Curious as to any opinions here. Suppose you have to terminate an ERISA 403(b) plan. As with most of them, an old document that was tossed together in 2009. 403(b) plan terminations are a bit "gray" at the best of times, but there's an additional issue now.

Do you have to restate it prior to termination? Or, do you interpret things such that as long as it is restated prior to the end of the restatement window, you don't have to? While it is clearly the safe approach to restate, I'm just curious as to how folks are approaching this question. Thanks.

P.S. FWIW, in the absence of additional guidance/information, I would always restate.

I'm getting ready to do the DOL filing for the Top Hat Exemption and noticed that the DOL has a means for electronic filing.  But I can't tell if e-filing is now required or is still optional.  I have a mailing address that I used a few years back, but not sure if that's still the right address if we can still do a paper filing.

have a part time employee who earned more than $5000 in 2015 and 2016 but was not employed by us on January 1, 2017.  our first plan year started January 1, 2017.  It was reasonable to say that the employee was not expected to earn $5000 for 2017 since he was not employed by us.  We did rehire the person in March and is expected to be with us until the end of the year.  Is this person eligible to join the plan or is the eligibility only established as of January 1, 2017.

Can a household employer establish a 401(k) plan on behalf of the household employees & be exempt from the 4972 10% excise tax on nondeductible contributions if the plan restricts contributions to only elective deferrals? Elective deferrals are not taken into account for purposes of Sec 404 deduction limits, so I'm assuming this can be done.

A Simple plan would be the alternative, but they require employer contributions.

Hello.  We filed a Form 5308 (request to change plan year) for a client for a 401(k) plan that was originally a calendar year plan, then changed to an off-calendar year plan 2 years ago and has now change back to a calendar year plan.  The form was submitted in October 2016. 

Do anyone know how long the turnaround time is usually for the Internal Revenue Service, Commissioner, TE/GE to acknowledge receipt of form.  Or, do you know who the client might be able to call to get an update on the status of the request.

Good Morning!

I have a client that sponsors a 401(k) plan with employer stock as an investment option which pays quarterly dividends. The sponsor has elected to give the participants the option to either receive dividends as a cash payment or to reinvest back into the plan.

It looks like we're counting these dividend payouts as normal distributions so, for any participants with employer stock in a Hardship eligible source who has elected the cash payout option for dividends, we are reducing the amount available for Hardship for each dividend payout the participant receives.

So, my question, is this correct? It seems to me that, since dividends are classified as earnings if they are reinvested, payouts should be considered a distribution of earnings and not principal and shouldn't have an effect on the Hardship calculation.

I've not been able to find anything that addresses this specifically, so any thoughts on the matter are appreciated.

Thanks!

Calendar year large SH 401(Comp. A) merged with new company (Comp B) in 2016.  All assets of Comp A were transferred to B by/on 12/1/16.  Plan A has until 7/31/17 to file 5558?  I am of the opinion the correct plan year end would be 12/1/16 since that is the day the trust of Plan A went to "0"

Potential client started up a typical 401(k) plan with safe-harbor match and profit sharing as of 1/1/2012. Plan number: 001.

In 2015 they moved their money to John Hancock and got a new document with an effective date of 1/1/15 and when 5500-SF forms were done for 2015 there was a final one for 2015 under 001 showing assets transferred to a new plan (002) and a first one for 002. Plan 001 listed an asset transfer and not payouts and question 13a on whether there was a resolution to terminate the plan was answered 'no'.

Questions:

1) Is this proper?

2) Would there be an issue with the mandatory waiting period after terminating a 401(k) plan?

3) How would you proceed? Amend 2015 filing for 001 and continue filing under 001 or go ahead with 2016 filing under 002?

A 401k Plan Sponsor sent a  payroll file with deferrals for a participant  whose check was later voided.   So bottom line he had a deferral deposited into the plan assets on money he did not receive.  What is the BEST way to handle this as far as correcting the error?  It's a small amount - $9.75, but the platform wants $100 to correct it(move it to the administration account)..

Feedback please.  Thanks

We have a DB plan that terminated in February 2017. After all of the participants were paid, there were still surplus assets. The plan sponsor would like to reallocate 20% of the surplus to the participants so that the excise tax on the remaining surplus is reduced to 20%. A couple of questions:

1) A participant terminated employment in May 2015 and was paid in November 2016. Must she be included in the allocation?

2) The plan benefits were paid to participants on various dates, as the distribution forms were returned. As such, the PVAB's were adjusted to the dates of the payouts. Now that we are allocating 20% of the surplus (and assuming that allocating based upon PVAB's isn't discriminatory) the PVAB's for the allocation would all be as of a single date - correct?

Any responses would be appreciated!

Governmental defined benefit plan has a 50% Social Security offset at age 62 for retirees.  The offset is based on earnings only while an active plan member.  For example, a 45 year old plan participant "retires" after 15 years and his/her Social Security offset amount is only based on those 15 years.  Does anyone know how to calculate the offset using only specific years of earnings?  In this example, how are you able to determine what the SS benefit is at age 62 since it is 17 years in the future?     

