COBRA is outrageously priced.  Are there any associations (in Arizona or nationally) for Arizona retired primary and secondary teachers that offer a reasonably priced group Health Care Plan?  Most primary and secondary teachers retire at age 52 and have to wait 13+ years for Medicare eligability.  Any one with a lead for these people?

Specifically, how does one determine if a NQDC is a "restoration" plan.  Must the plan type be explicitly stated in the plan documents?  What specific language in the plan documents should I be looking for?

For background, I manage investments for a number of Walmart Associates, some of whom defer salary and/or bonus in the employer plan.  Thanks in advance.  Scott

If a plan has Employer Nonelective Contributions for union employees only, does it need to be in the SPD or it okay for this contribution to only be addressed in the Collective Bargaining Agreement? The employer doesn't want the whole employee population to know that the union match is more than theirs. 

Hoping for any comments as to whether this would fly or not:

We have a small employer looking to start a safe harbor 401k for 2017.  Its 11/10/17 so the deadline for 2017 has long passed.

However, could they start one 12/15/217 and have the plan year run from 12/15/17 - 12/14/18.  Have a short plan year 12/15/18 - 12/31/18.  Then, go to calendar year for 2019.  Their company fiscal year is calendar, so does that automatically sink this idea?

They have 3 employees, 2 of which are owners.  The owners would be receiving large bonuses which they could make in late December, 2017, with the owners deferring most of that to the 401k plan in late 2017.  They then have 11+ months to make 2018 deferrals.  do nothing for the 16 day SPyear, and then pick up on a calendar year basis for 2019.  The other employee will not be putting anything into the plan. given what is likely to be a high contribution rate for the 2 HCEs for 2017, a QNEC for the other employee would be pretty expensive and not desirable.

Thanks

Employer has an EACA plan and auto enrolls participants at 4%. They now what to add auto escalation at 1% up to 10%. Question -  Since this is an EACA Plan, is the employer prohibited  ( regulatory restriction vs document restriction) from including the  participants who made an affirmative election in the auto escalation?

For example Jane defers 5% of pay - can she be included in the auto escalation annually? Realize she can decline the auto escalation during the notice period.

Can an employee participating in a Cafeteria Plan FSA also establish and use a HSA?

What do you all think of using 3% instead of actually calculating the ADP?

One very large company wants to use 3%.  Is there any regulatory backing for this position?

Hi All,

My wife's employer caps her 401K deferrals at 15% of her salary. She gives the 15% max but it isn’t enough to reach the $18,000 max for annual deferrals. She is over 50 but also not allowed to make “catch up contributions” due to the fact that she hasn’t reached the $18,000 limit. She wants to put more money into her 401K but cannot do so due to these restrictions. It seems these restrictions are extremely unfair to those employees who cannot max out the $18,000 deferral limit with a strict 15% cap on deferrals. Are these restrictions allowed by law? Shouldn’t she be able to contribute more? It seems completely unfair to restrict her deferrals in this manner.

If the proposal goes through to eliminate 457(f) does that affect the following plan design:

$50,000 per year, vested in 5 years if continuously employed. Amounts paid out 30 days after vesting.

I thought that was just the simple constructive receipt doctrine which is still in tact. Eliminating 457f I would think does not impact that?

Clearly once it is vested it must be paid.  I realize that if 457f goes away the option for the participant to pay the taxes independently and leave the balances in their deferred is no longer an option (but for practical reasons I've never used that anyway).   

So here's a new one for me:  We have a client who has not funded the employer contributions to the plan since 2013.  He would like to take a loan from his account under the plan and use that money to fund the plan.  The kicker is that he has already defaulted on a prior loan.  The loan policy could be amended to permit him to take a loan even after a default and we could include the prior loan and missed interest when calculating how much he can take out to fund the plan.  BUT, this isn't passing my smell test.  I fear this would be considered a prohibited transaction because it's the employer who already defaulted, and while he may use the money to fund the plan, he might not pay it back again.

Thoughts?

If an employer qualifies for the hurricane Irma tax relief extension until 1/31/2018 for 2016 returns, do they also have until that date to adopt a SEP for 2016?

