A law firm client of mine, which has maintained a cash balance plan for over 10 years, raised the possibility of terminating the plan and then establishing a new one.  They were told by another law firm that "if the plan has been in effect for 10 years this strategy is allowed by the IRS".  There are reasons my client would consider this...including getting out from under a complicated interest crediting methodology that the investment advisor can't seem to track.  There are no surplus assets that would revert to the employer.

I told them that while you can terminate a plan, and establish another, they would need to design the new plan with enough distinctions (e.g., different benefit structure, different eligibility, etc.) that the IRS would not consider this a subterfuge for making premature distributions. 

I tend to be "old school" but am I being overly cautious?  They would file a 5310 for the termination. 

Thanks to all.

What is your usual post-retirement mortality assumption for actuarial equivalence?

With the PPA restatements upon us, our company, like I suspect many of you, are re-evaluating our default selections for plan provisions. In the past we'd been using the 94 GAR table projected to 2002 with a 50/50 male/female blend. I'm wondering if it is reasonable to update this assumption, given that the base data is now quite old. On the other hand, for our clients, who are mostly small cash balance plans that pay out almost entirely lump sums, the definition of actuarial equivalence is immaterial, so why change something that isn't broken?

I think I know the answer to this but want to see if there is agreement.  If a plan uses a SH match of 100% of the first 4% to pass ADP, then also allocates a discretionary match of 100% of deferrals between 5-7%, it looks like 401(m)-2(a)(5)(iv) says that we have to run the ACP test on the 5-7% match (in other words, anything over 4%). 

Is it dependent on which SH formula we use?  For example, what if the SH match was 100% of the first 6%, then a discretionary match on 7-8%?  In that case would we have to run the ACP only on the 7-8% match, or on any match over 4%?

Thanks for any thoughts!

If the plan document states that everyone is in their own group and the contribution is allocated prorate or on an integrated basis do you still have to pass the average benefits test?

What are people doing to notify participants about the new hardship distribution rules, since the document providers have yet to issue their stuff? At least Relius has not yet done so...

The IRS FIRE site will be down for scheduled maintenance starting December 5, 2018 at 6 PM Eastern Standard Time through January 7, 2019, but won’t be available until January 10, 2019.

so I guess if you have an 8955-SSA due by 12/31 you need to check special exemption and say "because you shut the website down!"??? (their annual shutdown)

We are looking at a larger Church plan (300+ employees) that elects not to be subject to ERISA.  There are several HCEs.  They have followed mainly vanilla plan provisions but are looking to make some changes starting in 2019.  Do these changes sound permissible?

For individuals hired 1/1/19 or later, they want to have a 3 year cliff vesting schedule apply annually to that year's contribution.  So that if you are eligible to receive an ER contribution for 2019 plan year and have 1 YOS in 2019, you do not vest in that contribution until 2021. If eligible for contribution in 2020, you do not vest until 2022, and so on.  Since this is non-ERISA, that seems to be acceptable for this type of plan.

However, because it might be messy for the recordkeeper to track money in this manner, the ER was not going to deposit the money into the plan until they actually vest in it.  The ER would keep those contributions in a non-plan ER account.  So, from the above example, for those affected individuals, their 2019 ER contribution would be deposited into their accounts in 2021, 2020 ER contributions deposited in 2022....  If someone from 2019 leaves in 2020, their contributions never vested so that year's $$$ can stay with the ER or go to another year's contribution.

Writing the language in the plan document would be a challenge, but assuming that can be done, is this allowed?  Are there any 410(b)-type tests that have to be done since there are HCEs?  Its not subject to ERISA so maybe not?

Any comments are really appreciates.  

I have a plan that allocates a discretionary match on top of the SH match.  Max up to 4% of pay.

Last year, we had one owner deferring and no staff deferring.  No problem.

This year we have the owner and another HCE who is deferring.  Can I structure my discretionary formula to be: 

Owner and staff 100% deferrals up to 4% of pay; non-owner HCEs 0% 

What is the definition of Emergency Medical Service Personnel for puposes of the age 50 exception for Public Safety Employees?

Clearly it includes first responders, e.g. ambulance drivers, paramedics, etc...

What about dedicated emgerency room personnel or hospital staff performing EMS as part of their job description?

My client has a DB plan that is over-funded in the sense that the assets exceed the plan termination liabilities.  The owner at the company is at her 415 limit.  The financial advisor on the case has suggested a 401h account.  His thought is that excess assets could be transferred to a 401h account in the plan.  I am completely unfamiliar with this.  Do any of you have any familiarity with  this, or know of a good resource on this topic?

