We are drafting a new 401k plan for 2019, non-safe harbor.  200+ expected eligible participants.  Initially the plan was to be written excluding HCEs (HCEs would have their own nonqualified Deferred Comp program).   

The question was now asked can we let the HCEs into this plan so that they can rollover any 401(k) accounts from previous employer (presumably unrelated) 401k plans, but not have the HCEs eligible to make 401k contributions or receive any employer match (only 2 money types, other than rollover, allowed in the plan).  Does this sound acceptable?  This would only affect HCEs so discrimination issues would not seem to matter.

Thanks for any replies.

My ex and I went to mediation in April 2018. Settled on amount to be paid to me through QDRO (considering half retirement account/equity of assets and debts). My atty filed the paperwork. Divorce was final June 14, 2018. Through the mediation, I agreed to move with my 2 minor children. So, I had to find a house, down payment, closing costs, moving costs, etc. I also assumed the debt bc I planned to pay it off with a cash out of the QDRO. Came back for ex to sign on x amount back inn August. He refused to sign. He claims I didn't hold up my end of the bargain when turning the house over. Claims damage (there was none), claims I took things I shouldn't have (he made a list and I left EVERYTHING he asked for and then some). He said he doesn't have anything to lose. Right, I had all the expense of moving out and he's earning money on the money he owes me and I took the debt! His atty is a real treat and based on dates and texts I have from him, they were planning this all along- I just didn't see it coming until after the fact. So, they let me file the QDRO knowing full well that he was going to make me come after it. My atty told me in my county this wouldn't cost me more than 3500 as long as we settled in mediation. I paid him that and got an 8k bill after that. I have them hounding me for money but I'm a single mom and strapped. I have the bill down to 5800 but I need the QDRO money to pay him. He doesn't return my calls or emails for 6 weeks and the first thing he asks for is money! He asked me to settle with him after we ALREADY agreed. Finally, months later and I agreed bc I need to get this settled or I'm going to go into BK fast. I have borrowed from family just to keep my head above water. My atty claims he's waiting on a response from the other atty but it's gone on too long. I looked up what to do. It says file a motion to enforce the JOD. I was told when I do that, his atty is just going to file something claiming the mediation was done fraudulently. What can I do? My ex was controlling, abusive and manipulative and I still can't get away from it! Please help!

Is it permissible to include service within a specified period of time from a predecessor employer? For instance, only service completed since a certain date, or through a specific date?

In what is a unique scenario for our firm, we have a Plan where the Sponsor is a group of various health practices which have banded together to form one large corporation, where each "original" practice now owns a piece of this new company. 

When we originally established the Plan we credited all service from each predecessor employer, because those practices no longer employed the Larger group's employees, and these practices wanted the employees to become eligible based on their service with their practice. 

A new practice is joining the Group. For administrative reasons, we wish to exclude service with that employer prior to a certain date (1/1/2017, for example). This is to save us/the Sponsor from having to review whether or not any of the 500+ employees worked for this new practice at any time since its inception (30+ years). We wouldn't want to recognize all years, having the unintended side effect of resulting in an employee of another practice becoming eligible (and costing that practice owner the Profit Sharing contribution). At the same time, we don't want to ignore all service with the new group, preventing them from becoming eligible for the new plan. 

So, can we recognize / credit service from a predecessor employer during a specified period of time?

Is a plan using the "facts & circumstances" method of determining immediate and heavy financial need under Treasury Regulation 1.401(k)-1(d)(3)(iii)(A) permitted to impose a 401(k) contributions suspension period under the Proposed Hardship Regulations?

I realize that the preamble to the proposed hardship regulations state "the proposed regulations do not permit a plan to provide for a suspension of elective contributions or employee contributions as a condition of obtaining a hardship distribution." However, I couldn't tell if that applied solely to plans using the deemed safe harbor reason, or to both deemed safe harbor and "facts & circumstances" method. 

