An employee submitted an election to stop making 401(k) contributions shortly before her hardship distribution. Payroll continued to withhold the 401(k) and did stop it until about 2 months later.

How does one correct this?

This happened during 2016 tax year

thanks

Lexy

A law firm with one owner currently has a 401(k) with a service eligibility requirement of the next entry date following three months of service, with the entry dates being January 1 and July 1.

The law firm will be bringing in two partners who have not been employed before by the law firm, but will become partners immediately.

The firm is interested in allowing these two partners to participate in the 401(k) plan immediately, or at least the beginning of the calendar quarter following their employment.

It would require a plan amendment and they don't want this change to apply to non partner employees. There is a chance that employees who had worked for the new partners in another law firm could also become employees in this existing law firm who would not be partners, so it opens up a can of worms.

The 401(k) plan has no match, so other than administrative fees, there would be no downside to adding employees with a more liberal entry requirement.

I would appreciate any comments on the advisability of this.

Hello, we have a non-profit establishing a safe harbor 401(k) plan. The main director of the non-profit also owns 100% of two other for profit corporations with employees.

The rules states: (b) General rule. For this purpose, common control exists between an exempt organization and another organization if at least 80 percent of the directors or trustees of one organization are either representatives of, or directly or indirectly controlled by, the other organization. A trustee or director is treated as a representative of another exempt organization if he or she also is a trustee, director, agent, or employee of the other exempt organization. A trustee or director is controlled by another organization if the other organization has the general power to remove such trustee or director and designate a new trustee or director. Whether a person has the power to remove or designate a trustee or director is based on facts and circumstances. To illustrate the rules of this paragraph (b), if exempt organization A has the power to appoint at least 80 percent of the trustees of exempt organization B (which is the owner of the outstanding shares of corporation C, which is not an exempt organization) and to control at least
80 percent of the directors of exempt organization D, then, under this paragraph (b) and §1.414(b)-1, entities A, B, C, and D are treated as the same employer with respect to any plan maintained by A, B, C, or D for purposes of the sections referenced in section 414(b), (c), (m), (o), and (t).

Since the director of the non-profit is also a representative of the other organizations by virtue of owning them / being President, etc., I interpret this to be a control group situation between the three organizations. The for profit companies do not have any direct control over or involvement with the non-profit so the client disagrees with my interpretation. 

Thoughts?

Thank you!

We have a client that has allowed participants into the match portion of the plan earlier than the document allows.  We are doing a corrective amendment for 2016, but can we also do a corrective amendment NOW for 2017?  My concern is that I thought that a corrective amendment was only available after the plan year ended.

Client has changed the entry conditions for match to tie to those of the deferral with an amendment effective August 1, 2017.  But there is still the issue of the period from 1/1/17 to the date of amendment.

I have a 403(b) with elective deferrals, discretionary matching and profit-sharing contributions.  The plan meets the universal availability requirements while excluding student employees and employees who regularly work less than 20 hrs per week.

Question is: are these employees also considered excludable for purposes of applying the coverage and discrimination tests.  I haven't found specific guidance in the regulations as it relates to 403(b)s specifically.  It would seem intuitively that these employees would also qualify as 'excludable' for coverage and discrimination testing purposes as for matching purposes they would never receive a match as a result of being excluded under UA rules.

Welcome any thoughts.

DB plan's pre-retirement death benefit for unmarried participant who dies with vested benefit prior to age 60 is life annuity payable to beneficiary starting when participant would have attained age 60. How does this work with 401(a)(9) regs that require the life annuity to the beneficiary to begin within year of death (no lump sum available)?  If the participant dies at age 50, by when does the non-spouse beneficiary have to take the benefit? 

the CPI-U released today was 245.519

if next months collapses to exactly 243 I have the limits at exactly 55,000 dc limit, comp limit 275,000, etc

it is not going to collapse that much, so only a change to the regs will stop an increase

We have an HCE (>5% owner) who is now in RMD payout status, i.e. 70 1/2 and said HCE asked if we can count the ADP refunds already paid in 2017 to offset (reduce) the RMD amount (total distribution) now payable.

Is this permissible?  And any IRS produced documentation would be much appreciated.  Thanks! 

Small SH 401K, member of an LLC maxed out his deferrals/match and after year end, it was determined that his compensation was below 401(a)17, which resulted in an excess SH match of under $1300.  Does this money go back to the plan sponsor or is it forfeited?  If it is forfeit/suspense account, how can it be used in the future as I am not sure if you can use that for future safe harbor match contributions.  Perhaps Profit Sharing?  Plan expenses? 

