How are your firms structuring your staffing roles?  Are you operating with administrators that correspond with their assigned clients and also perform all of the annual valuation work from census scrubbing, to contribution calculations, applicable testing and tax return filings?  Or are you structuring your organization with staff assigned solely to client communication and others to day-to-day plan administration functions only?   Do you operate with staff that only perform distribution and loan processing functions? What seems to be working best in your organization from a client happiness and overall efficiency process?   And if you wouldn't mind sharing the size of your organization or what you have found has or hasn't worked if you have looked into making changes to your overall practice staffing structure.

Qualified DC Plan, fully vested account balance - no beneficiary form on file

Former participant was married at time of death and died 15 days before 1st RMD was due to be taken.

A letter regarding benefit from plan, along with distribution forms, has been sent by Plan Sponsor via certified mail and a return receipt has been received 2ce!  The SSN of the surviving spouse is unknown.

How can the account balance be disposed of?  As a missing participant - to forfeitures until/if a claim is made? other?

Like most plan documents, the plan has a small payment provision in which a single sum payment is made to the participant if the PV of their benefit is under $5,000 at the time of their termination. The plan sponsor has apparently failed to pay out several terminated participants who fall under this category - some of whom have been terminated for well over 5 years.

Has anyone heard of this coming up under an audit?

This has always puzzled me and I'm pretty sure there are other threads on this but I can't find them!

Anyway - participant in a profit sharing plan terms at age 58.  takes cash payment distribution the following year but before turning 59 1/2.  In reviewing the 1099-R codes, I think the 1099-R code should be a "2" because the participant termed "in or after the year the participant has reached age 55" (quoted from the 1099-R instructions; code 2) and not a "7" although the participant will be 59 1/2 before the end of 2017.  It doesn't appear that code 7 applies in the year a participant turns 59 1/2 but rather after they turn 59 1/2.

Does anyone know why didn't they just make the age 55 instead of 59 1/2 to avoid the 10% excise? Is this a leftover from when pension plans were more prevalent and more people took early retirements? 

I can only think of two examples of those between 55 and 59 1/2 who might still pay the 10% excise  - active participants between 55 and 59 1/2 who take an 1.) allowable in-service distribution or 2.) hardship withdrawal.  Any other examples?

Client is surviving spouse.  We believe her to be the beneficiary of a large account held in a "PSP."  Husband and his attorney are both deceased.  Life insurance salesman who sold them on the nonstandardized plan created by life insurance company is senile.  Only papers related to plan date back to 2000.  Those include some 5500s.  We have contacted the insurance company and it cannot produce the nonstandardized plan, let alone the adoption agreement.  We don't think it will ever be capable of being reproduced.  Likely that the plan just went totally silent after about 2001, but no contact we can find in deceased's files from the IRS.  Further, the small 3 person company that sponsored the plan is no longer and no one can be found.

The investment firm holding the account says, "produce the plan document" before it will do anything.  No plan document exists.  What to do?

One take I have is to say, "There is no plan document, hence, it's a after-tax account.  Make a distribution and don't report on a 1099-R.  I've read in this forum about the King case and the issues of "consistency" but, if I can convince the investment firm that it is an after-tax account, perhaps they would distribute the account to the surviving spouse.  I do have an issue with not having a beneficiary designation, it appears.  But, I do have a letter from way back from the attorney indicating that the deceased husband's revocable trust is the beneficiary.

The King case might allow me to argue that if the plan went out of compliance from the get go due to lack of a document, that cash contributed was taxable in a closed tax year.  And, now, the distributions are tax free from the account.  We can't establish that a plan ever existed but there are just a couple of returns that the deceased attorney prepared (1997, 2000 and 2001).  Nothing after.  We have exhausted our search and I have concluded no documentation will ever be found.

Thoughts?

In determining whether someone under the new fiduciary regulation is providing educational assistance to a plan participant or giving actual advice, when the investment professional is actually assisting that participant with completing a risk tolerance profile questionnaire/assessment-would that constitute advice since they are discussing the individual's personal situation...or NOT because it is the participant actually providing the answers and the investment professional is just there in case they had a question about how to complete the form?  Where is this line.  I've read a lot of articles, but it seems this is a pretty thin line...When do they become a 3(21) fiduciary or get to remain under a suitability standard?  

