Quick question: We reconcile our plans on an accrual basis for Form 5500 SF reporting. Because of this we end up with receivable contributions from one year to another, typically due to pending payrolls. We have had a question come up because of this. Our sponsors will mark a payroll file (for example) as the payroll period 12/01/15 to 12/31/15, with a pay date of 01/15/16. The payroll is then processed when given to us, say 01/16/16. Would you mark this payroll as a receivable contribution for 2015 because of the pay period OR would you leave it off of the 2015 plan year because of the actual pay date to ppts of 01/15/16? Advice is appreciated, thanks!

Per the 408(k) IRS rules, less restrictive rules may be established to include employees and owners in this retirement plan (see below). Assuming that I start the 408(k) for my company on January 1st, 2017, and we just started a new company on the same date, can one of the less restrictive eligibility requirements be the following?:

Employees do not have to fulfill the requirement of the 3 out of 5 year working at the company and may qualify for the 408(k) regardless of the number of years they have worked for the company if they are part of the executive staff. The executive staff includes the following positions: CEO, CTO, CFO, President, Vice President, Director. All other employees qualify for the 408(k) once they meet the 3 out of 5 year requirement.

This seems like a less restrictive requirement that we can set up and allows us to fund the SEP IRA's for owners and/or executive staff as an incentive to attract people at those positions, while also not mandating that we fund everyone's SEP IRA immediately.

Employee terminated in 2010.  Employee will turn 70.5 in September 2017.  Employee contacted us, the TPA,  today to initiate a rollover of her account.  Since she is not yet 70.5 can she roll her entire account balance or is she subject to an RMD?  We cannot agree on the answer.

Any guidance you can provide would be helpful.

I recently drafted a standard QDRO splitting H's 401(k) plan 50/50 as of the date of the divorce (4/04/16) plus earnings through the date account segregation. H also owes W $24,000 to cover his 1/2 of the family debt and the attorneys want to take it from the 401(k) as he doesn't have the money anywhere else. The divorce judgement has been amended to reflect this. I figure I have 3 revision options:

1) Reflect a percentage greater than 50% that will approximately amount to 50% + $24,000 (i.e. 59/41, etc.)

2) Use #1 to come up with an agreed dollar amount and award a flat dollar amount.

3) Keep the current formula noted above (50/50 plus earnings) plus $24,000. 

I don't see a problem with any of the options, but wonder if a plan administrator will accept #3 even though it seems the most accurate. Any thoughts.

A plan participant retired on his normal retirement date with a $650 monthly benefit. 3 years later it was discovered that the benefit was calculated incorrectly and the corrected monthly benefit amount should have been $700. There are obviously a number of different factors that could lead to this (incorrect compensation used, incorrect service calculations, etc).

The plan sponsor wants to self-correct this failure and follow the EPCRS correction principles in which a full correction will be made, restoring the plan to the position it would have been in had the failure not occurred.

However the plan sponsor is looking for guidance on exactly *how* to correct the failure. They are struggling with whether they just provide a lump sum (with interest) for the $50 per month that was missed over the last 3 years, and then correct the benefit going forward - or whether they actuarially adjust the benefit going forward to make up for the missed payments. They are also wondering if they should allow the participant to elect a new form of payment for the $50 (this doesn't seem necessary). I imagine there are many methods of correcting this failure.

Does anyone know if there is any guidance or a preferred method?

Anyone ever created a spreadsheet to mimic the DOL calculator that one could just copy/paste the information into the spreadsheet?  Sure would be easier than doing them one by one on the DOL page. 

Why is it that every President since Bush wants to get rid of 401ks?

First it was Bush with his LSA, RSA, and ERSA Plan. Then Obama and his Retirement Annuities.

Now its Trump who wants tax S Corporations, REITs, RICs and small business limited liability corporations at a 15% tax. However retirement plan distributions would be taxed at 35%.

Making sure I can wrap my head around early eligibility. If calendar year plan is setup for 83 hours a month in first three months, consecutive months, enter monthly - with 1 year and 1,000 hours (plan year) as subsequent - if someone is hired 5/8/17 and doesn't work 83 hours each month by 8/7/17, then they have to work 1,000 in plan year 2017 to enter 1/1/18. If not, they have plan year 2018 to get 1,000 hours and enter 1/1/19, correct? Or am I missing something? 

Hello,

For retirees living abroad, may their international or government provided health insurance premiums and insurance out of pocket expenses be reimbursed by an USA HRA (former employer lumpsum awarded at retirement for medical expenses)?  I would think no to other government premium insurance cost, but yes to private international medical polices and OOP. ?

