree in about 9 months. I apologize if I'm missing something, or have overlooked something on my state colleges website that is obvious.

Thanks in advance.

Background: Married in ‘16 then Oct ‘17 accident in CO, I survived my husband did not. I hire a accident firm. Life insurance is under ERISA which is based off 2x’s wage(there’s an annual raise). Within the first week the ex submitted a claim and was told she wasn’t listed as the beneficiary. She hires a lawyer. DRO from 2014 does not have plan names or amounts. Jan.-employer sends them a non-QDRO letter. Feb.-they open a motion to clarify for DRO to insert 2014 amounts and judge tells them they need to figure out who to substitute in due to death. Around the same time my accident lawyer contacts the ex to ask if she’ll sign for a QSF to work out details of wrongful death suit that will go to husband’s daughter. Her lawyer contacts my accident lawyer trying to get 2014 life insurance information. My lawyer informs him she’s only handling the accident case. The ex’s lawyer decides to fight QSF since he can’t get 2014 information. In May he starts declaratory judgment case against the employer and me while also asking the court to weight the life insurance and wrongful death amounts against each other. Case is transferred to federal court under ERISA. Oct ‘18 passes by and I don’t have to open the estate since we were co-signed on house and totaled out truck. I hear nothing back about modifying the DRO, I think they missed the 90 day to substitute someone in. No claims come in to estate from ex’s lawyer, he still just wants 2014 information. Jan ‘19 judge dismisses case and separates wrongful death back to state court. Feb ‘19 ex’s lawyer rewrites his case against employer to ask that DRO be considered a QDRO and asks court to consider extending time to sue the estate if not QDRO. He then also starts a conversion case against me at state court saying I’m controlling the funds that the employer has not paid out yet since I won’t sign them over.

Question: Have you ever seen a statue of limitations to submit a claim against an estate extended relating to an ERISA benefit? I am excused from the ERISA case but have been keeping tabs on it with my pacer login. New case against me brings up my accident lawyer, so she is going to respond asking for fees and harassment since the other judge in the dismissal hinted to the ex that I’m not apart of the DRO.

A 401(k) plan sponsor used a daily recordkeeper for it's plan assets. It has become clear from the trust report (which is by participant and money source) provided by the recordkeeper, that the transactions are not recorded accurately. 

For example, several distributions were processed in 2018 with the non-vested account balances to be forfeited. The report has a column for forfeitures, but in many instances, it isn't used. The forfeited amounts are variously lumped into Transfers, or Gain/ Loss, etc. 

Similarly, several items which I would expect to show up as Contributions, are instead listed under transfers. 

The known errors have been pointed out to the recordkeeper and several requests for an updated trust report have been made. The recordkeeper will not provide an updated report unless someone agrees to their hourly fees for the time it would take to fix the transaction history and trust report. I suspect there are a number of other mis-coded transactions that haven't even come to light yet. 

At what point should the plan sponsor and trustees contact the DOL? Would that be futile? 

For what it's worth, due to other issues with the recordkeeper the money and recordkeeping was moved away to another provider, so future errors should be limited. 

I usually only see DOL involvement when it looks like fiduciaries might mis-handling plan money. I don't usually see the plan fiduciaries go to the DOL (or IRS) over an issue with a service provider. So i'd love some suggestions, or to hear of people's similar experiences and how they were resolved. 

Notwithstanding the general rule that you can't terminate a SIMPLE and replace it with a 401(k) plan mid-year, if the employer has become ineligible to maintain a SIMPLE and is beyond the grace period and they correct under VCP by stopping any further contributions in the middle of this year, can they start a 401(k) plan for the rest of this year?  Or do they have to wait to start the 401(k) until next year?  It seems that, given that they can't continue the SIMPLE for the rest of this year, they should be able to start the 401(k) plan, but EPCRS says that a SIMPLE plan that is corrected for an employer eligibility failure through VCP "is treated as subject to all the requirements and provisions of ... 408(p)," which could mean having another qualified plan is prohibited for the rest of the year.

A TPA is suggesting that the employer would need to wait until the next year, so I was curious what others on this forum thought about this.    

Non resident taxation of NQDC in New Jersey if residence is in Florida

under fed code 104-95, distributions  would not be taxed in the nonresident state if one of 2 conditions were met.

