Unique situation - would appreciate any thoughts/insights.

Background: Participant worked in disqualifying employment for more than a decade while receiving pension benefit. Administrator found out and suspended benefits several years ago. During suspension (and continued DE), participant reached age such that benefits should have resumed at 75% rate, but didn't. Consequently participant has received a large overpayment, but also didn't receive 75% benefits for a several-year period during which they should have been paid. We're now trying to set things straight.

Question: Must the fund repay several years' worth of unpaid 75% benefits in a lump sum, and then resume monthly reduced benefits? Or can the fund simply offset that unpaid amount against the participant's overpayment, arrive at a net overpayment, and then resume monthly reduced benefits? This is apart from any separate action the fund may take relative to the overpayment - just want to get the resumption of benefits right.

Sorry if this has been covered before but I also have variations on the initial question that may be unique:

Situation: Sponsor has DB and SH DC plan. 2 NHCEs. HCE1 is sole owner and only Key, non-owner HCE2. Since no PS in DC Plan that plan is exempt from TH. DB document says any TH to be provided under the DB.

Q1: Would the TH minimum in the DB be 2%- or 3%- of pay?

Q2: If any PS contribution were to be made in the DC plan then would the answer to Q1 change?

Q3: If HCE2 were excluded from DB plan would any TH be due them under DC plan if no PS made to DC?

Q4: If HCE2 were excluded from DB plan would any TH be due them under DC plan if a PS were made to DC and would that TH to HCE2 be 3%- or 5% of pay?

Today's BenefitsLink news hyperlinks to a prepublication text of a proposed rule (to be published in tomorrow's Federal Register), which would decodify many Treasury rules.

https://s3.amazonaws.com/public-inspection.federalregister.gov/2018-02918.pdf

Among the rules that would be "removed", there are some keyed to Internal Revenue Code sections 401-412.  These include 26 C.F.R. section 1.401-11 through -13; 1.401(e)-1 through -6; 1.404(a)-4 through -7 and -9; 410(b)-1; 1.412(I)(7)-1; 11.402(e)(4)(A)-1, 11.402(e)(4)(B)-1.

Is the Treasury department correct in saying each of these rules no longer has any usefulness?

Or is there a rule (among those proposed to be removed from the Code of Federal Regulations) that states still-useful guidance?

If a terminated participant who has not been paid out, is rehired part-time, wouldn't they have to get the 3% non-elective contribution, as there is no hours requirement for the SHNE?

I would think so, accountant says no.

I recently came across the ISAR or In-Service Alternative Rollover.  It seems there is an investment management company and another company offering to "certify" advisors to walk clients through this process, apparently involving hiring an attorney to facilitate an in-service distribution of 100% of assets with no adverse tax consequence and continued participation in the plan while employed. Must be married and is a one-time event.

According to their marketing material, "This additional legislation expanded the ERISA recognition of a plan participant’s marital estate and made the ISAR transaction possible. The ISAR has technically been allowed since 1984 for plans subject to ERISA, and was first used successfully in California in the mid 1980’s."

Has anyone heard of this or have experience with it, or know what they are actually doing to facilitate this kind of event? I'm not asking because I would recommend it...frankly it sounds sketchy to me and would introduce at least a perception of an inherent conflict of interest for any advisor or insurance agent recommending it to a client. However, I try to stay current on industry trends and this is one I've never heard of before today.

Thanks.

I'm using Relius.

Eligible participant terms with 256 hours during plan year.

She does NOT show up in my 401(a)4 testing, however she shows up in the Average Benefit Testing.

Should that be?

I thought term < 500 hours and you are excluded from all general testing...

 A spouse is trying to submit a beneficiary distribution request to a plan; however, the plan has a beneficiary form on file from 2011 where the same spouse signed and notarized a waiver to allow their grandchildren to be beneficiaries to the account.

Is there any issue in providing the spouse with a copy of the form so he see that he consented to waive his beneficiary rights? Since he would  have seen it when he signed it I don't think it would be a  problem but want to be sure i'm thinking correctly.

My husband retired in 2013 as a HCE and rolled his 401k into IRA. He’s now 701/2, and he took RMD In 2017.  He received a letter in Dec. 2016 notifying him that the plan failed ADP test for 2013, and that they needed to give him a distribution of the excess, but since he retired and rolled his 401k into IRA; that he would need to take distribution from his IRA. A 2013 Corrected 1099R was issued to him by the plan administrator in January 2017.  

We did not Amend 2013(missed deadline). 2016 we withdrew some from IRA and paid tax on it as Normal Distribution. Jan. 2017 he withdrew correction amount from IRA plus he took RMD for the year. 2017 1099R from Vanguard shows both as Normal distributions.

Should the correction amount be coded as P on 2017 1099R? Should this portion of our IRA distribution be broken out as Other Income rather than included with Normal IRA distribution?

Thanks for any advice. The correction is an insignificant amount, but I don’t want to handle this incorrectly. 

Reviewing a takeover plan, and found what seems to me to be a bizarre (and inapplicable) provision.

This is a PRIVATE college - non-governmental in every way. The adoption agreement defines, for faculty only, compensation as including "Employee contributions described in Code Section 414(h)(2) that are treated as Employer contributions."

This wasn't a mistakenly checked "box" but was specifically drafted into the compensation definition. As I read 414(h)(2), I don't see how it can possibly be applicable in this situation. Am I missing something obvious here? 

