A 403(b) plan currently has a non-elective employer contribution.  It is proposed to implement a soft freeze on this formula, allowing existing participants to continue to receive the non-elective contribution while new participants will receive a matching contribution.  Can this new contribution be designed as a safe harbor match?  I guess the technical point is can the plan be restructured into two component plans for the different employer contributions that each satisfy 410(b), and then satisfy the safe harbor match requirements by including only those participants eligible for match (i.e., only the new participants)?

Thanks.

Does anyone know if the award instructions in a QDRO need to be clarified (e.g., the parties' intent regarding how to treat the loan balance, to include it or not in determining the balance), can the two divorcees submit a letter with both signatures?

I have cross tested Profit Sharing and Cash Balance plans. The plan sponsor did not make the minimum required contribution by 9/15, so they will be paying the 10% excise tax on the unfunded minimum. Now, the plan sponsor is also saying they are unable to make the minimum required profit sharing contribution for their employees- safe harbor, top heavy, and gateway. What happens if they do not make this? Are there penalties like the CB plan or is the plan disqualified?? 

We have a plan sponsored by a licensed speech therapist.  I am told she has a PhD but is not a medical doctor or psychiatrist.  Would this be considered a professional service organization and exempt from PBGC, or would this be subject to PBGC?

A client let it slip today that the employment contract for two of their new employees prohibits them from participating in their safe harbor match 401(k) plan.  At their request, the plan (effective 1/1/16) has immediate eligibility and no excluded employees.   So, both employees are participants.  Both are non-owner doctors hired late enough in 2017 year that they will be NCHEs for both 2017 and 2018. I'm trying to sort though potential problems.  So far, I have:

1.401(k)-3(c)(6)(i) says it's not a safe harbor match if there are restrictions on NHCE deferrals other than those listed.   This doesn't fit any of the allowed restrictions, so I read it as goodbye safe harbor.

I haven't seen the employment contract, but I will be shocked if it contains a one-time irrevocable election under 1.401(k)-1(a)(3)(v).  Besides, the plan does not allow such an election.  So, it appears we either have an operational failure or the employment contract provision is a CODA.

Does anyone see anything I missed? or have any additional comments?

What code is used on Form 1099-R when rolling over pre-tax qualified plan assets to a Roth IRA?

I could not locate any reference in the 1099-R Instructions.

Does anyone have an ESOP client (unleveraged) that allocates dividends on any basis other than share balance (e.g. comp or hybrid).  If so, has the client survived an IRS/DOL examination without challenge?

We have one takeover client that allocates dividends based on comp (and am anecdotally aware of others that do so).   While the client negotiated the allocation language with the IRS and was issued a favorable DL, the plan hasn't been subject to a more rigorous audit/examination.

Grateful for any insights and comments!

So after deferrals stop for 6 months, who is to initiate the re-start of elective deferrals?  Seems the plan sponsor would monitor this and automatically re-start upon the expiration of the 6-month period.  Or I can see asking the participant to complete a new election.  Thoughts?

Employer offers HDHP with maximum family deductible and out-of-pocket of $13,100.

Employer funds maximum HSA for family coverage of $6,750.

Can employer also offer a Medical Expense Reimbursement Plan for the spread?

Thanks.

Bob had a SOLOK, and died.  He was not married and had no children.  He had designated his Living Trust as his beneficiary.  It is my understanding that the benefit due to be paid into his Living Trust is not an eligible rollover distribution, and the executor of the trust can submit a W-4P to elect no FIT.  Then the benefit would be paid directly to the Living Trust, and from there, paid out according to the terms of that trust.  Is that correct?  

I thought it was prudent but not required to provide participants of notice the plan was terminating.

However, today I found the following on the IRS website.  Did I miss a change?

https://www.irs.gov/retirement-plans/retirement-plan-participant-notices-when-a-plan-is-to-be-terminated

Page last reviewed/updated August 3, 2017.

When a plan is to be terminated, participants should receive a written notice of the company’s intention to terminate the plan and a notice of plan benefits. See Terminating a Retirement Plan.

Notice of intent to terminate the plan

Description: Written notification that the plan sponsor intends to terminate the plan or cease benefit accruals.

What it should contain: The notice should contain sufficient information to notify the participant of the termination of the plan. The notice might include identifying information such as:

• the plan name and number;
• the proposed termination date;
• a statement concerning the cessation of accruals (benefit accruals are ceasing); and
• a statement that there are sufficient plan assets to meet the accruals provided under the plan.

Timing: The notice must be provided to all affected plan participants and/or beneficiaries at least 60 days and no more than 90 days before the proposed date of termination.

Who is responsible for sending it: The administrator of the plan.

Notice of benefits upon termination of the plan

Description: A notice to each affected participant or beneficiary that specifies the amount of the participant’s benefit as of the proposed termination date.

What it should contain: The notice should identify the amount and form of each participant’s benefit including any personal data used in determining the amount of the benefit, including lump sum conversions, mortality and interest rates used to compute the benefit.

Timing: Promptly to any affected participant or beneficiary after the proposed termination date and on or before the distribution date.

Who is responsible for sending it: The administrator of the plan.

Form 5330 has places for the filer (plan sponsor) and paid preparer to sign. It's not clear to me from the instructions if both of them need to sign. Do they?

Also, I see that the Form 5330 instructions only provide a mailing address for filing, which suggests that they need original signatures, but the instructions also allow for the paid preparer to electronically sign.

