401(k) plan excludes a group of employees. Historically this has not been an issued. For 2017 when running the coverage test for the excludable employees, coverage fails. This will require the employer to bring in a substantial number of excludable employees to pass coverage. These employees will all receive a QNEC.

the issue is which employees are brought in to pass coverage. Can the plan use date of hire as the basis for determining how to bring in?  We looked at hours ( those with the hours closest to 1,000) and this results in an OUTRAGEOUS QNEC.  Using date of hire or compensation would result in a lower cost.  

Can not find anywhere in the reg the process that must be followed in determining who gets brought in to pass coverage.   

I know...i know...I should be able to convince TPTB that there are a lot of bad consequences for failing to follow the plan document, but I am in need of something pretty basic on this topic for the top decision maker of my firm. She tends to know how she wants things done regardless of what the plan document says. And I have not been in this position long and am fighting a bit on "how it's been done" vs what the plan doc says. (I have a very strong 401k background, but it is from 1991-2000 or so..so my documents/knowledge can be out of date a bit)

I am in the process of setting up a meeting between our TPA, the exec, our financial advisor etc to go over the terms of the plan document as they exist versus what we want them to be. Our TPA isn't the strongest and seems to be okay with having knowledge that we are not following the plan document (tends to be that we can ask forgiveness later). Once they tell us something, there seems to be no followup (or an assumption that we cleaned up the mess on our side -- now granted much of it is due to prior HR employees and their lack of 401k knowledge or even opening the Plan Document/Adoption Agreement).

Would appreciate any help ......

Help settle a debate....  Assume a 401(k) plan is defined in such a way as that employee deferrals are distributeable only in a single lump sum when a distributeable event occurs, but any employer money (match, non-elective) is distributeable ONLY in the form of an annuity and ONLY after a distrubetable event AND attainment of the plan's Normal Retirement Age.  Clearly the annuity distribution option must comply with the QJSA requirements (J&S Annuity and/or spousal consent).

What about the deferral distributions?  Is spousal consent required for that distribution as well?  The debate is, if you look at the regs - says a "PLAN" is subject to the QJSA requirements when the annuity distribution exists - with the exception of a plan that is a "transferee" of money from a plan that was subject to the QJSA rules - and then ONLY that source need comply with the QJSA rules.

The plan design referenced above seems, in some ways analogous to the "transferee" source scenario, but the regs say the "plan" is subject to the rules when the annuity exists and it doesn't seem that the rules were written with this plan design in mind.

My team is rather conservative on such matters, and seem to believe that the "plan" as a whole is subject to the QJSA rules when an annuity exists, and the ONLY exception is the "transferee" plan exception - which allows only the transfered source to be QJSA constrained - which this scenario isn't.

We may be over-thinking this - but it's my team's job to vet this kind of stuff....

Thoughts?

Loan was initiated by owner of a business for himself in 2017.  Loan repayments were not started by his payroll clerk.  And so six months go by without any loan repayments.  The loan was re-amortized over the remaining life of the loan and repayments started.  A VCP filing is being prepared.

Question for the 2017 5500 - is there a prohibited transaction to report.  It seems this just adds insult to injury as the IRS will likely approve the fix under VCP and the use fee will be paid.  Seems like double jeopardy to also report it as a prohibited transaction.

Comments? Thanks in advance.

My brother borrowed from his 401k loan last year march, he did not repay it, he died in November what happens to his remaining money in his 401k? 

A plan is a DB/DC combo plan.  Do they both have to have the same NRA?

Right now the DB has 62 and the DC has 65.

Traditional DB plan, several participants were supposed to be put in pay status at age 65 but the prior record-keeper failed to initiate the payments. We are now calculating retroactive annuity payments; however, the plan does not know the participant's marital status. Some participants cannot be located and some won't respond.

On what basis should we calculate the annuity if we don't know their marital status? Single? Married? If married, what age should we use for spouse?

The plan document is silent and I cannot find any guidance on whether there is a default method to use when calculating the annuity.

Thank you.

with the release of the consumer price index last Friday,  (based on the current hi 3 average [ feb-mar-apr]) the limits just jumped to the next level

19,000 deferral

280,000 comp

56,000 415 limit

of course there are 5 months to go, but I don't see any major drop coming in the index....

We are assisting a client with terminating their plan. The plan is small (just over 100 participants). They are trying to decide whether or not to seek a determination letter with the termination. They are confident their plan document and administration of the plan is in order -- the last determination letter received was 2012.

Does anyone have experience with clients that do not seek a determination letter and if so, does this increase the likelihood of a PBGC or IRS audit? Most clients we work with go through the process of obtaining a Determination Letter.

They are under 300 participants, so the PBGC audit would not be automatically triggered.

Any details of similar terminations would be appreciated. Thanks.

Hello.

The alliance that holds the assets for a client of ours just added funds to the plan due to uncashed checks from 2012.  Yes, I said 2012.  The amount totals $195 for 3 participants.

How are these funds reported on the 2017 Form 5500-SF if the client has chosen not the restore the funds to each participants' account with the understanding that if the terminated participant comes looking, they will need to provide the funds?

Do the participants need to be reported again on a Form 8955-SSA that they still have benefits due, since they were reported as having been paid their vested balance in 2012?