Thanks

Business owner also receives a 1099misc for consulting revenue that is paid to her personally and not run through her business.  No employees on the side revenue.  Can she as a sole prop become an adopting employer of the retirement plan of her business thereby using that income for plan calculations?  I would think so as long as the paperwork is in order, the plan allows outside adopting employers, and the sole prop formally adopts.  Any cause for concern?

Does an election to apply the balances to the required minimum or quarterly need to specify the amount applied? Specifically, 

Plan year is 6/1 - 5/31.

6/1/2016 Minimum is $700,000.

Prefunding Balance as of 6/1/2017 is $150,000.

Plan was frozen 6/1/2017.

6/1/2017 valuation is not complete yet, but minimum will surely be much less than $700,000 since there is no target normal cost. It will probably be about $300,000. Therefore, the 9/15/2017 quarterly will probably be about $67,500 (=$300,000 * 90% * 25%).

Can the plan sponsor just elect to apply whatever is needed to cover the quarterly? Should he elect to apply the whole $150,000?

Thanks for any responses!

relief not specifically mentioned but the IRS relief for Irma seems to reference all of the relief listed in Rev. Proc. 2007-56.  can anyone confirm i am reading this correctly and that specifically the september 15 deadline to fund DC contributions would be extended to January 31, 2018?

A cautionary tale.

https://www.laboremploymentperspectives.com/2017/09/11/401k403b-loan-borrowers-check-your-paystubs-2/

We administer a SHM 401K. Auto enrollment, default deferral 4% in order to get the 4% SHM.

it has come to light that a couple of the eligible employees were not given the opportunity to enroll in 2016.

Accountant seems to believe these people are due a QNEC; how is a QNEC determined in such a case?  Would the employer in this case be obligated to make the 4% contribution as well as a 4% match?

I have a plan where one of the employees went from a W-2 employee to a partner.  He received a W-2 and K-1 income.  While I agree that the two pieces need to be added together to calculate the profit sharing contribution, I am being told to ignore the fact that the participant was a w-2 employee when doing the earned income calc for the profit sharing contribution (i.e. not reduce Earned income by employer contribution for their share of the contribution on their w-2 compensation) and also adjust the SS Wage base for this individual. I looked in the ERISA Outline book and can't find anything specific on this. 

Can anyone shed some light on this or provide a solid reference siting?

We have a non-trivial amount of deferred vested participants who are well past their NRD. The terms of the plan technically require commencement at NRD (at least as has been explained to me, but that's not really the issue at hand).

Ignoring any ramifications of RMDs, have you seen any creative ways to encourage these participants to begin their pension and move into pay status? Letters reminding them of their pension, mailing unsolicited election kits, something else?

This is attractive from a potential annuitization/termination perspective because deferred lives are more costly to place with an insurance carrier than an inpay life. We have made multiple lump sum window offerings without much luck and we have good addresses for substantially all of them.

I have no experience (yet) with PEO's. Doctor participates in a PEO 401(k)/PS plan. Doctor wants to start a CB plan only for her business. I think that is OK so far?

To pass a4 CB plan needs a PS combo. How do I handle the PEO K and PS contributions for a4 testing? The PEO PS provisions are individual classifications and no allocation conditions, so I guess they should be able to contribute what is needed for these people, if I can use it. Is it just like it was a single employer PS/k plan for a4 purposes? Or, should the doctor just start both a CB plan and a PS plan?   

Seeking confirmation before I stick my neck out that if a 501(c)(3) org is maintaining a deferral only 403b and a separate 401a plan which receives employer matching and non-elective contributions there's no defensible argument that the deferral only plan is exempt from ERISA (and exempt from 5500 and plan audit), thanks

Just curious - the requirement that the plan be amended by 30 days before the end of the plan year seems very strange. The IRS was very helpful in allowing mid-year amendments on SH plans - has any organization (ASPPA, etc.) also been advocating for a change to this 30 day requirement? Obviously, I can see requiring the amendment to be signed by the end of the plan year, but this is a nonelective 3% we are talking about. Absent the amendment, the participants get nothing. What is the sense in penalizing participants just because the employer misses the 30 day deadline? Seems like a no-brainer to allow an employer to "opt in" at any time up to the end of the plan year, with no notice requirement, either.

Thoughts?

Many of my clients, including me,  being in Florida took mild to substantial damage due to Hurricane Irma. Two questions:

1. I have a client located in Brevard County, Florida. Can any one determine if this client would qualify for special relief under Announcement 2017-13 and anything else? 

2. Under this announcement, even though special relief is being granted for qualifying for a hardship distribution, does anyone have an opinion on whether or not they would still be required to take a loan from the plan before the hardship distribution could be made?

Thanks for the help - Rick