I have an attorney who has continually asked if it is acceptable to co-mingle ROTH contributions with regular salary deferrals in a single investment account.  I informed him that it is acceptable as long as you keep each source separated when performing the annual accounting meaning...   as long as you allocate earnings proportionately. 

Does anyone have an IRS cite saying that is an acceptable practice?  That is what he is looking for.

Thanks

A potential client has an existing defined benefit plan and would like to add a 401(k) Plan. His current TPA does not want anything to do with adding a 401(k) plan. Are there any pitfalls to adding a 401k plan to an existing defined benefit plan?

DB plan failed to adopt a good faith PPA amendment or a 436 amendment.  Also, the plan adopted its PPA restatement late and did not submit the plan for a PPA determination letter.  The plan received a favorable EGTRRA letter after entering a Closing Agreement with IRS regarding other late amendments (which were ultimately adopted under the Closing Agreement).

I am having trouble finding any guidance on how to submit these failures for coorection through VCP.  I know I can correct the nonamender failure as to the 436 amendment.  However, given that the plan has been restated for PPA, do I need to correct the good faith PPA-non-amender failure - or would that failure be considered "corrected" by the (late) PPA restatement?  Should I just submit the 436 non-amender and the late PPA restatement as non-amender failures and leave it at that?

Also, since the IRS has stopped accepting determination letter application (except in limited circumstances not present in my case), is there a "failure" for submitted the PPA determination letter request late?

Any thoughts on this would be appreciated!

Company A wants to add a profit sharing element to the existing 401(k) plan.  They want the vesting date for the profit sharing to be different from the employer match piece. The want the vesting date to begin on the effective date of when the profit sharing element is added and exclude all prior years of service.  Reading Section 411, I don't think they can do that but they think they should be able to. Would help hear thoughts on this?

Hi,
Thanks in advance for any and all comments.
Does a safe harbor floor offset arrangement in which the two plans are not permissively aggregated, and thus treated as two separate plans, required to have the same plan year for both the DB and DC?
In 1.401(a)(4)-8, it doesn't seem to be one of the requirements of a safe harbor design. If not, can I still test the rate groups prior to the offset and the AB% test net of the offset?
Thanks,
Sam Winikor

Hello

I have an operational failure whether otherwise eligible employees (all NHCEs) where included prior to meeting the plan's minimum service requirement.  The money was deposited in the Plan (a 401(k) Plan on a prototype document), but sat in cash for a couple of months.  It appears from the reading of EPCRS that this can be self-corrected by retroactively amending the plan to permit those employees to enter the plan.  I have three questions I was hoping to get your opinion on:

1. The example correction in Rev. Proc 2016-51 provides for SCP by retroactive amendment, but also includes the submission of the amendment to the IRS for a determination letter.  This would no longer be an option beginning 1/1/2017, correct? 

2.  Earnings would need to be applied - since these employees never directed their investments, this would be based on the default fund provided in the plan, correct? 

3.  What if instead the facts were an error was made where only some of the otherwise eligible employees (all NHCEs) were included prior to meeting the plan's minimum service requirement.  Can this be self corrected through SCP by only including those let in early or would that require a VCP submission?

Thank you for your time

If document doesn't specify, what is the measuring year for "break in service"?  Did not  work 500 hours in what 12 month period?

Plan year?

Calendar year?

Employment Anniversary year?

The year the document says to use for Eligibility?

The year the document says to use for vesting?

I have a situation in which a church defined benefit pension plan has two participating employers that have been giving participants contributions and have adopted the plan without an official participation agreement. One plan has been operating in the plan since the spring of 2017 and the other since the mid 1980's. I believe SCP might be able to be used for the first issue but VCP for the second. Any thoughts? The employers provide contributions on behalf of participants. 

So, employer has group health plan. Employee terminates in 2017, elects COBRA coverage. So far, so good.

Suppose the employer modifies the health coverage effective 1/1/2018, increasing deductibles, out of pocket expenses, etc., for everyone. To somewhat mitigate these effects, the employer institutes an HRA.

Is the employer required to offer COBRA coverage on the HRA to this participant for the remainder of the COBRA period established as of the original date of termination of employment?

I don't work with COBRA, but I wasn't able to find a definitive answer in a reasonable amount of time, and wondered if others had dealt with this issue. Thanks!

P.S. - FWIW, as I looked at some of the regulations, it seemed to me that under a "common sense" approach and looking at 54.4980B-3, it seems like since the "similarly situated" employees receive the HRA coverage, the COBRA participants with the same health coverage should also be able to be covered under the HRA...

P.P.S. - while looking at it a bit more, perhaps a more appropriate reference might be 54.4980B-5, Q-4(c).  Anyway, it does seem to point in the direction of, in this type of circumstance, requiring a COBRA election for the HRA to made available to the former employee - in this circumstance, all employees were allowed to choose among several health plan options, and the HRA was offered in conjunction with these health plan changes.

Planned Outage: December 6, 2017 - January 8, 2018

FIRE Prod: This service will be unavailable from approximately 6 p.m. Eastern time on Wednesday, December 6, 2017, until approximately 8 a.m. Eastern time on Monday, January 8, 2018, due to planned maintenance. We apologize for any inconvenience.

.....................

I guess you can click the box

special extension

and fill in the reason as

DUH! It's late cuz I couldn't file because you shut the thing down for a month. I wasn't ready anyway, but now I have a good excuse and you can't do anything about it.

Having a brain cramp. Plan is rate group testing on an allocations basis. 2 HC's - wife makes all the money, and wants to max out. (cross testing doesn't work, 'cause owners are way younger than all the employees - only 4 employees anyway...) The husband takes a nominal salary, defers the max, but is excluded from all other employer contributions.

