I have a plan that currently has a basic safe harbor match.  Deferrals and SH have same eligibility of age 21 & 1 year w/1000 hours.  They want to change deferral eligibility to immediate upon date of hire, but leave the SHM eligibility as is.  Is this allowed?  If so, can this be changed mid-year or must it be effective 1/1/2019?

I had an ESOP paid the final benefits in April of 2018.  So the final 2018 5500 is due 11/30/2018.  We obviously don't have the 2018 forms.  Something in the back of my mind says you can use the 2017 forms.  I guess I can extend and by early 2019 we will have the forms but since the company was purchased no one wants to hang around to sign the forms almost a year from now. 

I just can't seem to find it in the 5500 instructions saying we can use the 2017 forms in this case. 

Is my memory faulty or does someone know where it is written saying we can use a 2017 form?

Thanks

Are PBGC plans exempt from an ERISA bond? 

Specifically asking about small DB plans that typically would not be subject to audit if the bond requirement is met. 

Does anyone have a citation for an answer? 

Takeover of an existing 401(k) plan on a vol sub document. The plan has 500 hours but no last day requirement for its discretionary pro-rata profit sharing formula. The owner's spouse has a business with no employees, just self-employed, but is not a participating employer in the plan. They are a group under common control, they do not meet the spousal exception.

They want to add the spouse's business to the plan as a participating employer, but want the profit sharing allocation under that business to be a different percentage. Meaning the plan sponsor can allocate X% but the newly added employer could allocate Y%.

Issues?

Employer allows union employees to donate unused PTO to a bank from which other union employees can apply for a withdrawal from the bank if they have exhausted their own PTO and have a medical event causing the  need for time off.  Union has a committee that reviews/ approves/disapproves requests which must be supported by a Dr.'s opinion of the length of leave that is needed.

Is this type of plan considered an ERISA plan?  Employer wants to know as a result of the new regs. re: procedures required when an employee of the company makes the determination re: who is disabled.

Plan allows for rollovers in for employees expected to become a participant but who haven't met the requirements yet.

Are these people "Participants" when it comes to the availability of a Participant loan?

Definition of a participant is:

Quote

Any current Employee who met the applicable eligibility requirements and reached his or her Entry Date and, where the context so requires, pursuant to the terms of the Plan, any living former Employee on whose behalf an Account is maintained or former Employee who has met the eligibility requirements.

To me, neither of this conditions have been met.

Maybe another one of the "old-timers" will know this; I am drawing a blank.  Many DC plans have a requirement that an otherwise eligible plan participant must complete a minimum hours of service during the plan year to receive an employer contribution, but IRS LRMs say that it can't be more than 1,000 hours, which is what I always assumed is the limit.  Does anyone know what the source of the 1,000-hour ceiling is (a Rev. Rul. or a regulation)?  Is it based on 410(a)?  If it is based on 410(a), does that mean all of the hour-counting service-crediting rules applicable to eligibility would apply for the annual contribution requirement (e.g., you must count hours not worked for which you are paid up to 501 hours)?    

Employer has an NQDC plan in the form of "appreciation units."  Executive wants any payments under the plan to be paid to a trust, of which he and his wife are the trustees, instead of to him directly.  My understanding is this does not avoid taxation for him, but he wants the trust to hold all of his assets.  Plan currently does not permit the assignment of rights under the plan.

My question is this: 

Does amending the plan to allow a participant to assign his/her right to payment to a trust present problems under 409A?  Any right to payment is still subject to forfeiture.

Any thoughts on this would be much appreciated.

DOL wrote a letter to one of my client (large-audited plan sponsor) to consider applying for the VFC program to formalize the late contribution violation correction.

The 2nd half of 2015 and the 1st half of 2016 plan years contribution transmission were late because the plan sponsor switched payroll service company.

When the annual account valuation was performed the following year, the late contribution violation was discovered, corrected and reported on the Form 5500. The lost earnings was calculated using DOL calculator and each participant portion of the lost earnings were deposited in to participants' accounts.

Question:

1) Does the prohibited transaction exemption 2002-51 in which the deferral deposit is not more than 180 day late applies to the principal? Or does it include the date the lost earning deposit into participants' deferral accounts?

2)Is this permissible to use the VFC program, section 5(e) - de-minimus exception to amounts less than $20, and not to write a check for former plan participants who were already paid out but allocated lost earnings as small as $0.10 at a later time?

3)How does the plan allocate the excise tax paid to the plan  on the lost earnings to fully correct this prohibited transaction? How about the de-minimus amount for prior paid plan participants reallocated? Do the excise tax and de-minimus amounts sit in the plan suspense account to be reallocated as employer contribution to all current plan participants?

Any help to any part of my questions are highly appreciated.

We have a small business w 10 employees and the business offers health insurance.  So the QSEHRA is not available.  Two employees have chosen Medicare instead of the employer health plan.  The employer pays 75% of the health insurance premium and employee 25%.  The employer wishes to reimburse the Medicare-covered employees 75% of the Medicare premium they incur.  There appears to have been a pronouncement in 2015 which allows for this provided certain conditions have been met which they have in this case.  So it appears to be allowable.

Questions: Is this still an allowable benefit?  Does there need to be a written plan?  If so I suppose it would be an HRA.  Can the HRA only address and cover the Medicare reimbursement issue?  I assume the reimbursement would be non-taxable.  

