hi we have a calendar year plan that had an employer matching safe harbor contribution for 2018, however they stopped the safe harbor match as of 11/15/18.  Doe the ADP and ACP test only need to cover the period from 11/16/18 - 12/31/18 or does it have to pass the testing for the whole year? thanks

A couple of our plan sponsors received notices that their plan is one of the settlement class members covered by some class action against a bank. The period covers some foreign transaction fees from 1997 to January 2019.

If they do nothing, it explains that a small percentage of the settlement may be sent to them, if the court approves.

Does this mean that years from now, the plan fiduciaries will receive some small check to allocate to participants to offset expenses paid by the plan from 1997 to January 2019? Would it be better to just write back asking to be excluded from the settlement? Or would that be a fiduciary breach?

There were no other Employer contributions for the 2017 Plan Year. The Plan was top-heavy for 2017. Do they have a loss of the top-heavy "exemption" for an untimely deposit?

We intend to have them correct under VCP.

Question - under PPA (or anything else for that matter) must a distribution notice to a participant, for a DC Plan (non-QJSA) provide the dollar amount of the total account balance and the vested account balance? Now, this seems like a ridiculous question, I know, but in response to some fraudulent distribution requests, we are considering what possible options might be available to combat this. Among the questions/ideas floated was not putting these amounts on the distribution statement that is initially/automatically sent to the "participant," and somehow adjusting procedures to require the participants to contact the Plan Administrator/Trustee to obtain this specific information.

Not saying whether this is good, bad, or indifferent, because we haven't yet begun to explore the ramifications - risk/reward, expense, quality/timeliness of service, what various platforms will/won't do/handle, etc. - only starting to determine if it is even possible. And not looking into any other changes (at this point anyway) so all other PPA requirements are NOT open to discussion right now.

It appears to me that this information would be required for a DB plan - (accrued and vested benefit)  but I'm not necessarily finding anything requiring it for DC plan. Of course, the statement must provide the verbiage re the effects of delaying distribution, QOSA if applicable, etc., but that's another matter.

Anyone have any thoughts on this?

Sorry if this is already covered elsewhere.

My ERPA expiration date is 9/30/2019.  Is April 1, 2019 the earliest I can complete the online renewal process?

And I'm assuming this covers my calendar year CE credits for 2016, 2017, and 2018?

Thanks very much.

Taxpayer needed large 2017 tax deduction and was advised to adopt a DB plan in November 2017 with a November 30 plan year end.

Taxpayer funded PYE 11/30/17 in November 2017, funded PYE 11/30/18 in early December 2017 and claimed deduction for both contributions on 2017 calendar year tax return.

Sounds fishy to me, is this allowable?

Group:

I apologize if this is not the proper forum as I didn't see a forum specifically for audits of qualified plans (ESOP's in my case).

Client's ESOP has been under audit for close to 2 years for plan year 2015.  It's been extended a few times and I'm not exactly sure why.  I believe one reason was that due to the Hurricane from 2017 as client is based in FL and the Miami TEGE office is handling matter.

I'm currently reviewing whether or not to come on board to assist.  The current client rep will most likely be terminated for a number of reasons.  I believe the main sticky issue has to do with leased employees.  I don't have all the info just yet and not sure if soon-to-be-terminated rep will be helpful.  I'm hoping the TEGE auditor will at least provide the sticky issues to me when I'm clients POA/2848 rep.

Q:  For practitioners who handle TEGE ESOP plan audits do you normally sign the SOL extensions? I'm usually of the opinion that signing once or twice is in clients best interest.  But I've never had the situation where there is a third request. 

What is the worse case scenario?  TEGE issues its determination immediately? 

Then client has to be prepared to file admin appeal?  then possibly Tax Court petition?

Thoughts and comments appreciated.  Resource/Guide in TEGE audits/appeals matters?

I've had successful TEGE audits and never had to worry about an appeal.

