I am curious how others generally regard state occupational licensing boards.  In our state, we have several such boards that are creatures of statute--basically established and set up by specific state law without any other official organizing or corporate documents (i.e., they do not have any articles of incorporation or other formal tax-exempt or non-profit status).  Most of the time, they are operated by an appointed Board (appointed by a mix of state legislators and the governor) but the appointed Board and entity really act fairly autonomously on day-to-day operations.  While their budget / funds are sort of run through the state, they are all derived by (and thus limited by) the fees raised from the licensed profession / group.

Current client has previously-established 401(k) plan but is moving to a new record keeper who is questioning whether the entity is eligible to establish a 401(k) plan as they are arguably an agency or instrumentality of state government.  On the other hand, we are aware of other similarly-situated licensing Boards with 401(k) plans who, like our client, apparently were able to set up 401(k) plans without anybody questioning.  It's unclear whether others believe they had some basis for claiming they were not an agency or instrumentality.  While there are a few items that may weigh in favor of non-agency or non-instrumentality status, taken as a whole the facts and circumstances would seem to point toward such boards being barred from sponsoring 401(k) plans.

How are such boards generally classified / addressed in various states.  If the Board cannot establish a 401(k) and also seemingly cannot qualify for a 403(b) plan and has been told it is ineligible to participate in the state's grandfathered 401(k) plan, is there some other cash or deferred arrangement typically available?

We have a management company that runs a NQDC plan.  The management company is wholly owned by A, and A also wholly owns B.  B also participates in the NQDC plan. 

The management company is going to be removed and replace with a different management company.  Under the NQDC plan this does not trigger a change of control payment.  But we have employees at B that are participants in the NQDC Plan.  We have two options.

First is to just start a new plan for the B employees.  They will still have their account under the old plan, but now they will have another account at a new plan.

Second, and what we'd like to do, is move the accounts for B employees to a new plan, sponsored by either B or A.  Is that possible?  It would be sort or like a rollover to a new plan.  According to the plan, amounts deferred for B employees are already paid out of the general assets of B, and subject to B's creditors, so I don't see the issue with having the money follow B, instead of staying in a plan run by the old management company.  Is this something we can do?

A client's employee is going through a divorce, and HSA assets were divided. The former spouse set up a new HSA to receive her share of the funds and to make future contributions.

The employee is being told by the bank that holds his HSA has said that they will only issue a check to the former spouse directly, and not to the institution where she has set up her new HSA. 

Does anyone have any specific guidance on this issue? Thanks in advance. 

The basic questions are: are exhaustion of remedies and arbitration provisions in local government plans enforceable, and if so, what law requires enforcement?  Anyone have cases directly on point?

Here are the facts: A local government plan provides a disability benefit to participants who establish a disability.  The plan has a claims procedure that requires claimants to file appeals of benefit denials within 60 days.  The plan requires all disputes to be arbitrated, and expressly requires claimants to exhaust their appeal rights before filing arbitration.  In the case at hand, a claimant filed for disability and was denied.  The plan complied with all the technicalities in the claims procedure.  Well after expiration of the 60-day appeal period, the claimant submitted new materials.  On what body of law or other authority can the plan rely to deny consideration of the new materials and cause any arbitration or court action the claimant might file to be dismissed?  Conversely, on what body of law or other authority can the claimant rely to require consideration of the new materials and/or file an arbitration or judicial action?  I know the answer under ERISA, but here those rules don't apply. 

Can a Plan whose termination has been submitted to the PGBC be amended?

Specifically, we want to raise the cash out threshold from $1,000 to $5,000.

The Plan in question has 4 participants who we have spoken to directly and emailed and regular mailed distribution forms.   These individuals just will not return signed forms for their Plan Termination distributions.  No clue why.

We are running into the 501 filing deadline.  I don't think paying the lost participant program is ok since they are not lost.  But I could be wrong there.

Thanks for any thoughts on this.

Does anyone have the code citation that states a government non-erisa 403(b) plan can have a matching contribution?

Hello,

My spouse and I have been covered under his previous employer's plan via COBRA since July of last year.  The plan renews in August of each year.  Last year we received no notification of any changes to the plan not coverage.  We did on 8/18 receive a notice of premium increase form the COBRA administrator, but were not able to get summary plan descriptions, etc. for several weeks.  We're going through the same thing now.  When must the administrator notify us of any changes including cost and/or changes to coverage, etc.?  What are the penalties for not complying, etc.?

