Nobody's brought it up so I will...the RecordkeeperDirect platform, which was perfect for micro plans, is changing pricing from an average account balance basis to a total assets basis.  A plan that was no cost with average assets of $5000 is now going to be $500 setup for a startup and $750 + $20/participant per year.  It's a punch in the gut for us; tough to add those prices to our fees when selling a plan for a handful of people.

So...what are the options?  John Hancock (meh)...Voya (meh)...?  I really really hate using individual brokerage accounts and effectively recordkeeping in house, manually. 

Appreciate any thoughts.

A situation I haven't encountered before, and I'm wrestling with it.

Suppose you have two non-profit corporations, A and B. A sponsors a non-ERISA 403(b) plan. B sponsors a SIMPLE-IRA. They merge, mid year, to form a new non-profit corporation C, with a new EIN, etc.

Apparently A & B no longer exist, although the information I have is far from comprehensive.

These are not plans that can be merged with any other plans.

Can you, for the remainder of 2017, treat each set of employees as still "separate" and continue the plans as before, and hope that if ever audited, the IRS is reasonable and accepts this as a good faith compliance effort? Do you treat each plan as terminated as of the merger date, and just start fresh with a new plan - which is problematic at best, since  the merger took place some time ago (date unknown - I only know that it was in 2017)? I'm reasonably certain that no plan termination notifications/resolutions/amendments were ever done prior to the merger. I don't yet know if deferrals/employer contributions to one or both plans have been made since the merger.

Quite a fiasco...

All thoughts appreciated!

I'm not finding anything in the cafeteria plan proposed regs that deals with this. So, let's say you have two non-profit corporations, only one of whom sponsors a cafeteria plan. The two corporations "merge" to form a new corporation, with a new employer id #. They do this mid-year.

In the qualified plan world, there is certain guidance for merger and acquisition situations, but I haven't seen anything on this for cafeteria plans. Anyone have any experience with this, or know of any guidance? If not, opinions on what is normally (or should be) done? Thanks.

Found some small amount of guidance which isn't really on point, but perhaps gives a tiny insight into general thinking by the IRS - seems tilted toward being reasonable - Revenue Ruling 2002-32. Since this is not on point, very old, and prior to the proposed regulations under 125, it ultimately isn't very useful, but is all I've been able to find...

I have an audit plan and they made 1 late discretionary matching deposit in 2016. It was 2 weeks late due to a glitch in their payroll system.  Their plan document was amended to allow matching contribution, made on an a payroll basis,  as of 2/1/2016. All their 401k deposits are fine. CPA wants them to go through SCP or VCP in case the plan ever gets audited. And he wants us to submit a letter stating that this is not an operational failure in case they get audited in years to come.  I'm thinking neither is necessary. Is this an operational failure?

Thanks in advance!

Does being a Directed Trustee count as a "Fiduciary" under the BICE exemption with the DOL Fiduciary/Conflict-of-Interest Rule?

Is this a breach of fiduciary duty and should we comply with his request?

The plan indicates that any employee who works over a year (even if the employee has not met the standard 5 year vesting) and terminates employment after age 55 is 100% vested.   This employee met this requirement.  However, the employee was somehow “lost” in the defined benefit plan recordkeeping system and never recognized as being vested.   The employee was given a Summary Plan Description when he was originally hired.  However, NO notices were ever mailed to him at termination or periodically.  He was not mailed a Deferred Vested Pension Notice at termination; He was not reported on the annual Schedule SSA in the year of termination; He was not updated with a SPD when the plan was modified; He was never mailed a SPD during the 10 years between his termination and age 65; He was never provided an annual notice.  It is not a matter of a “lost” participant as his mailing address and phone number remained the same throughout all these years.  Three months before his 65^th birthday, he contacted the plan administrator, asking for his paperwork.   He was not called back because it was thought that he did not qualify since he did not have 5 years vesting.  He later called back again and insisted that he was vested because of ERISA.   It was referred to our legal department who said that he was in fact vested due to his age at termination.   He has now asked that the benefits be paid from age 62 (which is allowed in the plan without any penalty).   A brief letter was mailed to him saying that he would have had to apply before age 62 to get the benefits and that he could only get benefits starting at age 65 but no explanation of how to appeal the decision was in the letter.   Since this was apparently a breach of fiduciary duty (although no one has openly admitted this to him), should he be paid the benefits from age 62?  And what if we have others who also fall into this category due to our failure to recognize the over 55 rule?  

I have a sole prop plan with a small earned income amount. There are no other employees in the plan.

Owner is over 50 and catch-up eligible

Net earned income after Sec. 164(f) deduction is $23,589.75.

25% PS contribution is $4,717.95.

Plan comp is now $18,871.80.

What is he eligible to defer? My thoughts are that it would be $18,871.80, but our testing software is coming up with 402(g) and 415 limit excess amounts with these amounts.  What am I missing?

Sorry if this obvious. My brain doesn't seem to be working today.

Plan is new comp, 3 classes.  Adopt Agreement allows allocation for each class to be:

i.  A percentage of Compensation

ii.  A fixed dollar amount

iii.  the greater of i. or ii.