Carrie

Co. A acquires in Co. B in 2016.  Co. A's plan grants predecessor service with Co. B for eligibility purposes.  Co. B had a plan that was into Co. A's plan at acquisition. 

John Doe worked for Co. B from 2001 through 2005 and participated in Co. B' s plan.  John Doe is rehired in 2017.  We are trying to determine whether he is immediately eligible.  Co. A's plan document provides that after five consecutive one year breaks in service, rehired participants are immediately eligible if they had any nonforfeitable interest in the Plan to employer money.

Would "Plan" generally include Co. B's plan which at this point has gone away.  My inclination is yes because it was merged into Co. A's plan, but I'm not 100% sure about that. 

Thanks in advance for any guidance. 

client formed their own 401K after deciding to leave ADP MEP, December 1st, 2016.

Effective date of plan 12/1/2016, plan is a SHNE with the 3% non-elective contribution.

Wouldn't the safe harbor contribution be due for only 1 month?

Plan Year and limitation year both calendar year.

To permissibly disaggregate for testing - must the Maximum statutory age and service conditions be used (Age 21 and 1 Year of 1000 hours service) - or can I draw the cut off somewhere short of, but not in excess of, the maximum statutory conditions?  for example ...

can I draw the line and test everyone only under 1 year of service (based on DOH) without regard to 1000 hours?

can I draw the line and test separately everyone who has only under 3 months of service? 

can I draw the line and test separately only everyone under age 19?

or is the only parameter that can be used is to test separately everyone by using the maximum statutory age and service conditions?

A client of mine is a corporation with several family members as stockholders, as well as a family foundation being a stockholder.  Is there any attribution of stock ownership from the foundation to family members who are directors of the foundation?  I know there is attribution with a trust or estate, but I can’t find any information regarding a foundation.  This would be for purposes of determining 5% owners for top heavy, etc.

Thanks.

We have a defined benefit plan with only one employee in the corporation. We would like to terminate the defined benefit plan and roll the assets into an IRA. However, the assets are shares of a corporation in another country. Also real estate in the US. Our intention is to use an IRA custodian like PENSCO that can handle real estate in the portfolio. I know that we have to get the shares of this foreign corporation appraised for purposes of rolling the defined benefit plan into the IRA, but I don't know who it is that I should hire to assess the value of the foreign corporation. Any ideas?

I have a client that has a non-calendar year ERISA Plan (7/1 -6/30) that is a Mega-Wrap Plan (all benefits bundled under one Plan). One of the benefits is the healthcare FSA. It is on a calendar year. I was told that the FSA Plan is not deemed as a policy and cannot be bundled with an ERISA Plan if the Plan Years don't match. I could not find any written provisions to back this up. Any feedback would be greatly appreciated. Many Thanks!

Outside of normal IRC 415 Limits and ACP Testing, is there any problem with doing a match in excess of 100%?  Thanks for your reply?

Traditional DB formula of [52.5% (AMC) + 12.5% (AMC-CC)] x Part/25, fractional accrual Partic. / Total Partic.

Does this formula satisfy the requirements for a designed based safe harbor?

Our client has a pro-rata Profit Sharing, fiscal Y/E 06/30.  Well after we finished reporting for PYE 06/30/15, the client advised us that 2 of the comps reported on the census were incorrect.  One owner's comp increased by $200,000, and another HCE's comp increased by $100,000.

We had allocated originally allocated 25% to everyone; revising the allocation, this was reduced to 13.52%.  The two people involved of course get a lot more, one owner gets a lot less and all the NHCEs get a lot less a little over half of original amount.  Distribution of participant statements will be a bit touchy.

If the employer wants to avoid reducing NHCE allocations, is there a way he can get around the pro-rata formula for the year?

You do see some strange things in non-ERISA plans. Consider the following, which I think is likely a bad idea from employee relations and/or union contract deals, but I can't see anything technically wrong with it in terms of violating the 403(b) regs. Any other thoughts? Maybe I'm missing something.

This is for EMPLOYER CONTRIBUTIONS ONLY. Deferrals appropriately follow all the "normal" rules. 2-year eligibility (1,000 hours for a YOS) for employer contributions. Plan year is calendar. Fiscal year is 6/30 Y/E. If you don't meet your eligibility in the first two employment years, subsequent eligibility computation periods shift to the FISCAL year BEGINNING  AFTER the end of the two year period. So, in essence, it would be possible to completely ignore nearly an entire year of service depending on hire date - for example, if hired on July 15th, and you don't meet eligibility in the first two years, then the next eligibility period doesn't begin until 7/1 of the following year. Is that strange, or what? Anyone ever seen anything similar?

P.S. - I'm dubious that many of the new Pre-approved documents, when available,  would permit this anyway...