Is it true that this form must be mailed and that the plan sponsor's signature must be a wet signature?

Thanks for any responses!

We have a pre-approved plan document that requires participating employers to adopt the plan by signing a Participation Agreement, which is also signed by the signatory employer.

Participating Employer X and the signatory employer signed a Participation Agreement properly in 2012, and again to mark Participating Employer X's cessation of participation in 2015. 

During the restatement process, it has been discovered that Participating Employer X is now totally out of business. 

Participating Employers are supposed to sign a Participation Agreement for the plan right now, in order to adopt the terms of the restated, pre-approved plan. But Participating Employer X does not exist.  The pre-approved plan does not address this situation.

Do others think that it would be sufficient for the signatory employer to add a note to the restated plan indicating that the Participating Employer cannot be found, and attach the old Participation Agreement that was originally signed?

Thanks. 

Client has 401k/ profit sharing plan, non safe harbor.

ADP test failed for 2016.

Can  profit sharing contribution, as long as 100% vested, be used to satisfy ADP?

And the balance of any profit sharing contribution be allocated as a profit sharing contribution for the year

A  client with a 401k plan  paid the HCE's bonuses and no deferrals were taken out.  Their document does not exclude bonuses from definition of compensation.   Do they have to calculate the deferrals?  If not, what type of notice/if any would the HCE participants need to sign saying they did not want deferrals taken from bonuses?  Should they amend document going forward to exclude bonuses?

Hello All -

Can someone confirm if I am understanding the correction under EPCRS appropriately?  Small non-safe harbor 401(k) Plan with eligibility of age 21 and 1 YOS with at least 1,000 hours worked in a plan year. For several years, the HCEs were the only ones deferring into the Plan (no match offered in the Plan).  The ADP Tests run for these years were automatically passing as none of the NHCEs were eligible - not shown to work at least 1,000 hours in any Plan year.  It is now discovered that the hours were calculated incorrectly for these year and several NHCEs should have been eligible.  My understanding is that the ADP Test would have to be corrected first.  The Sponsor is correcting by making a QNEC to each eligible NHCE.  A 7% QNEC (plus earnings?) will have to be contributed to each NHCE for each Plan Year to correct the failed ADP Test.  I'm having trouble reconciling this with the correction if the initial ADP Tests were passed and an NHCE employee was not given the opportunity to defer.  Depending on timing, the correction would be a QNEC of either 25% (or 50%) of the missed deferral (whatever the average deferral percentage on the ADP Test) plus earnings.  Am I understanding correctly that because no NHCEs were given the opportunity to defer, then an appropriate correction is a QNEC to these NHCEs to correct the failed ADP Test.  There is no 25% (or 50%) QNEC of the missed deferral?

Thank you

General question from a relative ERISA newbie. In the context of a multi-employer DC plan, is there anything in ERISA that would preclude an employee's spouse from being considered a "participant" in the plan? I.e., suppose that an employee's spouse has a separate retirement account that they'd like to roll over into the plan, and the plan were amended to define "participant" as including both employees and their spouses. Is that a crazy idea? I understand Section 3(7)'s definition of "participant" refers only to employees and former employees, but other than that, I'm trying to figure out if this is even remotely feasible. Appreciate any/all feedback. Thanks.

I've always understood that these must be provided if you are eligible to defer, even if you choose not to. This is being questioned. I don't see any exemption as being available under the regs - I'm talking about an active, eligible employee, albeit with no account balance. Am I nuts, or missing something? Maybe just Monday fog...

We know the basics when it comes to determining ownership of Corporations and Partnerships:
Ownership in corporations measure ownership in voting stock plus ownership in overall stock (voting and non-voting).  Meanwhile, ownership in partnerships measure the percentage of capital versus the percentage of profits.  

We also know that when measuring the non-voting shares in corporations, the value of the preferred stock may change depending on the ratio of the liquidation preference to the liquidation value of the company (where a higher liquidation preference would translate into a higher non-voting ownership); which can become pretty significant depending on the appraisal value of the company.

Here's my question:  How would such a liquidation preference translate in an LLC taxed as a partnership.  In theory, shouldn't it translate as an ownership of profits in the year of liquidation if (and only if) the company is actually liquidated?  Alternatively, would it somehow translate into a hypothetical value on the capital side; which would effective require an appraisal each year (depending on the amount of liquidation preference to the appraised value of the company)?

In all my years, I finally encountered a question that has me at my wits end 
 

A client with a 401(k) plan has only 3 participants, consisting of himself as owner, his wife, and one rank and file employee.  I am just now finding out that the owner and the rank and file employee are employed by the sponsoring corporation, while the wife is technically employed by her own LLC. For many years all 3 of them received deferrals, Safe Harbor, and profit sharing contributions.  However, for 2017, they want to give only the wife the profit sharing contribution.  I say this is discriminatory and they can't do that.  The CPA says that because the wife's contribution is made by her separate LLC and not by the sponsoring corporation of the plan, it's ok for her to have a profit sharing contribution while the rank and file employee does not.

I am thinking that the sponsoring corporation and the LLC are a controlled group belonging to the husband and wife and that they are still running afoul of non-discrimination rules.  I am also thinking that a participating employer addendum to the plan's adoption agreement should have been in place for the LLC all these years.

1) Can they give the wife a profit sharing contribution and nothing to the rank and file employee and 

2) Can a retroactive participating employer agreement be created dating back to the time that the LLC started making contributions on her behalf?

Thank you for any comments!