Company sponsors an unfunded severance plan subject to ERISA. They impose a 120-day limit on filing claims. (120 days is calculated from date employee receives notice that he/she won't receive benefit or notice of the amt of his/her benefits.) 

DOL regulations don't specifically address this, but they do say that the claims procedures can't inhibit or hamper the filing of claims.  (The example they give for this is that you can't charge a fee for processing claims.)

Has anyone thought about whether imposing a time limit on filing claims is reasonable?

Thanks!

Hello -

I'm sure this has been covered many times on the board, but I was not patient enough to do a proper search for it after 1 minute of failing to uncover anything.  A quick question on loan offsets in a qualified retirement plan.  I understand that typically upon a distributable event (in this case - termination of employment), an outstanding loan becomes immediately due and payable within a certain period of time (60-90 days...based on loan procedures and the promissory note).  Failure to repay in full within this time period results in a loan offset with 1099-R reporting. 

The question is in what year is the 1099-R reported?  I have seen some providers that report it upon the quarter following failure to repay in full and others that do not report it until the entire account is distributed.  I understand the administrative ease of reporting it upon distribution of the entire account...and it makes sense if it is earlier than the quarter following termination, but does not make sense if the participant waits years to request a distribution of their account.  I've been told it is based on whatever the loan procedures say, but waiting until whatever year the remaining monies are distributed does not make sense.

Thank you!

We are having a discussion in our office about how distributions are or should be processed.  Just for simplicity take a termination distribution.  Say that the participant has $10,000 and he's fully vested, to make it easy.  He doesn't want a rollover, he wants a taxable distribution.  The form he filled out calls for 20% federal withholding taxes and no state withholding taxes.  The recordkeeper charges $100 to process the distribution, and our office charges $70.

One of us thinks that the 20% federal withholding applies to the full $10,000.  The participant has $8,000 after taxes, out of which he pays the fees, and ends up with $7,830 in his pocket.  

Another of us thinks that the fees come off the top, and the taxable distribution is $9,830.  The participant ends up with 80% of $9,830, or $7,864.

It matters because we are trying to develop a consistent way of "grossing up" when requesting in-service or hardship distributions.  The amount we should request depends upon how the taxes are applied.

Thanks in advance for any help you can give!

Starting in 2018, the tax reform (if it passes) doubles the $3,000 limit per year to $6,000 per year for a plan to benefit certain volunteers (e.g. volunteer firefighters, fire prevention, EMS, ambulance).

I am looking for anyone who has written plan documents for a length of service award plan. Also, looking for anyone interested in writing an article for publication regarding this topic.

What do you think about how Congress's H.R. 1, including its changes about how a business's income passes through to owners, will affect small-business employers' desire and willingness to create retirement plans?

Do employee military leave make-up contributions have to be made on prospective W2 pay or can the employee write a check to the 401k account? For example it is 12/19 and employee wants to contribute $18,000 for 2016 and $18,000 for 2017. She has 2017 W2 income after returning from military. Does the $36,000 contribution have to be make from her remaining 2017 payroll or can she write a check?

Thanks!

FreeERISA cannot provide SSA's anymore.  If the employer doesn't have them, is there any other source for this information?

sole proprietor (age 55) considering to adopt a new defined benefit plan effective 1/1/2017.  the sole proprietor does not have any employees.  the plan uses a unit benefit formula equal to 10% of average compensation times years of service.  the sole proprietor has 10 plus years of past service and his average compensation is at the annual compensation limit. the plan's normal retirement age is 65.

therefore, the accrued benefit as of 1/1/2017 is $1,791.67 (1/10 of the 2017 dollar limit) and the accrued benefit as of 12/31/2017 is the same $1,791.67. there is no target normal cost for 2017 and a funding target as of 1/1/2017.

the accrued benefit as of 12/31/2018 will be 3,666.67 (2/10 of the 2018 dollar limit).

does the plan violate the 133-1/3 accrual rule for 2018 since the increase in the accrued benefit for 2018 (3,666.67 less 1,791.67) is 133-1/3 more than the increase in the accrued benefit for 2017 (1,791.67 less 1,791.67)?

if the plan violates the 133-1/3 accrual rule, how can the plan be designed and still grant past service?

TPA and client agree that withdrawals for tuition under hardship provisions must be for upcoming, unpaid tuition.  Client is worried that if a student begins a semester, let's say, September 1 and starts attending classes, but the tuition bill isn't issued, mailed and due until, say, October 1, then the tuition is "old" business and may not qualify, or at least might need to be somehow pro-rated such that the September expenses are not included.  TPA takes the position that the timing of the billing does not matter; the bill is for the whole semester and the fact that it didn't have to be paid to the penny up front is immaterial.  We can't find a chapter and verse anywhere that addresses the exact timing of the bill.  What say all of you?  Thank you.

Plan Merger.  Don't have money yet, cannot set up a takeover loan until money is transferred in.  Participants already are having loan payments that we have just sitting in the account to set up the loan.

Participant will not have much money when transferred in as they apparently took a hardship after the loan.

If there is not a big enough balance, how do you force the loan to work.  No help from Relius, said I had to put fake money in fake accounts.  This is a large, audited daily plan, so I don't want to have "fake" accounts.

Any ideas?

We terminated our pension plan, and distributed all assets.  Somehow we missed a plan participant.  We aren't  sure how.  But we do know that this person is owed money.  Does anyone know how to handle this?  There are no plan assets remaining.  But the balance is something we can cover from our corporate operating account.  The real question is how to process this.  Should we distribute into an IRA for the participant?  Is there any guidance for something like this?  I am guessing that we need to alert the PGGC.

