I am looking into training and development courses for 2 employees. One has no 401k experience and the other has some basic knowledge. I know there's a few different organizations out there that offer courses. Right now I'm looking for one that offers the basic ABC's of 401k administration.

Any suggestions?

Employee signed up for 401k in June 2016. The appropriate deferral amounts were taken out of his paychecks. However, the funds that he selected were not set up. Hence, his contributions were just going into the default money market account, A year and a half later, he just notices this.

What correction must be done to make the account whole? Apparently the client had just notified the payroll company to start the deductions but never sent the enrollment form to the recordkeeper to set up the chosen fund allocations.

Thank you!

I have a client with a great number of highly compensated employees.  They want to have a different matching formula for some of the HCE, but not necessarily all of them.  Is there a way anyone can think of that works and isn't considered "biased"?

For instance, can we have a different matching formula based on years of service and how big of a discrepancy could there be? 

Thanks in advance!

We recently took over the administration of an existing 401k plan (safe harbor 3% - but was SH match years ago) .  As the actuary was working on the 2017 combined testing and contribution calculation, they noticed that there was an employee with a rehire date in 2017.  Upon collecting the historical employment information, it was determined that this employee should have been allowed to contribute to the 401k plan back in 2009, his first date of rehire (after having met the plan's eligibility during his first employment period from 2/2008 through 9/2008).  No problem there - we can calculate the QNEC for this.  But, the employee then terminates in 2010 and is rehired again in 2012.  And then terminates in 2013 and is rehired again in 2017.  Phew.  So, my question here is when I'm calculating the QNEC, do I have to do separate calculations for each year for which he was rehired?  Or just for the first rehire period and call it good?  Technically, he should have been allowed to defer when he was rehired in September of 2009, and again in July of 2012 and now in 2018 (actually September of 2017).  Any comments on this are appreciated.

Company owner passes away and Company is sold fairly quickly.  All exisiting participants continue working for the new owner in same positions.  Exisiting 401(k) plan is termed by deceased owner's spouse (also a Trustee).

Question is...one participant is over 70 1/2, non owner, still working.  Is he required to take an RMD from his plan account under the termed plan prior to rollover?

Termed Plan Doc language does delay RMDs for non-owners until they actually retire.

Company X acquires 100% of the equity of Company Y.  Company Y was previously a wholly owned subsidiary of Company Z.

My understanding is that, because this is a stock deal, Company Y's employees have not experienced a severance from employment, and all service with Company Y (including pre-acquisition service) must be taken into account for eligibility and vesting purposes under Company X's plan.  (Unless the GCM 39824 exception is satisfied.  Let's assume it is not.)

My question is:  What about pre-affiliation service with other employers in the acquired company's controlled group?  If a Company Y employee also previously worked for Company Z, is that service required to be counted under Company X's plan after the merger?  This seems like a stretch, but I could make the argument that it should be counted.

I can't seem to locate any authority addressing the issue.

Does anyone know of how the "would result in an adverse business impact that is greater than de minimis" exception should be interpreted by plan sponsors who want to hold off the mortality table change for this year? I represent a company that has 3 billion in revenue each year and postponement of mortality table change would only yield a savings around 10 million. I anticipate that this is not sufficient to meet the requirement of the Notice but wouldn't mind having some guidance to reference. Thank you.

I am working with a frozen plan that is purchasing an annuity contract. The plan NRA is age 65. A participant who termed prior to age 65 is now age 67 and will be part of the contract. The plan wants to pay the same monthly life annuity that the participant would have received at age 65.

Plan does not allow RASD. The plan document does have wording related to suspension of benefits notices, but no one can tell if the notices were mailed out. Plan document states that the deferred retirement benefit cannot be less than the benefit at NRD.

Q1. Do suspension of benefits notices apply to term vested employees? I thought they were only for actively working employees.

Q2. Without a RASD option to give the participant missed payments, plus interest, I think that the payment needs an actuarial increase. Otherwise, the annuity would be "less than the benefit at NRD" because it is being paid 2 years later. Does the annuity need an actuarial increase?

This is my first post, so forgive me if I am missing any details that would help in answering the questions.

Thanks!

One of our clients has a 401(k) plan.  During 2017, the employer created 2 new controlled group companies.  All of the employees then became employees of one of the new companies.  We were never informed of this and the 2 new companies were never added to the plan as participating employers.  They continued to deposit deferrals for the employees.  Do the deferrals have to be refunded?  Or can this be corrected under EPCRS?  Any other suggestions?

sole proprietor sponsors a one person defined benefit plan.  the plan is overfunded on a lump sum basis but the participant is interested in purchasing an annuity upon plan termination.  i'm aware that an owner can forego receipt of a portion of their benefit in the case when he/she elects a single lump sum.  can the owner elect to forego receipt a portion of his/her monthly benefit to make plan assets sufficient?

for example, the participant who is age 75 (and currently receiving RMDs) is entitled to a $15,000 monthly benefit.  the plan only has sufficient assets to purchase a $14,000 annuity for the participant.  can the participant forego receipt of the shortfall? the sole proprietor is not interesting in making any additional contributions to the plan.

An RMD eligible 5% owner participant has a 401k balance 12/31/2016.

July 2017 - They rollover their balance to their IRA .

Sept 2017 - They make a lump sum contribution to the plan .

