Has anyone ever heard of Student Loan Genius?     They say employees make their student loan payments and based on a payment, the company makes a pre-tax contribution into the employee's 401(k).   I was just wondering how this would work and if anyone has any experience with it.    

Is a Form 6088 still required to be filed with the Form 5310 for a terminating 401(k) Plan?

I have not been able to figure out what happened to the old company.  But it seems to have gone out of business and the assets acquired by another bigger company.  Small company's plan was merged into big company's plan.

Is big company responsible for final 5500. etc of small company's plan?

Is there a requirement that participants must receive a notice every quarter that states that info regarding their account may be provided to them via multiple statements (e.g., a statement from the investment company and one from the TPA)?  

I have a client with a SEP IRA plan that is maintained on a calendar year basis, however, my client has a 9/30 fiscal year end. How do I calculate the client's contribution deduction on his tax return? Do I deduct a percentage of his annual contributions (e.g. 75% of 2018 contributions)? Or do I simply deduct his annual 2018 contributions, regardless of the difference in fiscal year and SEP plan year?

Thanks,

Justin

I am on a committee that is the plan administrator for a defined benefit plan.  A decree of divorce was entered ending the marriage between Employee X and spouse.  The next day, Employee X committed suicide.  Weeks later, spouse applied for and obtained a QDRO for 1/2 of X's benefits.  For the plan, the committee denied the QDRO.  Our denial was based on the advice of our ERISA attorney and actuary.  They explained that the entire benefit "died with X" because he died single and before the plan received or even knew of any QDRO might be coming.

The spouse has applied to the divorce judge who decided to vacate the decree of divorce, restoring X and the ex-spouse to married status, due to the "unique and compelling circumstances", including that the Decree had not even been delivered to either X or the spouse by the time of X's suicide.  Of course, it's obvious that the motivation for the divorce judge vacating the decree of divorce and pronouncing them married at the time of X'd death is to obtain for spouse a part of the benefits.

Our ERISA attorney and actuary both have never heard of an attempt by a divorce court to manipulate a pension benefit in this way, or whether it would be effective to do so.  What say you? 

401k plan considering safe harbor match formula of 100% of the first 4% - would only apply to NHCE. The plan allows for discretionary match. The plan sponsor wants to fund HCEs with similar 4%  discretionary match but retain vesting on HCE as well as last day rule. 

1. Permissible Safe Harbor as match for NHCE = 4% and overall match for all  =4%?

2. Is the discretionary still subject to ADP (which it would fail, obviously)?

I’m looking for some thoughts/assistance on a somewhat unusual situation I’ve come across:

Situation: Small Medical Practice Non-PBGC Plan Term with Asset Surplus. As of DOPT just the owner/participant had an accrued benefit. They also have 7 non-excludable employees that have been excluded from benefiting in the plan. Not as familiar with Non-PBGC Plan Terms and I’m trying to re-allocate the excess in a non-discriminatory manner.

Benefits and Participation frozen on 4/30/12; Amended excess assets to be re-allocated to participants eff 8/30/17; Non-PBGC Plan Termination eff 8/31/17. The document is a prototype with standard language on excess assets if a plan is not covered by the PBGC. States “…if elected in the Adoption Agreement, excess assets shall be reallocated to the Participants on the basis of their Present Value of Accrued Benefit…”

To allocate the excess, I used a safe harbor formula covering the owner and three other employees. (Three of the non-excludable, excluded employees) I came up with .62% x HI3 Comp resulting in accruals that produce a large enough total in PVABs for all four participants to cover the Excess Assets. (Still have four excluded employees) Note that 415 is not an issue for the owner. So, the excess ends up being allocated on a pro-rata on the PV of that .62% x Hi3.

Thoughts on this excess allocation method?

This formula satisfies 401(a)(26) and is a safe harbor formula satisfying 401(a)(4)/410(b).  The plan was frozen and met top-heavy requirements before and after the freeze.  Granted this accrual can be considered anew allocation. Thoughts on T-H requirements?

On a side note, Rev. Rul. 80-229, Paragraph 2 of SEC. 3. ASSETS NOT LESS THAN PRESENT VALUE OF ACCRUED BENEFIT states:

“If the assets as of the date of termination exceed the present value of the accrued
benefits (whether or not nonforfeitable) as of such date, the plan will not be considered
discriminatory if such excess reverts to the employer or is applied to increase benefits in
a nondiscriminatory manner. One method of applying the assets to increase benefits in
a non-discriminatory manner is to amend the plan to provide a new benefit structure
such that (1) the benefit structure would not be discriminatory if the plan were not
terminated and (2) the present value of the revised accrued benefits (whether or not
nonforfeitable) as of the date of termination equals the value of plan assets, and to
distribute assets equal to the present value of the revised accrued benefits. The new
benefit structure must satisfy other requirements of the law such as sections 411(d)(6)
and 415 of the Code.”

I would think an amendment explaining how the excess is allocated, along with the formula, and included participants would work in this situation. Thoughts? 

Thanks in advance for reading through this whole thing.

--Jeff

Record-keeper provides a one-time payment to its TPA partners based on a new plan that comes over (based on asset size).  For example, in 2018, one new plan is placed with the record-keeper.  Based on the asset size, the one-time payment to the TPA totals $6,000.  It is paid out of the general assets of the record-keeper.  This amount is not paid by the plan, participants or investments held in the plan.  Does this need to be reported on the Schedule C of the Form 5500 as indirect compensation to the TPA?  Does this need to be reported on the 408(b)(2) disclosure?

