In determining whether someone under the new fiduciary regulation is providing educational assistance to a plan participant or giving actual advice, when the investment professional is actually assisting that participant with completing a risk tolerance profile questionnaire/assessment-would that constitute advice since they are discussing the individual's personal situation...or NOT because it is the participant actually providing the answers and the investment professional is just there in case they had a question about how to complete the form?  Where is this line.  I've read a lot of articles, but it seems this is a pretty thin line...When do they become a 3(21) fiduciary or get to remain under a suitability standard?  

We have 401(k) participant who died in 2012 and at this point it is not clear whether or not he was married at the time of death:

·       He named son & daughter as beneficiaries in 2007, at which time he stated he was not married

·       He died in 2012; Death certificate shows him as married at time of death, identifies surviving spouse, and lists informant as the surviving spouse, relationship WIFE

·       Son and daughter are now putting in claim for his account balance; son says father was not married at the time of death but that his mother was trying to re-marry his father so she would get some of the money.

Sponsor is presently trying to get some clarification from “Wife” in the way of proof of marriage or an amended death certificate (if not married).

Meanwhile, I welcome any and all ideas on how to address this situation.  The 401(k) balance is in the range of $15,000, and the participant’s relatively small – there was no plan for going through probate.

This is in CALIFORNIA.  Also, what if they were married but in another country (San Salvador possibly).

Does anyone have a spreadsheet they can share with me on calculating ADP refunds manually? Not the gain and loss, the actual refunds. We have a plan that we don't put in Relius, so everything is done manually. Thanks in advance!!

ER has sponsored a SIMPLE IRA for several years for company employees.

Final EE contributions for 2016 plan year deposited in 2016.

Started a 401k 1/1/2017.

Just found out now (8/2017) that the 2016 ER contribution to the SIMPLE has not yet been deposited.

Is this 401k still OK for 2017 since the SIMPLE deposit is for 2016, but being deposited in 2017?

An employer adopts an amendment to cease the safe harbor nonelective provision with the appropriate 30 day notice.  Less than a week later, after speaking with the financial advisor, the sponsor wants to rescind that amendment.  Is that possible?  The amendment was executed and the notice distributed but is not yet effective.

401k plan failed to include bonuses in compensation for all contribution purposes (employee deferral and employer matching) for a number of years (employer only has payroll records back to 2006 but suspects that they have never included bonuses since the beginning of the plan in 1978 despite plan language).  Failure was discovered late last year and plan amended prospectively to exclude bonuses.  Employer wants to know if they can retroactively amend the plan to exclude bonuses from compensation for HCEs only (so no corrective contribution) but make a corrective contribution for NHCEs only to include bonuses in compensation for deferral and matching purposes.  Anyone have experience with submission of a correction like this in VCP?  My thinking is that the IRS would probably approve it since you are benefiting the NHCEs.  Thoughts?

Take a look at a new, optional, simpler 'theme' for the message boards. A 'theme' basically is a particular arrangement of the content on a web page.

To try it:

• Scroll down to the bottom of the page, and look for "Theme" -- click it.
• Then select the radio button next to "Responsive."
• The screen should refresh itself automatically, displaying the Responsive theme.

To revert to the default theme, just select the radio button next to "Default."

If you've been using a smartphone to read the message boards, you might not notice a difference from what you usually see. But if you use a desktop computer with a typically-sized (or wider) window on your screen, you'll see a difference.

Let me know what you think (please post a reply to this message).

Thanks!

Once upon a midnight dreary

While I pondered weak and weary

Would I get the plans, to go out the door?

Quote the Raven “Nevermore”

While I nodded nearly napping

Suddenly there cane a tapping

As of someone gently rapping

Rapping at my chamber door

It’s the IRS, whom I abhor.

             (they want more, ever more)

I slave all day, it’s such a pain

All these regs, oh my poor brain.

A raise I deserve, and much, much more

Quote the Raven “Nothing more”

Because of pensions, I have no life

No kids, no fun, nor even wife.

Are these plans the reason, I have nothing more?

Quote the Raven, “No, You are a bore”

The pension laws, change every few years

Brings most of us, to the point of tears

Who made the changes, so we could put away more?

