We have a pre-approved plan document that requires participating employers to adopt the plan by signing a Participation Agreement, which is also signed by the signatory employer.

Participating Employer X and the signatory employer signed a Participation Agreement properly in 2012, and again to mark Participating Employer X's cessation of participation in 2015. 

During the restatement process, it has been discovered that Participating Employer X is now totally out of business. 

Participating Employers are supposed to sign a Participation Agreement for the plan right now, in order to adopt the terms of the restated, pre-approved plan. But Participating Employer X does not exist.  The pre-approved plan does not address this situation.

Do others think that it would be sufficient for the signatory employer to add a note to the restated plan indicating that the Participating Employer cannot be found, and attach the old Participation Agreement that was originally signed?

Thanks. 

Client has 401k/ profit sharing plan, non safe harbor.

ADP test failed for 2016.

Can  profit sharing contribution, as long as 100% vested, be used to satisfy ADP?

And the balance of any profit sharing contribution be allocated as a profit sharing contribution for the year

A  client with a 401k plan  paid the HCE's bonuses and no deferrals were taken out.  Their document does not exclude bonuses from definition of compensation.   Do they have to calculate the deferrals?  If not, what type of notice/if any would the HCE participants need to sign saying they did not want deferrals taken from bonuses?  Should they amend document going forward to exclude bonuses?

Hello All -

Can someone confirm if I am understanding the correction under EPCRS appropriately?  Small non-safe harbor 401(k) Plan with eligibility of age 21 and 1 YOS with at least 1,000 hours worked in a plan year. For several years, the HCEs were the only ones deferring into the Plan (no match offered in the Plan).  The ADP Tests run for these years were automatically passing as none of the NHCEs were eligible - not shown to work at least 1,000 hours in any Plan year.  It is now discovered that the hours were calculated incorrectly for these year and several NHCEs should have been eligible.  My understanding is that the ADP Test would have to be corrected first.  The Sponsor is correcting by making a QNEC to each eligible NHCE.  A 7% QNEC (plus earnings?) will have to be contributed to each NHCE for each Plan Year to correct the failed ADP Test.  I'm having trouble reconciling this with the correction if the initial ADP Tests were passed and an NHCE employee was not given the opportunity to defer.  Depending on timing, the correction would be a QNEC of either 25% (or 50%) of the missed deferral (whatever the average deferral percentage on the ADP Test) plus earnings.  Am I understanding correctly that because no NHCEs were given the opportunity to defer, then an appropriate correction is a QNEC to these NHCEs to correct the failed ADP Test.  There is no 25% (or 50%) QNEC of the missed deferral?

Thank you

General question from a relative ERISA newbie. In the context of a multi-employer DC plan, is there anything in ERISA that would preclude an employee's spouse from being considered a "participant" in the plan? I.e., suppose that an employee's spouse has a separate retirement account that they'd like to roll over into the plan, and the plan were amended to define "participant" as including both employees and their spouses. Is that a crazy idea? I understand Section 3(7)'s definition of "participant" refers only to employees and former employees, but other than that, I'm trying to figure out if this is even remotely feasible. Appreciate any/all feedback. Thanks.

I've always understood that these must be provided if you are eligible to defer, even if you choose not to. This is being questioned. I don't see any exemption as being available under the regs - I'm talking about an active, eligible employee, albeit with no account balance. Am I nuts, or missing something? Maybe just Monday fog...

We know the basics when it comes to determining ownership of Corporations and Partnerships:
Ownership in corporations measure ownership in voting stock plus ownership in overall stock (voting and non-voting).  Meanwhile, ownership in partnerships measure the percentage of capital versus the percentage of profits.  

We also know that when measuring the non-voting shares in corporations, the value of the preferred stock may change depending on the ratio of the liquidation preference to the liquidation value of the company (where a higher liquidation preference would translate into a higher non-voting ownership); which can become pretty significant depending on the appraisal value of the company.

Here's my question:  How would such a liquidation preference translate in an LLC taxed as a partnership.  In theory, shouldn't it translate as an ownership of profits in the year of liquidation if (and only if) the company is actually liquidated?  Alternatively, would it somehow translate into a hypothetical value on the capital side; which would effective require an appraisal each year (depending on the amount of liquidation preference to the appraised value of the company)?

In all my years, I finally encountered a question that has me at my wits end 
 

A client with a 401(k) plan has only 3 participants, consisting of himself as owner, his wife, and one rank and file employee.  I am just now finding out that the owner and the rank and file employee are employed by the sponsoring corporation, while the wife is technically employed by her own LLC. For many years all 3 of them received deferrals, Safe Harbor, and profit sharing contributions.  However, for 2017, they want to give only the wife the profit sharing contribution.  I say this is discriminatory and they can't do that.  The CPA says that because the wife's contribution is made by her separate LLC and not by the sponsoring corporation of the plan, it's ok for her to have a profit sharing contribution while the rank and file employee does not.

I am thinking that the sponsoring corporation and the LLC are a controlled group belonging to the husband and wife and that they are still running afoul of non-discrimination rules.  I am also thinking that a participating employer addendum to the plan's adoption agreement should have been in place for the LLC all these years.

1) Can they give the wife a profit sharing contribution and nothing to the rank and file employee and 

2) Can a retroactive participating employer agreement be created dating back to the time that the LLC started making contributions on her behalf?

Thank you for any comments!