When performing the Average Benefits Percentage Test,  do his deferrals get added back in? Common sense says no, but as I said, brain cramp. Thanks.

Question about off calendar plan year and catch up.  Little different twist than the usual how much question.

Plan year end 9/30/2017.  HCE employee turns 50 in 2017.  Employee is on pace to defer 24,000 in calendar year 2017.  The catch up money would be in the 10/1/2017 to 12/31/2017 time frame.

I am calculating a cross tested contribution for the 9/30/2017.  The employee would not get the benefit of the 6,000 catch up at the plan year 2016 (9/30/2017 PYE) time frame would he?   Or to say another way, does the employee get the catch up benefit for 2017 at the 9/30/2018 PYE?

I need some clarification because I want to get this right at the get go.

I have a client who came to us with a Non-ERISA plan and appeared to meet all the requirements to remain Non-ERISA.  They just told me they filed a 5500 for 2016.   Has this filing damaged their argument that this plan is Non-ERISA?

THank you.

Patricia Neal Jensen

The plan was merged into another plan and the 2015 final (short plan year) Form 5500 was not filed. The plan sponsor received a notice from the IRS inquiring about the filing.   We are proposing DFVCP.

Will the IRS notice preclude them from filing under DFVCP?  I'm reading that you can file under DFVCP as long as you don't receive a notice from the DOL but there is no reference to IRS.

7 participant 401(k) with standard safe harbor match.  Plan is Top Heavy and has a New Comparability profit sharing formula.  Is a 3% minimum allocation to Non Key ee's if a Profit Sharing is allocated?  Does the safe harbor match not satisfy Top Heavy? 

Has anyone ever looked at how a QNEC that is figured wrong can be corrected?

Here is the scenario:

• In 2016 the plan administrator did not include all applicable Plan Comp in compensation for implementing match and employee deferrals. 
•  In accordance with EPCRS principles, a 25% QNEC was made to the plan on behalf of eligible participants. The Plan is a Safe Harbor Match - 100% of the first 3% of compensation and 50% of the next 2% of comp.  Under Rev. Proc. 2016-51, Appendix B §2.02(1)(b), Example 6, the QNEC should be limited by any amount that would exceed the 402(g) limit, taking into account the entire missed deferral opportunity, not just the 25 (or, if applicable, 50%) QNEC for the missed deferral opportunity.
• The QNEC was not properly limited, and a handful of participants have QNECs that, if the entire missed deferral were taken into account, would cause an excess 402(g) contribution. The QNECs were deposited in August of 2017. 
• The TPA wanted to treat as excess 402(g) deferrals.  However, the actual dollar amounts contributed to the plan were not in excess of 402(g). Rather, the QNECs were not figured correctly.

Does anyone know the fix?  

Can the excess QNECs be forfeited and allocated to a suspense account to offset future contributions.  Under the exact definition, of "Excess Allocation," I am not sure this qualifies, since it was "an amount made pursuant to a correction method provided under this revenue procedure for a different Qualification Failure,"and thus not an "Excess Amount" under the EPCRS definition.  Or maybe it is, because the actual amounts were not limited in accordance with EPCRS. 

Hi, I'm allowed two loans under my current plan. If I have two open loans and pay them both off, would that open up a new maximum loan? Or would the new loan amount be calculated using the highest balances over the last 12 months. Any help with be appreciated. Thanks

We have not run into any safe harbor plans that have wanted to suspend safe harbor contributions.

An accountant stopped by the other day and mentioned he had a small client (about 8 participants) that did not make their 2016 safe harbor contribution and don't want to fund it.

I explained that it was my understanding that if the company had financial problems and they could prove it, they may be able to provide a 30 day notice to participants and then not make any safe harbor contribution from that point (after the 30 days) to the end of the year. But I believe they are responsible for making the safe harbor contribution for the time up to that point. In addition, I think the plan then needs to provide top heavy minimums and run the ADP test for the year. 

He seemed to think that if the company could prove it had declining sales and business for the past few years, that they could simply not fund the safe harbor contribution.

Has anyone heard of this?

They are a going concern but has anyone heard of this for a company that was in very bad financial shape?

Thanks. 

I have a small plan with basic SH Match and discretionary PS (New Comp/cross-tested).  Using Corbel’s Volume Submitter doc.  Adoption agreement specifies SH Match to be calculated on an annual basis.  They prefund throughout the year (by depositing per pay period when they deposit deferrals).  Obviously, true-up is required at year end to ensure the annual calculation is accurate...

The two owners want to see a projection maxing out.  The TPA who performed similar projections last year did not true-up the Owners’ SH Match before solving for max PS, rather, they amped up the PS without taking into account the SH Match true-up.  I am trying to figure out why.

Although the owners are HCEs, all participants must have the SH Ma calculated on an annual basis, correct?  HCEs cannot just opt out of true up, can they?  One might say that as long as the NHCEs receive the true up, what is the harm?  I lean towards this thought, though:  FOLLOW THE DOCUMENT.  True up should be done for HCEs, too.  But, maybe I’m missing something here..?  

I searched the board and found a posting from a few years ago that said a client of theirs was under IRS audit for this and was still negotiating sanctions (but no update followed that I could find). Does anyone know where I can find supporting documentation - one way or another - on this?

Does anyone have the prescribed method for mandatory employee contributions that were missed due to improper exclusion from the plan.  While it is clear how to correct the employer contribution, it is not as clear if the employer is to pay the missed employee contributions as well.  Apply the same method as missed opportunity for after-tax contributions under EPCRS?