Company A wants to sponsor a plan in 2018.  Owned 50-50 by brothers.  Company was in existence since 2016, but only really started conducting business in October 2018.  Brothers, their wives and a child are all getting paid for services.  Company A adopts a 401(k) plan 10/1/18 effective 1/1/18.  21-1 YOS, semi-annual entry.  EEs employed 10/1 have service waived and enter immediately.

The brothers also owned another business, Company B, with 6 other (NHCE) employees.  So, controlled group.  Company B folded 9/30/18.  Company B did not have a retirement plan

Two employees from Company B started working for Co. A in November.

I'm guessing I have to count their service with Co. B.  When do they come into the plan?  January 1?

Do we have a coverage issue?

Company A, with 401(k), excludes nonresident aliens.  Employee B, citizen of non-US country with no US Source income, is employee of Company A starting Jan 1, 2018.   401(k) has 3 month wait.

Employee B is moved to US and will begin receiving US source income from Company A 12/1/2018.

In reading other posts, I believe service is counted since Jan 1, 2018, and Employee B would be considered as having satisfied the 3 month eligibility wait.

How about their compensation from Jan 1 to Dec 1?  I've seen posts that all non-US source comp is excluded (say for ADP test, determining next year's HCEs).  I've seen other posts that indicate the compensation non-US source income must be converted to US dollars and used for plan purposes.

Any assistance is appreciated.  Thanks.

Husband/wife own 96% of the company and are eligible for the plan. No other employees.

Their adult kids own the other 4%, but the kids are not employees, not eligible for the plan.

Eligible for EZ, or must they file SF?

Can someone speak to whether or not contributions to a 403b plan are tax deductible for a New Jersey resident?

someone is saying that they New Jersey does not recognize the deduction for 403b plans, but does for 401k plans.  Yet I have plenty of New Jersey customers and this has never come up--much less the issue of basis that people would have in their accoounts. 

It could even get messier if for example they do not get the deduction in New Jersey and then they move to  California to retire, and take the money out and pay California tax on the way out.

This just cannot be.

On a similar note, I heard the same thing about 457b plans.

A terminated participant has a residual balance of $5... so his RMD is less than the cost of the stamp it would take to mail the check to him.  I know there's talk of not having RMDs if the AB is <$50K, but that's not here today.  Any thoughts on just giving this a pass?  Thanks.

I'm having difficulty wrapping my head around a screwy situation.

Plan year is calendar year 2018. Limitation year is 2018. Fiscal year is 4/1/2017 - 3/31/2018. Extended tax filing deadline is 12/15/2018.

Plan excludes pre-participation compensation.  Eligibility is 3 months/250 hours, monthly entry.

Participant is hired in 2018 - let's say on June 14th, enters plan October 1, 2018. Compensation form Date of Participation is, say, $30,000.

Prior TPA has been allocating contributions made for a given fiscal year for the prior plan year, based upon prior plan year compensation. Example - for 2017 plan year, allocations were made based on 2016 calendar year compensation.

I don't see how this can work. While you can theoretically allocate a contribution made in a current plan year, with the fiscal year ending in the current plan year, for a prior plan year, how can you allocate for 2017 (in the circumstances above) based on 2018 participating compensation, when the only participating compensation is during plan year 2018? There is no 2017 plan year compensation.

Am I missing something?

I have a 401k account that was setup thru a divorce QDRO order. I have been making periodic minor partial withdraws from this account for close to 4 years. However the latest request for partial distribution was denied. The plan provider is now claiming that the plan does not allow for partial distributions and they claim that the previous withdraws over the last few years have been an "oversight" on their part. They stated that this "plan rule" can be found in the Summary Plan Description ( which I promptly download from them ) and it DOES NOT spell out any rules regarding partial withdraws for plan participants. I was polite and I asked them to point out exactly where the rule was...but they could not. They then claimed that it is forbidden according to the adoption agreement with the plan administrator and they are legally bound to abide by it. My question is do I have any recourse action I can take ? 