Thank you!

Employer who has a SEP for himself hired an employee in 2016. Employee works throughout 2016, 2017 and 2018. Question is whether the employee is eligible for the SEP for 2018. I think yes, since they have worked 3 out of the last 5 years (3 of 3 here). I have someone telling me that they are not eligible until 2019.

Any opinions?  Thanks for any replies.

I have  a client that would like to change the hours required for a "year of service" for both eligibility and vesting from 1,000 hours to 750 hours.

For eligibility - I believe that, as of the effective date of this change, we will need to allow all employees to enter the plan if they have worked at least 750 hours in a year, even if it was a long time ago.

For vesting, do we need to adjust vesting based upon prior years of service during which an employee worked 750 hours (even if they were not in plan and/or did not work 1,000 hours)? 

I would think not.  I would prefer that the reduction in hours for a year of vesting service is applied on a prospective basis.

Thank you!

Adult child no longer lives with non-custodial parent.  Child is covered under non-custodial parent's health insurance as a dependent.  Insurer is mailing ALL health insurance documents/notices including health information to non-custodial parent.  (Non-custodial parent is opening the mail even though mail is addressed to adult child.)  Can the adult child require the health insurer send mailings to adult child?  Additionally, non-custodial parent is sharing the mailings with others....

We have a 401(k) plan with related participating employers.  One participating employer (the owner and his wife) is terminating its participation in the plan.  Is this a distributable event?  I think it is not as the plan did not terminate, one of the employers just terminated their participation in the plan. If it is not, a distributable event, are those account balances still included in the TH test? Any other TH considerations? I think  those employees would be included in the 410(b) test. 

What if it was a multiple employer plan?

I would appreciate any guidance/thoughts.

A cash balance plan is frozen 6/30 with an estimated distribution date of November 30.  The plan's interest credits were also frozen at 6/30.  Permissible?  Or should interest credits continue through the distribution date.

New client adopted MP and PS plans in 1999, moved the money a couple of times, and never restated them.  Surprisingly, everything else looks pretty much ok - he's actually been entering 5500 info online and filing directly.  Two participants in each plan - father and his daughter, who is term'd.

Any thoughts/experience with maybe merging the plans now and submitting a VCP filing as one plan?  Over $500K in each plan; $3000 fee per plan...

I noticed many life insurance companies fail to provide participant counts on their Schedule A letters. Sometimes there will be a note indicating that information is on file.  Also, some medical carriers will not report covered employee and cobra counts.  In our office, our approach is to obtain this info from either the broker or the plan sponsor themselves, but I've noticed some 5500 preparers will instead leave the item blank and check off "Yes" to failure to provide.

We've always felt it will make the 5500 stand out less if we can answer No, and it doesn't seem that after all these years of these questions that such carriers have adjusted their reporting. It doesn't seem like a big deal to go back to the Plan Sponsor. I'm curious what is done elsewhere.

Can a VCP filing be submitted anonymously to the IRS for any failure such as failures related to paying required minimum distributions timely and amending the plan document for compliance with EGTRRA?

I have a major QDRO issue. In 2004 I was granted a divorce with a lump sum amount attached of 80k in both the Decree and QDRO going to the Alternate Payee. Only the participant (me) had a attorney at the time of divorce. The pension plan initially rejected the QDRO with the lump sum dollar amount, as I was not vested in a lump sum amount at the time of divorce. The amount should have been in a percentage, with the number of years married taken into consideration. It does not appear the attorney was familiar with the QDRO process, model language or rules. After numerous rejections, as the same QDRO was being presented to the pension plan administrator by the Alternate payee. Also, the attorney did not attempt to rectify the QDRO issue through numerous rejections. In Sep2017 the Alternate Payee hired an attorney and presented a QDRO with a new date of determination of 1/1/2014, which was after the date I turned 50 and now eligible for a lump-sum distribution. I have a new attorney who is familiar with QDRO's. The argument now is that the date of determination is changed from the date the decree was signed to match the dollar amount in the decree. Also, the Alternate Payee's approved QDRO does not state clearly the date in which interest will be accrued from, as it appears the judge may use the (2004) date the decree was signed to accrue interest, which would be contradictory and possibly illegal. I also have a approved QDRO with the correct percentage that was approved in 9/2017. However, the judge has stated that he will only consider the lump sum dollar amount in the decree that matches the QDRO. This is a attempt to take advantage of the pension plan by changing the date of determination and I'm not sure if the complicated process is legal. Also, should the original attorney be held liable for legal malpractice?

