Are employee and employer contributions to an HSA grossed up for 415 plan compensation purposes?  I am not too familiar how contributions to these arrangements affect plan compensation. It looks like they can be run through the cafeteria plan - if so then I assume they would be considered Section 125 pre-tax amounts and then gross up the 415 compensation?  To exclude these amounts under plan compensation, I assume you need to exclude them in the plan document?

Another way to set up an HSA is like an IRA and then take the deduction on your 1040. In this way, I assume the compensation is also included as 415 compensation in the employee's 401(k) plan?

Any suggestions to assist me would be greatly appreciated!

ERISA Section 105 requires benefit statement to include a statement of "vested percentage of such benefits (or the earliest date on which benefits will become vested)".  Do you agree that the "earliest date" is the date on which a participant becomes partial vested?  That is, on a 2/20 vesting schedule, does a participant "become vested" when they become 20% vested or when they become 100% vested?

Thanks

Guy bought a franchise with a ROBS 401k and wants to terminate it.  Can the stock get rolled over to an IRA? I think not, because if it could, there would be no such thing as a ROBS you would just do it from an IRA.  I thought the whole point was to take advantage of the employer securities exemptions available in a 401k plan.  Any specific sites (cites??) you can provide would be appreciated!

Hi.  I work for a governmental entity (at the municipal level).  My salary information is public information and subject to any citizen's Freedom of Information Act request).  Are my contributions to retirement plans (403(b), 401(a), and/or 457(b)) included in that information that is FOIA-able?

Thanks.

Hi.  I work for a governmental entity and participant in a governmental 457(b) plan.  I make elective deferrals into the 457(b) plan.  How do those deferrals impact my future social security benefit?  For example, if my salary is $100k, but I defer $15k into the 457(b), are my reportable earning to SS the $85k?  I just want to make sure that I am not suppressing my future SS benefit by deferring into my 457(b) account.

Thanks.

I have a participant who turned 70.5 in 2013, but at that time he wasn't eligible to receive his pension.  The 2016 Plan Year was his fifth, making him eligible to start receiving a pension (though he is still actively working and has already accrued another year of service in '17)..

So what would the required start date be for his RMD? He wasn't eligible on the 4/1 following the year in which he turned 70.5. 

Thanks in advance!

Any reason a medical plan offered through a non profit (nongovernmental, nonreligious) association would not be considered a Plan Sponsor and therefore be required to file Form 5500?  Association in question is unhappy at the $4,000 DFVC penalty and would rather do nothing. Yes the potential consequences have been explained.

On what line of Form 5500, Schedule H would you report the value of a private hedge fund?  Investors are not partners, the fund is not a registered investment, it is not a trust. Would you report it as a joint venture?

Thanks for sharing your thoughts and experience.

Hello All -

Longtime lurker, first time poster.  I really appreciate all of the insight from this forum.  My question:

Canadian based company has a few US Employees, they are Sales People located throughout the US.  They want to provide similar benefits to their US Employees like they do to their Canadian Employees.  They are inquiring about a startup 401k Plan.  Assuming they have an EIN would it be feasible to create a start-up 401k Plan for these employees?  I don't see a reason why they can't but I have zero experience with a Foreign Company setting up a new 401k Plan so I want to make sure I am not missing something.  If there is an alternative suggestion to a 401k I would be all ears as well.  Thank you very much.

Participant contacts the DOL stating that they deferred more than the Employer has credited.  DOL starts an inquiry, which is handled by the accountant.

Accountant claims that DOL has finished the inquiry.  DOL has not sent out any correspondence accepting what accountant submitted.

Accountant claims that DOL only sends out correspondence when there is an audit, NOT when a Participant makes a claim.

Is accountant correct?

I am trying to understand the comparability rules for HSAs, particularly as they apply to former employees and have some pretty basic questions. 

Under the Final Comparability Regulations for HSAs CFR § 54.4980 Section 1-7, employer contributions to an HSA are not subject to comparability testing if the contributions are made through a cafeteria plan “if under the written cafeteria plan, the employees have the right to elect to receive cash or other taxable benefits in lieu of all or a portion of an HSA contribution (meaning that all or a portion of the HSA contributions are available as pre-tax salary reduction amounts), regardless of whether an employee actually elects to contribute any amount to the HSA by salary reduction,” and they are subject to the comparability rules if made outside of a cafeteria plan. (54.4980G-5, Q&A-1)

• My first question is whether HSAs are ever not offered through a cafeteria plan?  This is not the relevant question, but I would like to know if that ever happens.

