Entity A sponsors a retirement plan.  This employer is now part of a control group due to common ownership with Entity B.   Entity B is a newly formed entity - not a result of a merger or acquisition.   All of the conditions of the grace period are met.  However, I am unclear if the grace period only applies to mergers and acquisitions or if it also applies to newly formed entities.

This strains the imagination, but it is so.  The only employees covered by the union are owners (albeit of a very small percent). The owners make hundreds of thousands of dollars each.  They are covered by some union multi-employer plan getting benefits.

Has anyone seen this before? I see nothing that suggests that I am prohibitted from maxing them out in this Plan.

I assume I have to comply with the 415 limits taking into account both "my plan" and any DC plan maintained by the union.  But let's say the union plan is defined benefit.  I can give them all the 415 max in this plan and nothing to the employees.

If it's true, then yeah for my clients.  But this seems to fall into the category of too good to be true.

Has anyone seen anything like this??  I went through the regs and found nothing in the definition of collectively bsargained employees that would be problematic. 1.410(b)-6(d)(2).  So disaggregation appears to be mandatory.

A consultant referred a plan to me.  He said they have a safe harbor plan with the 3% QNEC. 

He said they realized this year that the plan's safe harbor QNEC failed 410(b) last year.  All they have are the 3% QNEC and 401(k) deferrals.  They want to correct with an corrective amendment under 1.401(a)(4)-11(g).  The problem, the consultant says, is some of the employees they are going to add did not receive the safe harbor notice.  He wants to know if they can adopt an 11(g) amendment and separately correct the failure to provide the safe harbor notice under EPCRS.

I am struggling, however, with the idea that they somehow failed 410(b) "after the fact"  with a safe harbor contribution.  It is not as if they have a last day of the PY requirement with terminated employees, which can cause an "after-the-fact" 410(b) failure.  

Is it possible for a safe harbor plan to fail 410(b) after-the-fact, e.g., due to demographic changes that occur during the year?  Could this be a result of the method they use to test 410(b)? 

I guess I will need to ask the consultant for more details, but I was wondering if anybody here has seen a safe harbor contribution fail 410(b) due to mid-year employee changes, and, if so, how do you correct the failure to give the notice?  What if the safe harbor had been a match instead of the 3% QNEC?  Something is nagging me and making think it is impossible for a safe harbor that meets 410(b) at the beginning of the year to fail it later during the year due to employee changes.

Employee went on line at investment company and made a positive election to have a Pretax deduction of  $100 per pay, starting  10/1/2016.  Some how this never went to our payroll system.  We just found it last week and started deducting 2/23/2018.

I think the QNEC correction would go like this.

50 percent or $50 per pay from 10/1/2016 to 12/31/2016.

25 percent of $25 per pay from 1/1/2017 to 11/30/2017.

Zero for the last 3 months, 12/1/2017 to 2/23/2018.

What do you all think?

Census reports zero hours for the owner of a company but maximum limit of pay. Just contemplating this before I get back to them - would he be counted in the ADP test as a zero? Is this W-2 pay?

I am attempting to figure out how to vacate a federal QDRO~  My client and his x-wife are both in agreement to vacate the QDRO, she is willing to walk away from it.  Does anyone know the process?

Rev. Proc.  2007-71 provided model plan language that may be used by public schools to satisfy the final 403(b) regulations plan document requirement. The student exclusion used in the Rev. Proc. was a "student-teacher" definition (see below in bold) and did not point to IRC 3121(b)(10).

There is no mention of student-teacher in the applicable IRC or Treasury reg. sections.

The pre-approved 403(b) document LRMs has the following exclusion: " Employees who are students performing services described in section 3121(b)(10) of the Internal Revenue Code." (This language is being used by several 403(b) pre-approved document providers.) There is no mention of student-teachers.

For those plans that used the IRS 2007 Model document language would you use the pre-approved LRM student 3121(b)(10) exclusion or write in the student-teacher definition from Rev. Proc.  2007-71?

