A profit-sharing retirement plan provides as its only form of distribution, whether for a retirement distribution or a death distribution, one single-sum payment of the whole account balance.

A participant dies before receiving a distribution.

The participant, with her spouse’s consent to meet ERISA § 205, had made and delivered to the plan’s administrator a beneficiary designation:  “ABC Bank, N.A.”

The plan’s administrator receives a claim signed by a person identified as a trust officer of ABC Bank.  The administrator does not doubt the claim’s authenticity or genuineness.  The claim asks the plan to pay the bank (and does not request that the plan treat the payment, or any portion of it, as a rollover).

In the envelope with the claim form is a copy of a 13-page trust document and a transmittal letter that says:  “Following 26 C.F.R. § 1.409(a)(9)-4, Q&A-6(b)(2), we enclose a copy of the participant’s trust document.”

The plan’s administrator believes it need not read the participant’s trust document.  Rather, it believes its duty is limited to satisfying itself that the claimant is the beneficiary the participant named (and directing the plan’s trustee to pay that beneficiary).

The plan’s administrator is thinking of sending ABC Bank a letter informing the bank that the administrator did not read the trust document the bank furnished, and promptly destroyed it.

BenefitsLink mavens:

Must the retirement plan’s administrator read the participant’s trust document?  Or is it okay to ignore it?

Assuming the administrator had no duty to read, and did not read, the participant’s trust document, must the administrator keep the document in the plan’s records?  Or is it proper not to keep a writing the administrator never considered?

About the proposed letter to inform the bank that the administrator did not read, and no longer can read, the participant’s trust document, is this a good idea, or a bad idea?

On all three questions, what is the reasoning for your answer?

Hello,  Client was divorced 5 years ago and the divorce decree awards a portion of Jax police and fire pension as property settlement award.  Now, govt ee is retiring and not sure if can use IDO to claim divorcee's share? An attorney said use IDO, but this is property settlement award, not alimony or child support. Pension representative says use IDO. I think need to get order reforming this property settlement as permanent nonmodifiable alimony and use IDO. Can we do that? I am an attorney trying to help my client. But as a newbie attorney (yet old to defined contribution plans), not sure who to ask about what I do with a government plan question? Where can I go to find answer? Or, who can I reach out to for help in this divorce case?  Thank you, Susan

I inadvertently deleted a topic in my attempt to simply delete a blank response

The topic dealt with Derrin's book on e-bay.

my bad ooops

Can someone tell me where I can find the rule that states you have to have a blurb on the participant statements is the PS is integrated with Social Security?  (The reg and/or where to find it in the EOB)

Does it only apply to participant-directed accounts, or pooled accounts, too?

Thanks in advance.

Subject company has filed 5500 as a small plan for 2013, 2014 and 2015.

They recently discovered that a division of the company was not offered the opportunity to participate in those years. 

The company has done a self-correction for the failure to cover those employees.

If participant counts had correctly included the missed employees the plan would have been considered a large plan for 2013, 2014 and 2015.

Should the company file amended 5500's for 2013, 2014 and 2015 and hire an independent auditor to audit the Plan for those years?

This doesn't fit any fact patterns described in the voluntary correction programs, so how should they proceed?

Quick question:    Can a SIMPLE IRA balance be rolled into a 401(k) balance?   

I am proposing on a plan with St. Thomas Employees.  The client is a control group with 1 Company in the US and 2 companies in St. Thomas.  They have a 401(k)/SHBM plan and have allowed the St. Thomas employees to adopt the plan.  In order to receive certain tax deductions the client must provide a Contribution to the St. Thomas employees and would treat this as a PS contribution.  My thought is to separate the plans as long as coverage tests pass as the owner wants to max out his contribution.  Any thoughts?  Has anyone worked on a plan with St. Thomas employees? 

I am recalling an ASPPA workshop of a few years ago, where it was advised not to give any HCEs the safe harbor non-elective contribution.

