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? 

Takeover plan was being done in house (no tpa).

Reviewing 401(k) deposits back to 2011 (2010 5500 is last to report delinquent contributions).

2011-2013 as large plan did not file audit report, and will not pay for audit report now

In 2014 plan went from large to small

Average delay from payroll date to deposit date from 2011-2013 is 35 days, though one time they deposited in 6 days.

Contemplating the following:

-how many years to review? to 2011, or back 3 years?

-apply small plan safe harbor of 7 days to analyze large plan timing, or apply 6 days or 35 days or until 15th of following month for that period?

A thought would be appreciated:)

We brought in a new plan in April 2016 and found out in March 2017 that the 2015 ADP refunds were not distributed.

In lieu of QNEC, I think the one-to-one correction method (refunding excess contributions too) is going to be the cheapest route for fixing.  I cannot find the in the EPCRS language or in the EOB books that this is also a QNEC deposit.  The EOB just says "corrected with a contribution".

This correcting contribution is a QNEC, right?

Thanks

Let's say a participant is 75. He's not an owner so he didn't have to start taking RMDs at any point in time. Then, let's say he gets terminated in the middle of 2017. The first RMD is now due to be paid by April 1, 2018. 

What happens if the participant decides to rollover the entire balance to another plan or IRA? Can he do that or would he have to take the first RMD before rolling anything over into another plan?

Thanks.

Governmental defined benefit plan contains a provision that allows certain employees to extend their DROP periods using accrued annual leave.  Employees have the option to cash out leave or use the hours to extend their DROP period.  This looks like a CODA to me because the employees have the option to cash out or us leave hours to extend DROP.  Am I wrong on this?  Any help would be appreciated. 

Employee/Owner A made $53,000 last year.  He deferred $24,000 (he was catch up eligible for 2016).  Employer makes a safe harbor match contribution of 100% of deferrals up to 4%.  So his calculated safe harbor match is $2,120.  Employee/Owner would like to maximize his contribution.  There is enough non-owner compensation that we do not need to worry about the company's 25% deductible limit.

I have calculated his profit sharing as $26,880.  Another colleague is saying he can receive 32,880 in profit sharing since he is catch up eligible and his limit is actually $59,000 and not $53,000.  But I did not think that he could receive more than 100% of his compensation.

Who is correct?

Does anyone have experience in seeking relief for a Section 411 debarment--i.e., relief permitting convicted felon to serve as consultant to an employee benefit plan prior to the 13-year restriction period?  We have client who just discovered that they have long-term employee with felony conviction covered under Section 411.  Employee is a clerical worker in insurance agency / TPA type group that does work for group benefit plans.

In particular, I am interested in thoughts / experience around:

• Assume individual is prohibited from serving even in a clerical type position if some of the employer's services constitute consulting for ERISA plans
• Any sense how long it usually takes to pursue relief / how much time and effort is typically required assuming relatively sympathetic case--conviction more than 10 years ago and individual has been clean and conviction had some sympathetic facts (innocent spouse type issues)
• Any thought that client is in trouble for unknowingly employing individual for the prior few years when was unaware of law, her conviction and there has been no trouble plus has taken action to suspend her work while investigating.

Thanks for any advice anyone may have.

For DB plan terminations subject to PBGC requirements, other than for "small" plans (let's say more than 25 or more participants), what is your experience on the division of responsibilities?

1.  No ERISA attorney involvement; plan actuary prepares all filings, notices, any necessary plan amendments, and represents plan sponsor/plan administrator before PBGC and, if applicable, IRS.

2.  Plan actuary does everything, subject to ERISA attorney review.

3.  ERISA attorney does everything except calculations and certifications required by the actuary.

4.  Other?  

We administered a 1 participant defined benefit plan for a number of years. The plan had a 30% investment loss one year and the business owner got upset with us when we gave him the minimum contribution for the year. It was, of course, somewhat higher than in previous years. In any event, he left us. A year later he came back. It turned out he prepared and filed the 5500-EZ timely and the company funded the plan properly. The only problem is no schedule SB was prepared or filed for that year.

So the 5500-EZ was filed on time but we will need our actuary to currently sign the schedule SB that should have been signed about a year ago.

I would think if the plan were audited, we would get charged the $1,000 for a late schedule SB. Do you think that because the schedule SB is part of the 5500-EZ that we would also be charged $25 per day for a delinquent filing of the 5500-EZ?

We could file under the delinquent 5500-EZ program, but the instructions indicate that they do not want the schedule SB included in the submission. This because it was not required to be filed in the first place.