We have an employee whose last day of work occurred mid-September.  He was participating in both our group health plan and our HRA. He remains covered by the health plan through the end of the month. The question is if he is also covered by our HRA during that time?

In our plan adoption agmt, we have one clause that states that "an Employee is eligible to participate in the Plan under the same terms and conditions as under the Company benefit plan" - and our group health plan is then specified as the "Company benefit plan". However, later in the agmt, we have another clause that specifies "Permit Eligible Employees to participate in the Plan after Termination" and the "No" box is checked.

So our TPA is saying that the ex-employee's access to his HRA ends on his last day of work (or technically, the next day). But that seems to conflict with the first clause and in addition, it seems, shall we say, asymmetrical to allow an ex-employee to continue to accrue expenses under the health plan, while denying him access to the HRA at the same time. 

I am not sure which clause should take precedence or whether it is up to us, as the plan administrators, to override our TPA's interpretation if we so wish. Or should we just check with an ERISA lawyer...

Thanks in advance!

Client missed minimum funding deadline of September 15, but said date falls on a weekend. Client got the funding in by the following Monday, is this an issue or is the deadline pushed back since Sep. 15th falls on a Saturday this year? I cant seem to find any persuasive information on the matter and prior discussions on benefits link regarding the issue offer differing opinions. Thanks for your help.  

The company filed a Form 5300 for a determination letter a few years ago and qualified for the user fee exemption.  Now they are terminating the plan and filing a Form 5310.  Does the user fee exemption still apply?  There have been no changes, e.g., the company is still the same size.

Employer has a HDHP and provides a self insured HRA administered by a TPA.

Employer has a business associate contract with TPA.

If employer required to send out a HIPAA Notice of Privacy Practices to HRA participants even though employer does not receive PHI related to HRA?

A non-key employee is still employed at her company that has a 401k plan.  She turned 70-1/2 in 2017 and would have been due her initial RMD 4/1/18.  But, since she is still employed, chose not to take that.

Given her age, the plan allows for her to take all of her money out of the plan as an ISW.

Although still employed, she wants to roll all of her money out of the 401k plan and into an IRA before the end of 2018.  She would like to avoid taking an initial RMD from these assets until 2019.  

If she were to transfer the plan assets to an IRA before the end of 2018, would she then be required to take a 2018 RMD from the IRA or could that be delayed until 2019?

Thank you

I have a situation where Husband owns 100% of one business and Wife owns 100% of an unrelated business.  They are considering setting up a defined benefits plan for their businesses.

Operation of both businesses is kept completely separate and neither has any involvement in the others business.  Further, neither is an employee or officer of the others business.

They reside in Texas, a community property state.  However, they have a post-nuptial agreement which provides that neither has ownership in the others business and that income from the businesses are also separate property so there appears to be no direct ownership issues.

So long as the property is characterized as separate property, would the exception for aggregation under the control group rules for an independent spousal business apply? 

New 401(k) plan 2015 with pre-tax and Roth deferrals, enhanced SH match and integrated PS - 8 participants including one HCE.

TPA used incorrect formula to calculate SH match - basic tiered match instead of 4% enhanced match.  Match was contributed timely but at least three participants received less than they should have received, totaling several hundred dollars for 2017 plan year.  Plan document and SH notice all say enhanced 4% match.  No discretionary PS contributions made.

2017 can be corrected using EPCRS.  We haven't seen the numbers yet for prior years but it's possible the same error has been made from the beginning. 

What options are available if SH match was under-contributed for 2015 and 2016?

we have a client who has life insurance within the 401(k) plan.  The owner, will be required to take an RMD this year. 

when calculating his RMD, do we include the value of the life insurance, or not? 

Does anyone know if the hurricane extension applies to a TPA firm that is preparing the 5500 if they are in the declared disaster area?  I can't find info on this.  Thanks!

Situation:  the payroll company was calculating elective withholding including unpaid time off which in turn has caused people’s deferral rates to be off.  

For example, if a participant worked 32 hours for the week, and then had 8 hours of unpaid vacation. the payroll company was taking 40 hours X $10 an hour X 5% to equal $20 of withholding.   However, the participant was only paid $320 and correct withholding would have been $16. 

$20 of $320 of comp is actually 6.25% withheld, not 5%.  So the withholding election was technically not followed based on what the person was actually paid.

This has been happening since 2014. Since its unpaid vacation it's not huge $ wise but what correction is to be made.

A prospective client has just approached us to handle their 403b plan.  As it turns out, they are running two plans: a non-ERISA plan that is a deferral only plan and an ERISA plan that holds only the employer contributions.  We have never seen a set-up like this.  Has anyone ever encountered this before?

