I have a participant that is currently making quarterly repayments, but the large cost has become too burdensome and they'd like to have it taken out via payroll deduction instead.  My question is what interest rate would you use in order to handle the request?  Would you use the rate at the time the loan was taken or would you use the current rate?

Also, they asked if they could pay the loan back over a little bit longer of a time period (they originally set it for 3 years).  

Thanks in advance everyone!

Is there any consensus on whether a Plan should rely on a QDRO when it has reason to know that the QDRO conflicts with the underlying divorce decree's division of property? 

If you receive a QDRO, you review it, determine if it meets the requirements of a QDRO under ERISA, and if so, you implement it.  Does that change if you get extraneous information, like if you also happen to receive the divorce decree and the QDRO does not appear to reflect it accurately? Does a duty to investigate arise? Or is the plan required to implement the terms of the QDRO and not look beyond this?

From what I have seen, different states have different rules about modification of a final divorce decree. Accordingly, different state courts have come to some different conclusions about the validity of a QDRO that conflicts with the divorce decree, based on whether state law allows it as a modification. But, this issue arises in disputes between the parties to the divorce. It seems to me that it can't be the case that a Plan has a duty to inquire or to know, under the state law of various states, whether a QDRO should have been entered or not, if, in fact, it was entered.  If you receive it and it is signed and court-certified, but you also receive the divorce decree, and they're inconsistent, does a Plan ever have a responsibility to determine whether it was a permissible modification of the divorce decree? 

The 2010 regulations at 2530.206 seem to suggest that Plans shouldn't take this into account. "... a domestic relations order shall not fail to be treated as a qualified domestic relations order solely because the order is issued after, or revises, another domestic relations order or qualified domestic relations order."  Would you read this to mean that, when the QDRO is subsequent to the divorce decree and is inconsistent with it, that it shouldn't fail to be a QDRO on that basis? 

However, if it is void under state law because it impermissibly modifies the final divorce decree, then it is not an order "entered pursuant to state law," is it? But, are Plans ever responsible for raising that? Or is that strictly for the parties thereto to work out? 

We have a defined benefit Pension plan and we're going to do an early retirement window where people get extra age and service if they retire during a specific period of time.  We also have a defined benefit nonqualified plan that is linked to the Pension and provide additional benefits in excess of what is allowed under the Pension.  The benefit someone receives under the nonqualified plan is directly affected by the benefit one receives under the qualified Pension (i.e., the more someone gets under the Pension, the less someone gets under the nonqualified plan).

We don't want the nonqualified benefit to be affected by someone taking advantage of the early retirement window.  In other words, just because I'm getting a larger benefit under the Pension for participating in the early retirement window, we don't want that to result in a lesser benefit under the nonqualified plan.

Are there any issues with amending the nonqualified plan to provide the early retirement window benefit doesn't affect the benefit under the nonqualified plan?

In 2014, we obtained an EIN for a DB trust for a prospective client.  In the end, they never adopted the plan.  They have recently contacted us again to start a DB plan.

Can or should we use the EIN we got over 4 years ago or should we apply for a new one?

Long story short ...

We have run across a complex situation where the valuation software is unable to calculate the integrated PS allocation for self-employed individuals and we have to figure this out on a spreadsheet.  Can anyone provide insight on the formula to use for splitting income between compensation and integrated allocation where some partners plan compensation will be over the TWB and others below.  This is probably a long shot but thought I would give this a shot.  Thanks for any help!

I have a rehired employee who termed back in 2004 (1997-2004),  and was just rehired - 8 /2018.

I do not want to credit the prior years of service and want to have them start their vesting over from the rehire date.   Do they keep their service ? 

Is there anything I can do to amend the plan doc to stop this recurring with other rehires?  Currently on a volume submitter.

This is sort of a follow up question to a recent post on funding deadlines.

- Client has a calendar year 401(k) plan with a SH match, no profit sharing contribution in recent years.