Is anyone aware of a way to request old 8955-SSA's filed from the IRS?  We have a new client who wants to make sure they have D'ed everyone that they A'd as far back as possible (obviously just the ones who have closed their accounts).  they don't have copies internally and the prior provider sent the last couple but that's it.

This question relates to terminating a vanilla C-Corp employee stock bonus plan ("ESBP" not and ESOP) that is almost entirely invested in closely held employer stock.  A 5310 application has been pending with the IRS since Sept.  The company wants to give the participants the choice they have had in the past  (as called for under the plan) of taking their plan termination distributions in cash or in stock. The Company would like to redeem shares from the Plan to raise whatever cash is needed to meet the participant elections. There are non-employee shareholders, so can't compel sale of the stock.

Are they required to not only get an independent valuation but also to appoint an independent trustee to negotiate the redemption price and make a good faith determination that the plan is being treated fairly and receiving "adequate consideration" (not less than fair market value) for its shares?  Is this to be AS OF THE DATE OF THE  REDEMPTION SALE?  If so CAN THE REDEMPTION SALE TAKE PLACE BEFORE THE DATE OF DISTRIBUTION?   What are the mechanics of doing that?  Can the participants make their election now but advise them if they elect cash their shares will be redeemed at the fair market value of the stock on the date of actual share redemption as determined by the independent trustee and an independent valuation? 

Have a "splitting hairs" question.  Plan document reads:

(6)   Return to employment. A Participant may not receive a distribution based on Separation from Service, or continue any Installment distribution based on a prior Separation from Service, if, prior to the time the Trustee actually makes the distribution, the Participant returns to employment with the Employer.

At issue is the meaning of the phrase "Participant returns to employment" in the last sentence.  I contend that the employee has returned on the date he or she begins working.  I base this on the fact that his/her re-hire date is the date he/she begins working, not the date called.  Another party interprets that the employee has "returned to employment" if he or she has been notified they are being called back to work.  A distribution was in process to the terminated employee.  Before the funds were paid out, both parties were notified that the employee had been re-hired with an effective date three weeks in the future.  I contend we should not stop the distribution.  The more conservative party (who by the way is very highly regarded and I have the utmost respect for) states that because we know he will be rehired, he has "returned to employment" and we should stop the distribution. 

I've made my decision but am curious to run this by other experts out there.  Thanks much!

Company A Owns 60% and Company B owns 40% of Company C. The employees of Company B are no longer employee of Company B but now employee of Company C. Company B sponsored a 401k Plan previous. New Company C started sponsoring a 401k plan that allows rollovers. Both Company A and B still exist and neither have employees. All employees from A & B are now employees of Company C.

Do the employees of company B have a distributable event?

Plan allows for 1 loan at a time.  Participant has a loan, which he took out in 2014 with a weekly payment of $31.38.  In August 2017, the Participant contacts the Investment Company, pays off the loan and requests a new loan.  New payment amount is $140.53.  The TPA approves the loan and it is then approved by the Plan Sponsor.  The entire process is done electronically.  Participant is not married so there is no spousal consent and thus no physical paperwork is generated for the request until the loan is approved and the IC sends a confirmation report to the participant which contains the terms of the loan.  This is a standard procedure.  TPA and IC notify the client that the first loan was paid off and provide the amortization schedule with the new payment amount to be implemented via payroll.  Payments are being made but the IC/TPA do not provide loan monitoring for this particular client.  Fast forward to October 2018 during the 5500 audit, the auditor picks up this loan for his sample and discovers that while payments were made timely, the amount was incorrect.  How does this get corrected?  Would this loan be considered in default, even though payments have been made timely just in the wrong amount?  Does the plan need to file under VCP?  Can the loan be re-amortized so that the loan is paid off by the end of 5 years? 

