When it comes to plan terminations, we have always obtained all benefit elections and then instructed the trustee to distribute benefits all at one time.

Is this really required?

For example, we handle a 10 participant non-covered traditional DB plan that terminated November 30. Is there any problem distributing the benefits to one of the two 50% shareholders of the plan sponsor now and all remaining participants 6 months from now?

All participants other than the one remaining 50% shareholder would receive their full benefits (including PVABs determined up to the distribution date). The one remaining shareholder will end up waiving about 10% of his benefit.

Thanks.

I want to make sure my understanding of the QJSA rules for DC plans is accurate.  As I read Rev. Rul. 2012-3, if a plan offers a single life annuity or a QJSA as the default form of distribution in the absence of a participant election, and also offers a lump sum, spousal consent is not required if the participant elects the lump sum prior to the participant's annuity starting date.  Assume the plan has no annuity investments, and thus, e.g., Situation 2 in Rev. Rul. 2012-3 would not apply.    

I got divorced in 2007 - at that time, my ex-wife was awarded 50% of my 401K.  A QDRO was done stating this.  She never took the money out - the Plan never divided the money, I even got a loan from the 401k twice (which I should not have been able to do before they split the money).   The loans have been paid back.  Fast forward to 2017, she is wanting the money and is unfortunately, not using a QDRO lawyer, just a divorce lawyer, so she keeps writing the Order wrong to the Plan Administrators. 

The first time the Plan Administrators told her the Order must clearly specify whether loans are included in the participants account balance prior to any calculations and to submit an amended draft or court-filled QDRO .  The lawyer answered that wrong. 

Second time, they asked for historical statements issued by the previous plan administrators and provide an amended QDRO containing a specified dollar amount to be awarded.  Unfortunately, that was in 2000 and the previous plan says they don't have that info.

Her answer is to sue me - a Motion to Modify Postdivorce Domestic Relations Order.  Anybody have an idea how to respond to this?  Any thoughts would be appreciated.

I was hoping someone could explain how the Most Valuable Allocation Rate is developed when cross testing a cash balance plan.

For the Normal Allocation Rate, I projected the cash balance to retirement age using the interest crediting rate of 2.80% (30-yr treasury rate) and then converted to a life annuity using the Plan’s Actuarial Equivalence (also 2.80% and the 2017 applicable mortality table (post-retirement only). I then converted this benefit accrual to a lump sum using the standard interest and mortality table (8.50% and UP1984) and then discounted it to their current age at 8.50%. This amount is divided by testing compensation to determine the Normal Equivalent Allocation Rate.

Now because this plan pays immediate lumps sums, I am getting conflicting directions on how the most valuable equivalent allocation rate should be determined.

Any help would be appreciated.

Appreciate all insight on merits of in-sourcing claims administration v. using a TPA v. using medical vendor for larger (Fortune 500 size) corporations.

Any insight appreciated.

We have a 403b plan that provides a 7% match but only to employees who contribute at least 5%.  Is the plan tested under the ACP test or the Nondiscrimination test under 401(a)(4)?   I assume the ACP since it is conditioned on the employee contributing. 

Plan at one time offered an annuity product as an investment to all.  After a while, they stopped offering to participants.

At the moment, the owner is the only one in the investment and he is making contributions therein.

Is this a BRF issue in that he's the only one allowed in the investment?  Or is it ok, because at one time it was offered to everyone and is now, for the plan, closed to new investors?

Starting to file first form 5500-ez. Line 6a has information information about value of asset in the begin and end of year. My contribution was 20k in 2016 that I deposited in March 2017 for 2016. This is with fidelity solo plan. How will IRS know I actually deposited 20k considering the value of plan(including mutual funds etc) went up by 40K in the year? 

Unique situation - would appreciate any thoughts/insights.

Background: Participant worked in disqualifying employment for more than a decade while receiving pension benefit. Administrator found out and suspended benefits several years ago. During suspension (and continued DE), participant reached age such that benefits should have resumed at 75% rate, but didn't. Consequently participant has received a large overpayment, but also didn't receive 75% benefits for a several-year period during which they should have been paid. We're now trying to set things straight.

Question: Must the fund repay several years' worth of unpaid 75% benefits in a lump sum, and then resume monthly reduced benefits? Or can the fund simply offset that unpaid amount against the participant's overpayment, arrive at a net overpayment, and then resume monthly reduced benefits? This is apart from any separate action the fund may take relative to the overpayment - just want to get the resumption of benefits right.

Sorry if this has been covered before but I also have variations on the initial question that may be unique:

Situation: Sponsor has DB and SH DC plan. 2 NHCEs. HCE1 is sole owner and only Key, non-owner HCE2. Since no PS in DC Plan that plan is exempt from TH. DB document says any TH to be provided under the DB.

Q1: Would the TH minimum in the DB be 2%- or 3%- of pay?

Q2: If any PS contribution were to be made in the DC plan then would the answer to Q1 change?

Q3: If HCE2 were excluded from DB plan would any TH be due them under DC plan if no PS made to DC?

Q4: If HCE2 were excluded from DB plan would any TH be due them under DC plan if a PS were made to DC and would that TH to HCE2 be 3%- or 5% of pay?