Thanks!

We include a listing of the new employees who are participants in the COBRA, FSA and HRA plans when we send them our invoices.  I would like to know if the names of the employees are PHI and if we should send our bill via a secure mode of communication?

I read in one article that it was possible to add an EACA mid-year, but you would only be eligible for the 90 day withdrawal benefit, and not the 6 month penalty free ADP correction period.

That is fine with me, but everyone else seems to say (and really preamble to regs was pretty on point) that you can;t add an EACA mid-year.  Which is really stupid.

Follow-up: Anyway, let's say hypothetically I can't be an EACA for year 1.  So  now what, I have to be an ACA for 6 or 9 months, and then I can switch to an EACA, right?

I've got a plan that's been frozen "forever" - the plan sponsor was taken over by a multinational corporation long after the plan was frozen.  Everyone's been terminated since the late 1980s, I believe.

The plan has no lump sum feature, and payouts (commercial annuities purchased from trust assets) start at NRA of age 65.  Or, early retirement (.5% reduction per month) starting at 55.

At this point the last 5 folks are all in their late 50s / early 60s and could elect to begin payments if they want.

Unless the plan sponsor elects to terminate the plan sooner, they could potentially keep the plan open until the last person turns 65 in a few years.

If they wait, what's the typical reaction of the PBGC when you file to terminate a plan with 0 participants left?  Will they want to see X number of previous payments to participants not connected to the plan termination?  Or are they more likely to figure with no participants or assets, and the final premium payment in good order, that their file would quickly and easily be closed with the plan just going away after the final 5500?

Thanks....

A profit sharing plan sponsor has appx 2.5 million in their personal accounts and the couple are in their mid-80's.  They will take a hit with estate/inheritance taxes if the funds were ever distributed.  They are wanting to establish a trust and make it the contingent beneficiary.  I am of the opinion this is permissible, but want to be aware of pitfalls, if any, such a designation would result in. Has anyone had experience naming a charitable trust as a beneficiary?

As far as I can see, as of now -- Monday Nov 19, 2:45 eastern -- the IRS has still not yet released the October 2018 segment rates for minimum present value (lump sum) calculations.

In the past, it has tended to post each month's rates by the 15th of the following month, or earlier. I don't track every updates, but I can't recall their being this late before

Has the IRS changed when the rates are released? Or are they out there, but I'm just not seeing them?

Was thinking of trying something new.  How can I change my avatar?  I didn't see anything in the settings.

Our NQ plan allows participants to take a lump sum distribution or elect a 10-year payout at a Normal Retirement age of 59.5 Our industry competitors seem to have a Normal Retirement Age of 55  in their NQ plans.  We're considering lowering the age but are  concerned about complying with 409A. Does it make any sense to consider lowering the age or is there too much risk of 409A violations?

I feel like I must be overlooking a prior discussion around this topic but was not able to locate one in my search.

Plan has highly comped individual that switched jobs earlier this year. He made significant  401(k) elective deferrals at last job before coming to new job.  He enrolled in new plan and has been deferring to new plan for several months now.  Last week, he realized he is well over the elective deferral limit for 2018 and is seeking correction from the plan.  Since this has been discovered in 2018, the record keeper is proposing to correct through negative contributions within the next payroll runs.   Sounds like that is fairly routine (been awhile since I've had one discovered in the same year as the deferral) but am curious as to what sort of paperwork / documentation all this generates.  Also, still trying to get our arms around potential earnings in the account but assume if he has earnings on the excess that will have to come out too?  How does that happen with negative contributions?

I think I understand this, but I'd love any input, 'cause maybe I've got it wrong.

Plan has premium conversion account, and an FSA. Plan document, and plan forms/administration appear to be at odds.

My understanding is this: No premiums can be paid through the FSA. Premiums for group health insurance offered by the employer, or individual policy premiums for "excepted benefits" such as dental or vision, can be paid through the premium conversion account. However, premiums for individual "health" insurance may NOT be paid pre-tax through the cafeteria plan.

First, is that right? The document appears to support this interpretation, yet the forms/administration have been allowing pre-tax treatment through the cafeteria plan for individually purchased HEALTH insurance, as long as it isn't purchased through a federal or state exchange. I believe this is incorrect?

Thanks!

Is a money purchase plan sponsored by a governemnt/government agency subject to the same spousal waiver rules applicable to private money purchase plans?  i.e., must the spouse consent to non-annuity payment of benefits?