Company started in July 2018. For a calendar year plan, we will have a 01/01/2018 effective date. Do we have to pro-rate the TWB if using imputed disparity to pass the general test?

Client wants to set up 3 pools of money: Conservative, Moderate and Aggressive. The udnerlying securities will be stocks and bonds.

Has anyone figured out how to handle fee disclosures on this?

Note that we will be doing quarterly valuations, and participants can choose to switch quarterly. And it's a small group, almost exclusively investment experts. They're not really worried about would happen if the market tanked kind of a thing.  Maybe they should be, but they know their employees well.

[i.e., what I am really interested in here is the fee disclosure requirement].

ERISA § 411 makes it at least improper for someone convicted of any of a long list of crimes (if the conviction or the end of the imprisonment, whichever is later, is in the past 13 years) from serving in any almost any role regarding an employee-benefit plan.

Does an insurance company, before issuing an ERISA § 412 fidelity-bond insurance contract, do anything to check whether a person whose dishonest act the contract would insure lacks a disqualifying conviction?

My intuition tells me that the size and probability of an insurer’s potential liability on a typical fidelity bond is so small that an insurer doesn’t bother checking anything.

But I’d like to be wrong about that.

Can anyone tell us what an insurance company does?

Plan definition of pay is 3401(a) wages, excludes excess GTL, ALL fringe benefits, expense allowances, etc and commissions.

We need to run a 414(s) test due to the commission exclusion.  When calculating each participant's compensation percentage, I will put commissions in the numerator but what is in the denominator?  Specifically, must the denominator include the excess GTL and fringe benefits or can those be excluded from the denominator?  I am thinking I would exclude them since they are not part of plan compensation and  are allowable safe harbor compensation adjustments.  Is that correct?  Thanks! 

We have a PSP with owner-only as plan trustee.  The trustee died many years ago; one of the employees of the company bought the business after his death.  

The trustee did name the new owner as trustee of the plan, but no one can find that resolution, except that a corporate resolution naming the new owner was prepared and the new owner signed as employer and trustee.

The plan is funded with a pooled annuity and a small sum in a trusted bank account.

The annuity was surrendered, all but two were paid out as they terminated employment.  They both received their RMDs prior to rollover.

The bank has been giving the trustee and his attorney a hard time releasing the funds from the checking account saying basically, that they does not and will not recognize the current trustee as trustee because he has not presented the "proper" paperwork naming the successor trustee.

The plan document states the beneficiary (wife) is to be the trustee in the event no trustee no trustee can be found. DATAIR doc.  The bank will not even accept this as proof; the plan has been updated each time, GUST, EGTRRA and PPA with the new trustee.

In lieu of digging up the original owner/trustee's burial plot, I would think getting the DOL involved might be the only solution at this point.

5500 fillings are up to date.

Suggestions?

For a 2017 calendar Plan Year, what is the latest possible date to adopt a corrective amendment to permit early entry for an employee that did not meet eligibility (non-highly compensated)?

A profit sharing plan allows for participant-directed investments only for rollover accounts, all other amounts are pooled.  The only participants with ROs are a majority owner and an NHCE, and they have chosen to invest their RO balances in employer securities (company is privately held), which the plan allows (FT William doc).  They now would like to sell their employer securities to a financial advisor who assists with the appraisal of the stock and were wondering if this could somehow be legally accomplished without it being considered a PT.  If these participants elect to change their RO investments to cash and get out of the stock, could the plan then sell it to the FA?  When the plan was first set up (but before this stock sale was considered) FT William indicated that transactions involving the stock would generally not be considered PTs because it is not publicly traded stock and, therefore, not qualifying employer securities.  It seems that 407(d)(5) can be interpreted that way but I would like to be sure.  I can't say I have ever come across such a situation and would appreciate any guidance offered.  

Like to say I am new to filing Form 5500's please bare with me as you may see a lot of questions come through from me. 

I have a client who has a WRAP document in place and they have a carrier that has provided me with 9 different Schedule A's due to different policy numbers.  Am I able to combine any of the Schedule A's or do they have to be inputted separately?

I look forward to everyone's response.

New client has come to us.  He is a self-employed author.  He would like to start a solo-k plan.  He received his business EIN on 8/28/2018.  We are setting up the plan for him.  Can we use a 1/1/18 start date or does it have to be 8/28/2018?    Has anyone encountered this issue before and what date did you use for the plan's effective date.

I heard discussion that the IRS might change determination of plan size based on participants WITH balances rather than all participants.  So a 401(k) plan with over 120 participants with less than 100 deferring would still be small.

Did this change go through?  We have a 401(k) in the restaurant industry so there are nearly 200 participants, but only about 40 have balances.

Are funds in the Plan's forfeiture account added into total plan assets when determining top heavy status?

For example, assume the Plan provides that forfeitures are used in the plan year following the plan year in which the funds were forfeited, and allows the Plan Administrator to use the funds for any permissible purpose (reduce fees, contributions, or reallocate).  A participant in 2018 terminates, takes a distribution and forfeits $1000 which is now in the forfeiture account as of 12/31/2018. 