   The condition in question, is under section(ii) which state, if a plan was "created solely for the purpose of providing retirement benefits for employees in excess of the limitations imposed by 1 or more sections, including 401K plans".   How do you interpret "Soley"?   The plan I am questioning  states explicitly that the plan was created to allow tax savings for the participants. 

    I have submitted a non- resident tax  return,  requesting that all withheld NJ taxes   be returned. Will that be allowed?

A 1099 "employee" has been with a client for 7 years and is now a W-2 employee.

Eligibility 21/12 months with entry the 1st of the month following.  Must this guy wait 12 months, as technically he was not an employee priorly?

Or, maybe he was, but the client treated him as 1099 as a way to keep him from being an employee?

Plan has 3 year cliff vesting

Employee A

Hire 4/28/16

Term 4/26/19

two days shy of 3 years but did work 1000 hours in 2016, 2017, & 2018.  I say they get credited for 3 years.   

From document:

1.109 "Year of Service" means the computation period of twelve (12) consecutive months, herein set forth, and during which an Employee has at least 1,000 Hours of Service. However, the Employer may amend the Plan to provide a lesser number of Hours of Service in a Plan amendment for eligibility purposes, vesting purposes, or accrual purposes without adversely affecting the Plan's reliance on the IRS advisory letter.

For purposes of eligibility for participation, the initial computation period shall begin with the date on which the Employee first performs an Hour of Service. The participation computation period shall shift to the Plan Year which includes the anniversary of the date on which the Employee first performed an Hour of Service. If there is a shift to the Plan Year, then an Employee who is credited with the required Hours of Service in both the initial computation period and the Plan Year which includes the anniversary of the date on which the Employee first performed an Hour of Service, shall be credited with two (2) Years of Service for purposes of eligibility to participate.

A Year of Service for eligibility purposes is not credited until the end of a participation computation period.

For vesting purposes, the computation periods shall be the Plan Year, including periods prior to the Effective Date of the Plan.

The computation period shall be the Plan Year if not otherwise set forth herein.

Notwithstanding the foregoing, for any short Plan Year, the determination of whether an Employee has completed a Year of Service shall be made in accordance with Department of Labor regulation §2530.203-2(c). However, in determining whether an Employee has completed a Year of Service for benefit accrual purposes in the short Plan Year, the number of the Hours of Service required shall be proportionately reduced based on the number of full months in the short Plan Year.

Looking for some confirmation on my thought train here:

Client has a cash balance plan and a safe harbor 401(k) plan.  Because the owner is over 70½, he's been taking in-service distributions of his entire vested benefit so that he can use the DC method and have a smaller RMD while the rest of his benefit goes to his IRA.

The plans are general tested - DB plan has a $100k credit for the owner against 3% of pay for the staff, so the staff gets the rest of their gateway on the PS side (and the owner's also getting maxed out there in this PBGC-covered setup).

Now, because of all the great deductions they've been taking, they've got basically no room for a contribution for 2018.

Of course, an -11g amendment would allow the plan to increase benefits, but they must be done in a nondiscriminatory manner. 

I think that means, if they want to dump more money in, then the corresponding benefits must pass 401a4 on their own - meaning there's going to be a brand new additional gateway requirement to pass, just on the new amounts, such that anything they may have already received doesn't count.  I don't expect the new gateway to be an additional 7.5%, but depending on how much more the owner's benefit might be, could I be looking at such a second minimum?

And, does an amendment like this actually open up new deductibility on the DB side?  Isn't there something where the deduction rules are determined by the plan's provisions as they already were in effect on 12/31, rather than what they're being amended to?
 

Oh right, and basically I need an 'amendment for both plans, right?  Is it okay to increase benefits in one plan that are discriminatory, if the other plan's increased benefits take care of the overall 401a4?

Thanks in advance for any insight or experience with this.

--bri

A law firm client maintains a 401(k) plan with 21/1 eligibility and semi-annual entry.  The plan excludes attorneys other than those specifically named.  We just found out that they allowed a NHCE attorney into the plan on what would have been her otherwise correct entry date of July 1, 2018.