Comments? Thanks

I've not yet found guidance that says this expressly but am assuming if you have a plan with a service-based exclusion for seasonal employees (including the 1 year of service fail safe provisions) but let regular employees in after 6 months of service, a seasonal employee who has been working there for 6 or 7 months and is "hired on" or continues as a regular employee rather than leaving at the end of the season would be eligible to come into the plan right away--i.e., that you count all service with the employer even if it is during a period when they are not generally in an eligible class.

Hi there everyone, 

I’m hoping someone can help me with a query I have on taking loans from your 401k

in our plan you can have 2 loans at any one time and the plan rerefences to 2 standard IRS rules as applicable (up to 50% of vested balance or 50k less the excess between highest o/s loan balances and current o/s loan balance) 

I currently have 2 loans and want to pay one of them off and then take out another one, when I check what the estimated amount is I can take as new  loan it seems wrong so wanted to check if it’s correct or not.

here are some apt figures

Total vested balance =  $78,150

loan 1 current o/s balance = $14,300

loan 2 current o/s balance = $11,700

the highest o/s balance over the past 12months was $32,670

i want to pay back loan 2

the estimated amount is gives me is $17,340 available as a new loan. It give me this amount if I say that I would pay off loan 1 or both loans too. Is that correct?

it seems that it’s just reducing the 50k by the highest loan balance not the difference o/s balance and new current o/s balance once I pay one back. 

Any help or guidance would be greatly appreciated, I call the benefits centre who mange our plan and they can’t answer my query they just sound confused. 

A participant takes a hardship distribution on 1/3/2018.  Suspension period goes through 7/3/2018. 

If participant then takes another hardship 5/3/2018, does the suspension period go through 11/3/2018?

The plan has a match provision.

Does a new hardship distribution require a new 6 month suspension?

A client is decreasing their current auto-enrollment rate from 3% to 1% (too many employees opting out at 3%) and adding auto-escalation to the newly covered ACA employees.  (Not a QACA or EACA). They want to:

• Bring in all currently not participating (previously opted out) employees and auto-enroll them at the 1% and escalate them by 1% each year, and
• All future entrants would be auto-enrolled at 1% and escalated by 1% each year, and
• All employees currently automatically enrolled at 3% will stay at the 3% rate and will not be automatically escalated.

Are there any issues with having two different sets of covered employees:  one for employees prior to the new ACA (that do not escalate and are enrolled at 3%) and one for employees after the new ACA (that are enrolled at 1% and subject to escalation)?

I have a plan with one owner (dentist) and 5 participants. Each year they do a profit sharing and a safe harbor contribution.  The money is at LPL Financial and each participant receives their own statement and they cannot direct their investments.  The dentist  prefunds the profit sharing and safe harbor contributions during the year by depositing the funds  into his own account.  Every other year it seems, they fail to transfer the participants' profit sharing and safe harbor amounts out of his account.

The participants are clueless, and in the meanwhile, the owner is getting an unfair advantage as fair as gains.  I have tried telling them they need to prefund it into a plan checking account, not into the owners account,  but so far they are ignoring me.  Any ideas on how I can convince them not to do this?

I was awarded a QDRO during my divorce and the same time my ex was retiring. 5 years later he is returning to his former employer and they won’t let him collect retirement and be a full time employee. So do I lose my COURT ORDERED QDRO? 

Client currently has a 401k plan. It has just acquired a company with a SIMPLE IRA. It is my understanding that SIMPLE IRA's cannot be terminated during the year. However, is this still the case if the company is sold? Does the new company have to allow the employees to continue their contributions to the SIMPLE IRA? And so they continue the acquired company's employer contribution?

Current 401k plan has a 1 year eligibility requirement.Not sure if original hire dates are being kept so employees under the acquired company may or may not be eligible for the 401k yet.

A private sector employer is looking to establish a qualified plan or plans.  In gathering data, we've learned that most of the employees are covered by the state's retirement plan, even though they are employed by a private employer.  This is a result of a state law and lobbying by public sector unions, so it is what it is, even if it doesn't make any sense.  These employees are not unionized.  IRS was asked about this 3 years ago  WRT Social Security and opined that as private sector employees they are covered by SS and the IRS noted that they are not eligible for the state plan under the IRC, but that any correction for this would have to be handled by the state, as the private sector employer has no choice but to comply with state law. AFAIK the state is not pursuing any such correction and the situation still exists.

So under Section 410, what do we do with all these employees who are covered by a government plan?  They don't meet any of the 410(a) statutory exclusion.   Since government plans are generally exempt from 410 (per 410(c)), it doesn't appear that we can permissively aggregate the government plan with a private sector plan for purposes of coverage and benefits testing.

My only conclusion so far is that they would have to consider all of these employees in all testing for 401(a)(4), 401(a)(26) and 410(b), and perhaps cover some of all of them as necessary to pass the tests without regard to the government plan at all.

Any other ideas on this?

A plan was submitted for a favorable determination letter and the IRS found a problem with the date a participation agreement was signed.  We amended to change the company name and EIN and the date signed conflicts with the prior agreement.  Can a plan be retroactively amended to correct this type of error once the plan has been submitted?

i get this question all the time.  johnny owns 100% of his business and is looking for more deductions.  He wants to look into a Deferred Comp plan for himself.

I realize that there is no value in it for him, especially in a pass-through entity, but I am looking for an article from a large accounting firm or ERISA firm that explains either why it makes no sense and/or might give some reasons as to why it might in fact make sense in certain limited scenarios.

Any help appreciated!