Best,

Joe

In my situation, automatic payment was set up when COBRA benefits began in mid-September 2018. The payment requests were to be sent to a bank account that has overdraft protection. The first payment request, which covered three months of premiums due to coverage being backdated, hit the account and was processed and paid in full on October 2. The beneficiary used coverage for a flu shot in late September or early October and did not use the benefits for the next few months. In late December, after the deadline had passed for signing up for a new health plan, the beneficiary called the provider wit a coverage question and was informed that her benefits had been terminated in September or October for nonpayment. Knowing this could not be possible as payments were made automatically from an account with overdraft protection, she asked for a review and the matter was sent to a supervisor. She left a voicemail that day for the supervisor and called every few days to see if there was a resolution. She was told the matter should be resolved in about a week.

After numerous calls in which she was told the matter was being reviewed, on January 31 she sent an email.  The email included a screenshot of the provider's website section that shows her payment history and she explained that, though this alleged payment history shows more than one payment, she reviewed her designated bank account and only one payment request ever was sent to the account so only one payment had been made in response to that single payment request. She offered to call the bank with the provider to verify that this was true and that the provider's accounting records were incorrect. She later was told that the January 31 email was treated a s a review request and that the review would take about one or two weeks for January 31. Today she received the following statement from the provider:

"First and foremost my apologies. I recently conveyed to you the reason for the cancellation of your Cobra plan was due to a chargeback. That information was incorrect. The reason for the cancellation is because the last payment we received for your Cobra was in November 2018. We have not received a payment since then and unfortunately it is too late to pay back any missed premiums that may be due."

As explained, there was no November payment. The only payment was made on October 2 in response to the only payment request the provider ever was sent to the account for COBRA benefits. If automatic payment has been set up and a payment is properly processed, is it unreasonable to assume that the provider will continue to send payment requests to the designated account for subsequent periods of coverage? Can the beneficiary's benefits be canceled and the provider refuse to reinstate the benefits under these circumstances? Even if coverage could be backdated to the date of cancellation, can coverage be reinstated now and cover the beneficiary going forward?

Client has had a DB plan for his self-employment venture he's run since 2015.  And a 401(k) plan. Now he's hired some employees for the first time as of 12-1-2018.

Under the plan's current adoption agreement, employees would be eligible for both plans as of 1-1-2020.  (Standard 1 year, age 21, dual entry.)  But there may be a request by these new employees to see if the 401(k) eligibility can be accelerated to something less than a year.

We're also thinking about changing the DB eligibility, too, to 2-year at some point during 2019.  Just want to make sure I don't have any weird issues.  If we do change to a two year wait, then I'd surmise (and let me know if I've messed up here, please):

a.  401(a)(26) is fine for 2019 and 2020, because nobody else has met the DB eligibility requirements.

b.  For 2019, the staff employees are otherwise excludable.  So they can be tested for their DC benefits separately against the otherwise excludable HCEs (none), while the statutory employee test only consists of one HCE.  So they both pass.  Staff might only need a 3% THM depending on what other employer contributions are in play.

c.  For 2020, the staff are no longer "otherwise excludable" even though they're still out of the DB plan.  So they may need substantial DC allocations to pass 401(a)(4) against the accruals for the owner in the DB plan.

I'm not missing anything, am I? 

Thanks!

-Bri

Our company has a safe harbor matching plan. I know that there are few amendments that can be made during a plan year. Is it possible to amend the plan to allow a more generous eligibility/entry? Currently, our provisions are the maximum statute - 21/1 YOS, semiannual entry. I would like to move to 6 months of service, quarterly entry. 

I figure it can't be done but I thought I would check. 

Check this out. If it works, I seriously want a gold star!

403b covers the HCE's. The HCE's are exlcuded from the 401k.  Plans both have the same match formula, so one ACP test, everyone gets the same match formula.

We're failing the ACP test.  We also happen to be passing the ADP test because of course no HCE's are making ANY 401k contributions.  How do we feel about shifting ALL of the employees deferrals into the ACP test?

Pretty neat right??

Question -  Sal has a blurb about the options for elective deferrals if a successor plan exists, and I don't quite understand what he's saying. He gives option (1) as "Transfer the deferrals to the successor plan (most commonly used option)."

If a plan is terminated, participants must be given the option to have their funds distributed, either taxable or as a rollover to another plan. But a rollover is still a distribution. So what does this really mean? I'm sure I'm missing something completely obvious, and it is probably a late-week brain cramp... thanks.

