Any reason why you can't have employees of the same entity in two different fully insured health plans? I don't see why not, but can't seem to find any authority on this either way.

Thanks.

Client asked for withdrawal liability estimates for a number of years preceding withdrawal from multi-employer pension plan.  The plan used the same rate to calculate liabilities (including estimates of withdrawal liability) and minimum funding for years prior to withdrawal.  Upon withdrawal, the discount rate used to calculate the liabilities was changed from 7% to the PBGC rate and the liability skyrocketed.  The rate for funding purposes stayed at 7%.  The plan has had similar funding ratios, etc. for several years and there are no obvious signs as to why such a large discount rate change is warranted. 

We would like to talk to an actuary experienced in calculating withdrawal liability who can assess the reasonableness of the assumptions employed. 

All references greatly appreciated!  

New Employer and new 401(k) Plan for 2017. All NHCE's and HCE's are considered otherwise excludable. Testing software shows the ADP of the otherwise excludable NHCE's as "N/A" and the HCE's as 1.50%. The software says the Plan has passed the ADP - but it just does not look right (maybe it's just me).

Any comments would be appreciated.

Someone in my office claims to have filed a top hat filing for our top hat plan, but she has no record of it.  Is there someplace online I can go to look up the filing?  I tried FreeERISA, but the top hat filings seem to be only available if you have a "deluxe" paid subscription.

We did a top hat filing when we established our first top hat plan.  The regulations state, "Only one statement need be filed for each employer maintaining one or more of the plans described in paragraph (d) of this section."  Based on that language, it appears we do not have to do any additional top hat filings when we establish new top hat plans.  Normally we do anyway as best practice, but in this case we didn't and we've already missed the 120 day window to file.  Does it make sense to do a late top hat filing?  Would that just raise a red flag?  Or is it better to just rely on the language from the regulations and take the position that no top hat filings are required for the later-adopted plans?

On 10/18/17, I received my ERPA renewal letter from the IRS. It says it was issued on 10/1/17 and expires 9/30/20. To the left of that same page, it says, under CE Requirements: "Annual CE Cycle: January through December".

I know that the requirements are 72 hours with a min of 16 per year and 2 of ethics per year. What constitutes each of the three years?

Is it 1/1/17-12/31/17, 1/1/18-12/31/18 and 1/1/19-12/31/19?

Is it 1/1/18-12/31/18, 1/1/19-12/31/19 and 1/1/20-12/31/20? 

Is it 10/1/17-9/30/18, 10/1/18-9/30/19 and 10/1/19-9/30/20?

I think it should be the first but it is very confusing. Any thoughts?

I wondered if anyone ran into the following scenario. An employer enrolled in a Trust Benefit Plan and as a result is a participating employer. The trust declined to file the Form 5500 (reasons unknown) and the participating employer is concerned of being out of compliance. Since the Trust's Plan Administrator refused to file the 5500, the participating employer will file a 5500 for just its employees/enrolled participants. The Participating Employer plans to file as a single employer. The question though is - Would this be the correct path? The assumption is that the 5500 could not be listed under a trust since the Participating Employer is not connected directly to the financials and no knowledge of the Plan Assets. Your thoughts? Your help is greatly appreciated (by the way, the DOL has been asked via voicemail; currently there is no response.

An accountant has asked that we review a DB that has been in existence since the late '80s and "hard" frozen since the mid-90s.

Plan subject to PBGC.  PBGC filings as well as 5500s with Schedule B/SB filed each year.

The owner died, leaving his wife and two adult sons to run the company, who want "absolutely nothing to do with this plan". Apparently, this is a "C" corp with the spouse as the 100% owner, the sons as officers.

Granted, the plan should have been formally terminated at that time, I do not know why it wasn't.

The way we understand the situation, client told the TPA just "to keep the plan going", not to terminate, and the client would not make any contribution if it could be avoided.

Plan has been kept going by the owner and two adult sons waiving their benefits such that the normal cost each year would be "0".

Accountant asked we look into terminating the plan after all this time.

Any thoughts??

Participant wishes to suspend her contributions for a few months, not a complete stoppage of contribution.  She has not taken a hardship distribution.

Plan allows for quarterly changes.

I assume there needs to be a deferral change form to lower her % to 0% as per plan provisions for a change.

She would have to wait until the next quarter to resume contribution with a new change form to bring her % back?

If so, if she wishes to resume contributing sooner, the plan must be amended on a prospective basis, to allow more frequent election changes?

Anybody have experience with an IRS audit of a cafeteria plan for compliance with section 125 non-discrimination testing?

Doesn't seem to be something IRS has much interest in.

Thanks

After enactment of the ACA much has been written about the DOL 's supposed focus on investigating health plans for ACA, HIPPA and other compliance and there has been anecdotal evidence of a few investigations but is it really a DOL priority?

Anybody have experience with any such investigations and if so what DOL Regional Office?

Thanks

I’m sitting for the CPC exam this June. How similar is the exam to the practice tests? I have passed all of the modules and it seems like the study guide has the same information from the modules. If I just focus on the practice exams will I do well? Thanks in advance!

Hello, I am a 1099 independent contractor who has incorporated with an S-corp (one person/employee, which is myself). I've set up a solo-401k in order to make salary deferrals and employer profit-sharing (up to 25% of employee gross pay) to maximize the 55,000 contribution limit. This solo-401k is currently with Fidelity.

