I took out a 401K loan in July 2016 for $3,800 to pay my past due mortgage since my employer was having trouble paying payroll.  I agreed in writing to have the money deducted from my payroll for 4 years.  I received a 1099-R from Transamerica this year for 2017.  I questioned Transamerica and they told me that I received the 1099-R because my employer had defaulted on loan.  My employer has been taking money out of my check every week for 401K loan pay $19.92 as well as my 401K $29.76 that Im paying into for my retirement.  My employer has not paid anything on my 401K loan.  I feel that my employer owes me $19.92 for every check since Aug 2016 and they are still taking money out.  The only difference is that I have not received an ADP payroll check in a couple months, just a paper check with no additional information.  I have asked and I am still waiting on an answer.  I have all my checks.  What are your thoughts.

If a recordkeeper’s compensation includes “revenue sharing”, 12b-1 fees, shareholder-service fees, or other compensation from investment funds, a sponsor/fiduciary’s informed approval depends on complete and accurate information about the compensation the recordkeeper receives from the investment funds.

Does anyone use a CPA firm or other means to test the accuracy of a recordkeeper’s reporting or disclosures about compensation from investment funds?

(2) Costs directly related to the purchase of a principal residence for the employee (excluding mortgage payments);

OK so this participant is using the money towards the purchase of principal residence.

The problem here is, he won't own the principal residence, his girlfriend will.

I have approved things like this before where it is to prevent eviction or foreclosure, where it is easy enough to establish that the person is in fact living somewhere.  But this is a new twist.

One thing I thought of is gift taxes being a possible issue here.  The distribution is about $25,000.

Thoughts? Has this ever come up for anyone else?? 

Hello again Pension mavens! 

Quick question about the Plan Characteristic code 2A for DC Pension Features.

If the Plan has an integrated allocation would you list 2A as a characteristic code on the 5500? The description seems to suggest that you would since the allocation method provides for an additional rate on comp above the TWB threshold.

Thanks for your time!

Participant terminated employment on 12/31/17 and immediately rolled her plan account to IRA.

Participant is entitled to a profit-sharing contribution for 2017.

Employer is ready to make the profit-sharing contribution but no longer has an account in which to deposit participant's allocated portion.

Should employer open an account  to hold participant's contribution and ask participant to fill out new paperwork requesting a rollover? Is there a simpler alternative?

Any issues with a new plan starting deferrals on June 1 with a plan effective date of 1/1?

Someone here seems to remember someone opining on why NOT to do this, but we cannot figure out why.

Any thoughts?

Client (small medical company) has had a CB plan for several years and just became large enough to trigger coverage in the middle of 2017. 2018 is first full year of coverage.

The plan has more than 25 employees at 1-1-18, so the small plan cap is not usable.

The plan has a few doctors with large benefits who are 10-15 years from retirement. CB rate is 5%, but PBGC rate for them is about 4%, leading to inflated PBGC funding targets (i.e., PBGC FT is significantly higher than the actual CB benefits). The alternative rate is even lower, so that doesn't help.

Plan is end of year val, so assets are as of 12-31-17. Can't do anything to make that asset value higher, though a large contribution could be made for the 2017 plan year to increase 12-31-18 assets and decrease next year's premium.

This seems like a perfect storm, as the premium is coming out to be over $15,000! And this is for a group with about 30 participants that is 99% funded on a  lump sum basis!

This seems absolutely ridiculous, and I'm just wondering if I'm missing something as a potential solution.

Under the Mental Health Parity and Addiction Act of 2008, a group health plan (or insurer) generally cannot impose a financial requirement (e.g., copayment, deductible, or coinsurance) or a quantitative treatment limitation (e.g., number of inpatient days covered) on mental health or substance abuse benefits that is more restrictive than the requirements or limitations that apply to at least 2/3 of medical/surgical benefits in the same classification (e.g., in-patient, emergency care, prescription drugs). Under these rules, mental health and substance abuse benefits should be subject to the same deductible as comparable medical/surgical benefits.

I recently have seen health plans drafted by insurance companies (whether it is an insured or self-insured plan) that provide the same deductibles for mental health and substance abuse benefits as for medical/surgical benefits, but treat the deductibles differently for purposes of rollover. For example, the plan provides that costs incurred in the last two months of the plan year for medical/surgical benefits may be applied toward the deductible in the following plan year, but costs incurred for mental health and substance abuse benefits in the last two months of a plan year will NOT be applied to the deductible in the following plan year.

This appears to be illegal to me -- certainly it seems to violate spirit of the Act and guidance issued to date, but I haven't seen anything (such as A FAQ) directly on point.   Any thoughts?

Plan has 3 months of service for 401k (entry month following) and 1 YOS for safe harbor 3% and Profit Sharing.

There are 3 NHCEs and 1 HCE that enter the plan in 2017 for deferrals only, HCE deferred the max, 3 NHCEs are at zero, so OEE ADP test fails. Can the HCE be tested with the non-excludable group and the NHCEs be carved out and thus pass ADP? In reading regs (and other posts) this can be done but I am not sure if it applies with different eligiblity periods for safe harbor and deferrals (and I just might be fried for the day).

Thanks!

