Anyone else find this alarming?! Seriously? 

What if i'm a small plan sponsor and I've done my own lost earnings calc and deposited to the participant accounts, I've done an amount involved calc and filed and paid excise tax with the Form 5330. Seriously, the DOL is going to come after me for also not filing a VFCP?!

ARA article:

https://www.napa-net.org/news/technical-competence/regulatory-agencies/ebsa-threats-of-alternative-enforcement-actions-trigger-ara-response/

Letter from the DOL (see the last paragraph in particular):

https://www.napa-net.org/wp-content/uploads/letter-from-DOL-4.27.2018-002.pdf

ARA letter to DOL:

https://www.napa-net.org/wp-content/uploads/18.06.07DOLEnforcementFinal.pdf
 

Cash balance plan with formula something like 10% x YOP for HCES, .5% for NHCES.  Life insurance 100x projected benefit.  Plan names names for eligibility - covers 40% and is amended to add names when needed.

Tested on aggregated basis with PS/K that presumably covers everybody.

What are the issues?  BRF for the life insurance?  Anything else?

This is probably a dumb question. But how do In-Kind distributions work if the plan is invested in a group annuity? I'm assuming the In-Kind distribution rules do not apply to insurance products but I don't know where I can research this.

We have a plan that had an AFTAP of 76% for 2017, but we recently completed the calendar 2018 plan year actuarial valuation and the AFTAP is now over 80%.  That determination was made 6/11/18.

A participant making a claim for their benefit elected not to defer the election due to the prior restriction and decided to take the 50% lump sum and monthly payment for the balance.  The plan has a lump sum option and purchases annuities for monthly benefits. 

The benefit commencement date for this would be 6/1/18.  In this situation our procedure is to pay the lump sum portion, and pay the monthly benefit portion from the plan.  If/when plan comes out of restrictions, an annuity would be purchased for the benefit being paid from the plan.

The benefit is about to be processed, but has not yet been paid.  Would it be reasonable or even legal, to contact the employer (who is in very early stages of terminating the plan), explain the situation and ask if we could contact participant to ask again if they'd like to withdraw their current election so they could receive full lump sum?  Thanks

I have a client that has a 401(k) plan recordkept by us and a DB plan recordkept by another firm.  Most employees are eligible for both.  The compensation definition for all aspects of the 401(k) plan excludes commissions.  The employer has a few employees who earn commission only.  My general understanding is that if an employee has no eligible compensation for a plan, then they are excluded from the testing.  Further my understanding is that only folks who are benefitting form a particular money source are include in the 414(s) compensation ratio testing.  Therefore, in this case, if one of my commission only participants has only 100K in commissions, they would not be included in the 401(k) plan's testing (e.g. ADP/ACP, 401(a)(4)) because they are not benefitting.  Then, if they are not benefitting, then they should not be included in the 414(s) compensation ratio testing.  Is that correct?   

Part II - If they have a separate division that is include in the DB, but excluded from the definition of eligible employee for the 401(k) plan, then they should be obviously be included in the coverage testing for the 401(k), but not in the benefitting group and consequently, not included in the 414(s) compensation ratio testing for the 401(k) portion.  Does this sound correct as well? 

Thanks in advance. 

recently I was looking something up on the internet and the following appeared

but clicking on those links did nothing.

King Dave Baker indicated the following (after a big ARRRGGHHH)

I am finding that I can reach the intended target pages by doing some manual fiddling -- e.g. the first link below has a "t=4889" which means this link will work instead:

   https://benefitslink.com/boards/index.php?showtopic=4889

This is just a general "design" question

In the limited number of ESOP documents I've ever perused, they seem to generally provide for a 5-year distribution period for funds attributable to company stock. (longer for very large distributions) Several have also required a 5-year break in service prior to the payout even beginning.

Is the purpose of this to protect/cushion the employer/plan from big swings in stock prices -  so there isn't a major cash flow problem due to a high payout, or is it due to other considerations? I assume that if a sponsor CHOOSES to provide for immediate lump-sum, they could do that, even if potentially might be unwise/risky? Any thoughts on this in general?

Also got a question from a CPA on a plan we don't handle - if you have a 5 year payout on a person who has reached NRD, (assume it is over the $5,000 mark) and the person doesn't fill out the distribution paperwork for the first installment,  can the second installment be "forced" including the first missed installment? General question, as I don't have a document to look at anyway...

Thanks.

I am doing research on correcting excess deferrals for 457(b) plans. 

If you discover the excess deferral prior to the April 15th deadline and distribute accordingly, what is the corrective action? Does the employer have to issue a new W-2? Are there any other forms you need to submit? 

A participant has requested a hardship withdrawal to pay medical bills. They have old medical bills that are in collections at this time, and the date of service was back in 2015 and 2016. They even have a couple from the end of 2017, but nothing in the past 6 months. 

Is there a time limit on the medical bills, or is there a point in time where it changes from medical expenses to debt? 

What are the thoughts on approving this hardship?

A law office has two partners, and a new associate who is in his late 30s.  3 NHCE staff are in their 20s and 60s.  The new associate, who is a go-getter, got a lousy Profit Sharing contribution for 201, and was unable to benefit in the Cash Balance Plan.  He is unhappy with this outcome.

The partners want to keep him happy.  In terms of plan design, could we:

• Exclude the new associate from the CB plan (he isn't benefiting anyway).
• Amend the DC plan to exclude the partners, and change from a cross tested allocation to a design based safe harbor, such as an integrated allocation, so that the young associate can get a larger allocation in the DC plan.

