When answering yes to this question, it asks us to enter the MyPAA filing confirmation number.  I didn't do the PBGC filing yet.  How do I get by this short of just doing the PBGC filing?  For 2017, it is a new plan and the PBGC filing was due therefore 90 days after plan effective date, mid-March.  Since we are busy with contribution numbers in the spring, we usually just let the first filing be late and pay the very small penalty (1% of the unpaid premium is peanuts)  Since 6c is new, it is throwing me off.  Any feedback?

Hello, 

If an employee quits and gets rehired as a consultant with no benefits, do he/she have the ability to cash out their 401K? 

Thanks for your help! 

I'm prepare a Schedule H (Form 5500) for a 2017 calendar year 401(k) plan. The plan merged with another plan effective on 1/1/18. The majority of mutual funds were liquidated around 1/28/17 which was the trade date reported by the financial institution & received by the other plan on 1/2/18 which would be the settlement date. How should these transferred plan assets be reported on the 2017 Schedule H?

All of the guidance on the IRS website refers to "50% of the participant's vested account balance" when calculating the amount available for a participant loan.  When you are calculating the amount available for a second loan with a first loan outstanding, do you include the outstanding balance of the first loan in the "vested account balance"?  It appears from the example in the EOB that you should include the outstanding balance of the first loan but wanted someone else's opinion?

Thanks

Just took over a new plan and haven't seen this in a long time - the employer reimburses investment fees through thru the trust instead of paying directly.  I believe this is considered a contribution when they do that.  Does anyone have a cite that clarifies this? 

Rosemary C. Raymer, ERPA, QPA, QKA

Prospect sold his company (s-Corp) effective 2/1/2018 - strictly asset sale.

Employees were terminated 12/31/2017 and were not hired by the purchaser.

Remaining employees are seller and spouse, no common law employees

As of 2/1/18, it is the same company but with a new name, employer ID# same.

Seller wants to start a defined benefit plan. Since the corp EIN  the same, is it feasible to start the plan 1/1 under the old corp, then change sponsor and name of plan 2/1?

Or make effective date 2/1 and prorate the salaries 12/11ths and have a short year 2/1-12/31/2018.

How difficult is it to add another benefit to an existing VEBA. We have an existing VEBA and management asked us to evaluate adding the existing retiree life plan. The company pays most of the retiree life premiums, but retirees contribute a portion.

What are the key considerations? Upfront and ongoing legal and accounting costs? Our current annual retiree life premium is relatively small (about $600,000 per year including retiree contributions) so one of my concerns is that the initial cost to move the plan into the VEBA and the ongoing legal, accounting and investment expense could be significant in comparison.

Company A acquires Company B 5/1/2017.  Company B's retirement plan is merged into Company A's effective 5/1/2017 and the Company A plan is amended to credit Company B employees with eligibility and vesting service for time worked at Company B (which had not been a related employer). 

Can Company B people be treated as otherwise excludable employees for testing purposes for 2017 (based on real hire dates of 5/1/2017)? 

Can Company B be excluded for 2017 testing purposes by using the acquisition transition rule?

If Company B is tested separately under the transitional rule, would the employees count in the top paid group determination?

A one life individually designed designed DB plan wishe to terminate in 2018.

The plan was restated in 2012 for PPA. No changes have been made to the plan.

Does the plan need any amendments before it can be terminated?

A long time client with a Profit-Sharing Plan inquired (late 2015) about setting up a 401(k) Plan because of employee interest.  I suggested he do a survey to see what employees might defer.  He never got back to me.  In the meantime, Plan needed PPA restating so I turned on the 401(k) switch.

Early 2018, client wants to "discuss the next ten years" with me.  During the meeting, he nonchalantly says that he started a 401(K) Plan in 2016 with his Payroll Company.  Only he deferred, ADP test failed and he was told he'd get a refund.  (Same in 2017, except one other HCE deferred and was due a refund as well.)

Client had a MP/PS combo forever.  MP (Plan 001) merged into PS (Plan 002) in early 2000's.  We filed the 5500 for 2016 on time (assets ~$500k).  Payroll Company prepared a 5500 for 2016 showing only the owner deferral and match of $498.39 + interest as assets.  Client tried to submit Payroll Company prepared 5500 a number of times and it was rejected.

I asked if he had signed any paperwork, he put me in touch with Payroll Company (dude that set up the new Plan was long gone) and they sent me an Adoption Agreement.  I found a number of inconsistancies with the AA, including "New Plan 001"  instead of restated Plan 002, immediate eligibility instead of 1 year and a 5% of deferral match where it was discretionary in the PPA restement.  I also requested and received the account valuations for 2016 and 2017.

Dilemma #1- Payroll Company took $498.39 out of owners pay in 2016 and shows the amount in their accounting as $474.69 deferral and $23.70 match.  The match amount equals 5% of deferral, by magic.  Owner wrote no checks; funds were taken from Company account.

