Like many people, I'm looking for methods to have these regulations not apply to normal 401(k) plans. Amending hundreds of plans (and attempting to explain this crap to clients) isn't high on my fun list. Sure, we can do a plan sponsor level amendment - and that's probably where we'll end up...

So I toss this out there for you attorneys. Suppose a pre-approved Plan document currently says that the determination will be made by a licensed physician. Doesn't specify who chooses the licensed physician. If the Plan Administrator institutes a written policy that the determination of Total and Permanent Disability is made by a licensed physician CHOSEN BY THE PARTICIPANT, (and also accepts a SSA determination or under the employer's LTD program) is this sufficient to remove discretion, so that an amendment isn't even necessary? (I'm not saying this is necessarily a good idea - in fact, might be a very bad idea if participants get names of licensed physicians who are "easy" and will certify practically anything.) Just trying to look at any angles. It is frustrating, because the real life application of all this is so limited and a denial situation so uncommon that it is a whole lot of time for, generally, nothing. Whoops, I guess that describes my life in the TPA world.

Is it just me or is this the most over-hyped "thing" in the last 5 to 10 years?  I can't have a conversation with a recordkeeper or advisor without someone blurting out "3(21) and 3(38)" (and usually having no idea what they are saying).

It seems that any real protection is from participant lawsuits - in the small plan market, that is simply not a threat.  Is the DOL going after anyone for having "bad" investments? 

And...I know these services are inexpensive or "free" but it seems to me that to the extent there are costs, they are borne by the participants, but trustees and advisors are the ones being protected.  How wrong is that?!

Company A sponsors Plan A; Company B sponsors Plan B. After Company B buys Company A, Plan A is frozen and merged into Plan B. Company A employees begin accruing new benefits under Plan B.

I'm being told that the Suspension of Benefits Notice that Company B provided is only good for the new benefits and not for the old benefits, but I can't figure out why. (I'm getting this second hand and haven't seen any plan documents or the notice yet).

Any thoughts?

I'm sure this topic has been beaten to death here, but this is an extreme case to ask how much flexibility do plan sponsors have with individual class based.   

Profit sharing only plan has the provision that each participant is in their own class for allocations.    Plan has immediate eligibility.   There are no compensation exclusions and no annual hours or last day condition.  The plan is not top heavy.

Client identifies the following who gets an allocations:

.  Owner employee (single HCE) maxes out

.  Owner identifies lowest paid individuals only statutory group and allocates just enough % of them to pass a4 including average benefits and gateway - yes, kind of like a bottom up qnec. Gateway is only given to these individuals.

.   A couple of those lower paid individuals were excluded because they didn't work at least 1,500 hours and employed on last day.

If individual class based has this much flexibility, why does any plan's profit sharing provision have an age/service, annual condition, compensation exclusions and employee class exclusions?  All you need is for the employer to fill out a formula questionnaire each year to instruct the plan administrator who gets an allocation and how much.    

We are helping a client search for a 403(b) Recordkeeping and Administration Services provider and they are interested in including companies that are MWBEs in their bidding process.  Is anyone aware of any MWBE companies that provide Recordkeeping and Administration Services for 403(b) Plans.

Our Retirement Plan transitioned recordkeepers at the beginning of 2016. We don't have that many, but from time to time we will get QDROs in that require data and/or earnings calculations from prior to 2016 and we'll have to request that from the prior recordkeeper.  For a while they were really good about providing the information relatively quickly.  Now it is taking upwards of 6 months to get anything out of them.  We have 3 QDROs currently pending that we are waiting for data from the prior recordkeeper that have been outstanding for more than 3 months.  Is there any recourse against this recordkeeper (other than what would have been stated in the original contract with the recordkeeper)? Obligations as a holder of data that is governed by ERISA?  I generally recommend new QDROs from incorporating provisions that need data from prior to 1/1/2016 to avoid this, but from time to time we'll get stale QDROs in (one participant waited 10 years to submit the QDRO to us). 

Suppose you have a company that sponsors a traditional DB plan and 401(k) plan with a December year end.

1. The DB terminated April 30, 2017 so no participant accrued a benefit for 2017.

2. The DB and 401(k) plans are top heavy as of 12/31/2016.

3. The plan documents indicate that a 5% top heavy minimum will be funded in the 401(k) plan instead of the 2% top heavy minimum in the DB plan.

Question: Since the DB plan terminated in 2017 without any participants receiving a benefit, can just a 3% top heavy minimum be funded in the 401(k) plan for 2017 or must the 5% be funded?

Thanks.