If we were to do this, must we still combine the plans for 401(a)(4), or is the DC free from that requirement because it isn't subject to 401(a)(4), and the other HCEs aren't benefiting in that plan?

In other words, there is no crossover between the two plans where HCEs are concerned, so does this give us some wiggle room for the young associate?  

By the way, the associate is not Key.

Thanks!

Let's say a plan does not allow for in-service. Also, the plan document states that there is an exception for non-owners who are still employed (that they don't have to take an RMD until separated from service). I have two questions:

1) Can a non-owner (who is over 70 1/2) still elect to take an RMD even though he's not terminated? Meaning does that provision give an option for the non-owner to take an RMD or wait until terminated, OR is it a requirement to wait until terminated.

2) If the answer to Question 1 is "yes", can he stop the RMDs at any time after starting them or does he have to keep taking RMDs once he takes the first one?

Thanks.

Company X sponsors a calendar year-end safe harbor 401k. As of July 31, Company Z is buying Company X. More specifically, Z is buying the assets of X; it is an asset sale. X's employees will then go to work for Z.

If X terminates its 401k as of July 31, does it still get safe harbor protection for the final, short plan year? Normally, if safe harbor is discontinued during the year, then no safe harbor protection is given for that year. But if a company is purchased, then an exception is granted. Does this exception extend to an asset sale?

The sponsor has a plan year with fiscal year end of 6/30.

Let's say that this is the scenario:

1/1/2016 to 6/30/2016 - The owner deferred $9,000

7/1/2016 - 12/31/2016 - The owner deferred $15,000

1/1/2017 - 6/30/2017 - The owner deferred $12,000

The plan started on 1/1/2016 and there were no deferrals before that. Let's say the owner is catch up eligible and we're running the test for plan year 7/1/2016 to 6/30/2017.

The plan failed ADP test for the plan year ending 6/30/2016 and $1,500 had to be re-characterized as catch up.

For plan year ending 6/30/2017, the plan failed the ADP test again. The question is, what is the catch up limit for this plan year that can be used to re-characterize the deferrals for the owner. The owner deferred $15,000 + $12,000 = $27,000 for plan year ending 6/30/2017, but how would that show up in the failed ADP test?

A pension plan, subject to IRC 412 provided a timely 204(h) notice in January 2018 stating the plan will be frozen, no more benefit accruals, effective March 31, 2018. The amendment was provided to the employer at the same time with a March 31, 2018 effective date. We just received the signed amendment back, and it was not executed until May 10, 2018.

How is this amendment treated? As freezing the plan on its date of execution, May 10, 2018? Or is the amendment treated as not in effect? What additional action should be taken?

We have two loans that were taken with an incorrect interest rate, the plan uses the prime rate plus 1%. The prime rate had changed but the loans were taken at the old loan rate. I am looking for a correction procedure to fix the loans in question but cannot find one. Do we need to re-amortize these loans at the correct rate? Any assistance would be great.

415 Limits:

(e) Limitation year for individuals on whose behalf section 403(b) annuity contracts have been purchased. The limitation year of an individual on whose behalf a section 403(b) annuity contract has been purchased by an employer is determined in the following manner.

(1) If the individual is not in control of any employer (within the meaning of §1.415(f)-1(f)(2)(ii)), the limitation year is the calendar year. However, the individual may elect to change the limitation year to another twelve-month period. To do this, the individual must attach a statement to his or her income tax return filed for the taxable year in which the change is made. 

Has anyone ever filed such a statement?

Employer sponsors two plans – one is a cross-tested profit sharing plan with a 1-year service requirement; the other plan is a 401(k) plan with immediate entry.  Each plan can pass coverage testing independently and the profit sharing plan can pass 401(a)(4) testing with and without including deferrals.

 The PS plan is top-heavy with key employees participating.  The 401(k) plan is not top-heavy since key employees do not make deferrals and do not have account balances in the plan; however the key employees are not specifically excluded from participation.

 Since the 401(k) plan does not specifically exclude key employees from participation must the plans be aggregated for top-heavy purposes thus requiring top-heavy / minimum gateway contributions for employees with less than one year of service?  If so, would amending the 401(k) plan to exclude keys employees from participation change the answer?

Are they any foreseeable issues with removing a Roth elective deferral option from a 401k plan?  

VFCP filing will be prepared for overcharged participant fees to participants and overcharged fees to plan sponsor as a result of systematic error.  Once the principal amount and lost earnings are restored to the plan, does the plan sponsor also have to amend the Form 5500 for prior years? 

Overcharged fees are approximately $50,000 and the error goes back to 2014.

Good morning to all!

We have a plan where there are two Key employees as identified by our software and they both surprise us in how they were handled.

The first one was already HCE in 2016 but not Key, by virtue of his salary.  He does not own any stock in the company.  In 2017 he became the President of the company.  The software identifies him as a Key employee in 2017 and we thought it would be 2018 before he would be considered a Key employee.

The second employee was Key already but died in 2017 and his account balance was distributed before 12/31/2017.  The software put his distribution in the account balance column as a negative number and subtracted it from the President's account balance to get a net difference for the Key employees' balances for the year.

To be clear:  President has let's say $200,000 which is considered a Key balance, to our surprise, and deceased person's distribution of his $10,000 account balance is picked up as a negative number in the test, so the net Key balances on the Top Heavy Test are $190,000.

Does this seem normal to any of you?

Thanks in advance for any advice.