This is a case where the regs seem clear, (to me) but third party write-ups seem less clear, and I'd like to confirm that I'm not missing anything.

This is an S-CORP leveraged ESOP, and the employer also sponsors a 401(k). So you have the general 404(a)(3) limit of 25% of comp. The increased deduction limit under 404(a)(9) specifically does not apply, as per paragraph (C) of 404(a)(9).

Some of the write-ups appear to say that you could deduct up to 25% of eligible compensation on principal repayments of an exempt loan in the same year you take a deduction under 404(a)(3) for contributions to the non-ESOP 401(k), as long as you comply with 415.

Am I missing something?

Plan excludes bonuses for purposes of calclulating deferrals, but NOT for purposes of calculating the Safe Harbor Match.  Do I need to pass 414(s)?

I am probably overthinking this one...

A plan has individually directed accounts at American Funds.  We provide full fee disclosure relative to those accounts.  They also have some profit sharing money pooled in a brokerage account.  We have always disclosed a $75 distribution fee on the American Funds disclosure.  For the pooled account, we are now going to start using Penchecks for the distribution processing,.  They have a $35 fee that will be charged on top of our $75 fee.  This additional fee will only apply if the participant had money in the pooled account. 

Do I need to include this fee on the 404(a)(5) fee disclosure notice?  I think not because 404(a)(5) rules do not apply to pooled accounts, but I am not sure since this plan also has individually directed accounts.  I'm just not sure about anything anymore...

Thanks!

I got a question from a CPA source on an ESOP.  They have a client with an ESOP and they have a participant with a very large balance.  Distribution is in five years and cash flow is an issue for the company.  Does anybody have any good suggestions or familiarity with this issue?

Thanks!

A QDRO was submitted and calculated for the time of the marriage for 401k disbursement. The amount due was approximately $26,500, and a "clerical" was made and the receipant was cashed out in the amount of $67,000, more than was the ending balance at the time of separation. Participant was not notified and found error on own and brought it to the attention of 401k company. Since the money was wire transferred into the bank account as cash and an overpayment of $40,000, approximately 3 weeks ago. What are the ramifications? Can the funds be withdrawn automatically from the bank account and placed back into the participating 401k? What if the funds have been spent and are not paid back?What about lost interest future earning? Is the 401k plan responsible for the error and replacing funds regardless?

Can a Fire District set up a 401k plan?  Or does it have to be 403b or 457?   

It is a political subdivision of a Town and they, as a governmental entity, have the authority to assess taxes.  It is not a tax-exempt entity granted exemption from income tax under IRC section 501(C). 

Thank you.

I am curious how others generally regard state occupational licensing boards.  In our state, we have several such boards that are creatures of statute--basically established and set up by specific state law without any other official organizing or corporate documents (i.e., they do not have any articles of incorporation or other formal tax-exempt or non-profit status).  Most of the time, they are operated by an appointed Board (appointed by a mix of state legislators and the governor) but the appointed Board and entity really act fairly autonomously on day-to-day operations.  While their budget / funds are sort of run through the state, they are all derived by (and thus limited by) the fees raised from the licensed profession / group.

Current client has previously-established 401(k) plan but is moving to a new record keeper who is questioning whether the entity is eligible to establish a 401(k) plan as they are arguably an agency or instrumentality of state government.  On the other hand, we are aware of other similarly-situated licensing Boards with 401(k) plans who, like our client, apparently were able to set up 401(k) plans without anybody questioning.  It's unclear whether others believe they had some basis for claiming they were not an agency or instrumentality.  While there are a few items that may weigh in favor of non-agency or non-instrumentality status, taken as a whole the facts and circumstances would seem to point toward such boards being barred from sponsoring 401(k) plans.

How are such boards generally classified / addressed in various states.  If the Board cannot establish a 401(k) and also seemingly cannot qualify for a 403(b) plan and has been told it is ineligible to participate in the state's grandfathered 401(k) plan, is there some other cash or deferred arrangement typically available?

We have a management company that runs a NQDC plan.  The management company is wholly owned by A, and A also wholly owns B.  B also participates in the NQDC plan. 

The management company is going to be removed and replace with a different management company.  Under the NQDC plan this does not trigger a change of control payment.  But we have employees at B that are participants in the NQDC Plan.  We have two options.

First is to just start a new plan for the B employees.  They will still have their account under the old plan, but now they will have another account at a new plan.

Second, and what we'd like to do, is move the accounts for B employees to a new plan, sponsored by either B or A.  Is that possible?  It would be sort or like a rollover to a new plan.  According to the plan, amounts deferred for B employees are already paid out of the general assets of B, and subject to B's creditors, so I don't see the issue with having the money follow B, instead of staying in a plan run by the old management company.  Is this something we can do?

A client's employee is going through a divorce, and HSA assets were divided. The former spouse set up a new HSA to receive her share of the funds and to make future contributions.

