Is the Plan Sponsor required to provide to a participant the specific funds or stocks they are investing in for a pooled Profit Sharing Plan?

New DB plan set up and client funds corporate contribution into an ambiguously defined savings account.   What makes this a retirement account or not?    Is intent relevant?  Is it automatically not a valid deposit if the account was identified in the name of the business owner (and later corrected)?   Or does it specifically need to be identified in the name of the plan or owner as Trustee?

Hello all, Had a client that didn't start an employee's deferral on time back in 2018. Since the missed contributions cross two plan years, how are the QNEC, missed match, and earnings  tracked in testing with the 2018 testing being completed already. The entire correction is being made in 2019. 

Also just wanted to clarify that the missed match goes in as match source and not a QMAC since it's corrective. Thanks! 

Hello! Long time lurker, first time poster. I'm still relatively new to the game but I've completed the requirements for my QKA and I know enough to know there's still a lot I don't know yet. 

We've taken over a plan and the plan contact informed a member of our admin team that their prior TPA had warned them of a penalty for the plan failing ADP testing for three consecutive years. I've not come across this in any of my studies so far, and I cannot find anything about it anywhere - not on ERISApedia, not on tag, google, IRS site, nothing.

Now, I know that the layperson generally has no idea what we're talking about when we discuss ADP/ACP testing or coverage or anything else, so the likelihood of the client having misunderstood something that the prior TPA said is certainly present. But have any of you ever come across this? If so, could you point me in the right direction?

Thanks!

This is a cash balance plan for a sole proprietor with employees.  We completed the annual contribution calculation, client asking if contributions must be made in cash or he can transfer some personally owned securities into the plan as contribution.

I'm leaning towards "no"; the doc makes no mention.

Short version: we took over a pooled profit sharing plan a few years back... all pooled except for a few participants with life insurance.  No one new has purchased policies (we've made the plan sponsor give each participant a form to sign off saying that they don't want to purchase a policy), and all those with policies have terminated and gotten paid out except the owner, so his is the only policy left.

Can the plan be amended to no longer allow life insurance going forward without causing a nondiscrimination issue?  Or are they doomed to be stuck in CYA-mode until the owner gives up his policy?  Thanks.

Another question on this. The corrective amendments to conform plan language to actual operation - I'm guessing that this will not override the normal timing requirements for advance notice in a safe harbor plan? Or, is it meant to allow self-correction n such a situation?

If an employee works less than 1000 hours for the past 5 years and in 2019 they work over 1000 hours, when would they enter the plan?  1/1 or 7/1 - 1 year - Age 21 - Actual hours.  Thanks.

A small, calendar year cash balance plan purchases life insurance in November 2018.  The insurance company says a Schedule A will not be completed until November 2019.

Assuming the 2018 commissions will be listed on the Nov 2019 Schedule A, is it acceptable to wait until the 2019 5500 to enter 2018 commission amounts on Line 10e Part V of the SF?  Or do we press the insurance company to provide the commission amount paid in 2018?

Thanks very much.

A non-ERISA 403(b) plan was amended to include an automatic contribution arrangement.

1. Does that amendment make the plan subject to ERISA?

2. If so, if the plan is amended to terminate the ACA, does the plan again become a non-ERISA plan?

Facts: I have a non safe harbor 401k plan that's been in effect for 10 years.  Initially, the Employer adopted an "owner-only" plan that had no eligibility service or hours requirements, but he also owned another Company,  that (surprise!) had employees.  While not one of these employees ever worked 1,000 hours in a plan year, they were never excluded under the terms of the original plan document. 

There are no matching contributions, and the Employer deposited a 25% profit sharing contribution each year into his and his wife's accounts. the profit sharing allocation method is prorata under the terms of the document, and there are no allocation conditions (of course).

We had planned to submit under EPCRS, as the violations don't meet the requirements for self-correction.

Question: Assuming the ADP of the two HCE owners is 30%, I assume the correction for the "missed deferral opportunity' is 50% of an ADP for NHCEs that will pass the ADP test.  That is, do I take 50% of 30% divided by 1.2 to arrive at a correction percent of 12.5%? This seems like a really burdensome correction, especially since I need to give everyone a 25% of pay profit sharing contribution!!!

Has anyone tried to use a lower % for correction purposes?

Doctor who was 100% owner of his practice sells his practice to new owner (not related to the original owner), who is now the sole 100% owner.  The old owner continues to work as an employee in the practice now.  The 401k plan was top heavy before the sale.  The sale took place in 2018 (it is now 2019).

(1) since the sale, for the 2019 plan year, is the account balance of the prior owner now excluded for top heavy calculations.?  If so, does that continue for.....how many years?  forever?

(2) the adult son of the prior owner is also a plan participant and also continues to work after the sale.  He was a key by attribution before sale.  Starting in 2019, is he a key employee, non-key, or excluded from the top heavy calc?

Thank you.