The prior TPA filed an anonymous VCP for the client. The IRS blessed the correction and invited the client to file it as a regular submission. With respect to the actual filing process, do we just file a regular VCP submission and we include as an attachment the IRS approval of the anonymous filing?

If your company has a tuition reimbursement plan, what is your lifetime max reimbursement?  We are currently doing $3,000 per year (undergrad) and $5,000 per year (grad level) up to a lifetime max of $20,000.  We are reviewing/revising this policy and I'm curious what everyone else does for the lifetime?

Just wondering what the rest of the world encounters in "real life" on this. Plan is set up to be a non-ERISA - deferral only plan. In order to avoid ERISA status, there are operational requirements in addition to the Plan provisions. So, the Plan/Administrator, upon receipt of the DRO, refers it to the Vendor, 'cause the Plan Administrator doesn't want to kick Plan into ERISA status by making a determination if it is a valid QDRO or not. The Vendor kicks it right back, and says, "I'm not going to make this determination."

A similar situation could occur with hardship withdrawals, for example.

How do you folks and/or your clients typically handle this? You are between a rock and a hard place...

in the other day's newsletter

https://www.spencerfane.com/publication/congress-eases-restrictions-hardship-withdrawals/

basically it says

can include earnings from deferrals

don't have to require ee to take loan first

don't have to suspend deferrals for 6 months

plan would have to be amended for these provisions, after 12/31/2018. entirely optional, not required to amend.

As part of a plan merger we are looking at one of the plans subject to the merger.  Organization has four owners who each have established their own LLC and elected to be tax as an S Corp.  Each LLC owns 25% of the organization and is receiving guaranteed payments from the Organization.  Each S Corp is then paying W-2 compensation to the owner from proceeds received as guaranteed payments.  Current arrangement allows each S Corp to have its own retirement plan and be tested separate from the Organizations plan.

The TPA firm says based on ownership and related that they should not be considered related organizations for retirement plan purposes.  The Organization is in a service business.

I am trying to explain the technical reason they should be considered one plan for testing purposes.  Any thoughts?

While reviewing W-2s for 2017, client informs me one of the employees was employed prior to the effective date of the plan (1/1/16)  and was rehired 11/5/16.

Since there was no plan prior to his leaving the company, isn't he treated as a new employee and thus, the waiting period would apply??

Due to an error in the clients payroll system, a participants deferral was not taken for the plan years 2016 or 2017. They received their 3% SHNE, which was the only employer contribution. With the new 25% corrective contributions, can they still do this? 

I just want to make sure when it says "the last day of the second plan year after the plan year in which the failure began (which was 2016) - so that would be by 12/31/18 correct?

Hello,

If a MEWA plan is level funded, can it possibly be considered fully-insured?  And if it has not existed for a year, does that give us any out from being considered a MEWA?  Seller is part of a MEWA and hasn't been in compliance with state insurance laws.

Someone was full time and has received discretionary non-elective contributions.  They are now seasonal and working 300 hours per year.

Plan doc says forfeit after 5 Breaks in Service.  Would you forfeit while still employed?

I am working with a governmental 457b for a hospital. They have multiple plans, of which one that the hospital contributes on the behalf of participants up to the deferral limit. The question is whether the employer is limited at the 402g limit before catch up, or if they can contribute up to the additional annual catch up limit? The employer has contributed $24,000 to a participant for 2017. Do we need to return $6000 so that they are only funding $18,000? 

My thinking is that the catch up is only available if the participant actually defers, but not sure.

Thanks!

I have a retiree that is interested in starting an individual 401(k) plan to defer some consulting income he is going to receive over the next 3-5 years.  He also receives compensation from serving on the Board of Directors for two businesses (paid on a 1099).  Does anyone have a resource on whether or not the Board compensation could be deferred into the 401(k) plan?

Have two unrelated entities that are merging into a new entity (a type A or C reorg, accountants working out details).  They wish to also merge their respective retirement plans.  Both calendar year plans.  Plan A is a safe harbor 3% QNEC, Plan B is not safe harbor and has a matching contribution.

They wish to merge the Plans asap (during the year) with the new merge entity accepting sponsorship of the merged plans.  And want the merge plan to be safe harbor 3%.

I am trying to find guidance on how to handle - can we treat the merged plan as new and adopt SH provisions, do we have to wait until 2019, etc.  Any thoughts would be greatly appreciated.

Thanks.

Is it a REQUIREMENT for the filing authorization to show the EIN? We've always put it on the form routinely along with the Plan name, number, and Plan Year, but I'm not sure if it is actually a requirement. Just curious...