- Client initially wanted to do SH only for 2017.  2017 corporate return was filed with the deduction for the SH match.  

- Client now wants to reconsider the profit sharing allocation for 2017, but the CPA has some concerns since they already finalized the 2017 return and would need to make the deposit today in order to deduct it for 2017.

I'm considering the available options and the first that comes to mind is to make the contribution sometime between now and 10/15, which would let me allocate and count the PS for the 2017 annual additions but take the deduction in 2018.  If I do that and max my principals out at their 2017 annual additions, I can still max them out for their 2018 annual additions and deduct both in 2018 as long as the total contribution deducted in 2018 (2017 PS and 2018 annual additions) does not exceed 25% of 2018 covered comp right?

Just want to make sure I'm not misrembering - the 7-day "safe harbor" under 2510.3-122(a)(2) it is for plans with fewer than 100 participants at the beginning of the year. The 80-120 rule does NOT apply - it is for 5500 purposes only. I just saw it used for the 7-day safe harbor deposit rule for a plan with over 100 participants at BOY, so I want to make sure I'm not nuts before questioning this.

My 10+ year bookkeeper embezzled funds from our corporation.  While she was forging checks and sending them to her own credit card and bank accounts and taking expensive trips and living high off of stolen money, she had 10% of her salary withheld, and we matched it 50%.  Thus all $235,000 in her 401k represents money she embezzled.   Her entire net worth, aside from what may be hidden in some hole, is less than what she embezzled.  Now I want to claw it back.  Looking for an ERISA attorney.  If anybody can help, PLEASE!  North L.A. County.  By the way, we had her arrested.   Anybody know the process?  State or Federal?  I assume Federal.

This is ridiculous and almost suggests that the IRS doesn't understand their own rules.

This has happened to us 3 times in the last 4 or 5 months. Client rolled money from an IRA into a 401k plan.  IRA sends out a 1099-R with a Code G.  The IRS sends my client a letter that he owes $X Thousand in taxes (which of course the client freaks out about) claiming that they received no corresponding 5498 confirming the rollover.  But of course 401k plans don;t send 5498s when they receive rollovers.  Can anyone else see the flaw in the system?

Has anyone brought this to their attention?  We literally have a template letter that we use now to respond.  That's ridiculous.

Under universal eligibility for 403(b) Plans, I understand all employees working at a rate of at least 20 hours per week are eligible to participate, immediately. 

Say an employee enters the plan due to hiring status as full time.  Year later that employee goes part time. Can they be stopped from continuing to make contributions? I did not think so.

Alternatively, say they start making contributions, then later in the year it is determined they will not hvae worked 1000 hours during the year, can the plan sponsor refund the contributions and deem them ineligible?

We want to do an early retirement window where if participants agree to retire, they get an extra 2 years of service and 2 years of age.  For most of our "over-65" folks, the extra service and years won't help them, as they are more or less maxed out in the plan. 

Is this OK?  Can we offer an early retirement window that benefits people under 65 more than people over 65?

Secondly, do early withdrawal penalties apply the same for people who retire during an early retirement window.  If I terminate employment because of the early retirement window at 54, am I still subject to the 10% penalty, even if the plan is treating me as older for purposes of the window?

When is a contribution considered to be made "by the tax filing deadline?" in regards to being deductible for that plan year?  We have a client who waited until the last day to file their taxes - and to submit their annual employer match on that same afternoon. The submission missed the record-keeper's daily cut-off for the ACH pull, so funds were not pulled from the employer bank account until the next day - the day after their tax filing deadline. The funds were deposited to the plan's trust the following day. 

Is the contribution considered "made" when the transaction is submitted online? Or when the ACH actually pulls? Or when the assets are actually deposited to the trust? 

Thank you for any assistance!