Recently I have learned about the cash balance plan. I thought I could just open an account at a place like Schwab, which offers a Personal Defined Benefit Plan, and be able to contribute some amount each year. I am aware this amount is based on age (currently 32 y/o). Upon some other discussions online, it sounds like the total contributions (401k salary deferral, 401k employer contribution, cash balance plan) may not exceed 31% of payroll.

If my annual 1099 income is somewhere in the range of 300-400k, would it make sense to consider adding a cash balance plan? I haven't been able to find clear-cut answers to this. For example, from this calculator (https://www.dedicated-db.com/defined-benefit-plan-calculator/) with a 350k income, I can only do 401k salary deferral of 18,500, 401k employer 6% contribution of 16,500 (not profit-sharing), and the defined benefit contribution of 33,400, which is only 68,400 so not really worth it.

My goal is to save up at least 120k annually in these accounts. With Schwab, it would cost $1500 annually for their plan. Someone suggested I find a full service provider to manage both my 401k and cash balance plan to ensure everything is in order. Would these companies run numbers for me and let me know if it's worth it or how much I would realistically be able to contribute?

Thank you.

Hi to All,

A client has a profit sharing plan currently with only the owner and his wife as participants.  They want to invest the assets in a real estate program of some sort and have decided to terminate their plan and roll their funds to an IRA for each of them.  Each IRA will invest in the real estate.

The question came up as to whether it would be better to keep the money in the plan and let the plan invest in the real estate, because there would be more bankruptcy and creditor protection within the plan than outside of it.  Is that true?  Does the answer change when only a husband and wife are participants?  Does the answer change if they amend and restate the profit sharing plan as a Solo 401(k) plan?

Thanks in advance for any advice!  I did look on the internet and found one article that states there is absolutely more protection within the current plan, and yet another one that said there is some kind of exception to that protection for Solo 401(k)s.  We're confused.....

I have a client that has a hard time keeping a certain employee type to stay with his company. He would like to have a 10 year cliff vesting schedule. This is obviously not allowed but the idea we came up with was as follows:

Assuming he wants to give $5,000 per year of service to these employees. In year 5, he would make a $25,000 profit sharing contribution for these employees. Any amount in excess of the annual additions limit will be given as a bonus. None of the employees are HCE's and the plan makes each employee their own allocation group.

1. Does anyone see any issues with the above arrangement?

2. Should he be accruing the expense on the books (I think yes)?

3. Is this a deferred comp arrangement? Are there any 409a issues?

Thanks

I recently received a cash balance plan that defines the accrued benefit as the actuarial equivalent of the hypothetical account balance (where the hypothetical account balance is the usual sum of principal and interest credits), reduced by the actuarial equivalent of the balance of the "hypothetical offset account." The plan states that the hypothetical offset account for each participant is credited with an allocation equal to the lowest allocation rate from [Sponsor Name] Profit Sharing Plan plus the actual rate of return from the participant's account in the profit sharing plan.

The profit sharing plan uses a new comparability allocation formula with each participant in their own group. In past years, the owner received a contribution equal to the 415(c) limit, and the non-HCE received the minimum gateway, let's say it was 6%. The profit sharing and cash balance plans satisfied the numerical tests for coverage and nondiscrimination when tested together.

The idea behind this design seems to be that although the participants are not getting a uniform allocation in the DC plan, they are getting a hypothetical uniform allocation in the form of the hypothetical offset account, and it is that account balance which is being used to offset the accrued benefit. In other words, even though the owner is really getting a 20% allocation in the DC plan, his balance for purposes of the offset is based on only a 6% contribution since that is the lowest allocation rate of any participant in the DC plan.

My concern is whether this arrangement satisfies the minimum participation requirements. 1.401(a)(26)-5(a)(2)(iii)(A)(2) states that the formula meets the requirements if "The employees who benefit under the formula being tested also benefit under the other plan on a reasonable and uniform basis." The word "plan" here concerns me as I do not think that a hypothetical offset account constitutes a plan. Nor do I think there is any permissive disaggregation rule that would allow that portion of the employer nonelective source which is attributable to contributions not in excess of a certain allocation rate to be considered its own plan.

This plan does not have a determination letter. Has anyone ever encountered this type of plan design before? Does this seem permissible?

If anyone is willing share, what types of clients do you find to be "ideal" target clients who could benefit from a cross-tested or new comparability plan?  I will be glad to share my thoughts.  I look for smaller businesses that have a lot of income with demographics that are favorable for the testing and with owners who want to sock away some money, take advantage of the tax deduction, and mitigate the costs of benefits to their staff.  

New client with a plan document which is on a 403(b) Adoption Agreement and the plan's name is "403(b) DC Plan" but the plan only permits a nonelective employer contribution: no deferrals.

Is this a 403(b) plan?

(Why do I care?  Because it is not a PPA document.  If it is a 403(b), then I can restate now; if it is not a 403(b) but a DC plan, it is a problem.)

Self employed owner funded a SEP for the first time based on "projected" income.  Later discovered he had a self employment loss.  He took back the SEP contribution, less losses incurred while invested (before his tax return due date).  Is there an excise tax 10% on this reportable on 5330?  Also, is the 1099-R reporting only for employees, and since he has none this is a non-issue?  Anything else to worry about?  Can he take the "loss" on his tax return somehow?

Hey Relius users using the financial interface  - I was looking today and see in my software that American Funds (both Premier and Recordkeeper) show as available under the vendor list.  I use the import function for Premier plans because you can use the Empower (Great West) option since those systems are the same.  I had not noticed the American Funds option before.  Has anyone used them?  If so, how do you generate a file in Recordkeeper that works with the import?

FWIW - I did look on the Relius "help" information and did not find anything there....