Quote the Raven “It wasn’t Gore”

The pay is bad, the hours long

I often wonder, if I belong

I have no money, I’m always poor

Quote the Raven “Forevermore”

I do my job, I do it well

But all this work, is hell, hell, hell.

The boss is shouting, at my chamber door

Back to work,  Do this, do that and much, much more.

We have client merging pst plan into existing 401(k) with American funds. (Pretty close to open architecture but bundled)  Using Capital Bank and Trust as directed trustee. All work is complete and 25 million in assets liquidated ready to transfer.  At the 11th hour we have discovered small Wells Fargo stable value position that will not liquidate since this is not a plan termination but merger and AF will not hold or record keep.  They say can be held as an outside asset until maturity in 2018(we would actually liquidate sooner for distributions but can not now due to blackout) they will include the value in their reporting if provided. Need to know who should be custodian of this asset etc.? Anyone with any experience on issue like this? Would appreciate your comments.

A participant terminated 07/31/2017 with an outstanding loan balance.  She wanted to pay it back monthly after her termination.  The plan document says it's taxable to her the "day after termination". and does not allow her to continue to pay on the loan "forever".....Question: can she pay a lump sum now, and if so, roll it with the other cash to an IRA? .  How long does she have to pay it back and not violate/default on the loan now that she is terminated? and be able to roll it to the IRA?  I know usually loan payments are late the last day of the following quarter.   I hope this makes sense.  Thanks for any feedback. 

Have looked on the M&A forum but did not find much on PEOs there.  Know there has been a good bit of discussion on exiting PEOs in this forum in the past but haven't seen much recent or much addressing situation involving departure from a PEO plan due to corporate acquisition and am wondering what others are seeing as the most typical scenario of dealing with departures from a PEO.

Situation is this.  Small company grew to mid-size company.  Has used one of the leading national PEO groups for many years for payroll, welfare benefits and as participant in the PEO's 401(k) Plan.  Company is being acquired in a stock deal by large conglomerate with its own 401(k) plan.  Company will become a wholly owned subsidiary of conglomerate and participating employer in the conglomerate's 401(k) plan (and other benefit plans) so is terminating its contract with PEO and seeking to leave 401(k) Plan.  Employees will continue on doing same jobs with company as before but will just become part of the conglomerate's controlled group and will sever co-employment or whatever relationship they had with PEO.

PEO group has been inconsistent in advising on the options for addressing participants' accounts in the PEO 401(k) Plan.  At first said they would need to basically spin off or do plan to plan transfer to conglomerate's 401(k) plan.  Now are saying they can make distributions to participants and participants can roll over.  Conglomerate would generally prefer the later but mainly wants to do what is right with respect to potential distributable event and successor plan rules, etc.  We are still waiting to see plan provisions for PEO plan on the distribution terms there, etc.

I am curious though why the internal confusion at the PEO and also curious what others are seeing done in these situations which seem to be increasing with proliferation of PEOs.  I understand lack of regulatory guidance here makes some of this difficult but given the number of companies using PEOs these days it seems these are issues that should have pretty basic industry-standard options / approaches even if there is some gray area there.  PEO though seems to be looking to conglomerate for advice on how to handle which seems very backwards to me.

Appreciate any thoughts or insight from recent experience.

Individual A purchased a long-term care insurance contract from Insurance Company X in the 1990s.  X is currently in liquidation proceedings.  X is offering its long-term care insurance policyholders three options: (1) retain the same benefits at a substantially higher monthly premium; (2) continue with a policy providing for reduced benefits at a slightly higher premium; or (3) surrender the policy and receive cash in a single sum.  The amount of the lump sum payment greatly exceeds the total amount of premiums that A has paid on the contract.  Assume that A elects option (3) and receives cash.  What are the tax consequences of the cash to A?

I may not be on the right message board but I am wondering if anyone can verify that all my pre-tax deductions are exempt from workers compensation calculation.

I also understand that the 401K pre-tax deduction is not.

Any help would be appreciated

Cafeteria plan document contains language providing that a participant may modify or revoke an election under a 401(k) plan as allowed under Treas. Reg. section 1.125-4(h).  The 401(k) plan document, however, provides for an "irrevocable" election to transfer amounts from the cafeteria plan to the 401(k) plan.  As such, we seem to have conflicting language  in the plans.  My inclination is that the 401(k) plan should be amended to allow for changes to deferrals for the cafeteria plan mid-year.  Is there any reason why we should not allow for these mid-year changes?  Don't most cafeteria plans allow for mid-year changes to 401(k) elective deferral amounts?