Today's BenefitsLink news hyperlinks to a prepublication text of a proposed rule (to be published in tomorrow's Federal Register), which would decodify many Treasury rules.

https://s3.amazonaws.com/public-inspection.federalregister.gov/2018-02918.pdf

Among the rules that would be "removed", there are some keyed to Internal Revenue Code sections 401-412.  These include 26 C.F.R. section 1.401-11 through -13; 1.401(e)-1 through -6; 1.404(a)-4 through -7 and -9; 410(b)-1; 1.412(I)(7)-1; 11.402(e)(4)(A)-1, 11.402(e)(4)(B)-1.

Is the Treasury department correct in saying each of these rules no longer has any usefulness?

Or is there a rule (among those proposed to be removed from the Code of Federal Regulations) that states still-useful guidance?

If a terminated participant who has not been paid out, is rehired part-time, wouldn't they have to get the 3% non-elective contribution, as there is no hours requirement for the SHNE?

I would think so, accountant says no.

I recently came across the ISAR or In-Service Alternative Rollover.  It seems there is an investment management company and another company offering to "certify" advisors to walk clients through this process, apparently involving hiring an attorney to facilitate an in-service distribution of 100% of assets with no adverse tax consequence and continued participation in the plan while employed. Must be married and is a one-time event.

According to their marketing material, "This additional legislation expanded the ERISA recognition of a plan participant’s marital estate and made the ISAR transaction possible. The ISAR has technically been allowed since 1984 for plans subject to ERISA, and was first used successfully in California in the mid 1980’s."

Has anyone heard of this or have experience with it, or know what they are actually doing to facilitate this kind of event? I'm not asking because I would recommend it...frankly it sounds sketchy to me and would introduce at least a perception of an inherent conflict of interest for any advisor or insurance agent recommending it to a client. However, I try to stay current on industry trends and this is one I've never heard of before today.

Thanks.

I'm using Relius.

Eligible participant terms with 256 hours during plan year.

She does NOT show up in my 401(a)4 testing, however she shows up in the Average Benefit Testing.

Should that be?

I thought term < 500 hours and you are excluded from all general testing...

 A spouse is trying to submit a beneficiary distribution request to a plan; however, the plan has a beneficiary form on file from 2011 where the same spouse signed and notarized a waiver to allow their grandchildren to be beneficiaries to the account.

Is there any issue in providing the spouse with a copy of the form so he see that he consented to waive his beneficiary rights? Since he would  have seen it when he signed it I don't think it would be a  problem but want to be sure i'm thinking correctly.

My husband retired in 2013 as a HCE and rolled his 401k into IRA. He’s now 701/2, and he took RMD In 2017.  He received a letter in Dec. 2016 notifying him that the plan failed ADP test for 2013, and that they needed to give him a distribution of the excess, but since he retired and rolled his 401k into IRA; that he would need to take distribution from his IRA. A 2013 Corrected 1099R was issued to him by the plan administrator in January 2017.  

We did not Amend 2013(missed deadline). 2016 we withdrew some from IRA and paid tax on it as Normal Distribution. Jan. 2017 he withdrew correction amount from IRA plus he took RMD for the year. 2017 1099R from Vanguard shows both as Normal distributions.

Should the correction amount be coded as P on 2017 1099R? Should this portion of our IRA distribution be broken out as Other Income rather than included with Normal IRA distribution?

Thanks for any advice. The correction is an insignificant amount, but I don’t want to handle this incorrectly. 

Reviewing a takeover plan, and found what seems to me to be a bizarre (and inapplicable) provision.

This is a PRIVATE college - non-governmental in every way. The adoption agreement defines, for faculty only, compensation as including "Employee contributions described in Code Section 414(h)(2) that are treated as Employer contributions."

This wasn't a mistakenly checked "box" but was specifically drafted into the compensation definition. As I read 414(h)(2), I don't see how it can possibly be applicable in this situation. Am I missing something obvious here? 

FT William document with  "New Comparability - One Group per Participant" selected as the Allocation Method.  The are only three participants; owner, owner's daughter and job-cost estimator, all earning roughly $100k this year.

Estimator quit after year end.  Owner wants to skew contributions in favor of himself and daughter, if possible.  He's also considering no contribution. 

Limited reading sees to indicate that I could at least limit the estimator to 70% of what owner and daughter (owner by attribution) get - say 17.5% of pay vs 25% of pay.  But I get the sinking feeling that I have to look at the "reasonable business classification" portion of the Average Benefit Test to do so.

So, is Owner/Non-Owner a reasonable business classification?  All I find are "great debates" from ASPPA and limited examples in the regs.

The 2007 415 regs state  the 415$ limit post 65 is the lessor of the age 62-65 $limit increased by the lessor  of the statutory factors or the ratio of the (benefit at the asd)/(benefit at age 65)* 62-65$ limit. the "benefit" used is to be exclusive of post 65 accruals. Suppose someone enters the Plan at 65. then this second ratio at any asd will be 0/0. If this ratio is 1 then there is no adjustment to the $ limit post age 65 since 1 is less than the statutory increase. If it is infinite(/0) then we use the statutory(5%&applicable qx)increase since it is clearly the lessor. Alternatively,  is the reg just poorly written since in all thereg  examples the participant  had an accrual at 65; so just use the lessor of the plan's ae and the statutory basis which is what seems to make sense and what everyone has espoused for years? Note the 10 yr reduction would of course apply thru 74 and am not considering here forms other than a straight  life annuity.