Thank you.

I have a plan that failed ACP and the client wants to contribute a QMAC to fix it (given to only those who defer).  Less than half of the eligible employees deferred.   I believe the disproportionate rules that apply to QNEC's also apply to QMAC's, correct?  If so, then the Representative Contribution Rate would be zero, since less than half of the eligible employees received match.  Does that mean that they cannot contribute a QMAC to correct the ACP Failure?

We mostly administer HRA plans for terminated employees for employers that use Hour Banks or prevailing wages. The money is fringe dollars and does not belong to the employer as normal. 

We have a plan that has one employee left on the plan and the employer wants to terminate the plan. The employee still has $259. What should be our process for this?  Give the money back to the employee in a check?  The employee has a debit card to spend the money but has not used it yet.  Our big problem is the employees move so often we do not always have a current address.

Just want to see if I've got this right - if a participant terminates after age 55 and 10 years of participation during the 6-year diversification period, they continue to be able to diversify, correct? Or does that go away when they terminate employment? I believe it is the former. Thanks.

I have a plan that does not pass coverage due to the Amish being eligible but does not benefit due to religious and moral beliefs. How can I give a contribution to an Amish employee when he will not accept any contributions from a retirement and or profit sharing plan?

Will the plan, if audited, be safe if we keep them out of the benefited number?

There is no auto enrollment. A employee should have been permitted to enroll in the plan on Jan 1, but was not notified of the opportunity to enroll. The failure was discovered July 1. The employee has stated that he does not want to participate in the 401(k).

Even though the employee has said he does not want to participate in the 401(k), I think a QNEC is needed. I think EPCRS states that a QNEC of 25% of the ADP percentage for the NHCE group for the year of exclusion multiplied by the employee's compensation for the year is appropriate, but 1) is a correction necessary if the employee chooses to never enroll in the 401(k)? And 2) do we wait until the end of the year to make the correction, because we won't know his compensation for this year until the year is over.

I've looked at Rev. Proc. 2016-51 but it doesn't seem to address this fact pattern.

Thank you very much.

For the ERISA lawyers out there, and anyone else who wishes to weigh in.  DB Plan terminated and final distribution of assets made in 1999 (yes, 18 years ago).  It was smooth sailing through PBGC.  Now, in July 2017, a former employee receives notice from SSA telling him that he might have a benefit under the DB Plan.  That notice could very well be wrong, due to a Social Security Administration error or the Employer/Plan Administer having failed to list this individual in a Schedule SSA long ago as having received his benefit.  On the other hand, it is theoretically possible that the employee is entitled to a benefit because he fell through the cracks during the termination process and never received his benefits in cash and was never included on the annuity purchase list.

What is the limitations period for this employee to bring a claim?  Is it the most comparable state law limitations period (usually for breach of contract), and if so when does the clock start to run:  at the Plan termination date or now?  Or, is there a possible ERISA breach of fiduciary duty claim with a 3-year or 6-year SOL starting now?  Is the termination of the Plan in accordance with all PBGC rules at all relevant?

Please resist the temptation to suggest that we go back into the records and try to find out what happened to this individual's benefits.  Assume he never received the benefit he was entitled to receive and has a slam dunk claim but for the SOL issue.    

I've gotten two different responses to this from two people I trust.  In a 401(k)/Profit Sharing Plan, if a participant's account balance is less than $5,000 is spousal consent to a distribution (due to termination) required?

One of our plan sponsors was recently acquired and the acquiring company decided to merge the plan that we recordkeep into the acquiring entity’s plan effective 4/28/2017.  We informed the plan sponsor that this creates a short, final plan year for the plan (1/1/2017 – 4/28/2017).  We discussed the notion that the regulations are unclear regarding the ADP/ACP testing in a year of merger.  Based on our conversations, we stated that we could provide an ADP/ACP test for the short year and requested the appropriate census data to perform it.  At this point, the plan sponsor has still not provided the data.  If the plan sponsor goes with this testing methodology, my questions are: 

How does the 2½ months factor in regarding the 10% excise tax?  Since the plan terminated and merged effective 4/28/2017, what the last date to perform the corrective distributions (if any)?  (When does the 2½ month deadline expire?)  I know for the Form 5500, regardless of when the plan terms, you have 7 months from the last day of the month in which the plan terms.  I do not see a similar rule for the ADP/ACP testing. 

Is this even an issue since the assets merged into the other plan on 4/28/2017?  Has a “corrective distribution” effectively been performed? 

Either way, the funds should be either removed from the other plan (no recharacterized as post tax).  Does the 2½ month deadline apply to this action? 

One of the investment companies has been promising the Schedule C information for our calendar year audited plans since May 3.  The last communication we received is that they suggested we go ahead and file for an extension.  Even if we do that, I'm concerned that the information still won't be available in time to meet the 10/15/17 due date.  They don't seem to be too concerned that the clients don't want to file an extension. 

Can you file the Schedule C with a notation that the information is not available?  What other options are there?