Client has combo DB/DC plan.  For entire plan year, the DB plan is frozen.  For the same plan year, employer makes no PS or match to DC plan and no key employees make 401(k) contributions.  Only contributions for that plan year to the DC plan are non-key employee 401(k)'s.  

Both plans are top heavy.

Is any top heavy minimum due for the plan year?

Parent is 100% owner of Company.  Company has an ESPP under which participants can purchase stock of Company.  Parent is selling off Company but wants to continue to offer ESPP benefits, but now participants will have the opportunity to purchase Parent stock, rather than Company stock.  We have two choices -- one is to transfer the ESPP from Company to Parent; the other is to terminate the ESPP and start a new ESPP at the parent level.

Is there any difference as far as securities concerns go?  For example, would Parent need shareholder approval either way?  Or would transferring the ESPP, as opposed to establishing a new ESPP, save us some of the hassle of setting up an entirely new plan?

If plan excludes bonuses from the definition of compensation for matching allocations, isn't it correct that ADP and ACP testing can still be done using total gross comp?  

So there's a nonprofit that has an individual who has worked there for eight years (and founded the nonprofit). Over the years this individual took no money but there was an oral agreement with the board that she was owed a deferred salary of 20K per year, which will be paid the year after the individual's departure (at a rate of no less than 20K per year). This individual is about ready to depart the organization and only now wants to in writing. Obviously, since this is a nonprofit and deals with deferred compensation, this seems like it would fall under a 457 plan. Could it be considered a top hat plan (obviously not a highly-compensated person, but considered a member of a select group of management)? 457(b) or 457(f)? Any help would be appreciated. 

Company was changing recordkeeper for 401k plan. They got locked out of outgoing custodian and new one could not set up in time, so they missed timely deposits for one month. After they were advised the late amount that would show up on their 5500 and the lost earnings deposit due (<$100), they have resisted and they believe due to intention, they are not at fault. Contemplating how to handle

Does anyone have any experience with Open MEPs?  Employer was spun from a Open MEP mid way through 2017.   Through 2016, the Employer filed their audited 5500 every year.   Instructions do not seem to allow for the separate filing per participating employer.  The only thing we can come up with is the AICPA guideline below.  Does anyone know why they would advise separate 5500's per employer with separate audits?  Secondly, if assets were physically under the MEP the first part of the year wouldn't there be a need for a final "short" year of assets under the MEP and short start up plan year for the stand alone plan?  Would it matter if the start up document was effective 1/1/17?  CPA is confused as to how to audit 2017 when the assets were under the MEP.

If the common interest criteria is not met (as is usually the case with open MEPs and many MEWAs), each adopting employer is considered to be maintaining a separate plan for the benefit of its own employees. Consequently, each adopting employer would have a Form 5500 filing requirement and potentially an audit requirement (depending on the number of plan participants). However, there is a special exception for a MEWA that qualifies as a group insurance arrangement (GIA). A GIA exists if the MEWA’s welfare benefits are fully insured, the insurance contracts are held by a trust or other entity, and a trust is used as the conduit for payment of the premiums to the insurance company. If a MEWA that meets these requirements files one Form 5500 with audited financial statements as a GIA, then the adopting employers do not need to file Form 5500.

https://www.aicpa.org/content/dam/aicpa/interestareas/employeebenefitplanauditquality/resources/ebpaqcprimers/downloadabledocuments/ebpaqc-multiple-employer-plans-primer.pdf

An owner-participant who has W-2 income defers $18,000 in 2017.  He wants to max his contributions for the year.  

Is it permissible to recharacterize $6,000 of the $18,000 as catch-up so the owner-employee can receive $60,000 in aggregate, or is he limited to $54,000 because he failed to make an additional $6,000 in catch-up?

I read through 414(v) and I don't see anything that discusses recharacterization except in the event of ADP test failure.  I don't see anything that says you can recharacterize a portion of your deferrals as catch-up so that you can get more Profit Sharing.

Any thoughts?