Does it matter if the Employer contribution is a non-elective versus a matching contribution? 

If anyone can provide guidance, I would appreciate it. 

A Canadian citizen has a 100% ownership interest in a C-Corp which has a 25% ownership in an LLC (taxed as a partnership). The Canadian citizen does not receive a W-2 from the C-corp for wages performed. The C-Corp and the LLC would most likely be an affiliated service group. Could this Canadian citizen participate in the 401(k) plan offered to employees of the LLC?

My thinking is no because Canadian citizen would have no wages to defer. If they somehow received a W-2 from the C-Corp then they might possibly be able to participate.

Thoughts? Am I looking at this the wrong way? Would the C-Corp be disregarded and I would calculate earned income from the LLC earnings to determine eligible compensation?

I have a participant in the plan who has moved back to Italy--he was a resident alien while he was in the USA. He wants to roll his money over to an IRA (or the equivalent) in Italy, or take a lump sum distribution.  How would the tax withholding work if he took a cash distribution?  He has been gone for a couple of years now.

Thank you!

Client had a non-ERISA TDA (403(b)) plan.  The plan did not/does not offer loans.  The client converted the plan to an ERISA plan in 2009.  An employee who is a participant in the plan applied for a loan with MetLife.  MetLife sent the client a form to sign as the plan administrator.  The form relates to the private loan (outside the plan), which MetLife says it will not approve for the employee if she has a loan in a current plan with the client because she is still employed with them.  Can client sign the form as the plan administrator of the current TDA plan and say the employee does not have loans? OR will this invalidate the MOA non-ERISA status?

The old different match rates conundrum. Employer wants to keep existing match level for all current employees, but use a lower match rate for all new employees.

Passes current availability testing just fine (for now) but since current employees include ALL of the HC, I don't see any way for this to pass effective availability.

Anyone have any bright ideas on this?

Say a PS plan holds a life insurance policy. The participant was properly taxed on the cost of insurance each year. Cash value is $100,000 and death benefit is $1,000,000. The plan is the beneficiary of the policy.

I understand under 72(m)(3) that if the participant dies the plan gets the $1,000,000 death benefit and pays it to the participant's PS plan beneficiary. The [edit; typo] taxable tax-free distribution to the beneficiary is $900,000 ($1,000,000 in proceeds less $100,000 in cash value). 

If the participant buys the policy from the plan while the participant is alive, and the values are the same as above at the insured's death, does the life insurance beneficiary get all $1,000,000 in proceeds tax-free under 101(a)? Or do you still need to exclude the cash value from the tax-free portion because the policy originally was purchased by a qualified plan? In other words, is the only relevant variable policy ownership at the time of death?

The $100,000 of (taxable) cash value within the plan in the first scenario is being "replaced" with the $100,000 of cash the participant uses to buy the policy in the second scenario, so there is still a taxable distribution from the plan of $100,000. But there would only be one "bucket" of $100,000 that is potentially taxable ($100,000 from the plan) instead of two (one of $100,000 in cash value within the plan taxable upon distribution; another separate $100,000 that could have been used to buy the policy and potentially taxable upon death). Estate tax is by no means my strong (or semi-strong) suit, so I may be missing something here, but it seems like you get a slight benefit by buying the policy out of the plan. 

Client has 3 plans - a DC plan, DB plan and a TDA plan.  They paid out legal invoices related to all three plans out of one of the plans' unallocated account.  All plans cover same employees.   Is this a prohibited transaction? 

We have an Early Retirement Window for our pension plan going into effect.  We crafted the eligibility requirements and are comfortable that they are fine.

However, today, we discovered that four people at a key position at the company might want to participate.  There are only 4 people in this position company-wide, and having them all leave at the same time would be devastating.  Can we state in the eligibility section that, for this specific position, only two can participate, and the people with the longest service at the company have first dibs?  Thank you.

I am a TPA working at a financial services firm. I do not work on any non qualified plans. My boss seems to think that I should be able to provide him with a sample of boilerplate language for a COLI plan. In the qualified plan area, I can't imagine anyone being willing to share that for free. Is it something that might be available for a non qualified plan?

PSP terminated April 2018.  PSP assets were directly rolled over to a Individual 401k created April 2018.

I401k Summary Plan Description states:
"Can I withdraw money from the Plan while I am still employed?  You will be able to take certain distributions from the Plan while you are still working for your Employer, as indicated below.
In-Service Distributions
You may request a distribution of your rollover and transfer contributions at any time."

Can I do a direct rollover of a portion of the assets in the I401k to my SEP IRA?  Will this trigger the 10% tax penalty?  Anything I should be aware of?

Thanks for your help.