We have a small business w 10 employees and the business offers health insurance.  So the QSEHRA is not available.  Two employees have chosen Medicare instead of the employer health plan.  The employer pays 75% of the health insurance premium and employee 25%.  The employer wishes to reimburse the Medicare-covered employees 75% of the Medicare premium they incur.  There appears to have been a pronouncement in 2015 which allows for this provided certain conditions have been met which they have in this case.  So it appears to be allowable.

Questions: Is this still an allowable benefit?  Does there need to be a written plan?  If so I suppose it would be an HRA.  Can the HRA only address and cover the Medicare reimbursement issue?  I assume the reimbursement would be non-taxable.  

Comments? Thanks

I've not yet found guidance that says this expressly but am assuming if you have a plan with a service-based exclusion for seasonal employees (including the 1 year of service fail safe provisions) but let regular employees in after 6 months of service, a seasonal employee who has been working there for 6 or 7 months and is "hired on" or continues as a regular employee rather than leaving at the end of the season would be eligible to come into the plan right away--i.e., that you count all service with the employer even if it is during a period when they are not generally in an eligible class.

Hi there everyone, 

I’m hoping someone can help me with a query I have on taking loans from your 401k

in our plan you can have 2 loans at any one time and the plan rerefences to 2 standard IRS rules as applicable (up to 50% of vested balance or 50k less the excess between highest o/s loan balances and current o/s loan balance) 

I currently have 2 loans and want to pay one of them off and then take out another one, when I check what the estimated amount is I can take as new  loan it seems wrong so wanted to check if it’s correct or not.

here are some apt figures

Total vested balance =  $78,150

loan 1 current o/s balance = $14,300

loan 2 current o/s balance = $11,700

the highest o/s balance over the past 12months was $32,670

i want to pay back loan 2

the estimated amount is gives me is $17,340 available as a new loan. It give me this amount if I say that I would pay off loan 1 or both loans too. Is that correct?

it seems that it’s just reducing the 50k by the highest loan balance not the difference o/s balance and new current o/s balance once I pay one back. 

Any help or guidance would be greatly appreciated, I call the benefits centre who mange our plan and they can’t answer my query they just sound confused. 

A participant takes a hardship distribution on 1/3/2018.  Suspension period goes through 7/3/2018. 

If participant then takes another hardship 5/3/2018, does the suspension period go through 11/3/2018?

The plan has a match provision.

Does a new hardship distribution require a new 6 month suspension?

A client is decreasing their current auto-enrollment rate from 3% to 1% (too many employees opting out at 3%) and adding auto-escalation to the newly covered ACA employees.  (Not a QACA or EACA). They want to:

• Bring in all currently not participating (previously opted out) employees and auto-enroll them at the 1% and escalate them by 1% each year, and
• All future entrants would be auto-enrolled at 1% and escalated by 1% each year, and
• All employees currently automatically enrolled at 3% will stay at the 3% rate and will not be automatically escalated.

Are there any issues with having two different sets of covered employees:  one for employees prior to the new ACA (that do not escalate and are enrolled at 3%) and one for employees after the new ACA (that are enrolled at 1% and subject to escalation)?

I have a plan with one owner (dentist) and 5 participants. Each year they do a profit sharing and a safe harbor contribution.  The money is at LPL Financial and each participant receives their own statement and they cannot direct their investments.  The dentist  prefunds the profit sharing and safe harbor contributions during the year by depositing the funds  into his own account.  Every other year it seems, they fail to transfer the participants' profit sharing and safe harbor amounts out of his account.

The participants are clueless, and in the meanwhile, the owner is getting an unfair advantage as fair as gains.  I have tried telling them they need to prefund it into a plan checking account, not into the owners account,  but so far they are ignoring me.  Any ideas on how I can convince them not to do this?

I was awarded a QDRO during my divorce and the same time my ex was retiring. 5 years later he is returning to his former employer and they won’t let him collect retirement and be a full time employee. So do I lose my COURT ORDERED QDRO? 

Client currently has a 401k plan. It has just acquired a company with a SIMPLE IRA. It is my understanding that SIMPLE IRA's cannot be terminated during the year. However, is this still the case if the company is sold? Does the new company have to allow the employees to continue their contributions to the SIMPLE IRA? And so they continue the acquired company's employer contribution?

Current 401k plan has a 1 year eligibility requirement.Not sure if original hire dates are being kept so employees under the acquired company may or may not be eligible for the 401k yet.

A private sector employer is looking to establish a qualified plan or plans.  In gathering data, we've learned that most of the employees are covered by the state's retirement plan, even though they are employed by a private employer.  This is a result of a state law and lobbying by public sector unions, so it is what it is, even if it doesn't make any sense.  These employees are not unionized.  IRS was asked about this 3 years ago  WRT Social Security and opined that as private sector employees they are covered by SS and the IRS noted that they are not eligible for the state plan under the IRC, but that any correction for this would have to be handled by the state, as the private sector employer has no choice but to comply with state law. AFAIK the state is not pursuing any such correction and the situation still exists.

So under Section 410, what do we do with all these employees who are covered by a government plan?  They don't meet any of the 410(a) statutory exclusion.   Since government plans are generally exempt from 410 (per 410(c)), it doesn't appear that we can permissively aggregate the government plan with a private sector plan for purposes of coverage and benefits testing.

My only conclusion so far is that they would have to consider all of these employees in all testing for 401(a)(4), 401(a)(26) and 410(b), and perhaps cover some of all of them as necessary to pass the tests without regard to the government plan at all.