We have 401(k) participant who died in 2012 and at this point it is not clear whether or not he was married at the time of death:

·       He named son & daughter as beneficiaries in 2007, at which time he stated he was not married

·       He died in 2012; Death certificate shows him as married at time of death, identifies surviving spouse, and lists informant as the surviving spouse, relationship WIFE

·       Son and daughter are now putting in claim for his account balance; son says father was not married at the time of death but that his mother was trying to re-marry his father so she would get some of the money.

Sponsor is presently trying to get some clarification from “Wife” in the way of proof of marriage or an amended death certificate (if not married).

Meanwhile, I welcome any and all ideas on how to address this situation.  The 401(k) balance is in the range of $15,000, and the participant’s relatively small – there was no plan for going through probate.

This is in CALIFORNIA.  Also, what if they were married but in another country (San Salvador possibly).

Does anyone have a spreadsheet they can share with me on calculating ADP refunds manually? Not the gain and loss, the actual refunds. We have a plan that we don't put in Relius, so everything is done manually. Thanks in advance!!

ER has sponsored a SIMPLE IRA for several years for company employees.

Final EE contributions for 2016 plan year deposited in 2016.

Started a 401k 1/1/2017.

Just found out now (8/2017) that the 2016 ER contribution to the SIMPLE has not yet been deposited.

Is this 401k still OK for 2017 since the SIMPLE deposit is for 2016, but being deposited in 2017?

An employer adopts an amendment to cease the safe harbor nonelective provision with the appropriate 30 day notice.  Less than a week later, after speaking with the financial advisor, the sponsor wants to rescind that amendment.  Is that possible?  The amendment was executed and the notice distributed but is not yet effective.

401k plan failed to include bonuses in compensation for all contribution purposes (employee deferral and employer matching) for a number of years (employer only has payroll records back to 2006 but suspects that they have never included bonuses since the beginning of the plan in 1978 despite plan language).  Failure was discovered late last year and plan amended prospectively to exclude bonuses.  Employer wants to know if they can retroactively amend the plan to exclude bonuses from compensation for HCEs only (so no corrective contribution) but make a corrective contribution for NHCEs only to include bonuses in compensation for deferral and matching purposes.  Anyone have experience with submission of a correction like this in VCP?  My thinking is that the IRS would probably approve it since you are benefiting the NHCEs.  Thoughts?

Take a look at a new, optional, simpler 'theme' for the message boards. A 'theme' basically is a particular arrangement of the content on a web page.

To try it:

• Scroll down to the bottom of the page, and look for "Theme" -- click it.
• Then select the radio button next to "Responsive."
• The screen should refresh itself automatically, displaying the Responsive theme.

To revert to the default theme, just select the radio button next to "Default."

If you've been using a smartphone to read the message boards, you might not notice a difference from what you usually see. But if you use a desktop computer with a typically-sized (or wider) window on your screen, you'll see a difference.

Let me know what you think (please post a reply to this message).

Thanks!

Once upon a midnight dreary

While I pondered weak and weary

Would I get the plans, to go out the door?

Quote the Raven “Nevermore”

While I nodded nearly napping

Suddenly there cane a tapping

As of someone gently rapping

Rapping at my chamber door

It’s the IRS, whom I abhor.

             (they want more, ever more)

I slave all day, it’s such a pain

All these regs, oh my poor brain.

A raise I deserve, and much, much more

Quote the Raven “Nothing more”

Because of pensions, I have no life

No kids, no fun, nor even wife.

Are these plans the reason, I have nothing more?

Quote the Raven, “No, You are a bore”

The pension laws, change every few years

Brings most of us, to the point of tears

Who made the changes, so we could put away more?

Quote the Raven “It wasn’t Gore”

The pay is bad, the hours long

I often wonder, if I belong

I have no money, I’m always poor

Quote the Raven “Forevermore”

I do my job, I do it well

But all this work, is hell, hell, hell.

The boss is shouting, at my chamber door

Back to work,  Do this, do that and much, much more.

We have client merging pst plan into existing 401(k) with American funds. (Pretty close to open architecture but bundled)  Using Capital Bank and Trust as directed trustee. All work is complete and 25 million in assets liquidated ready to transfer.  At the 11th hour we have discovered small Wells Fargo stable value position that will not liquidate since this is not a plan termination but merger and AF will not hold or record keep.  They say can be held as an outside asset until maturity in 2018(we would actually liquidate sooner for distributions but can not now due to blackout) they will include the value in their reporting if provided. Need to know who should be custodian of this asset etc.? Anyone with any experience on issue like this? Would appreciate your comments.