A year of service for vesting is 1,000 hours in a plan year.    A SALARIED employee worked 5 months and was salaried for 881 hours during that time, but he worked overtime and had  actual hours worked  of 1,055.   

 Would he get a year of vesting since he actually worked over 1,000 hours?     My first thought is yes.    

In a plan with 500 hours required for the annual accrual, do you think it is reasonable to credit an accrual when there is no net earned income  ?  Likewise, is it reasonable to not credit an accrual on the basis of "no income, therefore not 500 hours?  Would you look at gross income before deciding on an answer?  Any IRS input on this question? 

Client wishes to terminate their prevailing wage only plan and allow immediate distributions to everyone (roll, cash, etc.) but amend their 401(k) to permit prevailing wage contributions going forward.  Any problems with this?

I was explaining the restatement process to a plan sponsor with an ERISA 403b plan, and the director said that he intends to terminate the plan at the end of 2017 anyway (there are only 5 participants, all employed, so assume payouts won't be a problem), so he won't need to restate onto the pre-approved document.

In 401k-land, plan documents have to be up-to-date as of the date of the plan termination.  How would that translate here?  Any thoughts?  Thanks.

We have a situation in which a corporation wants to have a plan for its employees, all of whom are physicians.  We ruled out a qualified plan, because there are a lot of nonphysicians who would be considered leased employees and/or part of an affiliated service group, so any plan for just the physicians would fail nondiscrimination testing.  However, we are now stuck on the question of whether they can have a nonqualified plan. 

The issue is that in order to be a top hat plan, a plan must be for a select group of management or highly compensated employees, and it seems unlikely that a group consisting of all employees could ever be "select."  And while the leased employees and affiliated service group are all treated as part of the same employer for Code purposes, there does not seem to be an analogous provision under ERISA.

Has anyone dealt with this situation?  Any brilliant thoughts on resolving it?

Company A and Company B are owned by the same individual and each have their own 401(k) plan (lets' call them Plan A and Plan B. Nondiscrimination testing has been done on a controlled group basis. It has come to light that the testing was not done correctly with respect to Plan A for the past several years - union and nonunion employees were not tested separately as required. Plan B has no union participants. The testing is in the process of being redone correctly.

What are the risks to Plan B in this situation?  If they fail to pass the tests now, when Plan A's union/nonunion employees are disaggregated correctly, is this a failure to pass for Plan B? I presume it would be, but what if the actions taken to get the plans to pass apply only to Plan A (i.e. Plan A makes QNECs)?  Since we're talking about prior plan years, does Plan B have to file with VCP since they failed the nondiscrimination testing and didn't correct within the designated time period? Even if the correction actions are to be taken by Plan A only?

Is it okay to not send the annual Safe Harbor Notice to non-employee participants? 

It seems non-employees don't need to receive it but we've always mailed it to everyone with a balance.  If there is a DOL audit we want to be sure to have sent out all of what was required.

Filing for excise tax refief for missed RMD (through VCP) and struggling to correcting answer this:

At least one affected participant is either an owner-employee (see IRC Section 410(c)(3)) or, if the plan sponsor is a corporation, a 10 percent owner of such corporation."

Plan sponsor is a partnership.  Some partners are professional corporations. 

Affected participant is the 100% owner of her P.C., which is less than a 10% partner of the partnership sponsoring the plan.   

For 401(a)(9), she is a 5% owner because Section 416 is cross referenced for that determination and those rules apply ownership test separately for members of the affiliated service group.

But it isn't clear to me whether the VCP form question is intended to refer to the partnership that sponsors the plan or would include owners of the P.C.s that are members of the affiliated service group (and related participating employers in the plan).  I'm not seeing an answer in either the form or the definition in 401(c)(3). 

There is no reference to 416 so I am inclined to apply the ownership test only at the partnership level.  

Can you offer any insights?

I'm terminating a plan for an employer/client.  It is subject to the QJS&A rules.  Two former employees have each about $6000 in benefits.  Neither will respond or send back an election for lump sum or direct rollover (with spousal consents).  Which financial companies are willing to deal with such small amounts for JS&As?  Any other ideas are welcome.  Thank you.