Happy Friday!

A minister's housing allowance is excludable from gross income for income tax purposes.  Considering Treas. Reg. 1.401(a)(9) Q&A9 below, would a distribution made for a housing allowance count toward satisfying the RMD for a participant? 

Thoughts? 

https://www.law.cornell.edu/cfr/text/26/1.401%28a%29%289%29-5

Q-9. Which amounts distributed from an individual account are taken into account in determining whether section 401(a)(9) is satisfied and which amounts are not taken into account in determining whether section 401(a)(9) is satisfied?

A-9. (a)General rule. Except as provided in paragraph (b), all amounts distributed from an individual account are distributions that are taken into account in determining whether section 401(a)(9) is satisfied, regardless of whether the amount is includible in income. Thus, for example, amounts that are excluded from income as recovery of investment in the contract under section 72 are taken into account for purposes of determining whether section 401(a)(9) is satisfied for a distribution calendar year. Similarly, amounts excluded from income as net unrealized appreciation on employer securities also are amounts distributed for purposes of determining if section 401(a)(9) is satisfied.

(b)Exceptions. The following amounts are not taken into account in determining whether the required minimum amount has been distributed for a calendar year:

(1) Elective deferrals (as defined in section 402(g)(3)) and employee contributions that, pursuant to rules prescribed by the Commissioner in revenue rulings, notices, or other guidance published in the Internal Revenue Bulletin (see § 601.601(d)(2) of this chapter), are returned to the employee (together with the income allocable thereto) in order to comply with the section 415 limitations.

(2) Corrective distributions of excess deferrals as described in § 1.402(g)-1(e)(3), together with the income allocable to these distributions.

(3) Corrective distributions of excess contributions under a qualified cash or deferred arrangement under section 401(k)(8) and excess aggregate contributions under section 401(m)(6), together with the income allocable to these distributions.

(4) Loans that are treated as deemed distributions pursuant to section 72(p).

(5) Dividends described in section 404(k) that are paid on employer securities. (Amounts paid to the plan that, pursuant to section 404(k)(2)(A)(iii)(II), are included in the account balance and subsequently distributed from the account lose their character as dividends.)

(6) The costs of life insurance coverage (P.S. 58 costs).

(7) Similar items designated by the Commissioner in revenue rulings, notices, and other guidance published in the Internal Revenue Bulletin. See § 601.601(d)(2)(ii)(b) of this chapter.

Any feedback would be greatly appreciated!

E

At what point in my life did the end of Daylight Saving Time go from "Hurray!  I get an extra hour of sleep!" to "Ugh! Now I'm up an hour earlier!"?

A Plan went through a transition, and there was some miscommunication about whether the Plan or the recordkeeper would distribute the 404(a)(5) annual participant fee disclosures. As a result the notices went out 3 month late. I know failure to meet disclosure obligations could result in the plan administrator’s breach of fiduciary duty, but there doesn't seem to be a way to remedy this through VCP. What can the client do besides document the issue and get the notices out asap?

This is a new one to me.  Participant is retired, had commenced his benefit and was in pay status, but then went missing and cannot be located - his payments are suspended. Then, a shared interest QDRO awarding a portion of his payment to an alternate payee. He's not currently being paid, but when he is located he will be paid back pay of his benefits that have been due. 

If his benefit were suspended by the plan for returning to work or something of that nature, then of course payments to an alternate payee would be suspended, too. But, technically his benefit isn't suspended by the plan here, the plan just doesn't know where to send it. 

To pay the alternate payee or not? If not, then the alternate payee would get a lump sum of back pay representing its share, as well, once he is located - but I don't see why the plan could not pay the alternate payee in the meantime, instead. 

Does anyone know if there is any rule or guidance on something like this? 

Employer wants to offer a MEC/skinny plan to get out of the "A" penalty, and make HSA contributions through a cafeteria plan to employees who get individual HDHP coverage on the exchange.  Questions:

1. Does a skinny plan disqualify the individual from making HSA contributions (assume it's the minimum MEC to get out of the "A" penalty)?

