A new company, established in July 2018 (calendar fiscal year) wants to set up a new 401k plan for 2018.  Assuming they are too late for a Safe Harbor plan for 2018 (since the company was established with more than 3 months left in the year (to qualify for the exception to the 3 month rule) and now won't meet the notice requirement for a 10/1 effective date), we are going with a traditional 401k plan, with safe harbor provisions effective for 2019.  

The employer doesn't want his part-time employees in the plan.  EVERYONE however, has the same July 2018 hire date, including the owner.  Has anyone used language in the plan document, stating something to the effect that everyone employed on July 1 2018, shall be eligible, providing that they are 21 years old and would "normally work 1,000 hours during the plan year"?  Do you think this will fly?  

(I've used the age only requirement condition before, but haven't used an hour requirement condition under the special participation date before.)

Thanks in advance!

I have a terribly persistent participant who is convinced that you cannot put criteria on obtaining a loan from your retirement plan.  Specifically, her plan requires hardship proof.  Does anyone have the IRS reg that states you can put these types of criteria on your loan program?

Good morning to all,

A client, which happens to be an Indian reservation, has a commercial entity that sponsors an ERISA covered 401(k) plan.  That commercial entity has no HCEs.  The employer decides that overall for 2017, it will contribute 5% as a profit sharing contribution for the year. Per the plan document, profit sharing is totally discretionary and is supposed to be allocated on a salary ratio basis.  However, each division within the company is responsible for being a profit center and one division says it doesn't have the resources to make any contributions for 2017.  This means that about 2/3 of the employees get a 5% of pay contribution and 1/3 of the employees get nothing.

Again, there are no HCEs.  Top Heavy status is not an issue.  Passing 410(b) coverage testing is not an issue.  

Does anyone see any problem with this?  Is it permissible for the 1/3 to get nothing in profit sharing for the year?

Your thoughts and suggestions are always appreciated!  Thank you.

Just looking to confirm if a company currently is making contributions to a SIMPLE IRA they are precluded from setting up a Cash Balance Plan for 2018?  We would need to terminate the SIMPLE by Nov 2nd and set up a new plan effective 2019?

We are setting up a money purchase plan for 2018 that will not have actual allocations made to the plan prior to 12/31/2018. The actuary is suggesting that a nominal amount be contributed to the plan prior to 12/31/2018 to establish the trust.

Is this a thing? Can someone point me to the regulation or guidance on why this would need to be done? Does it apply to all plans or is it special to plans subject to minimum funding requirements?

Thanks in advance

I have a 403(b) Plan with a TPA which charges 3% of the loan balance annually as their loan fee.  I have never heard of a loan fee based upon loan amount.  On its face, this appears unreasonable.  However, I wanted to ask the group if they had seen loan fees set up in this way.  I am more used to seeing a set fee for loan initiation (around $100-$150) and an annual maintenance fee (around $25).  Any feedback would be appreciated. 

What does line 14C on a k-1 refer to?

I am working to find basic information on rules regarding seasonal employees.  I have read various IRS material and realize this is a complicated subject that will have to be handled by the employee benefits firm, but I was wondering if anyone could tell me if I am on the right track.  The business currently has a plan that is open to employees, but only three employees participate, and of those three at least one is highly compensated.  The business has many seasonal employees.  The concern is that the plan in not in compliance.  They are considering a safe harbor plan.

From what I read, there are no specific rules about seasonal workers.  A plan can impose attainment age of 21 and completion of 12 months of service (considered 1,000 hours of work).  Participation may be conditioned on two years of service, if each participate has a vested right.   Is there any general information on the rules regarding having only three employees participate when there a hundred seasonal workers (assume more than 1,000 hours)?  Thanks for any general information to help me clarify.

I took out a 401(k) loan in December 2015 and have been making semi-monthly loan payments through payroll deduction ever since.  My boss, whose responsibility it is to upload a report to our plan administrator that shows all employee contributions and loan payments), received the reports on a timely basis (I know this because I do payroll and I provide him with the reports myself) but failed to upload the reports in a timely manner.  Some of the reports were uploaded as much as two months after the payroll date.  As a result, my loan was called into default and declared a distribution.  I somehow missed the 1099 that was issued at the end of 2017 (I never open my statements and I assume I tossed it thinking it was just another statement) and I did not become aware of the default until I recently logged on to change some of the investment options on my plan balance.  

I have made two of the partners at my firm aware of this and I need to determine exactly what the financial ramifications will be for me (the amount shown on the 1099 is $12,810.69, although the balance is less than that since I have continued to make my scheduled payments).  The firm will have to make me whole, and I believe they will, but I need to know just exactly what this is going to cost me.  I also need to know what my firm is facing in terms of penalties because there are at least three other outstanding loans that were probably also defaulted, not to mention the 401(k) contributions that were not posted to accounts in a timely manner.  Employees will have lost out on interest since their contributions were not credited for as long as two months after they should have been.  

I am trying to arm myself with as much information as I can.  Can anyone offer insight?  Many thanks.

A non-US citizen lived and worked in the US and participated in her company's 401(k) Plan.  She has since moved back to her home country, but left a small 401(k) balance behind.  I would think that she can avoid paying US tax (and early withdrawal penalty) by rolling the funds into an IRA and keeping the money there, at least until she turns 59 1/2.  I'm looking for some IRS guidance, but didn't see anything about non-citizens after skimming through Pub 590.  Can someone point me in the right direction?

