Tax-exempt employer established 403(b) plan effective 7/1/1998, and amended and restated effective 7/1/1999 on a individually designed plan document.  Document was not updated to comply with final 403(b) regulations, EGTRRA, PPA, HEART, and WRERA.

What corrective action should the employer take to address these document failures?

Background: Client is in the middle of selling a division and will be keeping those employees in it's medical plan for the rest of the year to avoid disruption, thus creating a self-insured MEWA with two employers for this short period. 

I'm trying to determine the potential risks and requirements of keeping these employees in the plan for the rest of the year under Tennessee law.  So far I've found the applicable rules and regulations (Tenn. Comp. R. & Regs. 0780-01-76), but I'm a little confused as to if these regs apply to a two employer MEWA because 1) the regs say they apply to "self-insured qualified" MEWAs and 2) then go on to define a qualified MEWA as consisting of ten employers.  

Anyone have any insight here?  Would really appreciate it - feel like I'm just spinning my wheels at this point. 

A 403(b) plan currently has 3 vendors and would like to move to a single vendor arrangement. However, they are hesitant to make any drastic changes from a participant perspective. Are there any clear issues with them doing a phased approach and moving to a single vendor going forward for new employees only? And is that something that could be amended in their plan document? Any insights would be appreciated. 

If a plan has a per-payroll fully vested match subject to deferral withdrawal restrictions, is the match deemed to be a QMAC? 

A plan sponsor's DB plan has been hard frozen for a few years. It has no early retirement and no subsidized benefits. Last month they changed their 401(k) plan to only provide allocations of deferrals and safe harbor match for 2019. Is the 401(k) plan top-heavy exempt, or does the mere existence of the frozen DB plan eliminate the top-heavy exemption?

We have a new client who came to us.  They were part of a MEP as of 6/1/16 and have decided to terminate their participation in the MEP and want to start their own plan this year.

We have conflicting thoughts in office as to what is the effective date of the new plan.  I say this is a new plan and its effective date should be 2019.  My reasoning for a 2019 date is that this if the first time that the employer has sponsored their own plan.

Others are saying the effective date of the plan should be the date they entered the MEP as a participating employer.  

Can anyone provide some guidance?

Hi,

Our client had an excess matching of $18 to an employee and couldn't contact with him to resolve this problem. The plan admin proposes the following fix.

"The guiding principle is to make the plan whole. You have three options here:

• Recover the assets from the participant to make the plan whole (let me know if you go this direction and I will provide some assistance with the mechanics)
• Make the plan whole from corporate assets and recover the assets from the participants to make the corporation whole
• Declare this to be a deminimis amount, taking no action to make the plan whole, and take your chances on audit with the IRS/DOL that they agree with you that this amount is deminimis"

We really want to treat this as deminimis since it would be troublesome and not cost effective to resolve such small amount. I just want to find some research or guideline from IRS/DOL to back this deminimis.

I did some research and only found Rev. Proc. 2016–51. section 6.02(5)(b) "(b) Delivery of small benefits. If the total corrective distribution due a participant or beneficiary is $75 or less, the Plan Sponsor is not required to make the corrective distribution if the reasonable direct costs of processing and delivering the distribution to the participant or beneficiary would exceed the amount of the distribution. This section 6.02(5)(b) does not apply to corrective contributions. Corrective contributions are required to be made with respect to a participant with an account under the plan." But this only applied to corrective distribution. In this case, the employee owes the plan back $18.

Would some of yall run in to this situation before and have any guideline on this or research regarding how to treat this. ?

Thank you!

I had a client call me with a participant wanting a hardship withdrawal.  All of his money is in ROTH deferrals.  Does he  need to request a hardship, or can he just take his ROTH out ?  He has not been in the plan 5 years however - only 3.  I am not sure of hardship rules as they apply to ROTH....  I can't seem to find anything definitive either.  Anybody know for sure?  He's only 32 and their inservice rules are age 59 1/2.  

He does have  a true hardship.  

Is adjunct professionals a reasonable exclusion from Code 410(a)??

The company I just started with has PTO purchase via 125 plan, the deductions was set up to  hit GL as  CR to PR Liability. When or how is the Liability cleared?  Plan states all time has to be taken or lost.

What should happen when the employee uses the purchased Time off?

Seems to me we will have to do a manual entry to DR the Liability account and CR Wages, to correct the balance sheet.

Currently,When the employee takes any PTO, this is paid out to them as vacation time , or wages in effect and taxed as such.

I  need to confirm I am understanding  the DR and CR of this transaction. 

Where is the benefit , other than extra week off, with pay, they in effect purchased from the employer.

They have never reconciled the balance sheet , I am attempting to do that for EOY 2018 and this one item has me confused.

Thank you to anyone that will reply and explain this in clear T accounts 

Pauline

Say a 5% owner is well past 70.5 and starts a plan effective 1-1-19. Vesting is excluded prior to 1-1-19 and NRA is 65+5. 3-year cliff vesting is used, so the owner will first have vested benefits in 2021.

Is the initial RMD date 4-1-2022 or 12-31-2021?