A participant terminated 07/31/2017 with an outstanding loan balance.  She wanted to pay it back monthly after her termination.  The plan document says it's taxable to her the "day after termination". and does not allow her to continue to pay on the loan "forever".....Question: can she pay a lump sum now, and if so, roll it with the other cash to an IRA? .  How long does she have to pay it back and not violate/default on the loan now that she is terminated? and be able to roll it to the IRA?  I know usually loan payments are late the last day of the following quarter.   I hope this makes sense.  Thanks for any feedback. 

Have looked on the M&A forum but did not find much on PEOs there.  Know there has been a good bit of discussion on exiting PEOs in this forum in the past but haven't seen much recent or much addressing situation involving departure from a PEO plan due to corporate acquisition and am wondering what others are seeing as the most typical scenario of dealing with departures from a PEO.

Situation is this.  Small company grew to mid-size company.  Has used one of the leading national PEO groups for many years for payroll, welfare benefits and as participant in the PEO's 401(k) Plan.  Company is being acquired in a stock deal by large conglomerate with its own 401(k) plan.  Company will become a wholly owned subsidiary of conglomerate and participating employer in the conglomerate's 401(k) plan (and other benefit plans) so is terminating its contract with PEO and seeking to leave 401(k) Plan.  Employees will continue on doing same jobs with company as before but will just become part of the conglomerate's controlled group and will sever co-employment or whatever relationship they had with PEO.

PEO group has been inconsistent in advising on the options for addressing participants' accounts in the PEO 401(k) Plan.  At first said they would need to basically spin off or do plan to plan transfer to conglomerate's 401(k) plan.  Now are saying they can make distributions to participants and participants can roll over.  Conglomerate would generally prefer the later but mainly wants to do what is right with respect to potential distributable event and successor plan rules, etc.  We are still waiting to see plan provisions for PEO plan on the distribution terms there, etc.

I am curious though why the internal confusion at the PEO and also curious what others are seeing done in these situations which seem to be increasing with proliferation of PEOs.  I understand lack of regulatory guidance here makes some of this difficult but given the number of companies using PEOs these days it seems these are issues that should have pretty basic industry-standard options / approaches even if there is some gray area there.  PEO though seems to be looking to conglomerate for advice on how to handle which seems very backwards to me.

Appreciate any thoughts or insight from recent experience.

Individual A purchased a long-term care insurance contract from Insurance Company X in the 1990s.  X is currently in liquidation proceedings.  X is offering its long-term care insurance policyholders three options: (1) retain the same benefits at a substantially higher monthly premium; (2) continue with a policy providing for reduced benefits at a slightly higher premium; or (3) surrender the policy and receive cash in a single sum.  The amount of the lump sum payment greatly exceeds the total amount of premiums that A has paid on the contract.  Assume that A elects option (3) and receives cash.  What are the tax consequences of the cash to A?

I may not be on the right message board but I am wondering if anyone can verify that all my pre-tax deductions are exempt from workers compensation calculation.

I also understand that the 401K pre-tax deduction is not.

Any help would be appreciated

Cafeteria plan document contains language providing that a participant may modify or revoke an election under a 401(k) plan as allowed under Treas. Reg. section 1.125-4(h).  The 401(k) plan document, however, provides for an "irrevocable" election to transfer amounts from the cafeteria plan to the 401(k) plan.  As such, we seem to have conflicting language  in the plans.  My inclination is that the 401(k) plan should be amended to allow for changes to deferrals for the cafeteria plan mid-year.  Is there any reason why we should not allow for these mid-year changes?  Don't most cafeteria plans allow for mid-year changes to 401(k) elective deferral amounts?

Hi,

We have a plan that failed to put retirees in pay status for the past 3 years.  The plan provides that the lump sum benefits will be calculated using the interest rate as of November preceding the plan year in which the distribution is made.

Which interest rate do I use when calculating the missed payments? Do I use 2016 for all plan years (2014, 2015, 2016) since the payment will be made in 2017?  or do I need to use the Nov 2013 interest for 2014 payment calculation,  Nov 2014 for the 2015 payment and so forth?

Thank you.