Don't really know anything about this subject (457(f) plans). There were proposed regulations issued in 2016 - are updates to 457(f) documents required by a certain date, similar to qualified plans? A client mentioned in passing that they have one of these, and I don't know who did the document or if any updates have been made (if even required in the first place).

Any thoughts appreciated.

As I was looking into this issue, I came across the DOL regulations at 2580.412-31 and -32.  However, these provisions appear to limit the exemption from bonding to the insurance companies providing the plans to other employers and do not specifically exempt the employers themselves.  Has anyone sought to apply these regulatory exemptions to the employers adopting such plans?

Plan auto enrolls at 5%. Participant completes the online process with the vendor to opt out. Plan sponsor does not stop withholding for 6 months. Participant wants the money back. Vendor says "too late you can't have the money back" because too much time has passed. I don't think their answer is valid.

EPCRS does not have an example of this nature, but is it reasonable to return the deferrals and forfeit the match using the logic in EPCRS of: 

(1) Restoration of benefits. The correction method should restore the plan to the position it would have been in had the failure not occurred, including restoration of current and former participants and beneficiaries to the benefits and rights they would have had if the failure had not occurred.

Any other thoughts? (participant wants the money, so leaving it in is not an ideal option)

Client's plan is being audited by IRS. We provide support services to the client/plan for the audit and charge a fee. Is that fee eligible to be paid from plan assets?

Hi.  We have a plan that currently is a safe harbor 401(k) using a QNEC.  The plan now wants to change mid year to a safe harbor using a match.  I do not believe this is possible, since it reduces the amount of the required QNEC.  Notice 2016-16 indicates that changing types of safe harbor plans mid-year is prohibited and uses the example going from a tradition 401(k) to a QACA 401(k).  Most literature out there cites this as the only prohibition, but the IRS Notice indicates that this is an example, which would seem to indicate that there are other prohibited changes.   Is there anyone out there that has dealt with this question?  Thank you.

Do Solo DB plans have to issue an SAR?

I am looking for DOL Advisory Opinions 82-21A and 79-82A.  Does anybody know where I can find them?

I have heard two opposing opinions.

When calculating an RMD, is the accrued contribution added to the 12/31 of the previous year's account value?

Say a participant dies while in pay status -- he is receiving installments.  Once he dies, can the plan allow a beneficiary to change the form of payment, or is the beneficiary locked into whatever the participant chose?

What if the participant was not in pay status?  Can the plan allow the beneficiary to elect how he receives the payment?

Thanks!

We recently took over a FICA Replacement plan.  The plan has a 7% employee contribution and a 13% employer contribution.  The employer contribution account has a vesting schedule that begins at year 5 with 50% vesting.  I was under the impression that at least 7.5% had to be 100% vested.  Can you have a vesting schedule?

GROAN. Ok, so let's say you have school districts A and B. Both sponsor cafeteria plans, which are calendar year plans. The plans have different provisions.

Let's further say that the school districts are legally merging on July 1, 2018, into one new unified school district. This merger date is a legal agreement and is set in stone.

I don't know what they WANT to have happen - at this point, only trying to determine what options might be available. 

What happens to the plans once the merger takes place? Can the plans merge into one plan, but maintain the same provisions for the separate employee populations for the balance of 2018?

Alternatively, possibly thinking outside the box, can the elections made for 2018 in Plan A and Plan B specifically state that they are for 6 months only? And then they make new elections, under a new plan sponsored by the new entity?

Somewhere in the back of my head, for no reason I can discern, it seems like there is some prohibition against consecutive short plan years in cafeteria plans. But even if true, since as of 7/1/18 there is a new entity, then perhaps this wouldn't apply?

Perhaps Revenue Ruling 2002-32 can be relied upon to prohibit any CHANGE in employee elections for the second half of 2018?

Any thoughts are very welcome.

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!