Is safe harbor match money eligible for age 59 1/2 in service distribution if plan document allows such distributions in a 401-k plan?  

Hello,

An employee deferred more than 18,000 for 2017 plan year but he is less than 50 years of age at the end of 12/31/2017. How we are going to solve this issues.

Thank you 

mmustafa

I'm hoping someone can help me with an issue that falls outside my typical practice area.  I have a client who wants to establish an accrual account into which the company would make annual contributions.  The purpose of the accrual account would be to reimburse executives for health insurance premiums (or to pay those premiums directly to the insurance company) upon retirement from the company.  To summarize, this account would be funded during employment, but would reimburse the HCI during retirement.

First question: is this considered a "self-insured" medical reimbursement plan under 105?  Or would it be considered a "fully-insured" health plan?

I'm somewhat familiar with HRAs (health reimbursement arrangements).  From my research, it appears that this type of arrangement would be required to meet the discrimination testing under 105(h).  However, if it's considered "fully insured," I'm unclear if discrimination testing still applies.

The other confusing element of this for me is the application of the ACA to these types of plans.  There were some early proposed regs stating that fully insured plans would have to comply with 105(h) discrimination testing, but I have not been able to find if those rules were finalized.

In short, the client wants to provide an executive benefit that would pay for post-retirement health insurance premiums on a tax-free basis.  (I know they can do this on a taxable basis through a 457(f) plan).  Any insights on this issue would be much appreciated.

With the upcoming 4/1/18 effective date of new disability claims procedures as related to plans which do not use an unrelated party to determine disability, I'm curious if there is a general push to amend these plans so that disability is determined by an unrelated party such as the Social SEcurity Administration or any licensed physician, or just leave as is and deal with the new, potentially more administratively challenging requirements.

I always thought that eligibility is not a protected benefit.  For example, a plan has a 3-months of service requirement and month entry dates.  Rhoda was hired on February 15 and would enter the plan on 6/1. 

However, in September that year, the ER amends the plan to require 1 YOS with semi-annual entry dates, and does not specifically exempt those already in the plan.

So, to me, Rhoda is no longer an eligible and active participant in the plan until 7/1 the next year.

Can someone point me to some guidance on why this is; ie, that eligibility is not a protected benefit...

EOB or the code would be cool.  I can't find it in Sal's book, but I'm sure it's in there somewhere...

Can someone clarify when match is forfeited vs when it is refunded when completing ADP and ACP testing?

Scenario - plan matches 25% up to 8%.   Independently both the ADP and ACP tests fail.   We've historically completed ADP and ACP tests "simultaneously" and refunded the respective elective and match to HCE's after leveling.  The permitted ADP for HCE's though falls below the 8% match cap so we're wondering if some match should be forfeited prior to running ACP testing.

So when exactly does match forfeiture come into play when correcting failed ADP and ACP?   In reading today, I came across ASPPA material indicating that non-vested match refund should be forfeited and that after both ADP and ACP are 'corrected' if any HCE's match % is greater than that of the NHCE's that portion should be forfeited.

We are a Relius office and the refunds calculated by the system supports running both tests "simultaneously" and correcting each independently as opposed to running the ADP test, getting refunds and then determining if any match should be forfeited based on those refunds.

This is a citing from another benefitslink posting that seems to support how we've historically been completing these tests:

Company adopted 401k plan w/ Safe Harbor effective 1/1/2018. An employee terminated in late December 2017.  Her final paycheck was paid 1/7/2018. Does the company need to make a 3% contribution on this final pay since it was paid in 2018?

Years ago before e filing, we had a large plan that filed right at the extension deadline with a "note" from the CPA stating something to the effect that the audit would be filed once completed. The plan sponsor filed the 5500 with the note and at some point after the extension deadline the audit was filed. Is this still an acceptable procedure? 

Let's say the company has a discretionary match provision chosen in the plan document. The company chooses to fund the matching contributions pay-date by pay-date. Let's say at the end of the year, the company decides that it actually does not want to fund the discretionary match. Can the company take away the matching contribution from the people who were funded?

Would like to clarify that when a key defers less than 3% (say 1%) then the top heavy minimum would only be 1% correct?  I keep on getting conflicting information that it must still be 3%.  Employer is not making any other contributions except THM.

suppose you compute the first rmd for a 5% owner on a 4.99% increasing life annuity basis. Does this imply that all subsequent year accruals should also be expressed as 4.99% increasing life annuity amounts determined at the end of the respective plan years when the additional accruals are measured?.

Do we have any guidance on how to allocate PPA funding results following a non de-minimis spin off? Specifically, how do we handle shortfall amortization bases, credit balance, and smoothed assets? If we are still operating without guidance, can you offer any suggestions on what you have done/seen?