Dec 2017 - We force out RMD from the balance created by the contribution.

Participant adamantly stated that they took the RMD from the IRA rollover and that we were not supposed to force his RMD.

Any support to the rules would be greatly appreciated. I will need something to cite.

I understand from reading the new final rule from the PBGC regarding missing participants, that a terminating DC plan can utilize the program as well.  I am just confirming that if the program is utilized that once the assets of the missing participants is transferred to the PBGC (and all other assets are distributed out), that a final Form 5500 can be filed?

Thanks!

I have an ESOP client that normally makes you wait 5 years in order to get a distribution via 5 installments.  They however have a provision that if a person terminates and then is ruled disabled they can be paid the year after the disability ruling. 

I just took over this plan.  A person terminated in 2012.  They were ruled disabled in 2014.  They got their first payment in 2015.  The firm that prepared the 1099-Rs in the past gave this person a code of 3. 

I am just not finding any guidance on this.  Do you have to terminate because of disability or merely be paid because of disability in order to get a code of 3?  It matters as the person is <59.5. 

Back when I did 401(k) plans if a person terminated and refused to take a distribution for years and then became disabled I don't recall making such a person a code 3. 

Thanks

On a call with an IRS representative today, after I faxed over Form 2848, the representative asked me for my personal SSN in addition to my CAF number and my client's EIN.  When I expressed surprise, she indicated that it was a very new IRS procedure.  I'm curious - has this happened to anybody else?

We have a client with a plan document that defines Earned Income as "net earnings from self-employment with respect to which the Plan is established, for which personal services of the individual are a material income producing factor."  

The plan is sponsored by ABC, LLC.  Owner O owns 100% of ABC.  O also owns 100% of XYZ, LLC.  XYZ has no employees.  O has net earnings from self-employment from XYZ that he would like to use to support his compensation in the plan.  My question is whether XYZ must adopt the plan as a participating employer in order for O to rely on the NESE from XYZ.  My thought is that it couldn't hurt, so why not.  

Client started a H & W DB plan in 2016.  They bought a stock that increased 4000% so now they are way overfunded and benefits will never catch up.  I am going to suggest they take out the money into a regular brokerage account and thus intentionally disqualify the plan.  Pay regular capital gains.  Taxes and penalty on the disallowed deduction are better than a reversion tax on an overfunded DB.  Or are they?  Please help!!

Hoping that someone can help...or point me in the right direction...

I worked for a company from 09/10 to 02/13. I won't get into details, but there was some shady and questionable things on their part and they found/fabricated a reason to terminate my employment...a lot of which had to do with my chronic illness...and the company requiring me to abide by my own set of rules, which didn't afford me the same flexibility as all other employees. If someone needs specifics, I can provide them. Anyway...

I haven't worked full-time since then and was determined disabled as of 07/14 by SSA. I received my ESOP distribution in 2014 (can't recall the month, offhand, but I believe it was November). I was only 20% vested, but it was brought to my attention that since I was still part of the plan, while waiting for my distribution, I should have been vested at 100% and also be able to forgo the 10% early distribution penalty. 

I managed to get the plan documents but they are not clear. Can anyone help?

We administer a traditional defined benefit plan that is offset by participant's vested balances in a profit sharing plan.

Our understanding is that the 415 limit applies to the gross benefit and not the net benefit under the floor offset plan. This does not seem right but apparently an IRS examination guide indicates that the “current approach is that the limit applies to the gross benefit (i.e. prior to offset).” There was a discussion between an actuary and Jim Holland a few years back on this issue. Rev. Rul. 76-259 was often cited in the discussion. I don't believe we have seen any further guidance on this issue, has anyone else?

The actuary made some good points as to why the 415 limit should apply to the net benefit. In our case, our pre-approved document makes no reference to the 415 dollar limit applying to the benefit prior to offset.

Any comments on this?

Thanks.

A client wants to terminate a phantom stock plan.  No shares have vested and value of shares minimal.  There would be no distributions on termination, therefore no acceleration on distributions.  Are we subject to the rules on terminations under 409A? in other words, can we only terminate if one of the 3 tests in 409A is met? Does it matter if there is no acceleration on distributions here because no distributions would be made. 

Follow up on this.  So the client is now thinking converting to an LLC and offering those same execs some type of an option plan.  I imagine that's improper substitution, but thoughts? Thanks 

We have a 401(k) client where the plan sponsor/corporation became owned by an ESOP in 2017.  I don't know any more about this transaction other than the company is now owned by an ESOP.  This company has sponsored a 401(k) plan and still does during 2017.  

Some research I did indicates Code Section 318 states that the constructive ownership of stock does not apply to shares owners by a 401(a) employee trust which is exempt from tax under 501(a).  So it seems since the ESOP is the owner of the company, the 401(k) plan no longer has owners for purposes of HCE and key employee determination.  All shares of the company previously owned by all the family members are now owned by the ESOP and don't attribute to them personally is my take.  The plan is subject to ADP testing but perhaps will be a non-issue if attribution does no exist.  I also have to question whether officers exist for top heavy purposes.  the plan is a long way from being top heavy thank goodness .  I'm told there are board members of the ESOP but the client is implying there are no longer officers.  If this is the case there may be no testing whatsoever.  But I'm approaching this with much caution! 

Comments anyone? Thanks