We have a Plan that allows for in-service distributions once a participant has achieved 10 years of service, at any age.  Plan contribution sources are 401(k), Employer non safe harbor contributions, and Participant Rollovers.

A participant who was under the age of 59-1/2 has received all of his employer and rollover monies and also some 401(k) monies which are restricted.  Under EPCRS the correction is to take reasonable steps to secure repayment of the excess amount.  We are assuming the participant does not have the capacity to return the funds.  In that case, as the over payment to the participant was a premature distribution the employer is not required to make up the difference.

It appears upon our initial review that a VCP filing will be necessary (and self correction not available).

I would be very much in appreciation if anyone has any comments or thoughts.

This has happened a few times in the past couple of years, so I was wondering if anyone else had the same experience...

Plan sponsors change their EINs for reasons.  When we complete the 5500-SF, we note on Line 4 that in the previous year, they used to be a different name and different EIN; presumably that is there to help EBSA track the filing when the EINs don't line up.  A year or so later, the plan sponsor gets a letter that a filing is missing.  When we finally speak to someone, they tell us that the old EIN needs to have a final 5500-SF filed showing the participant count going down to zero and the assets transferring to the plan under the new EIN.

"But it's the same plan."  Doesn't matter.  In their tracking, that EIN is still open and needs a filing until the participant count (and the asset values, but that's secondary, it seems) goes down to zero and a final filing is received.  We have been instructed to correct this issue by actual IRS agents by sending in amended filings showing this, even after they acknowledge that we have entered the information on Line 4 of the new EIN's filing that references the old EIN.

So we have started proactively filing final 5500s for plans where the EIN changes (and "first filings" under the new EINs) when we see this happening.  We've gotten no correspondence back on any yet, but there are so many questions... What about timing requirements?  What is an appropriate date to use as the transfer, and when does that mean the 5500 is due?  Whose crazy idea is this, and are they serious?  And so on.

Anyone else running into this?  When it happened once, I was willing to just go with what the agent told me to close the issue.  But when it got to several times, and now that our filings that continue the pattern seem to be going through OK, I'm wondering if this is some new directive that I missed.

Thanks.

Client needs assistance sorting out issues concerning an existing solo 401-k plan. 

Concerns: Proper original setup and on-going service. 

Can anyone help? 

Please provide your recommendation. 

We have an Employee who has properly opted out of a 4019k) plan.

I know he is counted as includable and not benefiting for coverage.

But how do I count him for 5500 purposes?  Is he a participant for 5a-b?  What about 5d(1) and (2)?

Plan year runs from 7/1 to 6/30.

During calendar year 2017 a 44 year old participant deferred $18,000 pre-tax 401(k) plus $4,500 Roth 401(k) (total = $22,500, see breakdown below).  The famous payroll company neglected to report the Roth deferrals in box 12 of the W-2 (AA) so this was not caught until after 4/15.

Between 1/1/2017 - 6/30/2017: $5,200 pre-tax 401(k) plus $3,900 Roth 401(k) (total = $9,100)

Between 7/1/2017 - 12/31/2017: $12,800 pre-tax 401(k) plus $600 Roth 401(k) (total = $13,400)

Are we permitted to distribute the $4,500 in excess deferrals from Roth?  Is it relevant that all but $600 in Roth deferrals were made during the prior fiscal year (6/30/2017)?

Thanks for any input.

A plan was frozen 2017 with no accruals that year. Doing a 401a26 test under average accruals to date as of 1/1/2017 it passes for 2017. The plan is formally terminated in 2018 and paid out. Does the plan have to pass 401a26 for 2018?

In the event a defined contribution or 403(b) plan terminates in 2018 and all assets are distributed by 12/1/2018, a final 5500 will be due 7 months following the date of complete distribution of assets so by 7/31/19. However, will an SAR need to be distributed in connection with this final 2018 5500? The DOL regulations state the SAR is furnished to each participant, but as of 7/31/19 there will not be any participants so can I assume an SAR does not have to be distributed?

Thanks! 

a) Obligation to furnish. Except as otherwise provided in paragraph (g) of this section, the administrator of any employee benefit plan shall furnish annually to each participant of such plan and to each beneficiary receiving benefits under such plan (other than beneficiaries under a welfare plan) a summary annual report conforming to the requirements of this section. Such furnishing of the summary annual report shall take place in accordance with the requirements of §2520.104b-1 of this part.

I have a DC plan that terminated in May 2017 and all participants have been distributed by 12/31/2017 except for one account.  We had a sample QDRO provided to us, but the ex-wife of the participant refuses to sign the QDRO.  What can the plan do at this point?  The employer does not want to keep paying for filings indefinitely.

Is there anything that can be done?

Hello, I was wondering if anyone knew of any SEC guidance concerning whether filings such as the Form 11-K could be paid with plan assets.

There is some scant DOL guidance on the issue of paying for expenses that benefit the employer from plan assets, but none that specifically mention SEC filings. 

