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?

We have a 401(k) plan which is sponsored by an entity (Entity A). Entity A is owned by 3 other entities (Entity B, Entity C and Entity D) each with the same ownership % of 33.33%. Entity B and Entity D are disregarded entities, Entity C is just another partnership. The plan document does not list any controlled/affiliated group members.

Would the individuals owning 100% of the two disregarded entities be able to include the compensation earned from the disregarded entities in 401(a)(17) compensation for the 401(k) plan sponsored by entity A?

Participant A owns 100% of XYZ corp which sponsors the XYZ Plan.  As of 1/1/19, participant A will acquire a significant percentage of ABC corp, which sponsors the ABC Plan.  ABC and XYZ will be a controlled group as of 1/1/19.  XYZ corp is mostly management, ABC Corp is mostly non-skilled labor.

The ABC Plan and the XYZ Plan are both at the same recordkeeper, and the plans will have the same plan design and availability.  The only difference is that the ABC Plan has higher recordkeeping fees.  As of right now, they would prefer to keep the plans separate. 

I had a chat with the financial advisor (same advisor on both plans) the other day, and his concern is whether different pricing could be a nondiscrimination issue. 

My assumption is that the pricing difference is not arbitrary but based on assets, participation rates, and so forth. I believe that all participant features like loans and distributions have identical pricing.

It “feels” like a discrimination issue because the plan with mostly low paid labor is priced higher than the plan with mostly higher paid management, but each plan is priced on its own merits.

Maybe the turkey leftovers is making me overthink this...  Anyone see an issue with keeping the two plans separate based on the difference in pricing?

Hello,

I switched jobs earlier this year. Coverage with old employer (no HSA but has employer provided HRA) ends 11/30. New employer has only HDHP plans and I have signed up for a HSA - coverage begins 12/1. Is there a problem contributing to HSA starting 12/1 or should I defer to the 1st of the new year? Thanks.

Leaving aside the issue of rolling out the ROTH piece to a ROTH-IRA to avoid the RMD altogether on that portion, we are working on that for future years ,the question I have is this -

Lets say the ROTH-401(k) piece has a RMD of $5,000 and the "rest" of the traditional non-ROTH assets has an additional RMD of $20,000.

Assuming the Plan's administrative policy allows, can the participant chose which sources to take the full plan RMD of $25,000 from or does the RMD have to be prorated between ROTH/non-ROTH?

I was under the impression participant could chose since it is a "PLAN RMD" and not a "SOURCE RMD" but I've been unable to find definitive support that clearly allows it. I also assume the Plan should have procedures in place for how it treats RMDs where participant is non-responsive as to how the RMD will be allocated but that's not really an issue for this particular RMD.

A law firm client of mine, which has maintained a cash balance plan for over 10 years, raised the possibility of terminating the plan and then establishing a new one.  They were told by another law firm that "if the plan has been in effect for 10 years this strategy is allowed by the IRS".  There are reasons my client would consider this...including getting out from under a complicated interest crediting methodology that the investment advisor can't seem to track.  There are no surplus assets that would revert to the employer.

I told them that while you can terminate a plan, and establish another, they would need to design the new plan with enough distinctions (e.g., different benefit structure, different eligibility, etc.) that the IRS would not consider this a subterfuge for making premature distributions. 

I tend to be "old school" but am I being overly cautious?  They would file a 5310 for the termination. 

Thanks to all.

What is your usual post-retirement mortality assumption for actuarial equivalence?

With the PPA restatements upon us, our company, like I suspect many of you, are re-evaluating our default selections for plan provisions. In the past we'd been using the 94 GAR table projected to 2002 with a 50/50 male/female blend. I'm wondering if it is reasonable to update this assumption, given that the base data is now quite old. On the other hand, for our clients, who are mostly small cash balance plans that pay out almost entirely lump sums, the definition of actuarial equivalence is immaterial, so why change something that isn't broken?

I think I know the answer to this but want to see if there is agreement.  If a plan uses a SH match of 100% of the first 4% to pass ADP, then also allocates a discretionary match of 100% of deferrals between 5-7%, it looks like 401(m)-2(a)(5)(iv) says that we have to run the ACP test on the 5-7% match (in other words, anything over 4%). 

Is it dependent on which SH formula we use?  For example, what if the SH match was 100% of the first 6%, then a discretionary match on 7-8%?  In that case would we have to run the ACP only on the 7-8% match, or on any match over 4%?

Thanks for any thoughts!

If the plan document states that everyone is in their own group and the contribution is allocated prorate or on an integrated basis do you still have to pass the average benefits test?

What are people doing to notify participants about the new hardship distribution rules, since the document providers have yet to issue their stuff? At least Relius has not yet done so...

The IRS FIRE site will be down for scheduled maintenance starting December 5, 2018 at 6 PM Eastern Standard Time through January 7, 2019, but won’t be available until January 10, 2019.

so I guess if you have an 8955-SSA due by 12/31 you need to check special exemption and say "because you shut the website down!"??? (their annual shutdown)

We are looking at a larger Church plan (300+ employees) that elects not to be subject to ERISA.  There are several HCEs.  They have followed mainly vanilla plan provisions but are looking to make some changes starting in 2019.  Do these changes sound permissible?

For individuals hired 1/1/19 or later, they want to have a 3 year cliff vesting schedule apply annually to that year's contribution.  So that if you are eligible to receive an ER contribution for 2019 plan year and have 1 YOS in 2019, you do not vest in that contribution until 2021. If eligible for contribution in 2020, you do not vest until 2022, and so on.  Since this is non-ERISA, that seems to be acceptable for this type of plan.

However, because it might be messy for the recordkeeper to track money in this manner, the ER was not going to deposit the money into the plan until they actually vest in it.  The ER would keep those contributions in a non-plan ER account.  So, from the above example, for those affected individuals, their 2019 ER contribution would be deposited into their accounts in 2021, 2020 ER contributions deposited in 2022....  If someone from 2019 leaves in 2020, their contributions never vested so that year's $$$ can stay with the ER or go to another year's contribution.

Writing the language in the plan document would be a challenge, but assuming that can be done, is this allowed?  Are there any 410(b)-type tests that have to be done since there are HCEs?  Its not subject to ERISA so maybe not?

Any comments are really appreciates.  

I have a plan that allocates a discretionary match on top of the SH match.  Max up to 4% of pay.

Last year, we had one owner deferring and no staff deferring.  No problem.

This year we have the owner and another HCE who is deferring.  Can I structure my discretionary formula to be: 

Owner and staff 100% deferrals up to 4% of pay; non-owner HCEs 0% 

What is the definition of Emergency Medical Service Personnel for puposes of the age 50 exception for Public Safety Employees?

Clearly it includes first responders, e.g. ambulance drivers, paramedics, etc...

What about dedicated emgerency room personnel or hospital staff performing EMS as part of their job description?