Any other ideas on this?

A plan was submitted for a favorable determination letter and the IRS found a problem with the date a participation agreement was signed.  We amended to change the company name and EIN and the date signed conflicts with the prior agreement.  Can a plan be retroactively amended to correct this type of error once the plan has been submitted?

i get this question all the time.  johnny owns 100% of his business and is looking for more deductions.  He wants to look into a Deferred Comp plan for himself.

I realize that there is no value in it for him, especially in a pass-through entity, but I am looking for an article from a large accounting firm or ERISA firm that explains either why it makes no sense and/or might give some reasons as to why it might in fact make sense in certain limited scenarios.

Any help appreciated!

401(k) plan excludes a group of employees. Historically this has not been an issued. For 2017 when running the coverage test for the excludable employees, coverage fails. This will require the employer to bring in a substantial number of excludable employees to pass coverage. These employees will all receive a QNEC.

the issue is which employees are brought in to pass coverage. Can the plan use date of hire as the basis for determining how to bring in?  We looked at hours ( those with the hours closest to 1,000) and this results in an OUTRAGEOUS QNEC.  Using date of hire or compensation would result in a lower cost.  

Can not find anywhere in the reg the process that must be followed in determining who gets brought in to pass coverage.   

I know...i know...I should be able to convince TPTB that there are a lot of bad consequences for failing to follow the plan document, but I am in need of something pretty basic on this topic for the top decision maker of my firm. She tends to know how she wants things done regardless of what the plan document says. And I have not been in this position long and am fighting a bit on "how it's been done" vs what the plan doc says. (I have a very strong 401k background, but it is from 1991-2000 or so..so my documents/knowledge can be out of date a bit)

I am in the process of setting up a meeting between our TPA, the exec, our financial advisor etc to go over the terms of the plan document as they exist versus what we want them to be. Our TPA isn't the strongest and seems to be okay with having knowledge that we are not following the plan document (tends to be that we can ask forgiveness later). Once they tell us something, there seems to be no followup (or an assumption that we cleaned up the mess on our side -- now granted much of it is due to prior HR employees and their lack of 401k knowledge or even opening the Plan Document/Adoption Agreement).

Would appreciate any help ......

Help settle a debate....  Assume a 401(k) plan is defined in such a way as that employee deferrals are distributeable only in a single lump sum when a distributeable event occurs, but any employer money (match, non-elective) is distributeable ONLY in the form of an annuity and ONLY after a distrubetable event AND attainment of the plan's Normal Retirement Age.  Clearly the annuity distribution option must comply with the QJSA requirements (J&S Annuity and/or spousal consent).

What about the deferral distributions?  Is spousal consent required for that distribution as well?  The debate is, if you look at the regs - says a "PLAN" is subject to the QJSA requirements when the annuity distribution exists - with the exception of a plan that is a "transferee" of money from a plan that was subject to the QJSA rules - and then ONLY that source need comply with the QJSA rules.

The plan design referenced above seems, in some ways analogous to the "transferee" source scenario, but the regs say the "plan" is subject to the rules when the annuity exists and it doesn't seem that the rules were written with this plan design in mind.

My team is rather conservative on such matters, and seem to believe that the "plan" as a whole is subject to the QJSA rules when an annuity exists, and the ONLY exception is the "transferee" plan exception - which allows only the transfered source to be QJSA constrained - which this scenario isn't.

We may be over-thinking this - but it's my team's job to vet this kind of stuff....

Thoughts?

Loan was initiated by owner of a business for himself in 2017.  Loan repayments were not started by his payroll clerk.  And so six months go by without any loan repayments.  The loan was re-amortized over the remaining life of the loan and repayments started.  A VCP filing is being prepared.

Question for the 2017 5500 - is there a prohibited transaction to report.  It seems this just adds insult to injury as the IRS will likely approve the fix under VCP and the use fee will be paid.  Seems like double jeopardy to also report it as a prohibited transaction.

Comments? Thanks in advance.

My brother borrowed from his 401k loan last year march, he did not repay it, he died in November what happens to his remaining money in his 401k? 

A plan is a DB/DC combo plan.  Do they both have to have the same NRA?

Right now the DB has 62 and the DC has 65.

Traditional DB plan, several participants were supposed to be put in pay status at age 65 but the prior record-keeper failed to initiate the payments. We are now calculating retroactive annuity payments; however, the plan does not know the participant's marital status. Some participants cannot be located and some won't respond.

On what basis should we calculate the annuity if we don't know their marital status? Single? Married? If married, what age should we use for spouse?

The plan document is silent and I cannot find any guidance on whether there is a default method to use when calculating the annuity.

Thank you.

with the release of the consumer price index last Friday,  (based on the current hi 3 average [ feb-mar-apr]) the limits just jumped to the next level

19,000 deferral

280,000 comp

56,000 415 limit

of course there are 5 months to go, but I don't see any major drop coming in the index....

We are assisting a client with terminating their plan. The plan is small (just over 100 participants). They are trying to decide whether or not to seek a determination letter with the termination. They are confident their plan document and administration of the plan is in order -- the last determination letter received was 2012.

Does anyone have experience with clients that do not seek a determination letter and if so, does this increase the likelihood of a PBGC or IRS audit? Most clients we work with go through the process of obtaining a Determination Letter.

They are under 300 participants, so the PBGC audit would not be automatically triggered.

Any details of similar terminations would be appreciated. Thanks.