I have a client who was the sponsor of a VS 401k plan.  They elected to to join a MEP available through their HR services company.  The original 401k plan was amended to suspend all contributions effective 4/30/2018 and the adoption of the MEP was effective 5/1/2018.  The MEP was setup to mirror the existing plan (basic 401k subject to ADP); to the employees it was essentially only a change in where their assets are being invested.  All participant accounts will be merged from the old investments to the new.  

With regards to compliance testing, we're getting push back from the  MEP administrator RE one set of compliance tests vs. two.  I don't see any reason why the plans would be tested separately since it is one employer who is the sponsor of both plans.  A separate filing for the original plan will be required until the assets are fully merged to the new but is there a logical reason (one that I am missing) as to why separate testing would be performed?  I have looked through regs RE mergers but most of them deal with asset/stock sales which this is not.

Hi, we are a small business with 4 people, all related to the owner. Since we do not have any employees considered “non highly compensated” under IRS rules, are we exempt from any sort of top heavy requirements? Thank you.

A defined benefit plan requires participant contributions.  An independent contractor signed an independent contractor agreement but later became an employee with no break in service.  He is claiming that he should have received eligibility service credit under Code Section 414(n) because he was really a leased employee (worked under direction of company and solely for the company using their equipment).  Also claiming that he was never provided with information about the plan and contribution requirement.  There are no plan records to verify these claims and we cannot confirm that SPD/application was provided.  Does he have a claim?  

I need some advice.. this is a sad and difficult situation. I was in the insurance and financial service industry for over 20 years. I moved &left an agency I ran after 20 yrs to take care of an ailing parent. Previously I was a reg rep for my co and actually handled our own simple for our office.. Esp since “i” shares were available because we actually did retirement planning at the time. This preface is why I feel so dumb! After my dads death I went back to work for a different agent, he advised at hire he provided a simple with a 3% match ,i also took the job on contingency he provide some type of group health. I was overwhelmed already in an environment that was seriously non compliant & sub par regarding just client accounts. If I ever brought up a compliance issue only wanting to help or resolve it was met with disdain as if I was trying to “ run the show” and reminded who’s name was on the door and that he was a CFP! After leaving for another position ( that was worse,lol ???‍♀️) I realized he had been deducting 3% for my Simple contribution every two weeks but I never did a risk tolerance tool, any paperwork,nor got correspondence ever. I texted him to inquire “ where my Simple was” his response was “i don’t know and why would I know where your investments are”? My response was simply “?”, I waited until the next day hoping he was in a mental crisis @ the time and send him another text explaining he had been deducting the 3% contribution .. again the shocking response was “ that’s news to me and I guess I owe you some $” I was mortified but still trying to not burn a bridge and replied “ oh well you saved me the 10% penalty because I need the $” then  just waited another few days because I was praying he’d do the right thing and at least offer to repay me my contributions plus the 3% match , i decided to just suck up the market loss ( which was huge?), he said he’d have to contact his cpa although I told him I had my last stub showing the 3% he deducted. Sadly a week later he sends me a text that says “ damn it “ I owe you $XXX which was EXACTLY MY Contribution! I have not responded at all since then ! I also found out his only former competent staff set up the plan 5 yrs ago! He has hired multiples of ppl since then and I have no doubt he has  neither done their paperwork to start their Accts nor has he been even sending in the contributions for former employees within prescribed times if at all! On one hand I want to help him still get out of this mess on the other I just want my $ plus match promised and not cause anymore animosity.  Telling him again the ramifications of his actions will only make me look like the “know it all” again and be met with an unpleasant outcome.  I don’t even want to disclose what happened with the health ins in this thread now. I knew I was in trouble when he told me “ Men have vulnerable egos & his  wife was a better man than he was”??‍♀️??‍♀️?help!  what is he potentially facing and how can I help him without hurting myself further ? Thanks, Serious Idiot ?

