I have two companies in a control group. Each company sponsors its own plan. Currently the plans are identical.

They run their own payroll and have their respective benefits managers. One company now wants to add a Roth provision. Other than the potential for a BRF coverage issue is there any rule that requires this specific (or any other plan design feature) be coordinated between plans provided each could pass the BRF test?

I have a $900,000 plan with 30 lives.   One deceased participant has an account of $300,000 in this pooled account.   We run quarterly valuations.  The trust value has dropped 7% since the end of the last quarter.  Are we permitted to run a special valuation to pay him and two others out?  The other two distribution elections just happened to come in at the same time.  

I would hate for all of the other smaller accounts to absorb the loss.

Regards, 

Pixie

My company's ESOP terminated after sale of the company.  80% of the funds were distributed one year after the termination event.  The remaining 20% were supposed to have been distributed at the 2 year mark but the company is now stating that the distribution is delayed indefinitely because of "an issue with the Trustee."

I'm posting here because while legal guidelines for distribution of a still-active ESOP are pretty clear, I haven't been able to confirm the guidelines for full distribution of a terminated ESOP.  How long can the company delay on the remaining 20%?

Thanks for any insight!

Good morning to all,

We have a client, a medical practice, with one owner-doctor, 100%, and two non-owner doctors, along with some rank and file employees.  The plan was set up to exclude "non-owner doctors" from eligibility to participate in the plan.  All the doctors are HCEs.

Now, the owner-doctor would like to make an offer of employment to a new non-owner doctor and he wants to make the plan available to just this new non-owner doctor but not the two non-owner doctors he already has.

We were thinking about amending the plan to simply exclude the two existing non-owner doctors by name.  As we have never done that before, we are not 100% comfortable doing it without asking the advice of the experts.  Would you do it that way or is there another technique?

As an aside, every year when the rate group testing is done for the new comparability profit sharing contribution, our software includes the two existing non-owner doctors in the test, even though they are not eligible to participate in the plan.  We are not 100% comfortable with that, either, and would like to know if this is really right.  The fact that they are HCEs and they do not get a contribution helps to pass the tests and that doesn't really seem "fair" but if it is permissible, we will continue to take advantage of it.

Thank you in advance for your advice!

How should participants be reported who were originally reported with a Code A, then reported as a D when they began receiving benefits, but then payments cease before the participants are paid out? 

The instructions to the Form 8955-SSA state that a Code D should be used to report “a participant previously reported under the plan number shown on this form who is no longer entitled to those deferred vested benefits. This includes a participant who has begun receiving benefits, has received a lump-sum payout, or has been transferred to another plan …”

The instructions to the Form 8955-SSA have a CAUTION that states:

If payment of the deferred vested retirement benefit

ceases before ALL of the participant's benefit is paid

to the participant or beneficiary, information on the

participant's remaining benefit shall be filed on the Form

8955-SSA filed for the plan year following the last plan year

within which the payment ceased.

However, the instructions to Code A state in part “Use this code for a participant not previously reported.”  Should a Code A be used in this situation, should we report using a Code B or is no additional reporting required in this situation?

Code B states:

Use this code for a participant previously reported under the plan number shown on this form to modify some of the previously reported information. Enter all the current information for columns (b) through (g), as applicable. You do not need to report a change in the value of a participant's account since that is likely to change. However, you may report such a change if you want.

We are not aware of Code B being used in this manner.  Our understanding is that it is primarily intended for correcting or modifying information incorrectly reported.