Client has a DB plan that has a DC component where certain participants have plan accounts. I am trying to figure out if it is possible for those participants to receive an in service distribution of DC component. Would this be prohibited since the DC is a component of an overall DB plan? 

Thank you for any clarification you can provide. 

I apologize in advance if I've missed something in my cursory research of this, but here goes. Also, for simplicity I am assuming the employer in question only has DC plans, but I don't think that makes a difference.

Clearly, to determine whether a plan is top-heavy for a "plan year" you use account balances as of the "determination date," which also quite clearly is the last day of the plan year preceding the plan year for which the determination of top-heaviness, or not, is being made. E.g., to determine whether a plan is top-heavy for a calendar year 2019 plan year, you use balances as of 12/31/2018. There are potentially also certain addbacks to determination date account balances of keys and nonkeys for distributions that were made during the plan year preceding the year for which the top-heavy determination is made (i.e., in my example, during 2018 for the 2019 top-heaviness determination), or potentially during a 5-year period in the case of some distributions. See IRC secs. 416(g)(1), (3), and (4)(C). And of course you have aggregation rules.

So the above gives you your key and non-key participant balances for purposes of determining whether more than 60% belong to keys. But then you have to figure out whether those balances belong to keys or non-keys. IRC sec. 416(I)(1) [Note: the "I" in 416(I)(1) should be lower-case, but I can't make that happen; sorry]  tells you that the keys are the folks who meet certain requirements, e.g. percentage of ownership of the employer, "at any time during the plan year." Just looking at 416(I)(1) [see previous note], it would seem that the "plan year" being referred to for identifying keys is the current plan year, i.e. the year for which you are making the top-heavy determination, i.e. 2019 in my example. At least, that's what I think, because 416(g)(1) tells you that a plan is top-heavy "with respect to any plan year," and to me, when 416(I)(1) says "during the plan year," they are talking about the same plan year. So it seems to me that based on the statutory language you would use ownership and compensation in 2019 to determine who are your keys and non-keys, and then you would go back to 12/31/2018 to see what those folks' determined to be keys based on their 2019 facts had in the plan for purposes of the "more than 60%" test.

But Treas. reg. 1.416-1, T-12 seems to say pretty clearly that the "plan year" being referred to in 416(I)(1) is not the plan year for which you are making the determination (i.e., 2019 in my example), but rather 2018. It does this by adding "containing the determination date" to 416(I)(1)'s simpler "plan year." I guess when, before EGTRRA, you looked back 5 years to determine who were your keys (i.e., the keys were participants who at any time during "the plan year or any of the 4 preceding plan years" met one of the status tests), and under pre-EGTRRA Section 416(g) you were also dragging back in all distributions made during the 5 plan years ending on the determination date, it may have made sense for the IRS to want the same 5 year period for both purposes, i.e., the IRS may have been trying to simplify. But if that was the reason for departing from what otherwise seems the very plain statutory language of 416(I)(1), it no longer seems valid, since using balances as of the end of the previous year, and status as of any time in the current year, seems just as easy to do now.

Has anyone else had an issue with this? To anyone's knowledge, has the IRS ever commented on this, formally or informally?

Co. ABC is acquiring Co. 123 in an asset acquisition.  Co. 123 currently sponsors a 401(k) plan.  There will be a few week period after the acquisition date where the employees remain on Co. 123's payroll and they will be leased to Co. ABC during that time.

Co. 123's 401(k) plan will be terminated.  The employees will participate in Co. ABC's plan.

My inclination is that Co. 123's plan should be terminated prior to the acquisition date.  However, if Co. 123 continues the plan for the few weeks that the employees are leased to Co. ABC is there then a potential successor plan issue?  My inclination is yes that the "leased" employees are really common law employees of Co. ABC at acquisition.

Thanks for any guidance.

Would you be permitted to have two matches where the first match would go to everyone but the second one would only go to employees employed on the last day (meaning the active employees would get both matches).

I am trying to think if there are any discrimination issues.