Thank you!

X is sponsor of 401k plan (solo; H&W).  X wants to invest both personal and plan money in a managed account with a major broker.  The account requires a minimum investment of $500,000.  X would like to form an LLC with 40% owned by 401k and 60% individually to own and make this investment.

My understanding is that it would not be a prohibited transaction for a plan and a party-in-interest to form a new entity and have that new entity make investments, which would naturally split according to membership interests.

I haven't been able to find any support or prohibition thus far.  Opinions? Citations?

Thank you.

Non-5%-owner is well past 70-1/2.  Wishes to take an in-service distribution from employer's DC plan and roll to an IRA.  (Please don't ask why.)  Must some portion of that distribution be withheld as an RMD or can it all go to the IRA?  

If a campany has an existing serverance plan already in place and outlined in an employee handbook, and the WARN act is initiated, can the employer reduce the amount of servernce an employee receives by the WARN benefit? 

A profit-sharing retirement plan has a last-day condition on who shares in an allocation of a discretionary contribution.  The employer is a partnership, and many of the employer’s workers are partners rather than employees.  For the last-day condition, the plan’s governing document refers only to whether the participant is “employed” on the last day.  The partnership keeps no records of a partner’s time worked.

How does one determine whether a partner was employed on the last day?

Was a partner “employed” on the last day of a year if she had not been deadmitted from the partnership (and had for the year earned income more than zero)?

What rules should I worry about?

If a 24 year old gets married are they still eligible for parent’s FSA? Even if they are no longer a tax dependent?

A health plan under ERISA is supposed to go into effect 01/01/18.  

The Plan Document isn't finalized or signed by the Plan until 07/15/18, yet it claims to be "retroactively" effective back to 01/01/18.

In the meantime, claims have been paid and denied based on a Plan Document that was never signed or distributed to Claimants until after it was signed.

Is this on the up and up or not?

If a Employer adopts a Prototype Plan sponsored by its Third Party Administrator, can the Plan continue to use the Prototype Plan in the event the relationship with the sponsoring TPA is terminated? 

The Prototype Document in question contains the following wording - 

"The employer may discontinue its participation in this Prototype Plan effective upon sixty (60) days written notice to the Prototype Plan Sponsor. In such event the Employer shall, prior to the effective date thereof, amend the Plan to eliminate any reference to this Prototype" 

Would switching the Plan's TPA likely trigger "discontinuance" in the Prototype Plan? 

Having a brain freeze ---- looking for confirmation or a directive to hit the books!

Controlled group with companies A, B and C. Client wants to adopt a safe harbor plan for A and B and not allow C to be a participating employer.

A has 7 HCE and 34 NHCE

B has 4 HCE and 17 NHCE

C has 7 HCE and 8 NHCE

Total is 18 HCE and 59 NHCE

A sponsors a plan and B signs participating employer agreement …. coverage is (51/59) / (11/18) = 141.45% coverage

Safe harbor is met with respect to A and B and we can forget about C as plan satisfies coverage so no ADP testing necessary.

Any 401(a)(4) testing for employer contributions would include the C employees with zeros, but probably fine since they have such a large number of HCE's.

Am I missing anything or misspeak somewhere?

A client has recently asked if they can require participants to enroll in their financial wellness program as a condition of receiving a hardship distribution from their retirement plan. It seems like a great idea to me, but I have no idea if it is allowed.

When you are calculating earnings, what are you using for the 'loss date'?

I've seen some people use just the pay date.  Others, 7 business days later.  Even others going all the way out until the 15th business day of the month following...

From VFCP:

Quote

The Loss Date for such contributions is the date on which each contribution reasonably could have been segregated from the employers general assets. In no event shall the Loss Date for such contributions be later than the applicable maximum time period described in 29 CFR 2510.3

So, what date are you using?

Rev. Rul. 2007-43 seems to me to provide some reasonable clarity for determining when a partial termination has occurred. You divide the number of "employer initiated" active participant terminations during the period in question (e.g., plan year) by the number of active participants you had at the beginning of the plan year, and, depending on how much the resulting percentage is over or under 20%, you determine whether you had a partial termination. 20% or over, you probably did, under 20%, you may not have, and other facts and circumstances can also be brought into the analysis if you're close. All this seems reasonable, to me, and as far as I can tell is rationally related to the case law.

But Rev. Rul. 2007-43 also seems to assume, as far as I can tell without any basis in regulations or case law, and possibly, in my opinion, contrary to the plain meaning of the statute (IRC sec. 411(d)(3)), to say that if you determine you had a partial termination, then everyone who terminated without full vesting during the period in question, including voluntary terminations, is deemed to have been "affected" by the partial termination and therefore is required to be fully vested.

Below is the relevant paragraph from Rev. Rul. 2077-43:

"If a partial termination occurs on account of turnover during an applicable period, all participating employees who had a severance from employment during the period must be fully vested in their accrued benefits, to the extent funded on that date, or in the amounts credited to their accounts."

Does anyone besides me think that this may be baseless and lacking common sense? Am I missing something that makes Rev. Rul. 2007-43's conclusion regarding the definition of "affected participant" correct?