How difficult is it to add another benefit to an existing VEBA. We have an existing VEBA and management asked us to evaluate adding the existing retiree life plan. The company pays most of the retiree life premiums, but retirees contribute a portion.

What are the key considerations? Upfront and ongoing legal and accounting costs? Our current annual retiree life premium is relatively small (about $600,000 per year including retiree contributions) so one of my concerns is that the initial cost to move the plan into the VEBA and the ongoing legal, accounting and investment expense could be significant in comparison.

Company A acquires Company B 5/1/2017.  Company B's retirement plan is merged into Company A's effective 5/1/2017 and the Company A plan is amended to credit Company B employees with eligibility and vesting service for time worked at Company B (which had not been a related employer). 

Can Company B people be treated as otherwise excludable employees for testing purposes for 2017 (based on real hire dates of 5/1/2017)? 

Can Company B be excluded for 2017 testing purposes by using the acquisition transition rule?

If Company B is tested separately under the transitional rule, would the employees count in the top paid group determination?

A one life individually designed designed DB plan wishe to terminate in 2018.

The plan was restated in 2012 for PPA. No changes have been made to the plan.

Does the plan need any amendments before it can be terminated?

A long time client with a Profit-Sharing Plan inquired (late 2015) about setting up a 401(k) Plan because of employee interest.  I suggested he do a survey to see what employees might defer.  He never got back to me.  In the meantime, Plan needed PPA restating so I turned on the 401(k) switch.

Early 2018, client wants to "discuss the next ten years" with me.  During the meeting, he nonchalantly says that he started a 401(K) Plan in 2016 with his Payroll Company.  Only he deferred, ADP test failed and he was told he'd get a refund.  (Same in 2017, except one other HCE deferred and was due a refund as well.)

Client had a MP/PS combo forever.  MP (Plan 001) merged into PS (Plan 002) in early 2000's.  We filed the 5500 for 2016 on time (assets ~$500k).  Payroll Company prepared a 5500 for 2016 showing only the owner deferral and match of $498.39 + interest as assets.  Client tried to submit Payroll Company prepared 5500 a number of times and it was rejected.

I asked if he had signed any paperwork, he put me in touch with Payroll Company (dude that set up the new Plan was long gone) and they sent me an Adoption Agreement.  I found a number of inconsistancies with the AA, including "New Plan 001"  instead of restated Plan 002, immediate eligibility instead of 1 year and a 5% of deferral match where it was discretionary in the PPA restement.  I also requested and received the account valuations for 2016 and 2017.

Dilemma #1- Payroll Company took $498.39 out of owners pay in 2016 and shows the amount in their accounting as $474.69 deferral and $23.70 match.  The match amount equals 5% of deferral, by magic.  Owner wrote no checks; funds were taken from Company account.

Taken by itself, the New 001 Plan is Top-Heavy (Super Top-Heavy w/002).  Don't even know what Owners Net C was in 2016 (since no contribution, no census) but assume it's over $200K.  So $23.70 / $200K is 0.01185% of pay Top-Heavy contribution for all employees.  But wait!  Owner's 5% match is forfeited under ACP. 

Question - Is everyone due a Top-Heavy contribution even if the Owner's match, after forfeiture, is 0% of pay?  (As an aside - Why wouldn't the 2016 deferral have been refunded?)

My ex was awarded a specific dollar amount when our divorce was finalized in March 2016 (NYS).  The amount awarded was to equitably distribute our assets.

In April 2018, his attorney drafted a QDRO specifying the dollar amount plus investment gains and losses.  I argue that he is entitled to only the amount specified in the divorce.  Can I win this argument?

Per the divorce decree, the ex is responsible for preparing the QDRO (which has been done); am I correct in assuming he is not responsible to cover the $600 processing fee charged by my 401-K plan?

Thank you.

A plan is an owner only plan until 8/1/2018, at which point an employee become eligible.  The owner has an individual brokerage account, but, starting 8/1/2018 and in going forward, all new contributions will be deposited into individually directed accounts at one of the larger online providers.

The owner's brokerage account balance will be transferred to his new account at the new investment provider, but this will likely not occur until September.  Is a blackout notice required?  It is no longer an owner-only plan, so blackout rules should apply, but the owner is the only participant affected by the blackout, so it seems unnecessary.