QDRO - Alternate Payee died before receiving payment from a 401(k) QDRO

QDRO - states that if alternate payee dies - it is to be paid to the alternate payees estate. 

Mother of the Alternate Payee I guess has control of the Estate per the court.

Alternate payee has a 4 year old child.

If paid to the Alternate Payees Estate - does that mean that their are no rollover options and we have to withhold taxes?

We have a client with a self-funded health plan. Ex-spouse of employee in Nebraska claims he should still be covered for 6 months (until divorce decree is final for purposes of health plan per Nebraska statute). 

Question: because the plan is self-funded would ERISA preemption apply? Would the answer be different if the plan was insured?

Nebraska Statue Below:

42-372.01. Decree; when final.

(1) Except for purposes of appeal as prescribed in section 42-372, for purposes of remarriage as prescribed in subsection (2) of this section, and for purposes of continuation of health insurance coverage as prescribed in subsection (3) of this section, a decree dissolving a marriage becomes final and operative thirty days after the decree is entered or on the date of death of one of the parties to the dissolution, whichever occurs first. If the decree becomes final and operative upon the date of death of one of the parties to the dissolution, the decree shall be treated as if it became final and operative the date it was entered.

(2) For purposes of remarriage other than remarriage between the parties, a decree dissolving a marriage becomes final and operative six months after the decree is entered or on the date of death of one of the parties to the dissolution, whichever occurs first. If the decree becomes final and operative upon the date of death of one of the parties to the dissolution, the decree shall be treated as if it became final and operative the date it was entered.

(3) For purposes of continuation of health insurance coverage, a decree dissolving a marriage becomes final and operative six months after the decree is entered.

(4) A decree dissolving a marriage rendered prior to September 9, 1995, which is not final and operative becomes operative pursuant to the provisions of section 42-372 as such section existed immediately preceding September 9, 1995.

Company owner died on 1/1/18.  His 6 children were the benes of his plan assets.  They requested distributions from owner's account last year and each took their share of his 2018 RMD.  They kept the assets in the plan, but the platform allowed them to move the assets to each of their accounts as a rollover.

How do we calculate the RMDs each year?  TIA

I have a plan that failed the ADP test.  Several HCEs terminated and rolled their money out prior to the refunds being calculated so their balance is $0.  What's the fix?

Florida imposes a document tax on loan transactions that are made, signed, executed, issued in the state.  Before you ask, why would a Plan Sponsor care, the loan is under a Qualified Plan ( and ERISA), the Florida statue  specially states that  "promissory notes made in connection with a pension plan loan, 401(k) loans and share loans"  ARE specially included. 

Failure to pay the stamp tax, could result in a state courts inability to  enforce provisions of the promissory note. It has been suggested failure to pay the tax  could mean the 401(k) is extending loans that are not adequately secured and could result in prohibited and/or operational failures.

Seems everyone I have spoken to about this matter is aware of it but no one is enforcing the stamp tax.  Obviously the recorkeepers are not doing anything on their end and TPAs processing loans, state it is not their responsibility. Ironically, the TPAs I have spoken with do not address the stamp tax with their clients.

Since the loan is issued under the regulation set by ERISA, could the State of Florida come in and challenge the loan? While the plan followed  ERISA guidelines with issuing the loan, not sure why some feel there is a prohibited/operation issue if the stamp tax is not paid.

For group who deal with Florida clients, are you recommending they file the payment and have the loan recorded with the state? Or is everyone just sweeping this under the carpet until the first major blow up occurs!!

Participant terminated 12/31/2018.  In March of 2019 he told a lump sum payment and rolled his benefit to his new employer's plan.

At the time of distribution he had an outstanding loan balance. The recordkeeper issued two 1099Rs, one for the rollover and one for the offset loan amount.

Under the Taxs Cuts and Jobs Act does the  participant have until 4/15/2020 to fund the "outstanding" loan amount to an IRA or his new employer's plan as a rollover contribution?

Any restrictions on funding the outstanding loan balance by the due date of tax return?

Plan has increasing rates of match based upon years of service.  Top rate has insufficient # of NHCEs so fails.

Top rate is 50% up to 12% deferral.  Second rate is 50% up to 10% deferral.

No one in the second rate deferred more than 10% so moving them up to the top rate and applying the formula would have no effect on the contribution.  So, can I:

1. Just give them 1% of pay anyway and be ok, or

2. Do I have to elevate lower years of service people with 12% or more deferral?

ER would like #1 since they are longer service employees but would it be a valid correction of the match problem?

Thank you

401(k) plan participant turned age 70 1/2 in 2018.  Attained age in 2018 was 71.  RMD should have been made by 4/1/2019.  Because it will be late, earnings will also have to be calculated.

The distribution is being made for 2018 when attained age was 71.  The distribution will actually be made in 2019 when attained age will be 72.  

If attained age in 2019 is used to determine the factor for the first RMD for 2018, then the same factor would be used again to calculate the RMD for 2019.

So the question is: which age factor to use to calculate the first RMD? 

Thanks!