Section 2 Participation and Contributions

 2.1  Eligibility.  Each Employee shall be eligible to participate in the Plan and elect to have Elective Deferrals made on his or her behalf hereunder immediately upon becoming employed by the Employer.  However, an Employee who is a student-teacher (i.e., a person providing service as a teacher’s aid on a temporary basis while attending a school, college or university) or who normally works fewer than 20 hours per week is not eligible to participate in the Plan.  An Employee normally works fewer than 20 hours per week if, for the 12-month period beginning on the date the employee’s employment commenced, the Employer reasonably expects the Employee to work fewer than 1,000 hours of service (as defined under section 410(a)(3)(C) of the Code) and, for each plan year ending after the close of that 12-month period, the Employee has worked fewer than 1,000 hours of service.   Note: This model language assumes that the plan has immediate eligibility, that the plan is limited to pre-tax elective deferrals, and that the plan has no matching or other employer non-elective contributions.  

 The model language in Section 2.1 also assumes that employees who normally work fewer than 20 hours per week or who are student-teachers are not eligible.  Either of these exclusions may be deleted on a uniform basis for all employees.  If this model language is used by a § 501(c)(3) employer that is not a public school and the plan is subject to ERISA, the plan should delete the exclusion for employees who normally work fewer than 20 hours per week.

Employee A is a participant in a hospitals 403b plan and contributes 24,500 to that plan.

Employee A is also an employee of a foundation and they also sponsor a 403b plan, to which Employee A makes no contributions (because he already maxed out in the hospital.

The foundation ALSO maintains a Profit Sharing Plan (401a) and contributes $54,000 on behalf of Employee A. 

There is no overlap on the Boards, so no controlled group.

I know that any additions to the 403(b) Plans would be considered subject to one 415 limit because the ee is deemed to sponsor their own 403b arrangement.

But what about that profit sharing plan?  What makes me nervous about 415 is that 415 tends to pull in "all plans of the employer."  Does the fact that the foundation sponsors a 403b plan make Employee A aggregate all of his contributions under all plans sponsored by the same employer (i.e., the two 403bs plus the 401a)?

Am I over-complicating this?

I was wondering if  you could help with this question. I cannot find any definitive regulation or other site.  The 72(p) regulations do not discuss what happens if the cure period ends after the 5 year period.

My question is: on what date should {redacted participant name} Loan #2 be DEEMED? The end of his 5 yr. period is 7/10/17. Should the loan be deemed on 7/10/17, or can the grace period (qtr. end following of 12/31/17) extend BEYOND the 5 year max period?

And so question 2 is – if the end of the grace period can be used and the missed payment was not made, is it defaulted on 12/31/2017 or 1/1/18?

Regulation 1.72(p)-1  Q&A 10 - (no reference to the 5 year period)

Q-10: If a participant fails to make the installment payments required under the terms of a loan that satisfied the requirements of Q&A-3 of this section when made, when does a deemed distribution occur and what is the amount of the deemed distribution?

A-10: (a) Timing of deemed distribution. Failure to make any installment payment when due in accordance with the terms of the loan violates section 72(p)(2)(C) and, accordingly, results in a deemed distribution at the time of such failure. However, the plan administrator may allow a cure period and section 72(p)(2)(C) will not be considered to have been violated if the installment payment is made not later than the end of the cure period, which period cannot continue beyond the last day of the calendar quarter following the calendar quarter in which the required installment payment was due.

Is safe harbor match money eligible for age 59 1/2 in service distribution if plan document allows such distributions in a 401-k plan?  

Hello,

An employee deferred more than 18,000 for 2017 plan year but he is less than 50 years of age at the end of 12/31/2017. How we are going to solve this issues.

Thank you 

mmustafa

I'm hoping someone can help me with an issue that falls outside my typical practice area.  I have a client who wants to establish an accrual account into which the company would make annual contributions.  The purpose of the accrual account would be to reimburse executives for health insurance premiums (or to pay those premiums directly to the insurance company) upon retirement from the company.  To summarize, this account would be funded during employment, but would reimburse the HCI during retirement.

