Generally, a small defined benefit plan must be at least 110% funded after a lump sum distribution is paid to an HCE. Is this also the case for a cash balance plan?

Thanks.

Puerto Rico only (not dual qualified) defined benefit plan is terminating.  US financial institution has indicated that it can only sell annuities to the plan if it has some kind of presence in the United States.  Anyone familiar with where this rule can be found and what qualifies as a minimum "presence"?

I have a self funded health client offering 7 (yes 7) different health plans.  One of the self funded health plans is solely funded by employee contributions.  How does the law speak to excess contributions?  What rights does the employer have to these monies?

Let's say the plan allows for loans to be rolled over, but does not allow new loans to be taken. A participant rolls over the loan from the previous employer (let's say that employer has weekly pay frequency, so 52 loan payments were made a year). The new plan has bi-monthly pay frequency (24 pay periods). Since the new plan does not allow for loans, should the amortization schedule stay the same as it was with the previous employer or can it be changed to a bi-weekly schedule? Also, if the amortization schedule is changed, there might be a slight discrepancy (by a few days) when the loan is paid off. Is that allowed?

Thank you.

I have a participant who has said he would like to stop loan payment withholding from his check because he can no longer afford them and treat it as a taxable distribution.  My first thought is he can't while he is still employed there.  The loan paperwork (which I have not been able to lay my eyes on since new plan in transition to us) should state that it is an irrevocable pledge and conditional upon payroll deduction repayment.  As the plan sponsor, I would think they could not just stop collecting the repayments since it is their job to ensure repayment to the plan.  My next idea is to explore a hardship to pay off the remainder of the loan but I am waiting on the participant to express an immediate and heavy financial burden in one of the safe harbor instances.

Thoughts on the ability of the plan sponsor to stop withholding the payments?  I would think this would be prohibited  transaction land.

Can an HCE Top 20 election in a volume submitter document be amended out any time before year end? 

Deceased participant has 4 beneficiaries ... 25% each.

Should all 4 claims be processed at same time or can they be done as received, each receiving 25% of the account as of the date of processing?

I'm taking a poll here. Since 403(b) plans are not subject to the 4975 penalties, late deposits of deferrals are not subject to paying the excise tax on a form 5330.

My poll question is this - when you have late deposits of deferrals on an ERISA 403(b) plan, do you:

A. Do nothing.

B. File under VFC, under the approach that ERISA 502(i) applies.

C. Other.

Spouse left for his home country more than 10 years ago.  Participant passed away last month and adult children want to make a claim for mother's 401(k) Plan assets.

Any thoughts?

Suppose you have immediate eligibility for deferrals, but are in a classification (Red Sox fans) that is excluded from receiving an employer match.

The language in 1.401(m)-5  would seem to say that you are not included in the ACP test, as you are not "eligible" to receive a match. Any other opinions?

I've never seen anything on this, which probably means it is ok. I haven't done any research, but just wondered if anyone knew if there was a specific exemption? In other words, generally if a qualified plan operates an active trade or business, the income derived from that business may be subject to UBTI.

What about a ROBS plan, where the plan owns the stock, or nearly all of it, in the corporation? Does UBTI generally apply, or is there a special exemption? Maybe I'm out in left field on this to start with...

Professional Corporations A & B are partners in an LLP.  These 3 entities comprise an A-Org affiliated service group.  They sponsor a 401(k) plan for the PCs and the LLP.  All employees are covered and both PCs and the LLP are adopting sponsors of the plan.

They decide to merge practices with another firm.  The assets of the LLP are first distributed to the two partner PCs, then the two PCs are merged into Professional Corporation C.    A and B's shares are exchanged for shares in  C.  PCs A&B cease to exist. 

PC C has its own 401(k) plan.  A&B's 401(k) plan was not terminated prior to the merger.  C would like to terminate it now and distribute the assets to participants. 

Is C's 401(k) plan a successor plan for purposes of 401(k)(10)?   What complicates this is, except for the sole shareholders of A & B, all the other employees were employed by the A&B LLP.  The LLP terminated them, and C hired them as of the date of the merger.  So the employees terminated employment from the A&B plan sponsor.  