We processed a QDRO that asked that the Alternate Payee receive 50% of the account, as of 1/1/2018, including earnings from 1/1/2018 through the date of division.  The QDRO was processed and the Alternate Payee too her portion as a lump sum distribution.

Now the parties are saying Alternate Payee's portion should not have included earnings.  The QDRO clearly said to include earnings, and all parties and their attorneys signed it, so there was no error on our part.  But now the parties want to reverse part of the distribution to the Alternate Payee (i.e. they want the AP to return the earnings amount to the Participant's plan account).

If the AP had left her portion in a qualified retirement plan, I'd just have the parties execute a new QDRO to transfer the earnings portion from the AP back to the Participant.  But, since the AP took the money as cash, this is not an option.  Is there any way to reverse the QDRO to get the money back into the Participant's account?

Thank you!

Suppose that you have a plan with 100 participants. All of the participants were hired and became participants on the effective date of the plan. Let's assume 6 year graded vesting. Two years into the plan, everyone is 20% vested. Early in the 3rd year, the employer fires 25 employees for dishonesty. 

Questions:

1) assuming the plan population has stayed at 100, is this a partial year termination? In determining the ratio, since these terminations are employer initiated, it would seem like we would have 25 on top and 100 on the bottom. 

2) If it is a partial termination, must the plan vest the 25 dishonest former employees 100% in their accrued benefits? If yes, it certainly doesn't seem fair.

Client has a safe harbor plan that currently states that employee is eligible for safe harbor match as of the entry date following completion of first hour of service. Under Section III.D.2. of Notice 2016-16, can you amend the plan PROSPECTIVELY mid-year to require NEW employees to complete a year of service before becoming eligible for the safe harbor match? I believe that the guidance allows it, but I am curious as to whether anyone has done this. 

If yes, does client need to provide a new safe notice to existing participants? 

Thanks!

Appears that DOL Philadelphia Region has started another round of letters inviting participation in VFCP based on transgressions reported on 5500s filed "within the past 2 years" (sample attached).

They're also offering free webinar workshops on VFCP that are open to all and are well worth attending.

Sample DOL VFCP invitation letter 07-17-18_16660886(1).PDF

Participant has an account in a money purchase pension plan and an account with a 401(k) plan.  Participant meets the requirements for a lump sum distribution from the MPPP.  He takes the lump sum, and then timely rolls it over into his 401(k).  The 401(k) permits loans to participants.

Can the participant use the amount rolled over into the 401(k) for a loan?  Assume he meets all the other requirements for a loan under the plan document but the plan document doesn't speak to whether a participant can use money rolled into the 401(k) plan for a loan.

Thanks.

• Plan is a 'definite' 3% safe harbor annually.   
• HCE's are excluded from receiving the safe harbor contribution.
• Plan is 89% top heavy
• Compensation is recognized from date of participation
• Plan is allocating 3% safe harbor to NHCE's
• Plan is allocating 3% profit sharing to HCE's

Question:  I have one 'mid-year' entrant so the safe harbor is given on participation wages.   Since the plan is also allocating 3% profit sharing to the HCE's, what am I required to give the mid-entrant? 

A. just the 3% safe harbor on participation wages, or

B. 3% safe harbor on participation wages + 3% profit sharing on wages earned before  plan entry (i.e. total of 3% contribution on full years wages

Thanks!

Have a takeover plan where the actuarial equivalency definition specifies no pre-retirement mortality (AMT post) and 5% interest but the lump sum section specifies that the lump sum is the greater of that or the result using the 417(e) interest and mortality.

This has been interpreted that the first calc uses no pre-retirement mortality but the 417(e) calc does.  This is a fairly new plan so there is no 417(e) transitional 411(d)(6) cutback issue involved.

Is this ok? Opinions please.

DB Plan subject to Title IV is terminating.  Shortly before the termination date, the employer contributed way more than the amount ultimately needed to purchase the necessary annuities and pay lump sums (either high 6 figures or very low 7 figures).  Can Rev. Proc. 90-49 be used in this situation to secure a disallowance of the deduction?  90-49 seems to be limited to a situation where you had made excess quarterly contributions towards minimum funding.  Am I reading it too narrowly?    

Divorced in 2003. Exxon Mobil split benefits at time of divorce. I am AP with Approximately $175,000 at time of divorce. Husband has continued to refuse to sign the dro. I have always been able to contact the plan administrator to update my address and let them know that I need to be spoken to in person if they receive anything with my signature on it. He used up his entire portion years ago.  Fast forward.  I try to call the plan administrator and it has changed.  New plan administrator states they have no record of me or my ex. What gives?

WE agreed I would give up a nursing career to stay home and raise our children. I was OK with that due to the fact that I had stake in the retirement. Now I feel like I'm out and over $150k is just gone and not into retirement.

We have a new client with a defined benefit plan.  The prior actuary did the valuations wrong for several years.  Do you think we need to file amended 5500s, or should we just fix it on the next 5500 and move forward, perhaps with an explanatory note.  Had the valuations been done correctly, nothing would have been different in terms in things like excise taxes, etc.