2. If not, can the employer make HSA contributions through a cafeteria plan for employees who have HDHP coverage through the exchange?  Would this violate any EPP rule (Notice 2013-54 et al) or other rule?

We have a couple of clients that are going to add safe harbor to their existing 401(k) plan for 2019, and at the same time remove auto enrollment provisions.

Question is, what do we do with the current default enrolled participants.  Just continue to provide an annual notice each year until they either elect in, elect out, or terminate?

Or does eliminating the auto enroll provisions mean that their default deferrals should stop as of 1/1/19?

Thanks very much.

BITD I remember attending a conference session where the presenter stated that an owner-only plan with no non-key employees did not need to include 416 provisions.  The reason would be to set up a plan with a 5 year cliff vesting schedule to delay RMDs as long as possible.

But I can't find any authority for this.  410(a)(10) and the 416 regs flatly state that all plans except those mentioned in Q&A T-38 must have such provisions.  And the vesting language applies to all employer-derived benefits, not just those of non-keys.

We just took over an owner only DB and the prior firm had used a 5 year cliff vesting and in the TH section it states that the TH schedule is the plan schedule. As luck would have it, a 3 year cliff would have required 2016 and 2017 RMDs.  

Anyone know of any authority for using a non-top heavy vesting schedule in an plan with  just a single key ee/owner participant?

I have a client who wants to purchase a house to flip in his 401(k) Plan. My first thought is NOOOOO. But I need something to back that up. Unfortunately, the advisor said yes.

Does anyone have some insight on this topic? 

A current QACA safe harbor plan auto enrolls at 3% and escalates to 6%. Effective 1.1.2019 (calendar year plan) sponsor wants to amend the document to auto enroll new participants at 6% and increase to 10%. 

Is there a restriction on sweeping back and bringing all participants without a positive election to 6%? For participants who have already been escalated to 6%, is there a restriction that would not allow us to annually increase them to 10%? Will we end up with two different groups of QACA participants?

I have reviewed the plan document and there does not seem to be any mention of what happens when the default rate changes. Also reviewed the EOB and don't see anything there either.

Thank you

I don't know how many Academy members frequent this board, but I would encourage all of you to seek out opinions related to the proposed changes before voting.  The CCA and ASPPA have both put out information related to the changes.  I am happy to post, if people haven't read anything about what is really going on.

They're here!

https://benefitslink.com/newsletters/2018/2018_11_01_retirement_bulletin.html

I've answered my own question - I was overthinking it.

Plan has a last day requirement for employer contributions.  If an employee is on furlough should that employee be treated as terminated for purposes of contribution accrual?

Thanks of any guidance.

A client's employee has submitted a hardship withdrawal request. (plan does allow hardship withdrawals for safe harbor reasons) The employee/participant attached some medical bills, a notice of collection on a student loan for his son , and an estimate to install a new seer heat pump at his residence.  He lives in Portland, TN.  I assume the only allowable amounts are the medical bills not paid by insurance.  I just want to know what you think about the student loan  (approx $11,000)....   I don't think the heat pump would qualify...not a casualty loss or disaster area.  Am I missing something?  Input appreciated...

Are they waiting until after the mid-terms or something??

Did the Tax Cuts and Jobs Act, in and of itself, affect Dependent Care calculations?

I found the following table for 2018. Does anyone know if it changes for 2019?

Has there been any news about the possibility of new Form 5500s with major updates for the 2019 plan year? Federal Register article

We have a PSP wherein the employer has not made a contribution since 2013, has the investment broker send duplicate statements for one account, but there are several.  I will not belabor this point here, as that is not my question.

I know what a partial plan termination is, but as of when is this determined? From 2-3 years from the last contribution, which would make all participants 100% vested?

Which would mean anyone receiving a distribution from, let's say 2015 forward must be 100% vested?

For 2018, the account is telling us he will be making a contribution, which obviously would include any individual with a W-2 who is still "in" the plan plus any individual meeting eligibility of 21/12/1,000 hours.

anyone on here for RIA's that also administer retirement plans?  I would like to discuss how you deal with distributions from plans in light of the new SEC custody rule.