 Plan design was always intended to be % or $ and plan has always operated with this type of allocation.  When preparing PPA restatement effective 02/01/15, we mistakenly checked box i. instead of box iii.

This error was missed when doing valuation for PYE 01/31/16 but caught now.  Please comment on proposed action of simply documenting error and correcting that page of Adoption Agreement.

Plan is new comp, 3 classes.  Adopt Agreement allows allocation for each class to be:

i.  A percentage of Compensation

ii.  A fixed dollar amount

iii.  the greater of i. or ii.

 Plan design was always intended to be % or $ and plan has always operated with this type of allocation.  When preparing PPA restatement effective 02/01/15, we mistakenly checked box i. instead of box iii.

This error was missed when doing valuation for PYE 01/31/16 but caught now.  Please comment on proposed action of simply documenting error and correcting that page of Adoption Agreement.

Hi.  We received a loan request where the participant is looking to extend the loan repayment period past 5 years because he is buying a primary residence.  He sent us a mortgage contract to prove that this was happening.

In the contract, it states that "This Agreement is contingent upon Purchaser obtaining approval of a FHA mortgage loan of $X...", where $X is the amount of the purchase less deposit plus closing costs.  The amount being requested as a plan loan is more than the deposit amount.

So... is the loan actually used towards the purchase of the primary residence or not?  If the Purchaser must get a mortgage to cover the entire cost, then the loan is just replenishing his bank account (except maybe for the down payment amount).  Or, as I suspect, this is just an example of language being stupid and inexact and we all know what the heck is supposed to be happening, so it's fine?

Thanks!

Does a profit sharing allocation that is a points based allocation based on service where participants get a share of the contribution based on the ratio of their years of service to the total years of service of all participants meet any kind of designed base safe harbor?  It's basically a pro rata allocation based on service.  Thanks. 

Looking for opinions on reasonable fee range for one of the big consulting houses to conduct an RFP to help us select a new PBM? We are a 40,000+ employee company operating in almost all states. Pharmacy is currently carved in with medical.

Also need reasonable fee for implementation and ongoing oversight of PBM.

Thank you.

We have a client who established a regular SEP but failed to cover their two eligible employees for five years. We've advised the client how to correct using guidance from the IRS Fix-it Guide.  What are the consequences if the client does not make the corrections?  A regulation cite would be helpful if possible.

Thanks!

Well, it is that time of year again.  The July CPI was published a few hours ago, so I imagine Tom is busy updating his spreadsheets.  To get the ball rolling:

It looks like we can lock in the 2018 limits as follows:

DB $220,000*
DC $55,000*
Comp $275,000*
401(k) $18,500
HCE $120,000
Key employee $175,000
Catch-ups $6,000
SIMPLE - $13,000

Those marked with an asterisk have a slight chance of not increasing as shown. For that to happen the August CPI would need to decrease 1.58 and then remain level at 243.206 for September or if August remains level at 244.786 then September would need to decrease all the way to 241.625 (a decrease of 3.16).  To put the 1.58 and 3.16 raw decreases into perspective, the CPI did, in fact, decrease from June to July by 0.169. If you are a fan of smoother rates a decrease of 1.05 from July to August and another decrease of 1.05 from August to September would also result in those three limits not increasing.

mike

The expense ratio of an Investment is 1.00% as advertised  on the Investment prospects. The detail fee structure of the expense ratio is that 0.60% is allocated to Revenue Retained by Investment Provider, and the rest of the expense ratio is paid out as Revenue Sharing to Record keeper/TPA.

Assuming the only service provider fee (Indirect Compensation) for the Investment in discussion is the expense ratio (EIC) that is advertised on the Investment prospectus, is this permissible to use the alternative reporting method and exclude the Record Keeper/TPA from being reported Part I Section 2 and Section 3 of Schedule C (Form 5500).

My careful reading of  the 2016 Instructions for Schedule C (Form 5500) Service Provider Information did not help me to be 100% sure to exclude the Record Keeper/TPA from being reported Part I Section 2 and Section 3 of Schedule C (Form 5500).

Thank you for all your help.

AdKu

Non-Safe Harbor 401(k) plan has (non-statutory) class exclusion for the employer.match.   They are not excluded from salary deferrals.  Must the employees of the excluded class be counted in ACP testing?  Thanks.

Is anyone using DocuSign to facilitate the signing of plan documents? Do you like it, did you try it and hate it, let me know!

When auditing a 401K plan for the first year it requires an audit, how are the financials dated? The Statement of Net Assets Available for Benefit must be comparative, but this is the first year audited (limited scope). Should we include two years on both statements and mark the prior year as "unaudited"?

USERRA Intermittent leave

A reservist has been repeatedly called up for 3- and 4-day/week assignments.  He has ceased to satisfy the "regularly works 30 hours/week" requirement for maintaining health plan coverage, i.e., has become a part-time employee.  Must we treat each weekly notice as a new period of service and restart the 30-day clock for retaining the eligible employee premium sharing rate?  Can we unilaterally classify this pattern of military service as a continuous period of part-time military service and then convert from the active employee rate to the 102% COBRA rate after the employee has lost the active employee coverage and received 30 days of coverage at the active employee rate?