Thanks for any guidance you can provide.

I have a small group medical client in Missouri with only 5 employees who changed from an ACA fully-insured plan to a Level-Funded Premium plan effective May 1.  It turns out that they have a former employee (who resides in Kansas) who may be interested in continuing her former group medical coverage; this employee's coverage terminated with this employer effective March 31.  This former employee was informed of her right to continue her coverage under Missouri law in April.

Unfortunately, the insurer for the Level-Funded Premium plan does not offer state continuation coverage, so now the employer cannot offer this former employee coverage under state law.  The employer is concerned that this former employee may decide to sue.  Does anyone have any experience with a similar situation or have any advice to give?  Thanks.

A safe harbor 401k plan was set up believing that it was for just the owner and his employee. The enrollment meeting was done by the broker. We now find out that it was the intention of the owner to set up the plan as part of the Union contract.

The owner apparently is the only non-union employee. It's been many years since I've worked on a plan with union employees. Are they able to have a safe harbor plan with a the basic match? Does the union's contract specify the eligibility requirements, match,etc.?

How should I proceed?

Plan sponsor wants to match dollar for dollar up to $18,500.  The catch is, the employees compensation will be reduced by the match amount. I don't think this is possible under the CODA rules. Ignoring ACP testing for the moment, is this even possible?

After I posted the question, I found this in the EOB. I think this answers my question, but still open to thoughts. Thank you

Company has a QACA safe harbor 401(k) plan with matching contributions made on a payroll basis.  The company is considering entering into an arrangement with an insurance company to have it make short-term disability payments to the company's employees.  The arrangement is NOT insurance.  The insurance company will determine whether employees are disabled and, if so, make payments directly to the employees using the insurance company's EIN, and withholding taxes, garnishments, etc., and issuing W-2s to the employees.  Loan repayments and 401(k) deferrals will not be withheld.  The employer company will then reimburse the insurance company for the payments made.

I am familiar with ASO agreements to administer short-term disability payments, but not direct payments by the insurance company that are not insurance.  No one I know professionally has heard of this type of arrangement and each thinks the payments are compensation from the employer company.  The insurance company says they've been doing this for years for many clients and the payments are not compensation from the employer.

Are these payments compensation from the employer company (and not the insurance company)?  These non-insurance payments are being made on account of service with the employer company. 

Probably an easy question.

I work one job as a full-time employee and I max out my ee contribution by contributing $18,000 into the plan.  I guess it has gone up this year a bit.

I also have a side business where I am the only employee.  I know I can't put any more into a 401(k) account for that business as I am maxing out my contributions into my W-2 job.  My question is:

If I am making $80K in the side business, what would be the most I could contribute to the second plan? If it matters, I am an LLC , but I file taxes as an S-corp.

Thanks.

Need some suggestions about this situation:

1. Participant is on deathbed, calls into provider (recordkeeper) and gives verbal authorization to transfer her account balance (approximately $160K) to an IRA at the same provider (to accommodate a partial distribution request). Provider complies with verbal direction. Prior to the transfer, the participant's beneficiaries are her 2 children.

2. Money moves to IRA. The participant's 2 children, who have power of attorney, request and receive distribution of $60K on the participant's behalf (for medical expenses).

3. Participant dies. The 2 children file claim against IRA for benefits. They are told that they are not set up as the beneficiaries for the IRA.

4. The 2 children approach the provider and state that the correct procedures weren't followed for the transfer to the IRA and want it restored back to the plan. The provider agrees that the transfer was not legitimate, but is not willing to restore the $60K that was taken out by the participant (via power of attorney) during the short time the funds were in the IRA.

Any ideas of the best way to unwind this mess? Help!

A governmental plan requires employees to contribute to the Plan post tax.  The monthly benefit reflects both the taxable and non-taxable portions and are reported appropriately.

 If a retiree dies before receiving benefits equal to his or her contributions (plus interest at the plan's rate), then his or her beneficiary receives a refund equal to the difference between the total benefit received and the retiree's post-tax contributions (plus interest).  Is this refund taxable?  How is the refund reported to the beneficiary?

I live in Texas and need assistance. I separated from my employer in April 2018. I had outstanding, non-verified receipts from Wageworks. My employer has withheld my last paycheck because I have not verified these FSA transactions. Are they able to do this?

I have a client who has a defined benefit Supplemental Executive Retirement Plan.  The question is: what IRS reporting form should payments under this Plan be reported on (W-2, 1099-R, 1099-Misc)?  Here are the pertinent facts:

• This is a non-qualified Supplemental Executive Retirement Plan aka, SERP
• The Plan is unfunded
• The covered executives made no contribution to the Plan: IT IS NOT A NQDC!
• The defined benefits are computed based on years-of-service combined with a targeted percentage of final average compensation.
• The benefits are paid out of general company funds on a monthly basis
• There is NO SURVIVOR BENERFIT
• There is a very strict anti-alienation clause
• There is no option to take a lump-sum payment

Given these parameters, what year-end IRS form should these payments be reported on?  Specific cites to IRS rules and regulation would be most appreciated.

Has anyone seen this? What election rules apply to such a deferral? What are the pros and cons of the plan allowing this?