Do we include that $1000 in the total plan assets when determining the top heavy ratio?

Thanks.

Currently working through an IRS audit on a calendar year plan, and the auditor mentioned that the 2017 profit sharing contribution was due next week.  Casually, I said, "Sure, if they want to deduct it for 2017, otherwise they have until the end of 2018."  He directed me to Publication 560, which says that the last date to make a contribution is the due date of the employer's return (including extensions) - link, see Table 1.

And now I see the 401(k) Fix-It Guide supports the same timing:
 

Quote

Timing of other contributions: 

Rules about the timing of matching contributions or other employer contributions are different from those for elective deferrals. The employer must meet the following rules to obtain a current tax deduction:

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• Employer contributions that aren't tied to elective deferrals must be made by the filing deadline of the employer’s tax return, including extensions.

What?  I'm looking for anything to refute this, but I'm coming up empty.  Is this real life?

A client recently changed payroll vendors.   The payroll vendor calculates their match and notifies the client of the funding amount.   During the client's recent audit, it was determined that the Compensation Limit was not capped at $170,000 when determining the match.   The payroll vendor said it was not something they track.   They indicated that the recordkeeper would catch that during the testing process.   So basically the payroll vendor knows that the match is incorrect, but does not feel it is their responsibility to monitor this.  

The recordkeeper  states that they assume that the match calculation is correct, unless they have been told differently.  They indicated they do not test for match accuracy.

I am curious what your thoughts are on this situation.   I always assumed that the party calculating the match would take into consideration the annual compensation limits.

Thanks!

Can a Money Purchase plan be merged into an ERISA 403(b) Plan.  Both plans are sponsored by same employer

Plan year is calendar year.  Quarterly entry dates.  Auto Escalation occurs on anniversary of entry dates.

Is the notice still required within 30-90 days before plan year?

Example: Jane enters the plan on October 1, 2018, makes no election, and employer automatically withholds 3%. On October 1, 2019, provided Jane makes no election, employer will automatically withhold 4%.

Result: Jane must receive the notice for the 2019 plan year between October 1, 2018 and December 1, 2018.

The Adoption Agreement allows the employer to elect escalation on anniversary of entry dates.  The basic plan document says the notice is provided 30-90 days prior to plan year.

This is an EACA, not a QACA.

This doesn't seem right.  

A 56 year old 401(k) plan participant terminated his employment in May after working with the company for over 30 years.   He was rehired in July to a position that is not an eligible class for participating in the plan so he is considered an inactive participant.    He did not request his distribution during the time he was gone, but of course now he wants it.     The plan does not allow in-service withdrawals and is silent on the subject of a rehired participant taking a distribution due to the prior separation of service.     I don't believe he is eligible for the distribution now.  Other than amending the document to allow for in-service, can anyone give me some guidance on this or a regulation?

Thanks for the help.

Participant was forced out of the plan with a balance of under $1000. Participant received the check which was made payable to him but did nothing with it for 90 days. He realized he missed the 60 day rollover window and would rather not claim the funds as income. 

I have never been asked this before - but can he purposefully let the check stale date then ask the record keeper to send a new check? Will that start the 60 window over again? I am guessing no, but thought I would ask the experts. The record keeper refuses to reissue a check to the IRA provider.

Thanks

A new company, established in July 2018 (calendar fiscal year) wants to set up a new 401k plan for 2018.  Assuming they are too late for a Safe Harbor plan for 2018 (since the company was established with more than 3 months left in the year (to qualify for the exception to the 3 month rule) and now won't meet the notice requirement for a 10/1 effective date), we are going with a traditional 401k plan, with safe harbor provisions effective for 2019.  

The employer doesn't want his part-time employees in the plan.  EVERYONE however, has the same July 2018 hire date, including the owner.  Has anyone used language in the plan document, stating something to the effect that everyone employed on July 1 2018, shall be eligible, providing that they are 21 years old and would "normally work 1,000 hours during the plan year"?  Do you think this will fly?  

(I've used the age only requirement condition before, but haven't used an hour requirement condition under the special participation date before.)

Thanks in advance!

I have a terribly persistent participant who is convinced that you cannot put criteria on obtaining a loan from your retirement plan.  Specifically, her plan requires hardship proof.  Does anyone have the IRS reg that states you can put these types of criteria on your loan program?

Good morning to all,

A client, which happens to be an Indian reservation, has a commercial entity that sponsors an ERISA covered 401(k) plan.  That commercial entity has no HCEs.  The employer decides that overall for 2017, it will contribute 5% as a profit sharing contribution for the year. Per the plan document, profit sharing is totally discretionary and is supposed to be allocated on a salary ratio basis.  However, each division within the company is responsible for being a profit center and one division says it doesn't have the resources to make any contributions for 2017.  This means that about 2/3 of the employees get a 5% of pay contribution and 1/3 of the employees get nothing.

Again, there are no HCEs.  Top Heavy status is not an issue.  Passing 410(b) coverage testing is not an issue.  

Does anyone see any problem with this?  Is it permissible for the 1/3 to get nothing in profit sharing for the year?

Your thoughts and suggestions are always appreciated!  Thank you.