There are several threads on this topic, but they give different answers, and some are more focused on the benefit amount instead of the starting date. One area of confusion appears to be that people get DC rules mixed up with DB rules. For example, in a DB plan, if an RMD starts at 4-1 with an annual payment, the second RMD is NOT due at 12-31 of that same year. The second RMD is payable at 4-1 each year. 

I think a second area of confusion is that I'm not sure the IRS gives a clear answer.

I can see an argument made for 4-1-22 or 12-31-21. How do others approach this? Thanks.

Is there any website or links that will explain the termination procedure that one needs to follow when the plan is part of a controlled group.  Basically can a plan that is part of a controlled group can it Terminate?

My client is contemplating leaving a multiemployer Fund.  We have two withdrawal liability estimates, one from a few years ago and one very recent.  The recent one is almost triple the one from a few years ago.

We have been told that the Fund changed their withdrawal liability calculation rules, removing a cap on how they calculate unfunded vested benefits.  This rule change caused the huge increase.

This seems suspicious to me that my client could have left the Fund a few years ago for a fraction of the cost based on unilateral action by the Fund.  Is the Fund allowed to make this change?  Should the Fund have provided advance notice before making this change?  Are there any other defenses my client has against this huge increase in withdrawal liability based simply on the Fund changing how the liability is calculated?

Some individual-account (defined-contribution) retirement plans allow a participant a choice of taking a retirement benefit in periodic payments.  Others provide a benefit is paid only as a single sum.  Some reason that limiting payout options doesn’t harm participants because whatever one might choose in an employment-based plan’s payout options can be accomplished with an Individual Retirement Account or Annuity [IRA].)

A recent Pensions & Investments article describes an Alight Solutions survey, which finds 57% allow periodic payments and 43% don’t.

I haven’t read Alight’s report, but I guess the sample is larger plans.  I wonder whether smaller plans have a different mix on allowing or precluding periodic payments.

So informal survey:

Do your clients’ plans allow periodic payments?

About whether to allow or preclude payments, do most clients follow your suggestion?

Is it possible to use a definition of compensation that passes 414(s) testing when the plan's design is using a safe harbor enhanced match per pay?

My fact set is the plan was designed to exclude pay in excess of $125,000.   Since this is a 403b plan, the safe harbor design is used to pass the 401(m) test.  The formula is 100% on 4% salary deferred with comp for employees capped at $125,000.  Since the only employees impacted by the cap are HCEs, the 414(s) testing passes.

But now I am wondering and am getting conflicting answers with some research I am doing that even allows a Safe Harbor plan to exclude any forms of pay even if the exclusions passes 414(s) testing.

I will take any help and feedback.  Thank you.

Brigid

I'm confused by the recently proposed excepted benefit HRA that would allow an HRA to reimburse dental/vision premiums and other ACA exempt benefits if eligible employees are also offered group health plan coverage. 

https://www.federalregister.gov/documents/2018/10/29/2018-23183/health-reimbursement-arrangements-and-other-account-based-group-health-plans

I thought current rules already allow for a limited scope HRA that reimburses dental/vision expenses only (including premiums) as long as they are not an "integral part of a group health plan" or they are provided "under a separate policy, certificate, or contract of insurance" (such as an individual dental/vision policy)? What am I missing?

Treas. Reg. §54.9831-1(c)(3)(i); DOL Reg. §2590.732(c)(3)(i). (special rules relating to group health plans)

See Amendments to Excepted Benefits, 26 CFR Part 54, 29 CFR Part 2590, 45 CFR Part 146, 79 Fed. Reg. 59130, 59132 (Oct. 1, 2014)

Treas. Reg. §54.9831-1(c)(3)(ii)

DOL Reg. §2590.732(c)(3)(ii)

HHS Reg. §146.145(b)(3)(ii).

The IRS User Fee Schedule (Appendix A, IRB 2018-1) does not show the user fee for an application to waive minimum funding and the Rev Proc refers back to 2004-15 which refers back to 2004-8, which shows user fees of $2,290 (waiver <$1M) and $5,415 (waiver =>$1M). It doesn't look like any of these rules have been updated.

Are these still the fees or am I missing something?

Thanks

In thinking about a standard non-qualified SERP plan for a tax-exempt organization (a nonaccount balance plan), would the remuneration under Notice 2019-09 be the same as for FICA purposes?  In general, it seems they would be the same.  Thanks in advance!

If husband at age 70.5 elected a 100% J&S annuity and passed away can the surviving spouse now take a lump sum that is equivalent to her receiving a monthly annuity (ie lump sum of the 7,500 monthly that she is supposed to receive)Thank you very much.

When is a participant permitted to resume his/her 401k deferral contributions following his/her 2018 Hardship distribution 6 month suspension period?  Is it immediately, or, must he/she wait until the Plan's next permitted "change", e.g. if Plan permits Quarterly changes, must he/she wait until the 1st of the next quarter following expiration of the suspension period?

Plan provides 6 mo suspension

Plan is SH401k

Plan provides the Participant must complete a new election following the 6 mo suspension bc the election is deemed to be zero at the point of Hardship distribution.

Generally speaking Participants may commence or change their deferral elections Quarterly (jan 1, apr 1, jul 1, oct 1).

Thank you!