We have a prospect who asked us to bid on the profit sharing plan.  At the presentation I earned for the first time they had a 401(k) bundled with a record keeper.  The record keeper has no role with the profit sharing plan. I find out the top heavy test has not been performed for the PS plan.  And when answering the record keeper's year-end questionnaire, the plan sponsor correctly indicated there was another plan but was told that the PS plan did not affect the k plan top heavy test.  Of course the PS plan at a minimum has to be top-heavy tested. 

I have not researched this thoroughly as it just came up.  But what I saw so far is that 2 plans of an employer must be aggregated for top heavy purposes when there is at least one key employee in both plans  "AND" the plans are aggregated for passage of 410(b) and 401(a)(4). I question the word AND in the source I saw.  So if both plans include a key employee but pass 401(b) and 401(a)(4) on their own, then there would be no aggregation is required for top heavy purposes.   That seems to be a big loophole.               

We have 3 plans, CDHP< PPO & PPO Plus with PPO plus being most generous and highest cost

Can an employee who gets married change his plan option from PPO Plus to CDHP or vice versa(if in CDHP chnage to PPO for example?

thnaks

Lexy

I have a plan with a 5% owner that has been taking RMD's each year since turning 70.5.  The plan also has ADP/ACP testing.  This year the plan failed and the 5% owner had to take an excess distribution from the plan.  Would this count as a part of his RMD?  

An independent contractor who receives a 1099 is actually a common law employee under ERISA and should be in the pension plan his company will sponsor. The problem is the definition of compensation in our Volume Submitter document calls for W-2 income of which he has none.

How can I include him?  Do I have to go to a custom document? Thanks.

I'm looking for a method to track pension payroll information for multiple plans.  The desired system would not make the payments, but would produce an output file for another system that makes the payments.  The desired system would also be modifiable to create other types of output, such as annual or monthly summaries.  I've reviewed Excel and Access templates and found nothing that seems appropriate.  Any suggestions?

This may be a dumb question, but I can't find a definitive answer on this in primary sources.  If a loan has been treated as a deemed distribution (because of missed payments) and the 1099-R issued, can the participant make repayments on the loan beyond the 5-year maximum repayment period?  It seems to me that this would be fine because the consequence of violating the maximum repayment period requirement is a deemed distribution, which has already occurred.  So, after the deemed distribution, repayments beyond the 5-year period have no consequence.  Does that seem right?  The only example given in the regulations involves repayments within the 5-year period, so it doesn't really address this question.  Any thoughts are appreciated.

I believe I know the answer to this, but not sure.

Client maintains a PSP, needs money for mortgage, wife's PSP balance around $50K.

Plan allows for rollovers from IRAs.

Can she rollover to the PSP and then take a loan on 50% of the total account, including the IRA rollover.

I do not believe so - doesn't the IRA still remain an IRA as far as IRA restrictions, ie there is no borrowing?

Not sure.

Company A and Company B are a controlled group.  Company A sponsors a 401(k) Plan.  Company B's employees are all  paid through Company A on W-2s and are included in the 401(k) Plan.  I know that Company B can co-adopt the plan, but are they required to do so?  It would seem to me that these employees, since paid by Company A, would be covered regardless of whether Company B adopts and may even be considered Company A employees.  This may come down to a "Who's the Employer?" question. 

I realize that there is no harm in Company B adopting the plan and I will recommend this, but I need to know if there is any reason that it would be required in order for these employees (who technically perform services for Company B even though paid by A) to be included in the plan.  Any thoughts?

Definition of Compensation under the Plan includes Bonuses. Employer pays a bonus on Aug 15, 2017. Employer fails to correctly apply the participant's 401(k) election percentage to the bonus. Employer discovers the mistake on Oct 15, 2017.  Does the missed deferral opportunity on the bonus qualify for the safe harbor correction method for Employee Elective Deferral Failures that do not exceed 3 months?

1.  Correct deferrals have been made by the Employer on all payrolls subsequent to Aug 15, 2017.

2.  The Employer will make a corrective contribution to make up for any missed matching contributions for the bonus.

3.  The Employer will provide the required notice to affected employees on Oct 31, 2017 (within the 3-month period beginning on the date of the failure). 

One problem, of course, is that none of the payroll periods since Aug 15, 2017 have included bonuses. So, I'm not sure we can really say we've satisfied conditions #1 and #3, above. I'm especially hung up on the 45-day notice requirement. 

From a matter of policy however, it seems that the affected employees still have time to make up the missed deferral opportunity if they want to. So, maybe this error should qualify for the new safe harbor correction (i.e., no QNEC required).  But, on the other hand, this might be better analyzed as simply an operational defect and, therefore, requiring a 50% QNEC.

Thoughts?

Thank you.

Employment agreement plainly says "Executive gets $50,000 a year for 5 years credited to a book account with no money actually set aside.  The Executive only gets the money if he is actively employed all the way trhough the 5 year anniversary date and is paid immediately thereafter."