Good morning to all,

Today we are working on the 401(k) plan of a sole proprietor who passed away in 2018.  When the CPA sent the Schedule C, she made the comment that this is the Schedule C of the owner while she was alive, and that if I needed the Schedule C that is being filed with the estate, let her know and she will provide me with a copy.

I wouldn't have even known that these are two different things, if the CPA hadn't brought it up, and while my first inclination tells me that the Schedule C while the owner was alive is the one I need, I don't know that for a fact.

Does anyone else have any experience with this?  Which of the two should I be using for 2018?

Thanks in advance, as always.

Partnership has a 401(k) plan with match, the match is funded per payroll, but the two partners do not have paychecks, they only have a few "draws" during the year, some have no draw. The document allows the plan administrator to decide whether or not to apply a true-up for the plan year.

The partners' NESE will be determined at year-end and will include their full compensation for the year for determining the match. Does that then require the plan to provide a true-up for the W-2 employees? the plan document does not appear to require that.

I have a DB plan that has an initial short plan year.  The effective date of the plan is 7/1/2018 and the actuarial valuation date is 12/31/2018.  Does the deduction for 2018 need to be prorated?

I have a large plan (over 300 lives) with a lot of rehires.  Just wondering what the general practice is for other administrators.  Do you provide formal notice of the forfeiture buy-back option to the affected participants?

Daughter inherited mother's Roth account 18 years ago and was not informed about RMD requirement, so no distributions taken.  Mother over 59 1/2 but had not held account for 5 years at death.  No options for daughter now except draining account?  Since daughter has held account for 5 years, are earnings taxable?  What would penalty for lack of RMDs be based on - just the earnings?

Anyone have experience requesting a "minor" modification of a VCP compliance statement? The only example in IRS guidance of a "minor" modification is a compliance statement that listed 200 affected participants; however, after recalculating the failure affected 225 participants. 

In our situation, the applicant got an IRS compliance statement approving a retroactive amendment adding back in a provision missing from a 2015 restatement. The compliance statement was issued over 150 days ago.  The applicant recently discovered an inconsistency between the retroactive amendment and the plan's historic administration, and believes additional clarifying language (no more than a phrase or two) should have been added to the retroactive amendment to achieve the intent of the VCP filing and conform the plan document to the plan's historic and ongoing administration.  

At bottom, we think the fix of the document could have been better, but this is a document issue only; the plan's always been operated as it should have been.

Has anyone had success requesting a "minor" modification of a VCP compliance statement under similar circumstances?

I've got a plan with a participant over the dollar limit late in life - this participant wants a lump sum benefit. 

i don't generally deal with anything other than compensation limit issues, but advanced age (late retirement increase) and generous plan features (subsidized lump sum) are the culprit here - the basic plan is not intended to be generous enough to create limit issues. 

My question is, if the participant in question is something like 69 and 6 months, is there any guidance on what is acceptable for non-integer ages in terms of calculating the increased (post-65) dollar limit. 

E.g., if the age 69 calculated limit is $3.2MM and the age 70 calculated limit is $3.4MM (for a lump sum payment form):

1) Is interpolation appropriate/allowed/required?

2) if so, is anything reasonable OK (pro rata in this case vs. a direct calculation at actual age yields a tiny difference. let's say for the sake of discussion that one would be 3.3MM and the other might be $3,301,000)

Sensitivity is heightened since the payment form is a lump sum and the participant's separation of employment is far from amicable.

(the plan document only has boilerplate language, so method isn't specified, and there is no precedent set administratively because this is the first participant in a very large plan who has ever tripped the dollar limit).  

No pre-termination issues with lump sum size, the plan is far too large for that.

Good morning!

I have a plan in which the only employees/participants are a husband/wife and 3 children.

The plans assets are held in FBO self directed accounts for each, but there are also non-qualified assets (mortgages and some other real estate) which are segregated in the owner (husband's) name so his account is the only one affected by their value.

Is he required to have a fidelity bond for the non-qualified assets?  I am not sure as there are no employees other than family members.

Thank you very much!