If you have a corrective amendment completed after the IRC 412(d)(2) election period (2.5 mos after PYE), you cannot use the corrective amendment on the Valuation for funding but can still/must correct the discrimination testing by the 11(g) deadline (9.5 mos after PYE). On the Form 5500 if the corrective amendment brought in an additional participant to pass testing do you show a different higher participant count on the Form 5500 than you do on the Schedule B ?  Any problems showing a different participant count on the Form 5500 than the Schedule SB ? Thanks in advance.

Looking for your professional opinions...a plan has company stock as an option in their 401(k) plan and realizes the fiduciary responsibilities around it. They are considering limiting the percentage an employee can contribute to stock and some other possibilities. However, the stock has always done very well and they are proud of it. The question is in their annual company town hall meetings, the CEO usually shows some information on how well the stock has always performed, how much they would have if they invested $100 in it 25 years ago, etc.  Could this be considered 'promoting' the stock as an investment in the 401(k) plan? He doesn't specifically mention that the stock is available in the plan during these meetings, but we're wondering if there should at least be some kind of disclosure language included in his future presentations. Any opinions are appreciated.

Good morning cyber friends!

I have a quick question for you to help clarify something I've come across in my DC 1 book. It is in the Plan Amendments and Terminations section (Chapter 10) and deals with nondiscriminatory amendments. It goes on to say that the establishment or termination of a Plan is treated as an amendment. A subsection of the establishment of a Plan says that there is a Safe Harbor for past service credits limited to five years. "If a Plan amendment credits years of service for past periods to determine benefits, the amendment is deemed to be nondiscriminatory if no more than five years of past service is credited, the past service is granted on a reasonably uniform basis, and the service can be taken into account under service crediting rules of TR §1.401(a)(4)-11(d)(3).

Say what?!?!

Does this mean that a start-up Plan can only credit prior years of service for vesting benefits for the prior five years, or is this talking about contributions based on service (not applicable under a 401(k)/PS Plan)?

The example in the book talks about establishing a DB plan, but the book is about Plan Qualification and Compliance, and a 401(k)/PS plan is a qualified Plan...

I guess I am looking for clarification on how to apply this correctly.

Thanks in advance!!!

We have a forfeiture balance of approx 60K @ 12/31/16 (Plan A)

We are merging this plan into a parent company plan (Plan B) effective 1/1/2018

Current forfeiture balance in Plan A is about 190K. I have suggested in reducing forfeiture prior to merger by  reducing matching , plan admin fees, allocation to participants (current Plan A order of forfeiture alloacation)

But what about the 62K as of 12/31/16- there was certainly enough employer match & plan admin expenses to reduce the forefeiture balance at 12/31/16 to zero!

Can we use this 62K toward 2017 employer match /amin expenses or must we allocate to participants as of 12/31/16 base on their Comp to total Comp

Much thanks!

Lexy

Hi,

I quit my previous employer in May 2016 and requested to Roll over my 401k to new emloyer plan in June 2016. They sent me a check which i failed to deposit in my new 401k . in Jan 2017 they send me a 1090R with column 7 as G direct rollover. later in Aug 2017 i requested them to send me another check so that i can rollover they send me a check less 20% tax addressed to me. I called them to correct it so that i can do direct rollover but they are claiming that the date has passed .

what options do i have now . i did not take the money and it is my fault to delay it this long. can i be able to get the tax refund and also avoid the 10% penalty if i can open a new IRA .

Please advise

Anyone having a long wait for support at Relius?

Have a 401(m) plan, looking at eligibility requirements.  Plan sponsor is composed of approximately 60% full-time hires and 40% .4 FTEs or less (most of this group are .01 or .1 FTEs).  Sponsor would like to set eligibility as follows:

Age: 21

Minimum Service: "employee regularly works more than 20 hrs per week"

Initial eligibility would be determined by employee FTE at hire date (per employment contract).  If .5 or higher - eligibility would be met and employee would enter next payroll period.  If employment contract is for less than .5, employee would be ineligible unless worked more that 1,000 hrs in plan year.  In this case, employee would enter next payroll period following the completion of the year of service (e.g. 1000hrs).

Looking into whether the service requirement (and eligibility procedure) would meet 410(a)(1)(A).  Relius - the plan document provider - says yes, as the procedure would identify employees meeting the 1,000 hrs requirement and would include them in the plan (and therefore meeting 410(a)(1)(A)).  But I'm slightly uneasy as I haven't seen any precedent for this procedure.

Welcome any thoughts.

Are there any regulations regarding the allocation of EE 401k (pretax) and 401k Roth ( after tax) contributions on the paycheck that an employee reaches their annual IRS limit of $18K or $24K if catchup qualifies?

If the EE is contributing to both pretax and post tax 401k plans and maxes out ....is there an obligation to apply all employee elected contributions for that pay period to the pretax 401k plan first? By obligation, I am referring to legal requirements by the IRS or any other institution?

I would assume that whatever 401k EE election % was used would be applied in this situation and it is possible that a person reaches the annual combined 401k/Roth 401k limit of $18K w/out all EE contributions being applied to the pretax 401k limit first.