The Appendix B correction method by plan amendment doesn't seem to fit this since it's not a case of the early inclusion of an employee who did not yet meet the age/service requirements.  Any chance it would come under the new retro amendment SCP provisions of Rev Proc 2019-19?  I would characterize it as an increase in a benefit, right or feature (albeit for one individual)...but what is meant by the requirement that such increase "applies to all employees eligible to participate in the plan"?  All employees who are otherwise eligible to participate already participate.  Since no attorneys (other than those specifically named) are eligible to participate in the plan would that sentence be satisfied without extending participation to them?

I know VCP would always be an alternative, but is SCP possible? 

Thanks for all input.

We have a safe harbor 401(k) with employee, SHNE and EE voluntary contributions.  Of course the owners are the only participants who did the voluntary contribution

ACP tests have been met; however, each owner seems to have over-shot the maximum $61K 415 limit.

I suppose that if the excess was contributed in 2019, all is OK; but what if not???

Say a client has had 3 welfare plans under their cafeteria plan, filing separate forms. Then for 2018 changes to a "wrap" document, so only one 5500 will be required. Do you go back and amend the previously filed 2017 forms for the welfare plans to show them as "final" forms? Seems like if you just file the one new wrap plan, you'll get DOL inquiry on why you didn't file forms for the plans that get wrapped...

Two partners are only employees in a business and want to start 401k / psp.  In reading 5500EZ instructions they can file 5500EZ if the partners are the only employees?  Just wanted to confirm this.  Thanks.

A one participant plan is late in filing 2016 and 2017. The prior TPA always filed a Form 5500-SF for one participant.

In reading the instructions on the DOL website, they make it clear that non-ERISA plans cannot file under its DFVC program. Under the Non-ERISA delinquent filer program, they only accept forms 5500-EZ. I suppose we could file 2016 and 2017 as 5500-EZs even though SF's have been filed through the life of the plan.

Anyone see problems with that?

Taxpayer found out that his AGI was too much to make a Roth contribution for 2018 and has an excess contribution of $4,000.  He filed his 2018 income tax return on time, but there wasn't enough time to get the excess out by 4/15/19. Trying to decide to take a distribution or change the contribution to 2019.

If he takes the distribution there is no 2018 income tax affect because he already paid income taxes on the $4,000. I think the earnings would be taxable in 2019, year of distribution. In this case I think he needs to re-file his 2018 income taxes to show the $4,000 excess.

If he changes the contribution to 2019, I think he would still need to re-file his 2018 income tax return because it would still constitute a distribution. 

Is there a way to fix this without having to re-file his income taxes. Thank you.

I have 5 policies that are written to me and my siblings and the company in which it originated from has been merged, shut down, and umbrella-ed into so many companies till no one now wants to give us our money for our father's policies; or they are claiming they can't find the policies because each company has originated new policy numbers.  I got in touch with Alabama Department of Insurance, and they claim that it was merged or umbrella-ed into Colorado Department of Insurance.  They are 14,000 to 16,000 policies; each one on outside of policy has American Prefered Life Insurance . Profit sharing life insurance contract. How and who can I contact?  I really could use some help.

We don't do a lot of large plans so sorry if this is something we should know.  But here's the situation:

We've handled a MassMutual plan for quite a few years.  Their fee and compensation report used to include an item for Indirect Compensation paid to the broker/dealer firm, so we would include them on the list of those receiving eligible indirect compensation.

Somewhere along the line, they started to report fees paid to themselves as direct comp, and stopped showing the indirect comp paid to the B/D.  We kind of shrugged our shoulders and didn't include the B/D at all on the Schedule C.  

So now I'm wondering if that is correct (if B/D comp isn't indirect comp I don't know what is).  I have exchanged emails with our service rep and she punted to their compliance department, which means we may or may not get a response, and it may or may not be adequate.  

Anyone else completing things differently, or otherwise have comments?

We had a company acquire another in 2018 and they both maintain separate plans. They now are a control group. The one that acquired the other utilizes top-paid group while the other plan does not. I know we are supposed to be uniform in how these are tested but wasn't sure if it's okay to test separately during the acquisition year.

The series of events is as follows: 1) the parties divorce, 2) a QDRO is filed with the court, 3) the parties re-marry each other, 4) participant dies, 5) widowed alternate payee  submits QDRO to the Fund for the first time after his death.

My only question is: does the existence of a valid QDRO nullify the J&S benefit to the AP?  Does she get both? 

Thank you