The Plan provides that if a participant works past age 65, no retirement benefit will be paid until actual retirement, subject to any required minimum distributions. Once the participant retires, distributions begin and the participant receives an actuarially increased benefit. The Plan is frozen. The Plan Sponsor wants to amend the Plan to force distribution at age 65. Would such an amendment be an impermissible cutback?

Good morning -

401(k) Plan document was restated a couple of years ago when moving to a new provider.  This is the only plan sponsored by the employer.  Top paid group appears to have been inadvertently selected on the adoption agreement.  I say that because it was not selected on any of the prior plan documents, the sponsor states that there were supposed to be no changes on the restatement other than a change to the new provider's document and it was not included on the initial draft restatement.  In looking at the census data from prior years and this year, it would never have been advisable to select this option.  The plan parameters set-up on the system left off top paid group, so it passed testing with flying colors the past couple of years without this selection.  When going back to re-test with that option selected, it fails badly each year. 

The sponsor will amend the plan prior to the end of the plan year to eliminate this option.  However, any thoughts on correcting this operational error without having to correct past years based on this inadvertent selection?  I know VCP is an option although my understanding is the IRS will not approve if request to retroactively amend to remove top paid based on this reasoning. 

Thank you!

A plan is a multiple employer plan.  John Doe is a key employee for company A and company B.  Both sponsor the Plan.  John Doe defers from company A and has a balance of say 20,000.  He has never received a contribution from company B and has no balance.  What do you use for his account balance in the top heavy testing?  Do you just use his balance from contributions/earnings from company A for their top heavy test.  Then, just use his contributions/earnings from company B for their top heavy test?  i.e.  His balance in company B would be zero, so he would not have a balance in the top heavy test for B.  His balance in company A would be 20,000 and he would have a balance in their test.

Is there anything that would specifically prohibit the formula for a Prevailing Wage QNEC to be structured as a match? For example if the QNEC was allocated as follows would there be any issues: Employer will contribute a QNEC to applicable prevailing wage employees equal to 100% of prevailing wage employee's compensation deferred up to 3% of compensation deferred and will then contribute 50% of prevailing wage employee's compensation deferred greater than 3% but less than or equal to 5% of compensation deferred.

Morning brain cramp. Say you have an ADP failure and a 415 failure for a participant. Not catch-up eligible.

The ADP refund amount is still considered an "annual addition" for 415 purposes as per 1.415(c)-1(b)(1)(ii). So suppose there is an ADP refund of $5,000, and the 415 excess is determined to be $10,000. Do you have to reduce the participant's account by another $10,000, or only $5,000, since $5,000 has been distributed under the ADP refund?

From memory, (always dangerous) it is the former, but I'm somehow missing the appropriate regulatory citation to support that, so I'm questioning my sanity. TGIF!

We have a group of eligible employees -- basically workers who work for 6 months or less, but aren't expressly excluded by the plan -- who have not been given the opportunity to defer (match not an issue).  We are doing a VCP and considering a retroactive amendment to exclude these people (rather than making QNECs).

This group has always understood they are excluded, and the employee handbook excludes them, but the plan document does not.  Unfortunately, as you might guess, they are all non-HCE's.  Any chance the IRS goes for this?  Should I even try?

If we don't do a retroactive amendment, we will have to do QNECs.  This problem potentially dates back to 2005 -- would we have to correct that far back?  Or can we just correct back to 2015, based on the 3-year audit / statute of limitations period?

Client instituted retiree HRA effective 1-1-17.  The plan has no participants and no contributions/assets in the plan.  Is a Form 5500 required?  Do I simply file a Form 5500-SF with zeros for participants, assets, liabilities, etc.?

ok - so I'm having an issue and while I thought it would/should be an easy question, Relius support has not yet gotten back to me....

As I'm running administration on plans for 2017, the system is not calculating the Normal and/or early retirement dates when I run eligibility.  I've never had this issue before.  I doubled checked the Plan Specs with regard to the Retirement information and all seems to be in order.  Oddly even the dates for existing employees (who were not previously eligibile in the prior year) are "wiping out" to 0 when eligibility is run!  The retirement dates ARE in there for those who were and remain participants.