Is there a standard methodology for applying pretax 401k and after tax Roth EE contributions as they reach the annual IRS limits?

Thank you,

Linda A

Is there a requirement for 401k catchup annual limit amounts ( $6000 for 2017 tax year)  to be separately identified from an employees regular 401k annual limit amt of $18,000 for 2017 tax year for payroll deduction purposes? The IRS makes a statement that the $18,000 limit has to be reached before 401k catchup contributions begin; however, does that imply that the catchup amounts have to be reported separately to third party 401k administrators or the IRS?  I don't see any requirements for W2 purposes in breaking out the catchup amounts for 2017 tax year. I am not sure if the Form 5500 requires catchup contributions separated?

Any advice here would be appreciated as to whether catchup has to be separated for reporting purposes.

Thank you,

Linda A.

In the attached complaint, the Secretary of Labor asserts that a retirement plan's trustees (who also served as the plan's administrator) breached their duties by failing to pay or deliver involuntary distributions for participants who had a one-year break-in-service and a plan account less than $5,000.

Beyond the harm of not paying benefits when due, the Secretary asserts the administrator's failure needlessly incurred per-participant service fees ($7 per quarter-year, and so $28 for a year) on individuals who ought not to have been participants.

Acosta v Stapleton complaint.pdf

Can assets from an HRA be transferred to a former spouse upon divorce?  My inclination is that they can't be, but is there a specific Internal Revenue Code provision I can cite for authority?  Any help is appreciated.

Since the deadline for new Safe Harbor 401(k) plans falls on a weekend this year it is ok to start a new Safe Harbor Plan on October 2 this year? 

Is the maximum limit for high deductible plans a combo of in and out of network or can the limit be for each type of structure? We have a shared family deductible and then individual out of pocket limits. This year we are thinking about adding an out of network structure and the costs in the network would not be credited towards the out of network limit.

First RMD was due for a participant by April 1, 2017.  The RMD was not processed timely.  Participant did not receive the RMD until just last week.

Would you report this 'failure to provide a benefit when due on the 2016 Form 5500-SF line 10f or the 2017 Form 5500-SF line 10f?

My client is on a semi-monthly payroll and the last payroll of 2016 was paid on 1/5/2017.

Each employees W-2s as well as the W-3 total for the 2016 didn't include the payroll contribution for the payroll period 12/16/2016 - 12/31/2016 that was paid on 1/5/2017.

How does the regulations require us to treat this last payroll that was paid the following year?

As part of the 2016 payroll or as part of the 2017 payroll?

If possible, please include the part of the regulation that go over the treatment of this type of payroll contributions.

Many thanks!

There were a couple of threads on this subject back in 2000 but nothing since. Maybe that means it's settled law now. But here's the scenario. 401(k) plan applies the last day rule to the company match. It matches employee contributions each payroll period, but the match is placed (real dollars) in a "conditional match" subaccount within the employee's plan account. The employee has investment control over the subaccount, which accrues gains and losses. If the employee is not employed on the last day of the year, the subaccount is "forfeited." Back in the 2000 threads this was deemed perfectly acceptable, as long as the employee communications were clear. Is this plan design accepted practice now? I might argue on behalf of an otherwise 100% vested employee that his/her accrued benefit includes any amount allocated to the account, that there is no provision anywhere for "conditional allocations," that once real dollars are allocated to the subaccount they become part of the employee's accrued benefit, and that removing funds from the subaccount is a prohibited forfeiture under section 411. but I could be wrong...

one person defined benefit plan with january 1st valuation date.  the plan has a single lump sum feature.  the 2017 AFTAP was certified to in june 2017 and equal to 150% and the FTAP was 95%.  the plan has a substantial prefunding balance resulting in the difference in the FTAP and AFTAP.

plan benefit formula is amended in august 2017 from 5% of comp. to 6% of comp. and the new formula applies to prior years of service.

i assume a new 2017 AFTAP needs to be certified. that being the case, the new 2017 AFTAP taking the new benefit formula into account is equal to 120% and the new FTAP is 70%.

other than the plan being subject to quarterly contributions and not being able to use the prefunding balance to satisfy the minimum contribution requirements, are there any other reasons why i would need to burn a portion of the prefunding balance to increase my FTAP to the 80% or 100% threshold? i assume a mandatory burn is not required since my AFTAP is above 80%.

some insight would be helpful.

Plan sponsor terminated it's sole employee.  Only remaining employees are partners.  Sole employee takes a distriubtion in 2017. 

I assume I can just start filing a 5500-SF as a 1 participant plan, correct?

My question relates to 29 CFR 2510.3-2(b) Severance Pay Plans

The Regulations state "the total amount of such payments does not exceed the equivalent of twice the employee's annual compensation during the year immediately preceding the termination of his service." What does the phrase "the equivalent of" mean? Is the DOL referring to the time value of money?

Additionally, in referring to the annual compensation, how is that determined? Is the annual compensation the employees previous years salary or is it the salary it would have been if he had continued working? Essentially I'm asking if anyone knows what they mean by "usual rate of compensation".

Any thoughts? Thank you!