New 401(k) Safe Harbor Plan with effective Date October 1, 2018.  Plan Year Ends 12.31.2018 so a 3 month plan year.  According to the regulations the new plan must be in place for 3 months to meet the safe harbor provision:

1.401(k)-3(e)(2) Initial plan year. A newly established plan (other than a successor plan within the meaning of §1.401(k)-2(c)(2)(iii)) will not be treated as violating the requirements of this paragraph (e) merely because the plan year is less than 12 months, provided that the plan year is at least 3 months long (or, in the case of a newly established employer that establishes the plan as soon as administratively feasible after the employer comes into existence, a shorter period). Similarly, a cash or deferred arrangement will not fail to satisfy the requirement of this paragraph (e) if it is added to an existing profit sharing, stock bonus, or pre-ERISA money purchase pension plan for the first time during that year provided that—

(i) The plan is not a successor plan; and

(ii) The cash or deferred arrangement is made effective no later than 3 months prior to the end of the plan year.

Operationally, it has taken a few weeks for the platform recordkeeper, advisor and plan sponsor to get enrollment meetings done and everything in place to start deferrals which will occur with the first payroll in November.

Is Safe Harbor Status negated if the first deferrals do not occur with the first payroll in October?  The regulation language seems to be very broad and does not specify that the first deferral must occur with the first payroll in October.  Although a very conservative interpretation could be taken to mean just that.

My understanding always was that Plans weren't required to withhold 20% on distributions under $200.  However I pulled up the 2018 Publication 15-A and in Chapter 8 it's not listed as an exception for the 20% withholding.  All that it says is:

Exceptions. Distributions that are (a) required minimum distributions, (b) one of a specified series of equal payments, or (c) qualifying “hardship” distributions aren't “eligible rollover distributions” and aren't subject to the mandatory 20% federal income tax withholding.

Does that mean that we should withhold the 20%, even on a "small" distribution or is it listed somewhere else as an exception?

Thanks again everyone!

Company A was part of a control group and was a participating employer in Plan A  (company A was not the main sponsor).  Plan involved is a 5/31 Fiscal Year End Plan.   FYI: Plan A is a Profit Sharing only plan.  Company A' s ownership changes effective 11/1/2018 and is no longer a member of the control group and intends to terminate participating employer agreement effective 10/31/2018 and wants to start its own Profit Sharing only plan.  Company A intends to sponsor a 5/31 Fiscal Year End Plan as well.

The question is: Can Company A's plan be effective 6/1/208 so that full year compensation can be used in determining  PS allocation at 5/31/2019 OR does the plan's effective date need to be 11/1/2018 due to prior participation in Plan A?

Just started a new job as an HR Generalist and we've discovered that our Employer failed to file 1094-C and 1095-C with the IRS. We are a self-insured ALE. The entire department retired this summer, we don't know what the IRS has been told.

I heard we got a letter that our extension was denied, but I don't have a copy of the letter. I don't have records of any other correspondence.

The employees did receive their forms. I am not sure where to start with the IRS.

I have a 4% Enhanced Match Safe Harbor Plan where the document provides for a discretionary integrated profit sharing allocation.  the 2018 SH Notice just says "refer to the SPD" under the heading of non Safe Harbor Employer contributions.

Do you think I can change the 2018 profit sharing contribution to be cross tested so that the two owners can maximize their benefits ?

Client has just informed us that he sold his business back in February 2018.  It was an asset sale and last check issued by client was dated 2/23/18.

We are NOW doing the plan termination paperwork (a bit late, as you can see) and are having issues with termination effective date.  Normally you cannot terminate a 401k plan retroactively but I think using an October 30, 2018 date leads to incorrect pro-rata compensation for plan purposes.  Example, owner decides to pay himself 200,000 with last check in February.  If termination date is February 23th, then pro-rata compensation limit for plan purposes would be 40,684.93 (54 days out of 365 days).  But, if we use a 10/31/2018 term date, pro-rata compensation limit for plan purposes would be $229,041 (304 out of 365 days).  And since owner's compensation is 200,000, limitation compensation matters.

Any thoughts?

DC plan has a last day requirement for nonelective allocations. DC plan gives a SH match, not a 3% SH nonelective.