Thanks for any help.

Participant wants an inservice distribution.  Has Traditional 401k, match and Roth.  Can he take just his Roth out in as an inservice distribution.  Everything I am finding deals with after-tax.    Where would I find this?  Hes an HCE.

The attachment is Judge Beetlestone's order enjoining two administrative-law rules about religious or moral exceptions to providing a health plan's coverage for contraception.

religious and moral exception rules enjoined.pdf

A client who currently owns 50% of a C Corporation (which maintains a safe harbor 401(k) plan...just mentioned that he and an unrelated party own a separate business - which is basically inactive.   They apparently maintained a SEP and  a profit sharing plan for the "inactive" business.  The business has not been terminated; apparently the plans have not been officially terminated either.  They do have account balances still just sitting there.  He does not want to roll them into the current plan.  His question is "can I just roll the old profit sharing account into my SEP and be done with it?"  I don't know, but I  assume the first step would be to officially terminate the old profit sharing plan.  It never had enough funds to file a 5500 according to him.  Thoughts, suggestions would be most welcome.  Thanks! 

Lately, all the publications have been alerting us that we need to check our mailrooms for the ACA Penalty Notices, because of the limited time to respond. I have been checking everywhere withing our organization, but so far, nobody is reporting that we have received any notice. Has anyone discovered a way to find out from the IRS directly (either by calling or through an e-mail or posting) whether a penalty notice has been issued?

I am trying to figure out best way to fix this or at least minimize risk.

Company is S Corp with no employees (except owner and wife, both over 50). 5305-SEP was adopted at Fidelity in 2006 and max has been contributed every year.

Company erroneously made 2017 contributions to SEP and later set up solo 401K. Request was made to Fidelity to return those funds to company (ECPRS), Fidelity sent the check and will be sending 5498 and 1099-R (very small gain, $0 taxable, and code E for box 7).

After check was received, salary deferral was started and deposited in 401K. No deposits have been made for profit sharing yet, but plan was to contribute maximum.

I am concerned that the 401K could be disqualified because the 5498 will show a fairly large contribution was made to the SEP in 2017, even though it was later withdrawn.

Schwab offers a prototype SEP (Fidelity doesn't). If prototype SEP is set up to amend existing plan with effective date of 1/1/17, does this solve the problem?

Or just leave it alone and deposit all profit sharing to 401K?

Plan document uses the safe harbor definition for hardships. Participant submits a current past due outstanding invoice for secondary education. However, the invoice is for a semester almost two years ago. Should this be denied based on the clause of "up to the next 12 months". Can historical education costs be paid or only costs associated with the next 12 months?

Payment of tuition, related educational fees, room and board expenses for up to the next 12 months of post-secondary education...

Thank you

Hello! I have a small business and a plan with no assets set up as part of a ROBS from personal retirement funds.  I've had a company file form 5500 each year.  Almost 5 years in business and we do not have any assets in the plan--I don't take a salary, there haven't been any profits, the admin is too much for my small business.   I would close the business but it does pay off the bank loan and my personal guarantee on the 10 year lease. 

A company that specializes in using personal 401K funds to start a business (ROBS) helped me set up and borrow from my retirement funds.  The $150K I borrowed is likely gone given our current lack of profits and trend.  The monthly fee to my company is a cost I need to verify whether it's necessary, if some shortened form (no census) would be acceptible and/or DIY.  OR, if partnering with the same person each year would be a smoother process.   However, finding anyone familiar with this kind of financial instrument has been difficult. 

Is filing the form 5500 necessary given the lack of assets? I've read less than $250K  is not necessary to file. The company who files for me yearly always is puzzled but I still fill out a census of every employee,  assign a value to company by best guess method.  It's always someone different handling the filing than the last year, it takes several emails/phone calls to clarify that although we have revenue, we are either losing money or realizing less than 10K profit/year on 1 million in sales and I have no extra time to make a 401K part of employee benefits.  The company I employ specializes in ROBS but the process seems too expensive for a once/year filing ($130/month + filing fees of another $150 or so).  I need to streamline and although this let me start a business when banks weren't lending to small business, I've had to accept the $150k is gone.   Apologies if this isn't the appropriate forum, I wear a lot of hats.  I appreciate professionals weighing in on alternates or if staying the course  is recommended.  Trying to sever ties with the admin company got me several letters of gloom and doom from them. Any insight would be very appreciated.

I am insured through my company and I chose to opt-out my family members since the rate would be too high to insure them. My question is if my insurance company can specifically require that I provide them with proof of insurance (company name, group, and group/id numbers)? Currently my HR manager is asking for this information and I don't wish to provide it. Is this legal that it be required information?

I live in California if that has any weight on the matter.

Employer has an old (obviously!) SARSEP.  No NHCEs contribute.  Owner should be allowed catch-up, right?  Are top heavy contributions required?  I think not...IRS examiner guidelines  say:

Determine if the plan is top-heavy or is treated as top-heavy and if so, confirm that top-heavy minimum contributions were made. If a the plan is a SARSEP verify that elective contributions made by non-key employees were not used to satisfy top-heavy minimums, but that elective contributions made by key employees (other than catch-up contributions) were used to determine the minimum that non-key employees should receive.

How do you feel about it if the owner has already contributed, say, $20,000, but withdraws the excess contributions before 12/31?