Quasi-governmental entity/employer affiliated with a City enrolls its employees in a State retirement plan.

10 years later State Retirement System determines employer is not eligible for State plan and refunds all contributions to employer entity.

Employer wants to propose a correction to IRS that would retain tax deferred "qualification" but facts don't seem to fit a VCP submission.

Where do you go (who you gonna call) for such a unique situation?

Please don't say "good ERISA attorney" without providing a specific name because I already meet the ERISA attorney part.

Thanks

I have always used 12/31 to terminate a calendar year full year safe harbor plan.  Some of my co-workers use 1/1 of the following plan year end to terminate the plan.  I'm curious as to what others are using.  

I am a caregiver for a 55-year-old woman disabled by mental illness since 2003. Her husband divorced her as soon as she became disabled, and she received alimony until he retired six months ago.  She was independent for the first several years I was with her, but I lived in her home as a safety measure because she was heavily medicated at night to keep her from having hallucinations that caused her to sleepwalk and even drive. She handled her own finances and I knew little except that even with disability and alimony she struggled financially due to the cost of her medications and paying for my room and board, which was the payment for my help.  After an accident in 2013 caused injuries to her brain and internal organs she became more dependent on me, and at the loss of driving privileges she became a recluse.  As soon as she receives her portion of her husband's retirement plan through a QDRO, I will be helping her find a residential care facility, as I am nearly 70 years old and ready to go. 

I apologize for the background, but it is necessary to my question.  She has recently told me in a rare lucid moment that she has not paid income taxes in eight years.  I did not mention to her that the IRS could levy her QDRO before she even receives it. Am I right?  I think she slipped under the radar since she has not received even a letter from them (I pick up our mail),  Her distribution will be $100k so they might take notice now, I'm afraid.  Thank you.

very little out there on this other than a couple of articles. anyone know why its not even on the IRS website yet?

Employer has a SIMPLE IRA and is being acquired. I know the rule is the employer must give notice to employees they plan to discontinue contributions by November 2. However for participants to roll over to any other IRA or plan they must have been in the SIMPLE for 2 years. Do you keep the SIMPLE plan open for 2 years even though the employer is going to sell its assets and presumably be dissolved so everyone can rollover to a non simple plan? Can you discontinue without terminating the plan?  

i understand the transition rules and i am guessing part of the reason is because of the 2 year rollover restriction. 

I have a participant that passed away last year.    His spouse passed away a few years earlier.    His wishes are for his full account balance to be divided up between charities.     What is the best way to fulfill his last wishes?   Can this be paid to the estate and then paid to the charities through the estate?   

Do I have to attach schedule A when a retirement plan trust is not funded using insurance contracts but the investment is held in the insurance company other financial products?

Facts:

Retirement Plan A invest portion of the plan trust in Principal Real Estate.

The parent Company - Principal Life Insurance Company issued Schedule A to Retirement Plan A .

In Part I  of this schedule A is shown Zero person covered in the insurance contract. In Part II Line 5 under separate accounts provided the current value of plan's interest at year end. 

Challenge:

Unfortunately, I can’t enter a value for separate account under schedule H Line 1c(10)(b) unless I attached schedule A.

In order to attach schedule A I must first tell on the main form 5500 that there will be schedule A attached by marking box 9a1,9b1,  and 10b3.

If a participant takes a Qualified Hurricane Distribution, which distribution code must be used. Because the 10% penalty is waived for Qualified Hurricane Distributions, would it be Code 2 if the participant is under 59 1/2? 

Thank you.

Hello -

A 401(k)/Profit Sharing Plan has made a number of profit sharing contributions over the years.  Unfortunately, it was recently discovered that several eligible employees were not given a profit sharing contribution. The sponsor is now deciding between VCP vs. SCP under EPCRS based on recommendations provided.  (1).  What do you call these missed contributions (plus earnings) once made?  Are they QNECs?  (2) Are these missed contributions 100% vested once deposited into the plan?  I assume so, if they are QNECs.

Thank you for your time.

Person A owns 100% of Company Y.

Person A owns 40% of Company Z. Persons B, C and D own 20% apiece of the remaining 60%.

So Y and Z are not a controlled group.

They both own the same brand/franchise so there is a lot of commonality in what needs to be done.

They sell a product; it's not a service business.

Company Y handles the following for Company Z, to take advantage of economies of scale: Payroll, Accounting (Payables, GL, CFO's time, invoicing, billing, etc). In exchange for these overhead services, Company Z pays Company Y $X per month as an overhead charge.  There is no itemization of any expenses. There is no extra charge in a "bad month" but the contract between the two is an arms length contract.

Employer had a 401(k)/Profit Sharing Plan, and for 2016 they put in a Cash Balance Plan.  The assets are:

Profit Sharing - $375,000
Cash Balance - $100,000 (all receivable)

Since the assets between the two plans are greater than $250k, is a 5500 required to be filed for the Cash Balance as well?  I'm actually not seeing the $250,000 requirement in the instructions directly, so I just wanted to be sure.

Thanks in advance!

Am I a newbie who knows nothing, or is this "weird IRS interpretation" ERISA 101?  They make it sound as though no one was following ERISA?  All the plan documents I have include the "safe harbor/1,000 hours in 12 months makes you eligible" language.

http://www.businessofbenefits.com/2017/10/articles/403b/403b-document-delays-the-once-in-always-in-rule-and-the-effective-date-addendum/