Hi to All,

If a 401(k) plan is on a platform like John Hancock, and JH produces the 404(a)(5) notice, how must it be distributed?  It's available on the participant's account page at JH.  Is it enough to tell the participants via an email or a written memo how they can access it themselves on their account page?  Or must the employer access it off the Plan Sponsor page, download it, and either distribute paper copies or email it to the participants?  Must this be done every quarter?

I am not picking on John Hancock - I could have used any platform provider - we just happen to have a number of plans with them.

Thanks for any information you can provide.  Yes I realize we should already know this and we are getting to the table late but better late than never!

Retirement plan documents now is mostly about IRS-preapproved documents, and seldom does an employer apply for a determination.

Beyond Form 5300 applications, what is it that enrollment as a retirement plan agent permits an ERPA to do (that one could not do without enrollment)?

Is it only about the Employee Plans Compliance Resolution System?

Does the right to represent a taxpayer in the IRS’s examination of a Form 5500 report matter?

Is there something else allowed for an ERPA (but precluded for others)?

Participant terminated 1/2/2018 and was 72 at the time of termination. Not a 5% owner.  Under the RMD rules he could postpone his first RMD until 4/1/2019.   If he did, he takes a second RMD in 2019 for 2018.

The participant rolled his account balance to an IRA on 5/1/2018. The IRA custodian is now telling the participant he had to take his first RMD before the funds were rolled. The 401(k) recordkeeper is saying he did not have to take the RMD before rolling the funds.

I do not agree with the recordkeeper.  I say the participant HAD to take the 2018  RMD before the funds were rolled.  The first RMD is technically for  2017, the second is for 2018. Even though he could postpone the payment until 4/1/2019, the rollover to the IRA triggered the RMD.

Need some help in understanding what and when the payment needed to be issued.  To complicate matters, the Rep from the Recordkeeper said when they spoke to the  IRS about this matter, ( called the 800 number) IRS rep  told her the funds did not have to be returned to the 401K trust and paid. The payment could be made from the IRA. Anyone else have issue with this response?  

A prevailing wage plan has loan repayments going back into the plan with pre-tax money from the payroll.  In addition, the loan repayments are being paid by the "untaxed/pre-taxed" fringe benefit dollars.

My understanding is that loan repayments are paid with after-tax dollars.  A participant is repaying part of the loan with money that has already been taxed. As you know, one of the benefits of contributing to a 403(b) or 401(k) is the fact that the money is invested pre-tax. When a participant takes out a loan,  he/she isn’t taxed on the proceeds, but the money used to repay the loan has already been taxed so the additional interest going into the account will effectively be taxed twice–at the time of contribution and again when eventually withdrawn from the account in retirement.

The rules would not change just because this is a prevailing wage plan?

We are a TPA firm who does some COBRA administration. Received a call from a distraught person because his COBRA was stopped due to non-payment. He sent a partial payment to cover May then sent nothing for June & July. He was then notified that coverage was stopped due to lack of payments. His argument was that he never received any payment coupons nor did he receive any "warnings" that coverage was going to end.

 He had signed off on all of the initial COBRA paperwork which stated the costs, payment of premiums, etc.

My question is whether he has any push back.

Thanks!

Appreciate some insight into this situation.

Calendar year 401(k) plan.  Company is sold in March, 2018.  Company terminates 401(k) plan effective 3/18/2018. 

A participant had already earned over the annual comp limit, deferred the max, and received the max match based on the annual limit, prior to plan term.

I believe due to the short plan year that we now have to prorate limits, including the comp limit?  If that is correct, the participant's match deposited exceeds the allowable amount using the prorated comp limit.

If that is all correct, is it acceptable to treat the overage as a mistake of fact, given that the match was calculated using an incorrect compensation amount, and return the overage to the employer?  Or must the overage be moved to the forfeiture account. 

Thanks very much.

Employer is asking if he can include Union Office Manager in his 401k/PS Plan.  Knee-jerk reaction is NOOO!  I think he has 20+ other Union plumbers.  Would like  any other opinion.

So, the 5% owner hits age 70.5 in January 2017, and we do his 2017 RMD in 2017.  No one blinks.