Any ideas appreciated!

(I originally posted this topic in the VEBA message board, but was not able to get much input.  I'm hoping someone will see it here, and provide advice/guidance)

I have a WRAP document that lists the following plans in Exhibit A as being part of the WRAP:

• Group Health Plan - A
• Group Health Plan - B
• Group Health Plan - C
• Group Dental Plan
• Group Basic Life Plan
• Group Voluntary Life Plan
• Group AD&D Plan
• Group LTD Plan 

This is a large plan (10,000+ participants).  The Group Health Plans are funded through a VEBA trust.  This results in the plan needing to file Schedule H and have an IQPA audit the plan.  The other plans (Dental, Life, etc.) do not flow through the VEBA (but they are part of the WRAP).  The employee portion of the premium is withheld and remitted to the applicable insurance companies as would be done in a fully insured plan.

As far back as I can see (10+ years), the Form 5500 Schedule H and the auditor's financial statements have only reported assets and activity related to the VEBA trust.  My understanding is that they audit the plan as a whole, but the financials only cover the Trust.  The question has come up this year as to whether or not that is the correct way to prepare the Schedule H and Financials.  Should the other plans be included too?  I do not believe it would affect the "balance sheet" portion of the Schedule H because the fully-insured benefits would have a net-zero affect, but it would affect the "income statement".

Any help or advice is greatly appreciated. 

This is a husband and wife plan. The husband is an adopting employer. They’re getting a divorce that will be effective November 2018. The client would like to begin setting up a separate plan for her husband. Can he adopt  a plan’s in the same year in which he is already an adopting employer of an existing plan? Or would it best to make the new one effect 1/1/2019?

I have a WRAP document that lists the following plans in Exhibit A as being part of the WRAP:

• Group Health Plan - A
• Group Health Plan - B
• Group Health Plan - C
• Group Dental Plan
• Group Basic Life Plan
• Group Voluntary Life Plan
• Group AD&D Plan
• Group LTD Plan 

This is a large plan (10,000+ participants).  The Group Health Plans are funded through a VEBA trust.  This results in the plan needing to file Schedule H and have an IQPA audit the plan.  The other plans (Dental, Life, etc.) do not flow through the VEBA (but they are part of the WRAP).  The employee portion of the premium is withheld and remitted to the applicable insurance companies as would be done in a fully insured plan.

As far back as I can see (10+ years), the Form 5500 Schedule H and the auditor's financial statements have only reported assets and activity related to the VEBA trust.  My understanding is that they audit the plan as a whole, but the financials only cover the Trust.  The question has come up this year as to whether or not that is the correct way to prepare the Schedule H and Financials.  Should the other plans be included too?  I do not believe it would affect the "balance sheet" portion of the Schedule H because the fully-insured benefits would have a net-zero affect, but it would potentially affect the "income statement".

Any help or advice is greatly appreciated. 

Employer has a policy whereby tipped employees pay health insurance premiums by check (because income fluctuates and they may or may not have enough to deduct from one pay period to the next).  Employer has a Section 125 plan. Can a tipped employee's wages and tax withholdings be adjusted so that the impact on the employee is the same as if the premium were deducted from pay pre-tax? 

The answer is a clear No, right?  I don't think it's a 125 issue as much as a tax withholding/reporting issue. The employer must accurately report all wages paid and the premium amount is wages paid - even if the employee writes a check back to the employer for premiums. Correct?  

Are federal work study students considered "employees" and eligible to join the 401(k) Plan?  The document does not specifically exclude this group.

These individuals while they are working for the employer are "students" and are not eligible for any benefits offered by the employer.  I am trying to locate some regulation/guideline that provides these individual are not considered employees for purposes of the plan.

Thank you.

Hello,

We have several health and welfare plans that are unfunded - benefits paid solely from general assets with the exception of employee contributions. We have one attorney that declares that a SAR is not required because of Technical Release 92-01 - EE contributions if paid to the carrier within 3 months they are not plan assets. We have another attorney who disagrees and says that even with Tech. Release 92-01 the SAR is required because it is not funded 100% from general assets. I have not heard back from the DOL's Office of Regulations and Interpretations. Any thoughts if a SAR should or should not be issued? Many thanks for your consideration.