We all agree I think that neither 409A nor 457f applies because there is no deferral of income beyond when the substantial risk of forfeiture lapses. 

Do I need a document beyond the employment agreement?

I guess I need a top-hat filing to avoid a 5500 filing requirement.  Is there anything else like that?

Are pre-approved plan document vendors generally providing sample sponsor amendments to permit rollovers from a qualified plan to a SIMPLE IRA (i.e. PATH  Act of 2015)?

Is this permissible not to apply the 20% mandatory tax withholding to a Non-qualified Roth Deferrals Distribution when the earning is below $200?

Who would be best to make the determination whether or not we could test two plans of a controlled group under a separate lines of business?   Same ownership- separate companies located 150 miles apart.

Erisa Attorney or clients CPA?

Does that allow you to have one SH plan and one non Safe Harbor plan and what testing would have to be combined?

Pat

Here is my fact pattern:

• Company A and Company B are in the same controlled group of companies.
• Company A and Company B each maintain separate 401k plans.
• A group of employees are transferred from Company B to Company A.
• Company B's 401k plan treats these employees as being terminated and allows them to take distributions and/or rollover their accounts.  Rollovers wind up going both to IRAs and Company A's 401k plan.

I believe this is a plan operational error.  Because the employees remained in the same controlled group, I don't believe there was a termination of employment that would have triggered a distribution event under Company B's 401k plan.  If I am correct, there are a few issues here.  One of which is Company A's 401k plan accepting a rollover that turns out not to be an eligible rollover distribution.

Is there any authority for asking the IRS, as part of a VCP application, to treat this as a plan-to-plan transfer for the affected employees?  Both Company A's and Company B's 401k plans would need to be retroactively amended to permit this transfer, but it strikes me as the "best" or "most reasonable" fix here.  Any helpful thoughts would be appreciated.

Company A and Company B are a controlled group by a recent purchase. 

Company A has about 10 HCE  52 NHCE and is a SH nonelective Plan. (12/31/16)

Company B has 2 HCE and 112 NHCE and is not a Safe Harbor Plan (12/31/16)

I think there are two options since I cannot aggregate a Safe Harbor Plan and an nonsafeharbor plan.  Plan A fails the Ration % test.

1.  Company A has to drop Safe Harbor.  Then ADP/ACP Test, Coverage Tests,  Top Heavy Test would include all employees of both companies.

2.  Company B must adopt Mirror plan of Company A - SH nonelective.  

3.  Combine into one plan - but plan would require an audit.

Am I missing Anything?

Thanks

Imagine an independent qualified public accountant in its audit of a retirement plan's financial statements discovers an operational error, one that if not corrected could result in the plan's tax disqualification.

May the same accounting firm act as the plan sponsor's representative before the IRS for a correction procedure?  (Assume the firm desires to continue as the IQPA auditor.)

Is there an independence problem?

Are there conditions under which there would not be an independence problem?

If an individual takes multiple distributions from a single IRA within a 12-month period & redeposits all the funds back into the IRA within the 60-day deadline, can the individual designate which redeposited funds are treated as an IRA rollover & which funds are considered excess contributions to be withdrawn?

My initial response is that the funds redeposited first are treated as a rollover & each subsequent deposits are treated as excess contributions. What if the individual doesn't designate the first deposit as a rollover but rather designates the largest deposit as a rollover?

There exists a control group of a staff plan who receive safe harbor contributions and individual Partner plans who contribute on an xtested basis, but do not receive a safe harbor; all plans tested together.

There is a new Partner. She would like to start her own plan on 11/1.  Although her plan will not have a safe harbor feature, does the staff plan limit her ability to start 401(k) for herself on 11/1? She has never been a participant of any of the involved plans.

Edit after receiving 2 responses below - this is not a control group, but an affiliated service group.

Company files its 5500s appropriately for 5 different benefits on separate 5500's. They are consolidating and creating a wrap plan document effective beginning of current year, with brand new plan number.

None of the current 'plans' have an existing ERISA plan document.

In addition to the resolution adopting the new plan and wrap plan document, do other plans which will be filing 'Final' 5500's need plan termination resolutions, given that there has never been a plan document to begin with?

We have a (calendar yr) client who failed the ADP and ACP tests for 2016.  Unfortunately, we didn't know until we finally received his census on 10/12/17.  It is a small plan with just 6 people; in 2015 the owner deferred a little under 6% and the testing easily passed.  He decided to max out deferrals for 2017 and so deferring at almost 14% both his ADP and ACP tests failed.  WE are trying to figure out if there is some way around the give-back and forfeiting match.

You see the NHCEs deferrals averaged 5.31%, which in our experience is not bad.  But the employer matches a straight 25%, which is almost unheard of.  His argument is that he is being far more generous than most employers, and yet he is penalized for the failed tests.

Can anyone think of a way around this?  QNEC is way too high, and yes, we are discussing SH for 2018.