The employee is being told by the bank that holds his HSA has said that they will only issue a check to the former spouse directly, and not to the institution where she has set up her new HSA. 

Does anyone have any specific guidance on this issue? Thanks in advance. 

The basic questions are: are exhaustion of remedies and arbitration provisions in local government plans enforceable, and if so, what law requires enforcement?  Anyone have cases directly on point?

Here are the facts: A local government plan provides a disability benefit to participants who establish a disability.  The plan has a claims procedure that requires claimants to file appeals of benefit denials within 60 days.  The plan requires all disputes to be arbitrated, and expressly requires claimants to exhaust their appeal rights before filing arbitration.  In the case at hand, a claimant filed for disability and was denied.  The plan complied with all the technicalities in the claims procedure.  Well after expiration of the 60-day appeal period, the claimant submitted new materials.  On what body of law or other authority can the plan rely to deny consideration of the new materials and cause any arbitration or court action the claimant might file to be dismissed?  Conversely, on what body of law or other authority can the claimant rely to require consideration of the new materials and/or file an arbitration or judicial action?  I know the answer under ERISA, but here those rules don't apply. 

Can a Plan whose termination has been submitted to the PGBC be amended?

Specifically, we want to raise the cash out threshold from $1,000 to $5,000.

The Plan in question has 4 participants who we have spoken to directly and emailed and regular mailed distribution forms.   These individuals just will not return signed forms for their Plan Termination distributions.  No clue why.

We are running into the 501 filing deadline.  I don't think paying the lost participant program is ok since they are not lost.  But I could be wrong there.

Thanks for any thoughts on this.

Does anyone have the code citation that states a government non-erisa 403(b) plan can have a matching contribution?

Hello,

My spouse and I have been covered under his previous employer's plan via COBRA since July of last year.  The plan renews in August of each year.  Last year we received no notification of any changes to the plan not coverage.  We did on 8/18 receive a notice of premium increase form the COBRA administrator, but were not able to get summary plan descriptions, etc. for several weeks.  We're going through the same thing now.  When must the administrator notify us of any changes including cost and/or changes to coverage, etc.?  What are the penalties for not complying, etc.?

Thank you!

Employer who has a SEP for himself hired an employee in 2016. Employee works throughout 2016, 2017 and 2018. Question is whether the employee is eligible for the SEP for 2018. I think yes, since they have worked 3 out of the last 5 years (3 of 3 here). I have someone telling me that they are not eligible until 2019.

Any opinions?  Thanks for any replies.

I have  a client that would like to change the hours required for a "year of service" for both eligibility and vesting from 1,000 hours to 750 hours.

For eligibility - I believe that, as of the effective date of this change, we will need to allow all employees to enter the plan if they have worked at least 750 hours in a year, even if it was a long time ago.

For vesting, do we need to adjust vesting based upon prior years of service during which an employee worked 750 hours (even if they were not in plan and/or did not work 1,000 hours)? 

I would think not.  I would prefer that the reduction in hours for a year of vesting service is applied on a prospective basis.

Thank you!

Adult child no longer lives with non-custodial parent.  Child is covered under non-custodial parent's health insurance as a dependent.  Insurer is mailing ALL health insurance documents/notices including health information to non-custodial parent.  (Non-custodial parent is opening the mail even though mail is addressed to adult child.)  Can the adult child require the health insurer send mailings to adult child?  Additionally, non-custodial parent is sharing the mailings with others....

We have a 401(k) plan with related participating employers.  One participating employer (the owner and his wife) is terminating its participation in the plan.  Is this a distributable event?  I think it is not as the plan did not terminate, one of the employers just terminated their participation in the plan. If it is not, a distributable event, are those account balances still included in the TH test? Any other TH considerations? I think  those employees would be included in the 410(b) test. 

What if it was a multiple employer plan?

I would appreciate any guidance/thoughts.

A cash balance plan is frozen 6/30 with an estimated distribution date of November 30.  The plan's interest credits were also frozen at 6/30.  Permissible?  Or should interest credits continue through the distribution date.

New client adopted MP and PS plans in 1999, moved the money a couple of times, and never restated them.  Surprisingly, everything else looks pretty much ok - he's actually been entering 5500 info online and filing directly.  Two participants in each plan - father and his daughter, who is term'd.

Any thoughts/experience with maybe merging the plans now and submitting a VCP filing as one plan?  Over $500K in each plan; $3000 fee per plan...

I noticed many life insurance companies fail to provide participant counts on their Schedule A letters. Sometimes there will be a note indicating that information is on file.  Also, some medical carriers will not report covered employee and cobra counts.  In our office, our approach is to obtain this info from either the broker or the plan sponsor themselves, but I've noticed some 5500 preparers will instead leave the item blank and check off "Yes" to failure to provide.

We've always felt it will make the 5500 stand out less if we can answer No, and it doesn't seem that after all these years of these questions that such carriers have adjusted their reporting. It doesn't seem like a big deal to go back to the Plan Sponsor. I'm curious what is done elsewhere.