In a 403(b) plan, we have a participant that exceeded the 2018 402(g) limit by $84. Since the time of the deposit, he has had a loss of $3 on the $84. There is some confusion as to what we send back to him and what is reported on 1099-R. Do we issue a check for $81 and report $81 on the 1099-R? Do we send him $81 and report $84 on the 1099-R? Do we issue a check for $84 and report $84 on the 1099-R since that is the amount he exceeded the limit by? Or something else? TIA for your comments.

Hoping someone can provide some input on a rather obscure split dollar issue. 

Employer extended one loan to employee's ILIT to buy second-to-die life insurance policy. Everything occurred before 2002/2003 and arrangement has never been modified. The arrangement was unsecured, i.e., no collateral assignment, just a note from the ILIT to the employer promising to repay with interest. Payment is due upon earlier of (1) sixty years later; or (2) 90 days after death of employee and spouse (both still living). Loan obligation now far exceeds cash value; significant additional premiums would need to be paid in to maintain policy. ILIT has no other assets. 

It appears that any loan forgiveness by employer would create compensation income to employee. 

It also seems to me that if the policy lapses (again, no collateral assignment or documentation at insurer), then both employee and spouse die later, the last one to die would have income (or income in respect of a decedent) at some point. 

Any way to complete a rollout without taxing the unpaid/forgiven loan amount?

My 22yo daughter is quitting her job where she had a 401(k). She already has a SEP IRA and a Roth IRA from before.

Will she be allowed to roll over her 401(k) balance directly to Roth IRA (Yes, I understand it'd be a taxable conversion)? If not, and she must roll over to a Traditional IRA first, may it be her SEP IRA, or must she open a separate Traditional IRA just to hold the rollover from her 401(k) for a few days till she converts it to her Roth IRA?

Please advise on the simplest legally-allowed way to get her 401(k) balance into Roth.

Thank you,

MK

Hi all.

Company A acquires Company B, Company B's 401(k) plan merged into Company A's plan as of 1/1/18.  In looking at HCES for 2018 Plan Year, do 5% owners of company B now employed by Company A with no ownership in Company A count as HCES?  What about employees earnings $120,000 or more in Company B in 2017?

Any help would be greatly appreciated.

Thank you  

The effective date of a restatement is generally the first day of the plan year in which the restated document is adopted. However a retroactive amendment, particularly an -11(g) amendment, can be effective back to the first day of the prior plan year provided it is adopted in time. For example you could adopt a restatement in April 2019, effective 1/1/19, then adopt a corrective amendment in September 2019 effective 1/1/18.

Are there any issues with adopting an amendment with an effective date prior to the effective date of the document being amended?

Hello all.  I have a participant who had an account at Morgan Stanley.  His vested account balance was less than $200 so the client, after many tries,  had him cashed out; however, despite many emails from me to Morgan Stanley that he was only 20% vested, they cashed him out at 100%, so he got around $800 too much..  It's a 10/31 plan year and I only discovered this last week when I did the valuation and looked at his March statement.  Is there any recourse? Pretty sure the participant is not going to give the money back and the client has since moved the funds to Charles Schwab, so this person doesn't have an account at CS.

Assuming the top-hat exemption was filed with DOL when the plan was established, is there a requirement to notify them of a termination?

Any sites on this would be tremendously appreciated...

These things are the best hidden topic I think I have ever seen.  Does anyone have an article that talks about how these work?  I can't find anything in the regs. The EOB doesn't mention them.

In general I know they are mandatory ee contributions as a condition of employment which the IRS treats as Employer contributions.  Do I have the long and short versions of it just about right?

Suppose an employer sponsors a 401(k) plan with a 25% match (non-safe harbor). This plan will fail the ADP and ACP tests for 2018. They will refund to HCEs.

They want to adopt a Cash Balance Plan and a Profit Sharing Plan for 2018.

The 401(k) plan, Cash Balance Plan and Profit Sharing Plan all pass 410(b) on their own using the ratio percentage test. All of the same employees will benefit in each plan.

For 401(a)4 and Top Heavy, can the 401(k) plan be tested on its own and the Cash Balance Plan and Profit Sharing Plan be tested together? Or must all 3 be tested together?

Thank you.

Can an Employer convert an existing Profit Sharing Plan to a Roth Profit Sharing Plan? No 401 (k) deferrals, possibly Profit Sharing contributions.

Any help would be appreciated.

