An existing, 3% safe harbor nonelective 401k plan, calendar year, uses a One Year Wait for eligibility.

The plan sponsor would like to amend the plan today, 12/1/2017, to permit anyone hired as of 12/1/2017 immediate eligibility.  This would bring in 2 HCEs and 6 NHCEs.

It seems that expanding the eligible ees is allowed mid year, but the timing seems aggressive, since the new entrants have only one month to defer?

Thanks.

Would appreciate any feedback on experiences with requesting a "minor" modification of a VCP Compliance Statement. Are such attempts typically successful? If request is denied, are there negative consequences?

Applicant discovered some additional corrections needed to be made within the 150 day period after receiving Compliance Statement. These corrections all related to the SAME underlying failures included in the VCP. At question is whether the corrections below could be considered "minor":

1. Three (3) participants were included in original VCP as "Overpaid"  (not being fully vested at time of termination). However, it was later discovered that they were not in fact overpaid (were age 65 at time of termination thus fully vested). Overpayment letters were sent to participants and then later retracted upon the discovery. 

2. Due to missing payroll records, Applicant listed certain assumptions in the VCP submission as a result of missing data. This data was later discovered, and it was determined that this assumption was not correct for 24 participants. The result was that the OVERPAYMENT to these participants had been originally calculated to be greater than it actually was. Thus, OVERPAYMENT amount decreased. 

3. Due to multiple record payments, two (2) participants believed to have received OVERPAYMENTS had in fact received a slight UNDERPAYMENT

Does IRS take into consideration the ratio of the corrections made under the original VCP submission to the number of modifications required in determining "minor"? 

Any input is greatly appreciated. Thank you!

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Plan sponsor will be finalizing the termination process during the 1st quarter of 2018. They have 40 annuitants. Expected liability for these annuitants is approximately $350,000.

We are having a hard time finding firms to bid on the annuities due to the overall size. Does anyone have firms that they have had success with smaller plans?

Thanks.

Plan uses Rule of Parity.    Exclude eligibility service before a period of 5 consecutive one year breaks in service if an employee does not have any nonforfeitable right to the account balance derived from Employer contributions.     Does not have a one year holdout. 

The employee is eligible to enter the plan on his rehire date if vested when terminated.   

My question is, is there a limit as to the number of years an employee is gone from the company so that his prior service will not count for eligibility?   

Employee is terminates in February 2005 and was 60% vested.     He is rehired in 2014.   He was gone for 9 years.    

Can an employee be rehired after 20 years and will that prior service count?   

I have a quick question.  X provided health and insurance services to its client.  From there, X offered that client a discounted rate for providing fiduciary services to that client for its retirement plan.  The retirement plan received a discount of 15% on the stated fee for the retirement plan because of the bundled services.  Prohibited transaction?

Do you have any thoughts or guidance you can provide? I have been unable to locate anything.  

Plan covers owner and sister. So covered by PBGC since sister does not have ownership. That's good as it allows 25% deduction for DC plan. Sister terminates. If she is not paid her benefit, remains in plan as terminated vested, I think the plan remains covered by PBGC, so we can still have a 25% DC deduction. Correct?

I'm starting to worry more every day about the reduction of pass through income taxes to 20% nder the new proposals.  Would 100% of pass through income be subject to just 20%?  In other words, does that include Guarnateed Payments and the allocation of ordinary income?

ASPPA put out a piece where they brought up the issuye that if clients only get a deduction for 20% whent he money goes in and then it is taxed as ordinary income when they withdraw, they will likely be paying MORE tax on the way out, creating a huge disincentive to save.

I've seen some write-ups, but nothing on the nuts and bolts mechanics of what this would look like.

I have two separate situations with a safe harbor plans: one that is trying to join the MEP and one that abruptly left and went to a large national payroll company. The first plan is a safe harbor plan that is being administered by a national payroll/benefits company. They were informed that the plan was leaving and stopped accepting payroll contributions in November. I am trying to contact the payroll company conversion specialists and ask if this is a fact. Because this is a safe harbor plan I thought we should merge the plans effective 1/1/2018 but the advisor wanted to start the plan 12/1/2017 because of this situation.   Should we make a quick amendment to allow contributions to trustee directed (i.e. pooled) and set up a checking account in the name of the plan so we have somewhere to hold the assets? 

The other safe harbor left the MEP abruptly in November 2017. I have contacted the client and asked if the payroll company he went to had provided any consulting about the impact on the safe harbor but have had not response. 

Any advice would be appreciated.

For DC plan deductible limit, in a plan with a last day requirement, does eligible compensation include compensation of participant who terminated before the end of the plan year?  Thanks.

Let's say a participant is terminated earlier in the year. He elects a rollover distribution, but later (after the check is issued), decides to put the funds back in the original 401k account. Is that permitted? I would think that it wouldn't be because he's no longer an employee of the original 401k plan. Would you agree?

Thanks,

A 401K, plan terminating in 2017, last day of plan year 2017 would be the dat all assets distributed, which I do not know yet, but obviously would be the month all assets out of the plan.

A consultant suggested the PPA effectively repealed IRS Notice 96-8, at least to the extent the notice said future interest credits are part of the benefits that are already accrued.  He says under the PPA the cash balance is the accrued benefit.  But if what he is suggesting is correct, could that mean you could reduce the interest credits on benefits that have already accrued?  That doesn't seem right.  Am I mixing apples and oranges here?  

ok - for you long time Relius users:

Prior to version 18 (I think) when the loan specs and info were separate on the "Data Entry" flag, you could model a loan for a participant and generate an amortization schedule without having to set up a loan.  This was helpful for participants who were looking for the different repays for different time periods.