First question: is this considered a "self-insured" medical reimbursement plan under 105?  Or would it be considered a "fully-insured" health plan?

I'm somewhat familiar with HRAs (health reimbursement arrangements).  From my research, it appears that this type of arrangement would be required to meet the discrimination testing under 105(h).  However, if it's considered "fully insured," I'm unclear if discrimination testing still applies.

The other confusing element of this for me is the application of the ACA to these types of plans.  There were some early proposed regs stating that fully insured plans would have to comply with 105(h) discrimination testing, but I have not been able to find if those rules were finalized.

In short, the client wants to provide an executive benefit that would pay for post-retirement health insurance premiums on a tax-free basis.  (I know they can do this on a taxable basis through a 457(f) plan).  Any insights on this issue would be much appreciated.

With the upcoming 4/1/18 effective date of new disability claims procedures as related to plans which do not use an unrelated party to determine disability, I'm curious if there is a general push to amend these plans so that disability is determined by an unrelated party such as the Social SEcurity Administration or any licensed physician, or just leave as is and deal with the new, potentially more administratively challenging requirements.

I always thought that eligibility is not a protected benefit.  For example, a plan has a 3-months of service requirement and month entry dates.  Rhoda was hired on February 15 and would enter the plan on 6/1. 

However, in September that year, the ER amends the plan to require 1 YOS with semi-annual entry dates, and does not specifically exempt those already in the plan.

So, to me, Rhoda is no longer an eligible and active participant in the plan until 7/1 the next year.

Can someone point me to some guidance on why this is; ie, that eligibility is not a protected benefit...

EOB or the code would be cool.  I can't find it in Sal's book, but I'm sure it's in there somewhere...

Can someone clarify when match is forfeited vs when it is refunded when completing ADP and ACP testing?

Scenario - plan matches 25% up to 8%.   Independently both the ADP and ACP tests fail.   We've historically completed ADP and ACP tests "simultaneously" and refunded the respective elective and match to HCE's after leveling.  The permitted ADP for HCE's though falls below the 8% match cap so we're wondering if some match should be forfeited prior to running ACP testing.

So when exactly does match forfeiture come into play when correcting failed ADP and ACP?   In reading today, I came across ASPPA material indicating that non-vested match refund should be forfeited and that after both ADP and ACP are 'corrected' if any HCE's match % is greater than that of the NHCE's that portion should be forfeited.

We are a Relius office and the refunds calculated by the system supports running both tests "simultaneously" and correcting each independently as opposed to running the ADP test, getting refunds and then determining if any match should be forfeited based on those refunds.

This is a citing from another benefitslink posting that seems to support how we've historically been completing these tests:

Company adopted 401k plan w/ Safe Harbor effective 1/1/2018. An employee terminated in late December 2017.  Her final paycheck was paid 1/7/2018. Does the company need to make a 3% contribution on this final pay since it was paid in 2018?

Years ago before e filing, we had a large plan that filed right at the extension deadline with a "note" from the CPA stating something to the effect that the audit would be filed once completed. The plan sponsor filed the 5500 with the note and at some point after the extension deadline the audit was filed. Is this still an acceptable procedure? 

Let's say the company has a discretionary match provision chosen in the plan document. The company chooses to fund the matching contributions pay-date by pay-date. Let's say at the end of the year, the company decides that it actually does not want to fund the discretionary match. Can the company take away the matching contribution from the people who were funded?

Would like to clarify that when a key defers less than 3% (say 1%) then the top heavy minimum would only be 1% correct?  I keep on getting conflicting information that it must still be 3%.  Employer is not making any other contributions except THM.

suppose you compute the first rmd for a 5% owner on a 4.99% increasing life annuity basis. Does this imply that all subsequent year accruals should also be expressed as 4.99% increasing life annuity amounts determined at the end of the respective plan years when the additional accruals are measured?.