   

• Former employees may receive contributions from their former employers, and former employees are a category that must be tested under the comparability rules if they apply.
  
  (a) Categories. The categories of employees for comparability testing are as follows … (3) Former employees (except for former employees with coverage under the employer's HDHP because of an election under a COBRA continuation provision (as defined in section 9832(d)(1)). (54.4980G-3, Q&A-5)

   

  Also, “An employer that contributes only to the HSAs of former employees who are eligible individuals with coverage under the employer's HDHP is not required to make comparable contributions to the HSAs of former employees who are eligible individuals with coverage under the employer's HDHP because of an election under a COBRA continuation provision (as defined in section 9832(d)(1)). (54.4980G-3, Q&A-12).

              Am I correct that if the HDHP is a retiree plan, the comparability rules apply and if elected  through COBRA, they do not apply?  So, subject only to discrimination testing, the employer can choose to make HSA contributions of differing amounts or only to some but not all former employees under COBRA?  Finally, is there any limit as to how long employers can continue to make contributions to former employees, either under COBRA or the comparability rules?

I have only a couple 401(k) plans with auto-enrollment, so now that a 150-life NFP with an ERISA 403(b) asked me to add auto-enrollment to their plan, I figured I should ask around to see if there is anything that I specifically need to be careful of implementing this in a 403b.

I figure they will go the EACA route because they are not going to want to do the required QACA contribution, and they sound like they want the ability to let the participants do the 90-day withdrawal.  Following the Relius chart I'm linking below, there doesn't seem to be anything else that would pose an issue in this situation.  Any tips or advice would be appreciated, thanks.

http://www.relius.net/news/pdf/Form376ACAcomparchart.pdf

So, employee defaults on a loan, and no 1099 issued for deemed distribution.

Payer penalty for failure to issue 1099 (let's suppose it was defaulted in 2016) before August 1 (from memory) is I think $260.00. I can look that up. But here's my question - since participant didn't get 1099, taxes filed incorrectly, since participant didn't "know" it was a distribution.

How do you typically see this handled? By that I mean, does the employer/plan administrator/TPA/guilty party pony up any expenses top reimburse the participant for refiling expenses, if any, and interest/penalties? Could be expensive if it happened years ago...

this is the report I have been using

SSA report

(saved as excel file)

then copied and pasted into the FT William

8955 Sample

which imports quite easily.

of course, no guarantees use at own risk, but I have been running this for years.

this reports people an A the year following termination not the year of termination.

if someone went from active to ineligible (e.g. person was active but now excluded class) they will show as an A, it will indicate "Verify Data", you might have to delete them from the report.

If terminee is 0% vested it should show person as a D and  indicate 0% vested. Since I am not sure if the person was ever reported as an A (if it was a takeover) they will show up on the report as a D. of course such people should forfeit.

8955Sample.csv

notes on SSA report.doc

SSA .rpt

All too common situation of definition of compensation in plan document not being applied operationally.

Has anybody had any success in getting the good folks at EPCRS to accept a retroactive document correction?

This might sound strange but does anyone have a script for an enrollment meeting, where the focus is on motivating people to save more? So stuff like "Social security is not enough" and "to replace income in retirement you need to save 10% a year" and "the longer you wait the harder it gets to meet your goals because of compounding, etc."

Maybe not a script per se, but detailed talking points.  I know everyone has their own flavor to these things, but the good advisors I have watched do a fantastic job of motivating people to save with these little tid-bits.

I'm not talking about anything to do with the investments, just education on the importance of saving.

Thanks!

Plan Sponsor's Deferral and Loan Payments for 7 payroll periods were deposited late.  Payroll periods start in March and end in May. This occurred when the Plan Sponsor changed HR management and went unnoticed until the plan's investment platform sent an alert regarding a late loan repayment issue.  All 7 payroll periods were deposited immediately when this was realized, all were within 75 or fewer days of when they should have been deposited but for the oversight.

The Recovery Date is June 13.  Amounts involve about $5,800 in total deferral deposits (aggregate all payroll periods) and $100 in loan repayments (aggregate). This is a self directed plan and 20 participants are affected. This oversight was addressed immediately and steps/protocols were established to prevent this from happening in the future. This is a Prohibited Transaction but not an operational defect as the plan does not specify a deposit date for deferrals.