I was not an attendee.  My client maintains a safe harbor 401K/PSP new comp allocations.  After 3 years, now he wants to know why he or any of the family members did not receive the "safe harbor" 3% contribution.

Besides that language in the plan document, as well as the fact that the general test stands a greater chance of being blown, what are some other good reasons???

I was working as a regular employee for a huge company A for many years.

I was recently laid off. I found another job with a small consulting firm B (which just puts people on its the pay roll, the actual work is for another big client C who I found myself).

The company B is just a pass through, it takes it cut from the hourly rate offered by C and runs the payroll, etc. It does a Health insurance plan (with 2 different options) but does not subsidize it at all.

Now I am considering my best options for Health Insurance.

- Option one, I can sign up for Cobra offered by A (good for 18 months) but I pay the full prize now and not the employer A subsidized price. or

- Option two, I can select one of the options offered by B.

Looking at the prices and deductibles etc, I like the Cobra option from A (as it was a much bigger company than B).

Is there any way I can pay for that option using pre tax dollars from employer B (they do provide HSA if it helps in any way)?

If yes, then how?

If no, then should I compare the Options one and two, using post tax dollars for one and pre tax dollars for two, taking into account their actual costs to me?

thanks.

Pardon me, if I am making any wrong assumptions here. I have never dealt with this stuff before.

Can an employer amend their tiered-vesting match to give immediate 100% vesting to only actively employed participants' balances?  Put another way, can an employer make all match balances for only active employees 100% vested, while keeping termed participants on the existing tiered vesting schedule?  Note this full vesting would be on existing balances as well as future match contributions for active employees.  I'm a bit rusty on protected benefits but don't immediately see where any accrued non-forfeitable benefits are being reduced in any way.  Any insights and guidance are most appreciated, as always!!  Thanks! 

Company acquires sub of seller via an asset purchase transaction and decides to employ certain of the sub's employees following close of the transaction.  Buyer is an ALE.  There will be a lag time until Buyer gets plans in place for the acquired employees (it's putting separate plan in place for the acquired employees).  Buyer is considering paying for acquired employees' COBRA under Seller's plan on a tax-free basis.  Any thoughts as to whether this will work, or what issues it may raise?  What about the ACA concerns?  Thanks in advance.  

Just saw the new article that ASPPA now wants us to Save our Savings:

https://www.saveoursavings.org/

I thought we were still saving our 401k and protecting our piggy.  I can't save everything - I'm not Melissa McCarthy. :)

A small plan just discovered an error in which they did not make their 2015 safe harbor and profit sharing contribution. They took the deduction and tried to process the contribution but the submission never went fully through so the money was never withdrawn from their account. They obviously already filed their 2015 tax return and may have already filed 2016. Is the only way to fix this amend the tax returns and not take the 2015 deduction or can they document the attempted the submission?

Maybe someone has experience with guild plans, this is specifically the Directors Guild but probably applies to similar situations.  (Not my client but CPA called me about it.)

A partnership has a studio and makes commercials.  One partner (I think it is just one of them) is in the Directors Guild.  Participants in the guild pay into the guild pension plan(s) based on their income, which is reported to the guild, but otherwise not passed through the guild.  In prior years, these payments were small and buried on the partnership return as pension expense.  An internal audit of some sort resulted in substantial additional pension (and health insurance) costs for 2016, based on prior years' under-reported income (under-reported to the guild). The partnership paid the guild the amount due and called them guaranteed payments to the partner.  The amounts are, let's say, $52,000.  CPA intends to deduct them on the 1040 as Keogh contributions.  To make it interesting, the partnership has a SEP, and partners have typically maxed contributions at $53K.  CPA wanted to know if this partner would be limited to $1,000, or could do $53,000, or...?  (Interestingly, one of the guild plans is a DB, and one is a DC, and the reported DC contributions were split into "employee" and "employer" and exceeded $53,000.)