I understand that the loan setup info has been moved to the participant census screens. 

Is there still a way to "model" a loan and generate an amortization without setting the loan up?

Thanks in advance!

I am looking for insight on when money has to be withheld for automatic enrollment plans.  For example:

Plan has:

Age 21 &  3 months of service for eligibility

Entry Date is first day of month following meeting requirements

If a person meets eligibility on 10/16, they can enter on 11/1.  Does the plan sponsor actually withhold the money on the 11/1 pay period if no election or opt-out has been chosen by participant?  Or do they wait to withhold until the Opt-out period has ended?  

the folks in Washington reduced the 2016 avg wage from

48664.73 to 48642.15. just $22 dollars but that was enough to change the TWB. previously the divide by 300 was 428.60 which rounded up to 429.

the calculation is as follows

I fear that I may be overthinking this issue but have not found this expressly discussed on the boards here and would appreciate some guidance from the experts.

Plan discovered that a few participants who had made elective deferrals for the year (including some that had also elected to make catch-up contributions given that their regular elective deferral elections would max out) were not implemented for the plan year.  The participants have now missed several months of deferrals and the employer plans to correct under EPCRS by making QNECs for missed elective deferrals and matching contributions and earnings per Revenue Procedure 2016-51.

Question is whether the missed catch-up contributions can also get corrected / included in the QNEC calculations.  (Here, there is no doubt that the individuals would have qualified for the catch-ups had their deferral elections been properly implemented yet, in actuality, they will now end up with actual elective deferrals not reaching the max for the year.)

I see that the EPCRS has a separate section / correction protocol for missed catch-ups under Appendix A .05(4); however, it appears to be limited to employees excluded from "catch-up contributions only."  The example provided shows that a participant was permitted to make their maximum regular elective deferral  but simply denied the ability to make a catch-up contribution.  Unfortunately, I do not see anywhere else in Rev. Proc. 2016-51 where somebody that was eligible for making maximum regular elective deferrals plus maximum catch-up contributions for the year gets corrected by having a QNEC made on the catch-up portion as well as the regular elective deferral amount.  Perhaps the potential for covering the missed catch-up is generally assumed but the narrow phrasing of the .05(4) section and careful limiting of the QNEC correction there to catch-up only mistakes leaves me thinking otherwise.  Also, when looking at the IRS presentation on Correction Methods for 401(k) Failures linked below (from 2012), page 28 notes:  "If an employee has been excluded from making any deferrals then ordinarily no additional correction with respect to catch-up contributions is required because the deemed elective deferral is below the threshold for being eligible to make a catch-up contribution."  

Just wondering if that should be read to basically mean you never make a QNEC correction for missed catch-up amounts unless they are the only missed deferral amounts?  (I'm all for eliminating windfalls for participants for inadvertent errors but that seems a bit much where you know somebody was on track to max out both regular and catch-up contributions.)

Thanks for any guidance you might provide.

www.irs.gov/file_source/pub/irs-tege/epcrs_401k_phoneforum_presentation.pdf

2017 is about 90% done.

Imagine a written plan provides that safe-harbor matching contributions are made on a payroll-by-payroll basis, and that “true-up” contributions will not be made.

The employer now would like to provide that matching contributions are recalculated (after a plan year ends) based on the ratio of elective deferrals to compensation for the plan year, and “true-up” contributions are made.

May the employer make this amendment effective for 2017?

Or must the employer apply the amendment only to 2018 and later years?

Which regulation and what reasoning allows or precludes the change for a year already begun?

Anyone know what the premiums are on this?  I just cant imagine they are affordable?

https://www.loaneraser.com/individuals/

I have a client who has just closed a U.S. DOL investigation for (very) late deposit of prevailing wage contributions.  They have now paid in all of the unpaid contributions and paid and allocated estimated interest based on a method approved by the DOL investigator, paid corrective distributions to former employees and they have received a closing letter. 

I expected that these late contributions would also be an operational defect that would require a VCP filing, and my client is prepared to do this.  My biggest concern had been whether the (DOL-approved) method of allocating interest would be acceptable to the IRS.  But, I am now wondering if there is in fact any operational defect, because I cannot find any plan provision that specifies when these contributions have to be made.  The plan has a schedule to the Adoption Agreement that lists the prevailing wage fringe benefit portion to be paid for each covered hour. The plan provision for Time of Payment of Employer's Contribution states:

"Unless otherwise provided by contract or law, the Employer may make its contribution to the Plan for a particular Plan Year at such time as the Employer, in its sole discretion, determines."

I don't think the "unless otherwise provided..." language incorporates the statute or contractual language by reference.  There is also plenty of typical plan language about when annual addition are credited, and when contributions must be made to be deductible for a plan year, or to be taken into account for testing, but those aren't really the issue here. 

State law does in fact require the contributions to be made quarterly, and there clearly has been a violation of this law.  

If the plan document doesn't have a deadline for the contribution, is there an operational defect when contributions are made later than the statutory or contractual deadline?    I had assumed the answer was yes.  But after parsing all the plan language relating to employer contributions, I am now thinking that the answer is no.  And that would mean there is no operational failure that could be corrected under VCP.   

Agree or disagree?  

Participant dies at age 81.  Was not Key or HCE.  Spouse had already died.  3 Adult Children, who are named as Contingent Beneficiaries.  Primary Beneficiary is named as Living Trust establish with the Participant's name.  Since Living Trusts are something I have zero experience with any suggestions, comments or advice on how to process this death benefit will be greatly appreciated.  Thanks!