IMO C's plan could very well be a successor plan.  By the merger of the corporations, A&B, who co-sponsored their plan, are effectively part of C now, and C is effectively the sponsor of A&B's plan, and A, B and C are essentially one Employer.  The employees who were employed by the AB LLP and participated in the AB plan are now employed by C, who has (perhaps unintentionally) taken over sponsorship of the A&B plan.   So terminating that plan now, C's plan precludes in-service distribution to employees under 59-1/2 who are not otherwise eligible for a distribution. 

Does anyone see this differently.  I've read the merger agreements and believe this accurately describes the merger transaction. 

The plan administrator inadvertently allows a participant to exceed the plan dollar amount limits when taking out a second loan (second loans are permitted). 

The plan permits in-service distributions.

At the time the loan is taken out, the participant is already 59 and 1/2.

The error is found several months later. 

Because the participant was already 59 and 1/2, I believe that the excess amount over the dollar limit should count as a distribution (as opposed to a deemed distribution) and the payments (principal and interest) that have already been made should be applied to the correct loan amount (i.e., the amount that is left once the excess has been characterized as a distribution).  In addition, the employer must issue a 1099-R.

No VCP is necessary.

Am I missing anything here?

Thank you

Hello,

Does anybody have any language (perhaps from a conference) that shows what would be considered a timely corrective distribution?  I know it's 2.5 months after PYE but I'm looking for something specific like check date, assets segregated from account by, etc ...

Thanks!

Participant had an accident and out on unpaid medical leave.  He wants a 5 year loan.  Plan doesn't allow hardships and employer is only willing to allow payroll loan repayments.   Can he take out a loan now with no repayments until returning (before a year) and then have the loan "reamortized?"  In other words, do you have to already have a loan in place before you can take advantage of loan repayment forgiveness for leave of absences?

401(k) plan document reflects the "maybe" 3% non-elective safe harbor option.

Plan sponsor received an election form from TPA, selected "I will amend the plan to trigger the safe harbor for 2016", distributed the required notice to participants on a timely basis and actually made the contribution within the requisite period.

Sponsor now realizes they never executed the required plan amendment.

Anybody have any experience/success with a VCP filing to fix the error via a retroactive amendment?

This may not specifically by a 403b question, but it is happening in an ERISA 403b, so here I am.

A participant has been trying to roll her money into the plan (I believe from a former 403b) for about six months, but due to... less-than-stellar 'assistance' from the financial advisor, it still hasn't happened.  She has calculated that the amount she would have earned based on her fund selection less her earnings in her old account is ~$140 (her math looks pretty spot-on), and she's wondering who owes this to her.  The HR dept seems willing to pay it just to make peace.

Let's ignore the idea that since she controlled the money, she could have invested it however she wanted in the interim and therefore is responsible for her own lack of investment gains over this timeframe.  Of course, I can't find any legal justification for the NFP to pay this amount - there are only deferral and match in the plan, so I can't do anything creative with profit sharing (well, I guess I could since she's not an HCE, but that seems extreme for this small amount).  Is there any legitimate way for the employer to make her 'whole'?

And, yes, I'm already trying to straighten the broker out so this doesn't happen again.  I suspect there's even less legal standing for their firm to deposit that amount.

Thanks.

We have a prospect who asked us to bid on the profit sharing plan.  At the presentation I earned for the first time they had a 401(k) bundled with a record keeper.  The record keeper has no role with the profit sharing plan. I find out the top heavy test has not been performed for the PS plan.  And when answering the record keeper's year-end questionnaire, the plan sponsor correctly indicated there was another plan but was told that the PS plan did not affect the k plan top heavy test.  Of course the PS plan at a minimum has to be top-heavy tested. 

I have not researched this thoroughly as it just came up.  But what I saw so far is that 2 plans of an employer must be aggregated for top heavy purposes when there is at least one key employee in both plans  "AND" the plans are aggregated for passage of 410(b) and 401(a)(4). I question the word AND in the source I saw.  So if both plans include a key employee but pass 401(b) and 401(a)(4) on their own, then there would be no aggregation is required for top heavy purposes.   That seems to be a big loophole.               

We have 3 plans, CDHP< PPO & PPO Plus with PPO plus being most generous and highest cost

Can an employee who gets married change his plan option from PPO Plus to CDHP or vice versa(if in CDHP chnage to PPO for example?

thnaks

Lexy

I have a plan with a 5% owner that has been taking RMD's each year since turning 70.5.  The plan also has ADP/ACP testing.  This year the plan failed and the 5% owner had to take an excess distribution from the plan.  Would this count as a part of his RMD?