So...are those guild payments properly deducted on the 1040?  Something about that part doesn't seem right, but I can't put my finger on it.  I think the SEP contribution could be $53,000.  I guess it boils down to "Who's the Employer" for the guild contributions.

I can't think of any reason not to commingle a 457b and 457f investments? OK, there are different vesting rules, but it's no different than a 401k FBO account with PS and 401k.  Let me know what others are doing.

Also, it would be one single Rabbi Trust for both plans.

Good afternoon everyone!  I'm hoping one of the bright minds on here can shine some light on the following topic and proposed solution:

Company A has a 401k plan with it's assets in participant directed accounts with a recordkeeper. Company B  became part of an affiliated service group with Company A however previously participated in a MEP.  They ceased participation in the MEP and want to move their assets in that plan to Merrill Lynch.  To do this there are a few options:

1. Sponsor their own plan with the assets in a trustee directed brokerage account (pooled account with both HCE and non-HCE assets) with Merrill Lynch and transfer the assets from the MEP into it. Company A is much larger than Company B and since BRF testing would be needed due to different investment options, by using a trustee directed brokerage account, BRF testing on the benefit of having participant directed accounts would pass.

2. Sponsor their own plan and transfer the assets from the MEP into it, terminate it and rollover their assets into IRAs at Merrill Lynch and then wait a year to participate in Company A's plan.

3. Transfer the MEP assets into a trustee directed brokerage account with Merrill Lynch that is considered part of Company A's plan.

Question 1: Is option 3 permissible?  I have never seen a plan that has both participant directed accounts and a trustee directed brokerage account.  Company B would be the only one with assets in the brokerage account but both Company A and B will have participant directed accounts under Company A's plan

Question 2: Would the BRF testing be done again only on the right to have participant directed accounts or is there a concern that only Company B has the right to have assets in a trustee directed brokerage account?

I have a 401(k) Safe Harbor Match Plan that excludes Bonuses. It fails 414(s) for 2016. The Plan is a McKay Hochman non-standardized prototype using Basic Document #03. The plan allows for exclusion of bonuses as long as compensation is tested under 414(s), but I can't find where it addresses what to do if 414(s) fails. If anyone know where fail safe language is to permit full comp, can you point it out for me? If there is none, can I amend the plan or is it just no longer a Safe Harbor Plan? I know the topic has been addressed before, but there seems to be no definitive answer.  

I have been in a debate with a TPA firm over whether or not a Form 5500 should be filed in the following scenario. They are telling me a filing is not required. I asked them to show me documentation as to why not and their answer is that it is "industry standard" not to file. I would like to ask the Benefitslink experts if this really is "industry standard". Their argument is no assets therefore no filing since they choose to file on a cash basis. The EOB has an example almost identical to this which says to file. I called the Office of Chief Accountant they say file and they referenced page 2 of the 5500 instructions.

Situation:

Traditional 401k plan was effective December 1, 2016. Plan year ending December 31, 2016. Document was signed and the first payroll withholding happened on December 31, 2016. Deposit of the funds was made first week in January 2017. 

File Form 5500 for 2016? Yes or No? If you respond with "no" will you please share documentation as to why? Is it industry standard not to file with $0 assets when you have participants and withholding? We are not changing the effective date of the plan to 2017, deferrals were clearly withheld in 2016 and there were participants on December 1, 2016.

Thank you

A safe harbor plan distributes a hardship under IRS safe harbor hardship rules, to a participant. We know this is an operational failure. What is the correction and consequence? I can see it being treated under the overpayment rules and ask for the distribution to be returned (lets assume there are no other sources that can fulfill the amount of the hardship need).  Does this distribution blow the safe harbor status of the plan by any chance, and are there any other consequences?

Thanks!

One company, 2 plans.  The plans used to satisfy coverage separately using ratio test.

Now they don't.  Can I apply the ABT for coverage separately (considering those in other plan as zeroes)?  Or must the populations be aggregated?

And if they are aggregated thusly, will I lose my ability to perform nondiscrimination testing separately?