Hi,

We have a plan that failed to put retirees in pay status for the past 3 years.  The plan provides that the lump sum benefits will be calculated using the interest rate as of November preceding the plan year in which the distribution is made.

Which interest rate do I use when calculating the missed payments? Do I use 2016 for all plan years (2014, 2015, 2016) since the payment will be made in 2017?  or do I need to use the Nov 2013 interest for 2014 payment calculation,  Nov 2014 for the 2015 payment and so forth?

Thank you.

A sponsor is top heavy in the initial plan year (i.e. 2015). We accrue an end of year match to reduce the TH ratio below the 60% threshold that would in effect, get them out of top heavy for both the initial and subsequent plan years. They neglect to fund the match.

During 2017 can they still fund the end-of-year 2015 match to reduce the TH ratio, or does that option go away and they now must fund the 2015 and 2016 3% top heavy allocation?

Thanks for any input.

Sometimes a tricky subject. Suppose you have a business that has a large majority of employees who might work anywhere from 500 hours to 1400 hours. The business would like to set up a plan that EXCLUDES ALL the H/C employees, as well as ALL the employees in the 500 to 1400 hour classification, and only covers the rest of the employees, who, (purely coincidentally) are full time. Don't really have any demographics or job classifications/functions yet.

The guidance on this is a little strange. Under 401(a)(5) for example, there would be no problem with excluding all these employees IF they here all hourly. If all the rest are salaried, then everything is clean.

On the other hand, under 1.410(a)-3(e)(1) you can't have an exclusion category that would "indirectly" impose an impermissible age or service condition. And you have QAB FY-2006-3 which give s some guidance.

Suppose you have an exclusion category that says anyone earning W-2 compensation of less than "x" is excluded. And everyone earning less than "x" isn't in the full-time category. This would not appear to pass the "smell" test, even though if everyone earning less than "x" was hourly, it would be perfectly acceptable to exclude them as hourly.

It appears that if the exclusion category doesn't relate to service, that it is generally acceptable. So would you say that using a salary level is acceptable? I keep returning to 1.410(a)-3(e) on this, but I think this doesn't ultimately impose an age or service requirement. I've just never seen a plan do this.

Thoughts?

Is there any legal requirement that an employee must be the beneficiary on a dependent life insurance policy?  I see this in many policies and I'm not sure why this is the case.  I have a situation where an employee designated his children as beneficiaries on the policy on his spouse's life.  The employee made this designation on the dependent life insurance enrollment form provided by the insurer.  The insurer did not object to the designation when originally made.  Unfortunately, the employee's spouse passed away recently and the insurer is now saying it will not pay the children because the policy language requires the proceeds to be paid to the employee.  I think if the insurer accepted the designation, they must pay the designated beneficiaries, even if that conflicts with the terms of the policy.  The only reason I can see for not paying the children is if there is some legal prohibition against naming someone other than the employee as a beneficiary on a dependent life policy.  Any insight would be appreciated.

Self-employed individual with a 401k/PS plan has a net schedule C  for 2016 (before 1/2 SE tax and before his PS contribution) of 100,000.  The 404 deductible contribution is 18587 (provided I did that math correctly).  He can contribute the 18587 for PS and then max out the deferrals, 24000.  The total deductible contribution becomes 42587.    The individual, however, made a contribution in excess of this amount.  Any suggestions on how to remove that excess?  could it be returned and considered a reversion subject to 4980 excise tax?  I understand about the excise tax for nondeductible and "using" up that amount in subsequent years, but there may not be compensation in 2017, so we are looking at how to remove it from the account, if possible.  

I've got a participant who took a hardship distribution from the plan to pay medical expenses (using the safe harbor hardship rules).  We now find out three months later that the participant used the money for other purposes... so those invoices are still unpaid.  Now he is asking for a hardship using the same bills he provided before (or maybe they are updated versions, but it's the same amount for the same place).  Is there any reason the Plan Administrator can deny the request under the regulations?  He has enough of a basis to take the amount again.  Thanks!