Thanks DPSRich

Hello   I have just found out in the past few days that my 401k plan was transferred to another company and is now in the blackout period.  I had left the company 6 months ago but I am still a participant. I had planned to move it to an IRA. I also have more than a half million in the plan . The only way I found out is that another  former employee was trying to get into his account and was locked out. It looks like that the company’s 401k administrator did not notify and give notice to any past employees in the plan. I called my former employer’s HR person and was told they have all my contact info and I should have received an email in October. I had told her I did not receive anything and told her at least one other had not received any email or any other correspondence concerning the transferring our 401k plan to another company. While on the phone the owner of the company overheard our conversation and told the HR person that she will have to get back to me. Two minutes later I get an email from the company’s 401k administrator showing an October 26^th email giving the info of the 30 days notice and the black out period.   FYI - all the employees were removed from the email chain and confirming that I did not receive it at that time. It is now in the blackout period. I called the new  401k company  (Fidelity) and was told they could see I have zero balance but were having issues registering me to have a new account set up. They also said they could not give me any info since they are in the middle of the blackout period that started in late November. I made calls to two other past employees and were told they did not get notice either. I have calls into the old 401k company to see if I can find out what was my final balance when they transferred it over to fidelity. If I had known I certainly would not have allowed this to happen without changing things up. I know they still have not given any info to the past employees that also did not receive any notices also . I think they are concerned it will open up a can of worms. What recourse do I have if I lose money during this transition? What are my rights? 

Let's say a plan has an in-service distribution option for matching and non-elective contributions. A plan previously did not require participants to be 100% vested to take an in-service distribution from these sources. Can a plan be amended to allow in-service from these sources only if the participant is 100% vested?

Thanks!

Question for my fellow admins.

I know that 10% withholding is required on RMDs, but in practice do you withhold 10% unless the participant completes a W-4P, or do you process the RMD with no withholding unless the participant tells you otherwise?

A participant in one of our client's 401(k) plans has died.  The beneficiary form lists her trust as the beneficiary.  The decedent's daughter is the sole beneficiary of the trust.

The trust's administrator is asking if it is possible for the plan to pay the daughter directly to an inherited IRA, rather than pay to the trust.

The plan document does not have any language pertaining to this particular request.

Has anyone run into a similar request? 

Our thinking, as the TPA, is to have the Plan Administrator refer to their legal counsel.

Thanks very much.

I have a terminating DB Plan covered by the PBGC that recently paid the liability to the PBGC through the missing participants program. I had confirmation from the PBGC that the plan could use the missing participants program. The participant just reached out claiming that their paperwork just came in the mail (doubtful as it was sent a few months ago, and again as a follow up). They are looking to roll over their lump sum into an IRA. What would the correct steps be? Could the plan sponsor ask the PBGC for the money back to pay the participant? Or does the participant have to wait until all of the paperwork is finalized and then seek payment from the PBGC?

Does anyone have a suggestion for fixing ADP Refund for 2017 done by prior TPA in May and then done again in October?  2 people were paid out twice.

Based on some prior (but pretty dated) posts here and other items, it seems separate Form W-2 reporting of regular, after-tax 401(k) contributions (i.e., non-Roth contributions) is more of an optional than a mandatory item that may be reported in Box 14 of Form W-2?  Does that seem a fair statement? 

The employer will include the after-tax amounts as part of wages subject to tax and withholding getting reported but the question is do they also need to separately break out and report the after-tax 401(k) amounts elsewhere on the W-2?  They prefer not to do so which I suppose is understandable from an administrative perspective although I can see some benefit to including this information for transparency and confirmatory purposes.  (Seems like that may also prove useful if questions ever arise as to what a participant's basis is in the after-tax account under the plan (e.g., if the record keeper loses track of that information going forward)).  Thanks.

Hi All,

I'm looking for solutions on how to deal with FSA account balances of employees whose employer is being merged into a different entity as of 1/1/19.  The surviving entity has its own FSA, so the merged entity's FSA is being terminated effective as of the end of the CY (creating a stub year because the plan year was originally FY 6/30).  Other than amending the soon-to-be-terminated plan to provide a 2.5 month grace period, is there any other way to protect these employees from losing their account balances?  Thanks in advance.  

Company ABC had a 401(k) plan for several years.  In May 2017, they adopted the XYZ MEP.  It's an open MEP.

How does the ADP test work in this case?  Do we (they) do one ADP test for the entire 2017 plan year?  Or, do they run two ADP tests, one from Jan to April and the other May to Dec?

I'm a sole proprietor and I open a defined benefit plan for my company (myself) in 2015. The plan administrator is telling me that I need to restate my plan by 2019 and there is a hefty fee on top of the annual maintenance fee. Given that I haven't changed anything on the plan and it's only for me a single employee, must I really restate the plan?