Hi,

Does anyone have any recruiters that they would recommend for the benefits and/or insurance industry in the NYC area?

Thanks.

Greg

Hi To All,

Who would like to settle a tiny difference of opinion in our office?  One of us thinks that Plan Characteristic Code 2T would apply to ALL such plans (with participant directed accounts) as those maintained by John Hancock, American Funds, Mass Mutual, Lincoln  et al because there is a mechanism of some sort in dealing with money belonging to participants who never made a fund election.  It won't just sit in cash. Typically it goes to a Target Date fund based on the participants' birthdays but it could be something else.  So wouldn't all such plans automatically check 2T on the 5500?  The other person in our office  thinks that 2T only applies if there actually are participants who have defaulted into the automatic investment.  He thinks that merely having the provision is not enough; there must actually be such people in the plan.  

What do the experts say?  Thanks!

A participant died and his wife wanted to rollover his money to her IRA.  We provided Directive instructing plan to make check to Bof A, fbo the wife; we would report that on the 1099-R as a rollover, non-taxable event.

When we got copy of the check as evidence of distribution, it was payable to the WIFE.  This makes it a fully taxable event (about $14k with nothing withheld).

Assuming she puts the money into her BofA IRA within 60 days, how do we report this on the 1099-R?  Do we report it as taxable or as a rollover?  I have never encountered this before.

Have sole proprietor who started business at age 73 and started pension plan at age 74. Is this person a 5% owner required to start RMDs when vested? A prior thread in BL seemed to indicate no, and page 5 of the recent EA conference session on RMDs (attached) backs that up, but does anyone have definitive reg cite or IRS guidance to confirm? All other research I've done does not support this nuance. Thanks

303 - Required Minimum Distributions.pdf

Heckuva way to start a Monday morning. Oh well, supposed to be in the 60's tomorrow, so it'll be gone in a day or two. I never take my snow tires off until May anyway, so just an irritation rather than a real problem. Now I just need some cheese to go with this whine.

I have a DB plan I have funded for 3 years.  I want to continue to fund it, but maybe not at the same levels.  Can I?

Also, another option I am looking at if permissible is whether I could stop the funding of the plan now, or does that cause any inherent problems?

Finally, can I at this time rollover all or part of the funds in the DB plan to an IRA or 401(k) plan.

Thanks very much to this community.

Client has been self employed and incorporated in 2014 with new corporate name and EIN.

Forms 5500-SF had been file under sole prop as sponsor with the corresponding EIN for 2014-2016.

Amending 2016 is no problem, how would 2014-2015 be handled?

2016 show new sponsor and EIN, enter old information in box 4 from original filing. 

2014-2015 to be done similarly?

I don't see why not, with DOL, but one never knows with IRS.

A plan is removing automatic enrollment as of beginning of its plan year on 7/1 due to an acquisition and new plan design. What happens to the currently enrolled participants? Should they receive a final notice on 6/1 telling them this is the last notice, the plan is being re-designed to the recent acquisition and then give them the methods where they can get more information and change their deferral election?

Thanks!

Employee has excess deferrals b/t current emp. and former emp. (unrelated), past April 15 deadline, does either employer have to issue corrective W-2? 

I have a question that I do not believe I have tackled before and need some help. A large client with a 401k plan has a subsidiary that is an adopting employer they acquired in 2009 it appears. We are being told that they do not have any payroll records for this location prior to 2013. They now have to process a distribution request for an employee with service from 2004 - 2014. They have 2013 - 2014 but missing payroll from 2004 - 2012. They need to determine the participant's vesting for years prior to 2013 and want us to come up with a clever assumption.

My first thought is do they not have Human Resources rules to follow or conduct like going to the IRS for copies of prior W-2's? Is there not something they need to do legally? Other than that, all I could suggest is to use elapsed time for 2004 - 2012 and grant 9 years of vesting service and the participant will be 100% vested. And then do the same thing for all other affected participants.

Any input of thoughts would be great especially if there is HR steps that I should tell them they need to do first.

Thanks!

just in case there are some newbies out there who missed this awful joke. I made the rest of the bunch suffer through it, so you might as well. Besides, it has been a number of years since I posted this.

..............................................................................................

The original Titanic -- the largest ship of its type at the time -- sank 100 years ago when it struck an iceberg on the night of April 15, 1912, on its maiden voyage from Southampton to New York. More than 1,500 people perished in the disaster, which captured the popular imagination. The ship had been vaunted as "unsinkable."

Most people don't know that back in 1912, Hellmann's mayonnaise was manufactured in England. In fact, the Titanic was carrying 12,000 jars of the condiment scheduled for delivery in Vera Cruz, Mexico. This was to be the next port of call for the great ship after its stop in New York. This would have been the largest single shipment of mayonnaise ever delivered to Mexico. But as we know, the great ship did not make it to New York. The ship hit an iceberg and sank, and the cargo was forever lost. The people of Mexico, who were crazy about mayonnaise, and were eagerly awaiting its delivery, were disconsolate at the loss. Their anguish was so great, that they declared a National Day of Mourning, which they still observe to this day. The National Day of Mourning occurs each year on May 5th, the day the shipment was to arrive in Vera Cruz, and is known, of course, as Sinko de Mayo.