Any thoughts on whether the IRS considers the average rate of return for the plan as a whole a reasonable rate to use to adjust earnings on corrective contributions for missed deferrals?  The plan participants had made investment elections, but employer wishes to avoid that level of complexity.  Most participants are NHCEs. 

It seems that many service providers advise clients to use this approach. Any thoughts?

Say you have a PS plan with each participant in his/her own group for allocation purposes and you want to run average benefits testing.

I'm aware of the apparent IRS position that every participant in their own group is not a reasonable classification because it may have the effect of excluding an employee by name. I understand that position if the employer is allocating completely individual rates, including some zeros, with no consistent objective basis (e.g., we like Ann so she gets 5%, but we don't like Ben, who does the same job, so he gets 0%). 

However, if the actual allocation itself is still made on a reasonable, objective, business-criteria basis (and the group is nondiscriminatory) can you use ABT? 

For example, an employer has two locations and every participant works at one or the other, say Florida and California. The plan says every participant is in a separate group for allocation purposes. The employer makes the "official" allocations individually, but everyone who works in Florida gets the same percentage allocation, and everyone who works in California gets the same percentage allocation. 

Is this still a reasonable classification for ABT purposes despite the plan document saying everyone is in their own group for allocation purposes? 

In other words, do the "reasonable classifications" for ABT testing need to be explicitly stated in the plan document, or are the "reasonable classifications" based on actual practice?

It's Monday and my brain isn't working today. Basic admin 101 question. Plan compensation is is based on when participant enters plan. For the purposes of allocating a profit share contribution, does one use compensation based on the entire plan year or the one from when the participant enters the plan?

Code C Purpose: "Use this code for a participant previously reported under the plan of a different plan sponsor and who will now be receiving a future benefit from the plan reported on this form. Also complete columns (b), (c), (h), and (i)."

So a client is merging Plan A into Plan B.  Plan A happened to be an employee contribution only and Plan B happened to be Employer contributions only.  Both are sponsored by the same plan sponsor.  Based on the instructions above, I am planning on NOT reporting these folks as a Code C on the surviving plan.

Do we all agree?

I've been tying myself in knots on the math trying to compare the cost-sharing implications of switching from a Cadillac health plan to a higher deductible plan w/ an integrated HRA.

The former is a family plan with a standard deductible of $0, no coinsurance, and a max out-of-pocket of $3k/$6k (per person/ per family).

The latter has a standard deductible of $3k/$9k, no coinsurance, and a max out-of-pocket of of $5k/$10k. Copays are naturally a bit higher & the plan is obviously more restrictive all around.

If one of the goals is to minimize cost-shifting to employees, how would you go about determining the appropriate HRA contribution amount?

My current thinking is that this should be based simply on the increase in the max out-of-pocket i.e., $4k ($10k - $6k). But I'm being thrown off by the much larger increase in exposure from the high deductible ($9k vs. $0).

I understand that comparisons will vary depending on total medical expenses, the number of visits, procedures, etc. & should also account for the employee's savings from lower premiums. So it's complex. But I'm hoping someone can help clarify my thinking and perhaps add some insight on how best to approach this.

Many thanks in advance.

Plan sponsor had late deposits of elective deferrals for multiple pay periods in 2017.  Due date for Form 5500-SF and Form 5330 were extended by filing Form 5558; $19 was paid with extension for amount due on Form 5330.  After preparing Form 5330, excise tax total is $19.21.  Is it necessary to remit $0.21 with the form?  Is there some kind of de minimis that would apply to this situation?

Thanks.

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