Taken by itself, the New 001 Plan is Top-Heavy (Super Top-Heavy w/002).  Don't even know what Owners Net C was in 2016 (since no contribution, no census) but assume it's over $200K.  So $23.70 / $200K is 0.01185% of pay Top-Heavy contribution for all employees.  But wait!  Owner's 5% match is forfeited under ACP. 

Question - Is everyone due a Top-Heavy contribution even if the Owner's match, after forfeiture, is 0% of pay?  (As an aside - Why wouldn't the 2016 deferral have been refunded?)

My ex was awarded a specific dollar amount when our divorce was finalized in March 2016 (NYS).  The amount awarded was to equitably distribute our assets.

In April 2018, his attorney drafted a QDRO specifying the dollar amount plus investment gains and losses.  I argue that he is entitled to only the amount specified in the divorce.  Can I win this argument?

Per the divorce decree, the ex is responsible for preparing the QDRO (which has been done); am I correct in assuming he is not responsible to cover the $600 processing fee charged by my 401-K plan?

Thank you.

A plan is an owner only plan until 8/1/2018, at which point an employee become eligible.  The owner has an individual brokerage account, but, starting 8/1/2018 and in going forward, all new contributions will be deposited into individually directed accounts at one of the larger online providers.

The owner's brokerage account balance will be transferred to his new account at the new investment provider, but this will likely not occur until September.  Is a blackout notice required?  It is no longer an owner-only plan, so blackout rules should apply, but the owner is the only participant affected by the blackout, so it seems unnecessary.

The Plan provides that if a participant works past age 65, no retirement benefit will be paid until actual retirement, subject to any required minimum distributions. Once the participant retires, distributions begin and the participant receives an actuarially increased benefit. The Plan is frozen. The Plan Sponsor wants to amend the Plan to force distribution at age 65. Would such an amendment be an impermissible cutback?

Good morning -

401(k) Plan document was restated a couple of years ago when moving to a new provider.  This is the only plan sponsored by the employer.  Top paid group appears to have been inadvertently selected on the adoption agreement.  I say that because it was not selected on any of the prior plan documents, the sponsor states that there were supposed to be no changes on the restatement other than a change to the new provider's document and it was not included on the initial draft restatement.  In looking at the census data from prior years and this year, it would never have been advisable to select this option.  The plan parameters set-up on the system left off top paid group, so it passed testing with flying colors the past couple of years without this selection.  When going back to re-test with that option selected, it fails badly each year. 

The sponsor will amend the plan prior to the end of the plan year to eliminate this option.  However, any thoughts on correcting this operational error without having to correct past years based on this inadvertent selection?  I know VCP is an option although my understanding is the IRS will not approve if request to retroactively amend to remove top paid based on this reasoning. 

Thank you!

A plan is a multiple employer plan.  John Doe is a key employee for company A and company B.  Both sponsor the Plan.  John Doe defers from company A and has a balance of say 20,000.  He has never received a contribution from company B and has no balance.  What do you use for his account balance in the top heavy testing?  Do you just use his balance from contributions/earnings from company A for their top heavy test.  Then, just use his contributions/earnings from company B for their top heavy test?  i.e.  His balance in company B would be zero, so he would not have a balance in the top heavy test for B.  His balance in company A would be 20,000 and he would have a balance in their test.

Is there anything that would specifically prohibit the formula for a Prevailing Wage QNEC to be structured as a match? For example if the QNEC was allocated as follows would there be any issues: Employer will contribute a QNEC to applicable prevailing wage employees equal to 100% of prevailing wage employee's compensation deferred up to 3% of compensation deferred and will then contribute 50% of prevailing wage employee's compensation deferred greater than 3% but less than or equal to 5% of compensation deferred.

Morning brain cramp. Say you have an ADP failure and a 415 failure for a participant. Not catch-up eligible.

The ADP refund amount is still considered an "annual addition" for 415 purposes as per 1.415(c)-1(b)(1)(ii). So suppose there is an ADP refund of $5,000, and the 415 excess is determined to be $10,000. Do you have to reduce the participant's account by another $10,000, or only $5,000, since $5,000 has been distributed under the ADP refund?

From memory, (always dangerous) it is the former, but I'm somehow missing the appropriate regulatory citation to support that, so I'm questioning my sanity. TGIF!

We have a group of eligible employees -- basically workers who work for 6 months or less, but aren't expressly excluded by the plan -- who have not been given the opportunity to defer (match not an issue).  We are doing a VCP and considering a retroactive amendment to exclude these people (rather than making QNECs).

This group has always understood they are excluded, and the employee handbook excludes them, but the plan document does not.  Unfortunately, as you might guess, they are all non-HCE's.  Any chance the IRS goes for this?  Should I even try?

If we don't do a retroactive amendment, we will have to do QNECs.  This problem potentially dates back to 2005 -- would we have to correct that far back?  Or can we just correct back to 2015, based on the 3-year audit / statute of limitations period?

Client instituted retiree HRA effective 1-1-17.  The plan has no participants and no contributions/assets in the plan.  Is a Form 5500 required?  Do I simply file a Form 5500-SF with zeros for participants, assets, liabilities, etc.?