Our 100% ESOP S Corp has a SAR’s program for senior leadership and board members that creates a huge amount of synthetic equity. In fact synthetic equity is now almost 30 % of all outstanding shares of stock. At the end of this year this program will pay out almost 4 million dollars to these select shareholders.This is a company that only makes 5 million net income on average annually.  

It appears they are staying just within 409(p) testing , but they just merged the 401k with the ESOP to help with this ratio testing. I’m afraid they are going to get even more bold in coming years in creating more synthetic equity. Employees now need to contribute to 401k to get matching ESOP shares. I’m concerned that Managment and board may be acting unethically and hurting value of average employees retirement benefits.

There is also some self dealing going on with leases and sales of builiding owned by board member to the company. Same three board members and CEO appear to be the main beneficiary of all this. Any recommendations about what to do next would be appreciated. 

My apologies if this is a dumb question from a non-actuary.  Is there a way to figure out what mortality table was used in determining PV of governmental defined pension plan?  I have the following info:

• Age at cut-off = 41.86
• Pension start age: 45.66
• Accrued annual pension benefit at cut-off age = $40,639.32
• PV of $1 pension = $12.2619
• PV pension = $498,315

Thank you.

NAPA Net article on the executive order

White House factsheet on the executive order

Executive Order on Strengthening Retirement Security in America

• Executive order directs DOL to "consider changes" to make it easier for businesses offer MEPs together.  Order uses the term Association Retirement Plans so I guess they are now MEP/PEP/ARPs...
• Executive order also directs Treasury to review rules on RMDs so that participants can keep more money in plans and IRAs longer
• Executive order also directs DOL to consider ways to improve notice requirements to reduce paperwork and admin burdens.  Can you say electronic disclosures?

Participant died in 2001.  Spouse continues the MRDs each year until she dies in 2007.  Daughter continues RMDs each year based on the life expectance of the spouse as of the spouse's birthday in the year of death, reduced by one each year.

Spouse's single life expectancy in 2007 was 11.4.  Therefore, factor for 2018 is 0.4.  I am assuming this converts to 1.0.

For discussion purposes, account balance at 12/31/2017 was $100,000, and balance as of today is $105,000.

My question is, must the daughter close the account in full by 12/31/2018, or can she take the 12/31/2017 balance of $100,000 as the RMD by 12/31/2018, and carry over the earnings each year with continued RMDs on that substantially declining balance?  

This happens sometimes. Let's assume the individual promptly repays the loan amount, plus interest for the few days he had the funds. Now 2 months later, set to buy a house again.

Would you treat the first loan as "never happened" for purposes of the subsequent loan limits, or would you treat it as part of the highest outstanding balance in the last 12 months? I lean toward to former, as the latter seems to produce a truly unfair result, but one could argue that the latter is more technically correct.

Opinions?

A Schedule C business utilizes a leasing company to pay employees. Schedule C owner wants to know if they can make a SEP contribution on their own behalf, and not for the employees who are paid by the leasing company. It is unknown if the employees can utilize the leasing company plan, but, for arguement sake, let's say they can.

In looking at various threads throughout here, I change my answer with every post I read.  If anybody could give me some guidance on this, I would appreciate it.

I was wondering if there is guidance regarding how often self-insured plans need to implement updates to the USPSTF A and B Preventive Care Recommendations.  How soon after a recommendation is released must a non-grandfathered plan implement it as a covered preventive service without cost sharing? 

If late contributions were already corrected is there still a required 5330 filing?  Looking at Section 4975, those excise taxes are for those contributions that have not been corrected.  Plan Administrator is trying to answer the question in the VFCP application relating to the exemption from the excise tax but the wording seems to be contradictory.

addendum:  excise tax was way under $100 so PA prepared the 5330 to keep on file and the $$ is going in to the Plan.

I'm hoping someone can provide a helpful suggestion for an odd set of facts.

Employer had Trigon/Anthem health insurance for many years. It never received shares in the demutualization process; they found their way to the state unclaimed property fund, which eventually sold them for cash, and just recently distributed the cash to the employer.

Problem is, the employer terminated all its employees several years ago. Some now work for a related entity over which the employer has no control. The employer (getting the demutualization proceeds) has no employees, no group health plan, etc. At least some, but not a lot, of the demutualization proceeds were from employee premium payments. Many were from the 1990s and payroll records have been lost/destroyed.

The DOL guidance doesn't seem to squarely address the situation. There are cases where funds from a terminating welfare benefit plan are transferred to another welfare benefit plan covering the same employees, but I can't find anything where the plan was out-and-out terminated and no employees remain. 

Regs say upon termination of a welfare benefit plan, the remaining assets will be distributed in accordance with the plan. Here it was just a group health and dental policy.

Is it a reversion if the employer takes the money back? Subject to excise tax? A PT? Is the only option track down former employees and give them a check for an arbitrary amount? Can we give the money to the other related employer to use toward these employees' current premiums/benefits?

Appreciate any thoughts.

Another question! I can't find documentation that there are penalties for late QDIA/Fee disclosure notices.  I have a 09/30 plan who should have gotten both notices by today-- Nationwide is running late so they will not be received timely.  The client is worried about a penalty from the DOL...

Thank you!!!