Questions:

1. Lost Earnings: it is my understanding the Employer may determine Lost Interest (from date deposits should have been made (usually 1 day after payroll date) to actual Recovery Date) based on the greater of the (i) DOL Calculator or (ii) the Plan's actual "Investment Experience" had the deposits been timely made*.  *To determine the "Investment Experience" it is my understanding the Employer may use the highest performing investment offered within the Plan, for each of the affected payroll periods in lieu of determining each participant's Investment Experience for each of the periods, if doing it individually is more costly than the benefit itself. The measurement period is the date the deposit should have been made, i.e. the Loss Date, to the Recovery Date (date actually deposited). IS THIS CORRECT?
2. Interest on Lost Earnings: are determined from the Recovery Date to the Final Payment Date (the date the Lost Earnings are actually deposited along with interest on the Lost Earnings). DOL Calculator determines this easily using the DOL rates. HOW WOULD YOU DETERMINE THE INTEREST ON THE PLAN'S "INVESTMENT EXPERIENCE" LOST EARNINGS (referring to the greater of (i) DOL or (ii) Plan in #1 above)? Select a reasonable interest rate, e.g. Prime +1%?
3. I read a post that suggested If the Employer were to determine the "Lost Earnings" and the "Interest on Lost Earnings" correctly (as above) and opted not to submit VFCP, it should be acceptable (no action nec) if ever audited since the Employer made the correction using the greater of the DOL or Plan Experience determination. IS THIS CORRECT?
4. If submitting VFCP the Employer can use the DOL Calculator and ignore the plan's Investment Experience - correct?
5. Restoration of Profits: is this an amount equal to a reasonable rate of interest (e.g. prime + 1%?) accumulated on each PT (i.e. each payroll period), measured from the Loss Date to the Recovery Date? If this cumulative amount is greater than the Lost Earnings determined as described above, then this amount should be remitted to the Plan in lieu of the Lost Earnings as determined above (and the Interest to the Final Correction Date is likewise adjusted)?
6. Form 5330: essentially the Employer must pay a 15% excise tax for 4975 PT, and it is equal to 15% of the Lost Earnings amount (or Restoration of Profits amount if greater)? If the 15% Excise Tax is less than $100, the Employer may opt to deposit it into the Plan and allocate it to the affected participants (as per plan provisions)?
7. Notice Affected Participants: is not necessary if the 5330 excise tax is deposited into the Plan and allocated to the affected participants in lieu of submitting Form 5330 and paying the tax?
8. Are there any further corrective steps necessary?
9. Should the VFCP submission be completed in spite of the small amount involved? Again, I thought I read a post indicating not to submit if the cost to prepare the submission exceeds the correction necessary. But of course the Employer must be certain all is calculated correctly and the correction is the greater of the DOL calc amount or the plan experience...

Thank you.

forgive me if a similar question was asked and answered on this forum that I seem not to find it.

My client wants to file for IRS Plan Termination Determination Letter.

Assuming every other notice and filing requirements are met and the DB Plan proposed termination date is 8/31/2017, can I use 2/25/2018 as a proposed distribution date.

Please help

PTIN System to reopen today

PTINs issued without charge for now.

It seems that most (all?) prototype/volume submitter plan documents that I have seen explicitly reference the 410(b)(6)(C) transition rule as either a default in the basic plan document or an election within the adoption agreement.  As a result of this practicality; I have always assumed that, in order to take advantage of the 410(b)(6)(C) transition rule, it must be explicitly stated in the terms of the plan document.  

I am now confronted with a prospective client's plan that is being spun-off from an individually designed MEP. The MEP document does not reference 401(b)(6)(C) or the transition rule at all but the sponsor of the MEP claims that "while the plan document does not specifically reference the rule, the plan covers it."  My gut reaction was to "call BS" on that but, being a careful person, I thought I should try to look for some actual support for my position.  Unfortunately, I came up with nothing.  

Any thoughts, guidance or insight (or even better a citation) that anyone can offer regarding whether it is necessary for an individually designed plan to include explicit reference to the 410(b)(6)(C) transition rule in order for the sponsor to take advantage of it?

Thanks.