The other thread on creative ways to handle a top heavy plan reminded me of something I thought up a while back but never went forward with because I felt it was too aggressive. However I can not find any reason why it would be actually disallowed. I'm hoping someone here can poke a hole in this scheme and teach me something.

This is a 401(k) plan with a single 100% owner who is the only HCE and the only key and is over 50 years old. The only contributions for the plan year are deferrals, although discretionary matching and nonelective contributions are permitted in the document. The plan passes the ADP test for the current year. The plan is top-heavy for the current year. The HCE's deferral contributions are equal to $6,000. Can we do the following:

1. Shift 100% of the NHCEs' deferrals to the ACP test. The ACP test passes because there are no HCEs included in the test.
2. Recharacterize the HCE's $6,000 deferral as catch-up as it now exceeds the limit of the ADP test, when testing on only the un-shifted deferrals. Since all of the NHCE deferrals were shifted, the ADR for the NHCE in this test is 0% and therefore the ADP limit for the HCE is 0%.
3. There is no top heavy minimum for the current year, since the key did not have any contributions other than catch-up contributions, and catch-up contributions for the current year are not taken into account for purposes of section 416.

My thinking is that this falls apart on step 1, that you can not shift deferrals into the ACP test just for fun, that there has to be an actual failure of the ACP test first. Is that actually written somewhere, or just accepted practice?

Code 4980 says that the excise tax on a reversion is limited to 20% if AT LEAST 20% of the surplus is allocated to plan participants. But it further indicates that not more 40% of the allocation can go to non-actives. And that even if more than 20% is allocated, only 40% of 20% - 8% - can go to non-actives. So for instance if 50% of the surplus is allocated to plan participants, 42% must go to actives and only 8% can go to non-actives.

Am I reading this correctly?

I am having general trouble understanding the third criteria of FBRIC determination.

Quote

The contract requires all participant-initiated transactions to occur at contract value (without any conditions, limits, or restrictions).

The contract will say something like below:

Transfers from Fixed Account Plus. The Participant may transfer up to 20% of the Accumulation Value allocated to Fixed Account Plus during each Certificate Year.

Is that a limitation that would violate the criteria of fully benefit responsive investment contracts?

As an additional question, are there any good CPE's or just websites or videos with in depth explanation of the investment vehicles we see in these plans (GICs, PSAs, etc.)?

Today my skills as a magician are being questioned, as I have failed to pull a rabbit out of hat....

A referral partner has brought us a situation with a client of his who is not our client.  The party in question has a 401(k) plan that eliminated its Safe Harbor match in 2012 and has been subject to all testing ever since.  This employer is angry because he has been told that for the first time, his plan became Top Heavy for 2018 based on the 12/31/2017 results of the test.  He has been told that if he doesn't want to be obligated to make a Top Heavy contribution of any kind, then the Key employees cannot defer in 2018.  Deferrals count, and even if a Key only deferred 1% of pay, then the company would owe the non-Key participants 1% of pay as a TH minimum contribution.  Of course if any Key deferred 3% or more, then the company would have to make the standard 3% TH minimum contribution.

The referral partner is looking to us for some kind of magic trick to allow the Keys to defer whatever they want to defer and somehow not owe a TH minimum contribution.  My crystal ball must be cloudy or something because there's nothing I can find to do about 2018.

For 2019, they should adopt Safe Harbor provisions again, whether it's the 3% SHNE or the basic SH match.  If they aren't willing to do that, then they just have to accept the fact that the Keys can't defer.

Am I missing something?  The referral partner has been told that a "creative solution" should be found.  I can think of all kinds of creativity for failed ADP/ACP tests, cross-tested formulas that don't work out, etc., but I don't know of a "creative" solution to Top Heavy!

Any ideas will be appreciated.  Thanks!