Now we find out that he sold his portion of the business "one second after the stroke of midnight" (who knew lawyers could be poets?) (I find it hard to believe that that's what they were doing while singing "Auld Lang Syne") into 2018 to avoid taxes in 2017, and he is arguing that he doesn't need a 2018 RMD.  I explain that, at least in this instance, once he is in RMD pay status, that's where he stays.  Grudgingly accepted.

Here's the question - his wife turns 70.5 in 2019.  Is she off the hook because the stock was sold before the calendar year in which she turns 70.5?  If she is still employed in 2019, do I go to the definition of HCE, which has a lookback year and because her husband owned more than 5% of stock for a second in 2018, she has to take a 2019 RMD?  Or do I go to the definition of "5% owner", which does not includes a lookback year?  Personally, I'm hoping she terminates and takes her entire balance before the end of 2018! 

Thanks.

The 401(k) plan has auto enrollment. Apparently a few years ago, three participants were not auto enrolled and it was discovered on audit. HR spoke with these employees and they all indicated they would have opted out from the start if they had been provided with an opt out form. If we have them sign a document indicating they would have opted out, will that save us from having to make corrective contributions on their behalf? Of course that would save us money and make our lives much easier, but it somehow doesn't seem quite right to me. While the employees are willing to execute such a document, I could see the IRS arguing that employees could be pressured into signing such types of documents to please their employers etc. 

Any input would be appreciated. 

One participant plan owns real estate that is rented out. An organization filed a complaint against the property manager and the 401k as the owner of a house. Are attorney fees a settler function or can the plan pay the attorney fees?

A deemed distribution of unpaid loan balance in 2015 after leaving employment was recorded on tax return as income. If loan is then paid back three years later including all interest etc.. Can an amended tax return then be filed to remove the 1099R distribution?

Putting aside all of the other complications and concerns with ROBS, let's assume the structure has already been finalized and implemented.  Now, the C corporation that is owned by the Plan goes to a lender to borrow money to finance its inventory, general operations, what have you.  The lender is happy to lend the money to the corporation as long as the principals - i.e., the individuals whose Plan accounts own the stock - will guarantee the loan.  Would providing that guarantee be a pt?  

2  plans with common ownership, have a different match.  For ADP and ACP, one is prior year and one is current year. 

Can we voluntarily combine the plans for just coverage?

Medical group sells practice July 31, 2018.  Former doctor employee terminated employment in 2016 and is 20% vested in PS source.  The terminated doctor has not incurred forfeiture since he has not been cashed out nor has he had 5 break in service years.  We believe full vesting must occur here.  But the client does not want to provide full vesting due to termination circumstances.  I'm right - right?

Thank you in advance for comments. Tom

An employer is considering becoming an adopting employer in a MEP. We advised this potential adopter to ask for a copy of the 408b2 notice. The sponsor of the MEP refuses and states they have no obligation to provide the 408b2 notice to adopting employers. Their reasoning is that the 408b2 regulations apply to the covered service providers and themselves as plan sponsor of the MEP (i.e the fiduciary referenced in 408b2). They state the adopting employer is not a plan fiduciary and therefore will not provide it. 

After reviewing 408b2 I think the MEP sponsor is right. However, how is an employer supposed to make a good decision for their employees if they don't know who is being paid what? All they have is the participant fee disclosure and cannot compare total cost between a MEP or sponsoring their own plan?

Curious of anyone's thoughts. Thank you

Employer has several USA Divisions and there are 3 401(k) Plans:

- Plan A by other TPA - Age 21 and 6 months, with monthly entry dates, Safe Harbor Match

- Two Plans by us as TPA - Plan B has entry on the date of hire and is a Safe Harbor Match. Plan C has a 2-month wait, with monthly entry dates and discretionary match.

Plan C is a smaller Plan and will not pass coverage on its own. However, this Plan was effective 01/01/2017 but they did not hire anyone until mid-November 2017 (i.e. no contributions as no one was eligible).

We cannot use the RPT for coverage - correct?

If not, I believe we can use the ABT - correct?