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?

Deposits late by deposit date, but they mailed checks a week previous.    Do we calculate from check date or date that it was deposited into the account? 

Did I miss the memo? 

I have a client who has for a few years been taking distributions from his single member plan.  He is older than 59-1/2 (70-1/2 this year as a matter of fact) so there is not premature distribution issue.  We pay the taxes on all distributions in excess of the 20% minimum (33%)... prepare the 1099-R and 945.  Uncle Sam sent him a penalty letter telling him that his tax payments are late!  That he is on a tax payment "schedule"? 

Ok.. how can he be on a "schedule" if he doesn't know when he will take a distribution?  And.. when he does take a payout he immediately pays the taxes... using the EFTPS  system. 

Like I said.. did I miss the memo? 

If any of you are familiar with the FT William document, I have a quick question, please.  I have a takeover plan that used the FT William document.  They are not providing me with an actual PPA restatement Adoption Agreement, but only a snap on amendment for the adoption agreement.  Did FT William provide an actual PPA restated adoption agreement and my client is just not finding it or did they truly only do snap on amendments to the EGTRRA Adoption Agreement?

Thanks

2017 year, client makes a lot of money.  He has a DB/DC Plan for his consulting income.  He is over 50.

In day job he defers $17,500.  

How do I determine if he can defer $500 or $6,500? 

Does he have to communicate with benefits department of day job to determine if any of $17,500 was treated as a catch up 401k contribution?

Thank you

My client is a 501(c)(3) organization eligible to maintain a 403(b) plan. Even though the plan provided for salary reduction contributions, they had never been implemented. There are a couple of other operational errors as well. The client has raised the following questions: (1) can the user fee be paid from plan assets? and (2) can the correction of QNECs equal to a default of 1.5% of compensation plus earnings be credited to the plan using plan assets? I am inclined to say no to both questions.

I've been retired for more than a decade, so my legal and technical skills are pretty rusty.  But suddenly, it seems, I have the need (opportunity?) to put them to use once again.

My spouse just retired after working beyond age 70 1/2 and has not been subject to RMDs until now.  The plan is to take a lump sum of $105,358 from employer's defined benefit plan.  The payment election form states that the RMD is $7,599, which is not eligible for rollover.  This represents the correct amount under under Section 1.401(a)(9)-6(d)(2) (the annuity method).  Using the 6(d)(1) (individual account method) the RMD would be $4,115.

The plan document does not state which method the plan will use (although there may be some ancillary document I have not seen).  If memory serves me right, the annuity method (which is almost always far less favorable for the participant) is very uncommon.  I am trying to determine if the plan sponsor has formally adopted this less favorable annuity method.  From a plan perspective, I can think of no reason why a plan sponsor would knowingly disadvantage a participant.  In the meantime, I have two questions.

1.  Section 1.401(a)(9)-6(d) is written in a way that suggests the individual account method may be the default if no method has been formally adopted.  I say this because subsection 1 says the RMD "is determined by treating the single sum distribution as a distribution from an individual account plan."  Subsection 2, on the other hand says the RMD "is permitted to be determined by expressing the employee's benefit as an annuity."  If no method has been formally elected by the plan sponsor, does the individual account method automatically apply?

2.  The responsibility for determining the RMD ultimately belongs to the payee, not the plan sponsor or the administrator.  So, if the administrator distributes the larger amount to the participant, could the participant rollover the excess of the annuity method over the individual account method as a 60 day rollover.  In other words, does the choice of methods ultimately belong to the participant who is the one responsible for satisfying 401(a)(9) in the end?

Thanks for sharing your thoughts!

Good Afternoon -

I should know this answer, but I'm unsure and was hoping I could get some thoughts from this board of experts.  401(k) plan has the language in it where divorce or legal separation does not revoke the beneficiary designation.  Participant completed beneficiary designation naming his spouse (at the time) as the primary beneficiary which I know is required unless waived.  Participant gets divorced a couple years back and plan never receives a QDRO.  Participant subsequently remarries and dies shortly thereafter.  There is no one-year marriage rule in the plan.  Participant never completes a new beneficiary form prior to his death naming his current spouse.  Who gets the money?  I can argue both sides which I'm going to blame on a long week.

Thank you!

I know this is true for 401(k) and 403(b) plans , but can someone let me know if there could be (2) plan providers for a church plan? And also: Are only conduit IRA's allowed into the plan?