If it is helpful, here are details of my specific situation. Plan spun out a non de minimis portion of participants at 12/31/2017 to a new plan as a result of a change in controlled group. Assets have been allocated and split as of 1/1/2018. The plan is over 100% funded on a PPA funding relief basis (but wasn't on a 4044 PVAB basis), smooths assets and has FSCB and PFB. 

I don't have much information, but extrapolating/guessing from what I do know, the following situation may be the actual situation, or close to it.

Suppose you have a non-profit foundation, that does whatever - provides canoe trips for blind dogs and cats so that they are less stressed.

They have a U.S. operation, and a Canadian operation. Let's ASSUME that the same board controls both organizations, so they are a related group.

The U.S. organization has a non-ERISA, deferral only 403(b). They have NOT been allowing the Canadian employees to participate, and there is no separate plan.

Now, I can't find where the Canadian employees (I THINK they are all Canadian citizens, not U.S. citizens) can be "excluded" under the Universal availability regulations. But, perhaps the plan could simply exclude all non U.S. source income COMPENSATION, which would accomplish the same thing, as they are paid purely for work in Canada? Or actually, as I think about it, they should be able to exclude Nonresident aliens, I think, which depending upon the circumstances should take care of that "problem."

Never seen a situation even approaching this, and curious if anyone else has? By the way, no highly-compensated employees, apparently.

A former participant had his account balance distributed in February 2017.  The distribution was processed as a direct rollover to his new company's 401k. The check was deposited in February by the rollover institution, Empower. The plan administrator never gave the authorization to Empower so Empower issued a check payable to our Trust, FBO the former participant, as a refund. The check was issued and mailed to the former participant in April 2017. 

The former participant sent us the refund check this week. He has held on to the check for almost a year.

Do we need to accept the funds back? The form 1099R was already issued. Also, we couldn't accept the check as we have since changed Custodians and the check is made payable to our old bank.

What options does the former participant have? 

Thank you

I just had a client ask me how long she is required to retain records (employment and other). Her auditor is telling her that she has to keep record forever. We generally keep paper copies for 7 year, and I just learned that we keep everything electronically - forever. Is there any formal guidance on this?

Thanks for any responses!

Small employer currently has no group health plan.  If the employer pays a "minute clinic" a flat per head fee (say $200) that entitles its employees to utilize the limited medical services the minute clinic provides at a discounted rate (say $40 per visit instead of regular $90 walk-in rate), has the employer established a group health plan subject to the ACA and ERISA? 

The problem here, of course, is that if this arrangement is a group health plan, it does not comply with the ACA and ERISA for several reasons, including, no free preventive services and no documentation of the "plan." 

Good Morning -

It is that time of year for questions on ADP/ACP Testing failures.  One of these years I will get this right.  Lets say you have both an ADP and ACP Testing failure.  Participants are 100% vested in the match.  Only one HCE is due a refund which is distributed out to the participant as an excess contribution.  My question goes back to the rate of match which I still cannot understand.  In this example, the HCE earned $200,000 in plan compensation and deferred $18,000.  The Plan provides a match of 100% on the first 3% of compensation.  The Plan contributed $6,000 to the HCE's account.  HCE receives a refund of $1,000 for the ADP failure and $500 for the ACP failure.  With the refund, the HCE now shows $17,000 of deferrals in the plan and a match of $5,500.  Is there an issue here with rate of match?  If not, then when is it an issue? 

Thank you!

401(k) Profit sharing Plan, new comp.   Doctors max out, staff gets minimum.   They currently deposit the 3% safe harbor with each payroll and would like to do the same with the profit sharing.   Anything negative with doing this?   No LDR, or hours requirement for P/S.    

If they do this, for the HCE's that max out,  would it be better to divide the non-elective P/S that they will receive and do that per payroll, or to contribute the percentage each payroll and stop when they hit the max.  

I've never had anyone that wanted to deposit the P/S each payroll.   

Client initiate new 401(k)/PS plan effective 1/1/18.Plan consists of three participants, father and 2 sons, no common law employees.

The makeup of the company is such that they do not have steady income, but rather receive in huge chunks during the year.

Can they make their deferrals in one shot during the year?

I remember somewhere that as long as the income for the month is at least the max deferral, this would be kosher, but never ran into this situation before.

Can a governmental 401(a) DC plan require rehired eligible employees, who were 100% vested at termination, to repay their entire distribution in order to have vesting service restored? The rehire would need to repay the distribution the earlier of 5 years after their rehire date or 5 years after the distribution was paid. If paid within this period the rehire will be 100% vested. (Yes, they want the 5-year period to begin after the distribution date and not the termination date.)

Thank you.