FT William document with  "New Comparability - One Group per Participant" selected as the Allocation Method.  The are only three participants; owner, owner's daughter and job-cost estimator, all earning roughly $100k this year.

Estimator quit after year end.  Owner wants to skew contributions in favor of himself and daughter, if possible.  He's also considering no contribution. 

Limited reading sees to indicate that I could at least limit the estimator to 70% of what owner and daughter (owner by attribution) get - say 17.5% of pay vs 25% of pay.  But I get the sinking feeling that I have to look at the "reasonable business classification" portion of the Average Benefit Test to do so.

So, is Owner/Non-Owner a reasonable business classification?  All I find are "great debates" from ASPPA and limited examples in the regs.

The 2007 415 regs state  the 415$ limit post 65 is the lessor of the age 62-65 $limit increased by the lessor  of the statutory factors or the ratio of the (benefit at the asd)/(benefit at age 65)* 62-65$ limit. the "benefit" used is to be exclusive of post 65 accruals. Suppose someone enters the Plan at 65. then this second ratio at any asd will be 0/0. If this ratio is 1 then there is no adjustment to the $ limit post age 65 since 1 is less than the statutory increase. If it is infinite(/0) then we use the statutory(5%&applicable qx)increase since it is clearly the lessor. Alternatively,  is the reg just poorly written since in all thereg  examples the participant  had an accrual at 65; so just use the lessor of the plan's ae and the statutory basis which is what seems to make sense and what everyone has espoused for years? Note the 10 yr reduction would of course apply thru 74 and am not considering here forms other than a straight  life annuity.

DOL Regs 2520.104-50 regarding short plan years/deferral of audit report.

(b) Deferral of accountant's report. A plan administrator is not required to include the report of an independent qualified public accountant in the annual report for the first of two consecutive plan years, one of which is a short plan year, provided that the following conditions are satisfied:

(1) The annual report for the first of the two consecutive plan years shall include:

(i) Financial statements and accompanying schedules prepared in conformity with the requirements of section 103(b) of the Act and regulations promulgated thereunder;

See 103(b) from US Code (definition of financial statements)

https://www.law.cornell.edu/uscode/text/29/1023

Taken from this link:

(2)

I don;t understand how a non-profit could be subject to prevailing wage laws,, but it has something to do with their clients working on federal projects under some "put people to work" program.

Anyone see any reason why this cannot be done in a 403b plan?

What software do you use that you wouldn't give up unless they pried your cold, dead fingers from the keyboard?

Mine: ClipMate (for Windows). Records every copied item, so I can copy (contol-C) multiple text items in sequence and then go back to fetch any one or more of them (for purposes of pasting into a new text document, for example). The standard Windows clipboard (control-C) only holds one copied item at a time, and overwrites any earlier-copied item.

I can even paste the earlier-copied items one by one into an ordered list in a new text document, by hitting control-V repeatedly.

Does any body who owns or runs a TPA have a good grasp how tax reform may affect our industry?  If so I'd be interested in your thoughts on whether your typical TPA is a "Professional Services Firm".  Would be nice to take advantage of the 20% deduction on pass through income if it's available for a lowly pension administrator :).

My Ex-husband and i were divorced 3 years ago. I completed the QDRO paperwork, paid for the processing and received a response back from the administrator stating there were no funds in the account. Any suggestions on what or how to proceed collecting from my Ex the funds that were in the decree? FYI, my attorney took another job and doesn't return my calls so I'm really in limbo at this point. 

403(b) plan for a 501(c)(3) organization - now owners. A highly compensated employee terminates on, say, 12/31/2015. Receives a last paycheck in early January of 2016. A deferral is withheld from that final paycheck in 2016. Plan has a last-day requirement for match, so no match received on that 2016 deferral.

When testing for coverage/nondiscrimination, is he counted as a HC for 2016? Or since he formally terminated employment on 12/31/2015, is he not considered HC for 2016?

P.S. - don't waste any time on this, as it is purely "idle" curiosity - didn't have any effect on any testing, etc.

I paid excise tax for an LLC (Form 5330) relating to employee benefit plans and just wondering if this is a deductible expense for the federal and CA state return. Hoping for some insights. Thanks!

Last year, Plan Sponsor amended their document mid-year to change from a safe harbor non-elective to a safe harbor match.  A new notice was issued and safe harbor matching contributions have been made ever since.  Previously, the plan provided for a discretionary match as well. I understand that this was an impermissible change mid-year re-Notice 2016-16 and needs to be corrected.  However, I am inquiring on thoughts on how to best correct this issue.  I'm also struggling on the match piece as participants likely signed up once changed to the safe harbor match in expectation that they would receive 4%. 

Thank you!

There seems to be a consensus, based on various Q&As on this forum, that an employer cannot maintain a 5305-SEP and a 401k in the same year.  I am not sure I agree with that.  Can someone please provide a source for this?  I see on the IRS website that an employer may not use a Form 5305--SEP if it maintains any other qualified plan -"maintained" means even if no contributions are made - but if an employer terminated the SEP as of 2/28/18 and then started up a 401(k) plan on 3/1/18, wouldn't that be acceptable?  In that instance, the employer is not "maintaining" both plans.  Yes, it would have had both plans in 2018, but they weren't maintained at the same time.  I can't find anything from the IRS that would prohibit this fact pattern.  Any thoughts?  Thanks!