The DB and DC Plans are top-heavy. The plans are written to say that employees in both plans receive 5% top-heavy minimum in the DC plan. Plans are combined for coverage and 401(a)(4) testing. Assume coverage and 401a26 are not problems, even is a handful of employees terminate. No one has under one year, so OEE is not in play here.

1. Suppose one non-key HCE is excluded by name or job class from the cash balance plan, eligible for the 401(k)/PS plan, but not deferring. That HCE terminates after working 1,000 hours. As an HCE, the gateway minimum does not apply. But, as a non-key employee, because they are not employed on the last day, no top-heavy allocation is required even though the plans are aggregated?

2. Now suppose a NHCE (also non-key) is excluded by name or job class from the cash balance plan, eligible for the 401(k)/PS plan, but not deferring. This NHCE also terminates after working 1,000 hours. As a non-key employee, because they are not employed on the last day, no top-heavy allocation is required? If that is true, then as an NHCE, they must receive the minimum gateway, but since the are not receiving any nonelective allocation, the gateway minimum is not triggered, so no allocation?

Please confirm or please set me straight on this. Thanks!

We just submitted a 5500-SF for DFVCP today and the client informed that the EIN is incorrect.

Could someone please tell me how to prepare an amended DFVCP filing?

https://content.next.westlaw.com/w-017-1687?isplcus=true&transitionType=Default&contextData=(sc.Default)&firstPage=true&bhcp=1
 

Quote

"The group or association is not a bank or trust company, insurance issuer, broker-dealer, or other similar financial services firm (including pension record keepers and third-party administrators), or owned or controlled by such an entity or any subsidiary or affiliate of such an entity, other than to the extent such an entity, subsidiary, or affiliate participates in the group or association as an employer member of the group or association."

So can we sponsor a MEP as long as our own company's 401(k) Plan is a participating employer?

Agent wants to put insurance in the DB Part of the DB/DC Plan for Mr. Big.

Since the DB Plan, on its own, is a discriminatory arrangement, wouldn't putting in insurance at 100x proj monthly benefit be a discriminatory ancillary benefit?

Is there a way to make this work?

Mandatory insurance in the DC Plan which the employees and cannot waive out of the coverage?

Thank you for any thoughts.

Can a 401(k) plan sponsor restrict investment in the employer stock fund to current employees only? i.e. require terminated employees to exit the employer stock fund when they terminate employment?

This may be a silly question but I have someone adamant that a 401(k) plan "has" to have a Plan Year from 1/1-12/31.  I tried to find it in the regulations, but can't seem to find it.  

Any help?

Thanks again everyone!

At the end of the plan year, a sponsor must file a Form 5500-EZ for their plan when the assets of the plan are greater than $250,000.  For calculation purposes, I’d like to know what’s included in assets.

Assume… at the end of the plan year… a Individual 401(k) has a balance of $240,000 and an outstanding loan of $30,000.  For purposes of Form 5500-EZ, are the total assets $240,000… or are the total assets $270,000?  Thanks for your help.

I have a current small client (approx 15 employees), with a 401(k) Plan with elective deferrals and is 3% Safe Harbor Non-elective Maybe.  The client is deciding on whether to amend to Safe Harbor for the 2018 plan year, so that we can send the required 30 day notices ASAP.  

Question - the plan currently applies the SHNEC to ALL participants, but the client is considering Excluding all HCE's from the allocation in the future, which consists of about 4 employees besides himself.  Can he make this part of the 2018 SH amendment and notify participants now that they the HCE's will not receive a SHNEC for 2018? Or must he wait and amend the plan for 2019 to Exclude HCE's from the SHNEC?  

Thank you! 

At the end of the plan year, a sponsor must file a Form 5500-EZ for each of their one-participant plans when the total combined assets of all one-participant plans the sponsor maintains are greater than $250,000.  I’m pretty sure I know that the answer to the following question is “No,” but I’d like to ask it anyway just to be sure.  For purposes of calculating the total combined assets, is a SEP IRA included in the calculation?