Hi Everyone,

I know this question has been asked a million times already, but I owe my due diligence to my employer to ask this question again in order to make sure that there's no way around this.  Please bear with me.

I am an administrator for our 401k plan which existed since 1999, and this entire time, our plan doc has allow all W-2 compensations which included bonus; however, our general unwritten policy has always been to exclude bonus from deferral.  All 18 years, we have never deferred any compensation related to bonus and now our auditor has recommended a SCP to correct this.  I've looked through the adoption agreement, asked our 401k vendor and confirmed that our plan indeed never excluded bonus. 

This is a new auditor and it's hard to believe that the previous auditors have missed this the entire time.  The recommendation is to do recalculate the missed deferrals for at least the last 3 years.  Is there a way to correct this without doing a SCP which includes QNEC from the employer of over 40-50k?

I am not sure it's helpful to know but we've always executed bonus payment in a separate payroll from our regular payroll schedule.

Thank you,

Notice 2017-49 that just came (within past two hours). Funding relief until January 28 if an Affected Plan.

Notice 2017-49 Hurricane Funding Relief.pdf

I have a scenario and I want to see what you all think.

A dentist is purchasing a practice (asset purchase) as of 9/15. He will have had nothing to do with the practice prior to purchase; no employment. He wants to start a cross-tested 401k PSP plan right away and wants all nine staff members eligible immediately and then wants to shift to statutory eligibility requirements moving forward.

If he were to recognize predecessor service for eligibility purposes, then everyone will be eligible right away except one of the nine staff members, the dentist and his spouse. If we then add a dual eligibility bringing the three of them into the plan, those three are otherwise excludable employees and for 2017 and 2018, and may be disaggregated from the the other staff members for 401(a)(4) general testing.

Anyone see any problem with this line of thinking? Do you think recognizing predecessor service for eligibility plus using dual eligibility is problematic? If not, there are no HCEs in the non-otherwise excludable group so it passes automatically. Following that line, if for the otherwise-excludable group I’m passing 401(a)(4) on a benefits basis, is it necessary to allocate a gateway contribution to all staff members or only the one staff member in the otherwise excludable group?

Plan sponsor is taxed as a partnership.  Plan sponsor uses a recordkeeper platform for their 401(k).  A few of the partners had 401(k) contributions that exceeded $24,000 deposited to their accounts during 2016.  It wasn't noticed until after 04/15.  

Since they are partners and not W-2 employees can this be  corrected by forfeiting the excess amount?  Just trying to avoid the double taxation; potentially they can be made whole outside of the plan.

Thank you for any guidance.  

Has there been any news on which mortality tables will be used for funding and lump sums after 2017?  Unless we missed something, we would expect to hear something soon regarding this matter.  We know the proposed regs are out, but nothing final yet.  Thanks.

Have a small calendar year defined benefit plan that terminated and distributed all assets 2/28/2017. The final 5500 is due 9/30/2017. However, I don't believe the 2017 electronic forms are available yet. What do we do?

Thanks

Company maintains two plans - 401(k) for non-union employees and a DB for union employees.

We provide tpa services for the 401(k), another firm provides actuarial services for the DB.

We recently found out that 6 union employees declined participation in the DB plan (?) and the company offered them participation in the 401(k).  These employees were listed on the annual census, but never identified as union employees.  The 401(k) plan excludes Collectively Bargained from plan participation, always has.

I do not believe that this situation can be corrected under EPCRS and in regards to the union employees who were allowed to participate in the 401(k) plan they will have to;

• return deferrals plus earnings, not eligible for rollover, no 10% penalty
• all returns are taxed in the year returned
• 1099-R will use a Code 8
• rerun ADP / ACP testing without these employees
• forfeit match plus earnings

Does anyone know of any solution where the excluded employees could remain in the plan?

Thank you.

A single member LLC is a partner in a general partnership.  The LLC receives a K-1 for its partnership distribution, which the accountant treats as self-employment income.  The LLC also has other sources of income.  The LLC has employees and has established a defined benefit plan and a 401(k) plan.  With respect to the 100% owner of the LLC, can the partnership income which passes through the LLC be counted as compensation under the LLC's plans?  If the owner was the partner personally, then the partnership income wouldn't be counted since the partnership would be deemed the "employer" and it isn't sponsoring the plan.  Does the answer change when the income is distributed to the LLC (which is a disregarded entity) and then the LLC ultimately distributes income to the owner?  If no, how do you track what portion of the LLC distribution reflects the partnership distribution?

Thanks, Cathy

can 1099 employees treated as employees of a company and contribute salary deferral into the 401(k) Plan if the plan eligibility provisions looks like as shown below?

Plan Description: Prototype Non-standardized Profit Sharing Plan with CODA

I. ELIGIBILITY AND PARTICIPATION REQUIREMENTS
A. Eligible Employees (Plan Section 1.1.25)
Must choose either 1 or 2:

1. [x ] All Employees of an Employer are eligible to participate in the Plan.

2. [ ] All Employees of an Employer are eligible to participate in the Plan, except
Check each appropriate box (a-g) to specify excluded employee groups, if applicable.
a. [ ] Salaried Employees.
b. [ ] Hourly Paid Employees.
c. [ ] Any nondiscriminatory classification of Employees employed in or by one or more specified divisions, plants, locations,
job categories, or other identifiable groups of Employees as determined by the Board of Directors. Please specify:
(Note: Under Treasury Regulations, part-time and seasonal employment is not a nondiscriminatory classification. This
item should not be completed with a definition that by its terms defines an excluded classification as including NonHighly
Compensated Employees with the lowest amount of compensation and/or the shortest periods of service.)
d. [ ] Employees included in a bargaining unit covered by a collective bargaining agreement with the Employer in the
negotiation of which retirement benefits were the subject of good faith bargaining (unless the bargaining agreement
provides for participation in the Plan).
(For a Plan that includes union employees, specify whether less than all union employees are included. For example: If
the Plan is set-up for employees in Union X, but employees in Union Y are excluded, Union Y should be specified.)
e. [ ] Employees covered under any other tax-qualified retirement plan with respect to which the Employer is obligated to
contribute. Please specify:
(Specify the retirement plan, if applicable. For example: XYZ, Inc. Pension Plan.)
f. [ ] Leased Employees.
g. [ ] Employees not required to be taken into account for nondiscrimination testing purposes under Code §410(b)(6)(C) but
only during the Code §410(b)(6)(C) transition period.
(Note: If selected, in the event of a corporate acquisition, employees of the acquired company will be excluded from
participation in the Plan for a period not to exceed two years, as determined by the acquisition date and Plan Year.)
 

Hi.  I'm working on two related companies (that do not rise to the controlled group or affiliated service group level) where the top guy (who is in both companies/plans) took a max $50K loan from each plan - each loan was a valid loan based on amount, etc.

Now there may be a change in ownership that will put these entities into the same controlled group.  There is even talk about merging the plans.  His loan balance will be more than $50,000, but is that OK since the loan(s) were valid when they were taken?

Thanks.

If a doctor (an s-corp) has her husband working for her and he appears each year on the census with under 1,000 hours, can we deem him, as her spouse, to have worked over 1,000 hours.  This is what our actuary is saying we can do.

Is anyone aware of specific cases addressing claims for monetary damages relating to the exclusion of eligible employees in a 401(k) plan - sponsor has already followed EPCRS correction guidance and made QNEC?  Thanks in advance.

I need to find an attorney who has been successful in having a QDRO removed from a pension.

27 year marriage, divorce in Ohio January, 2012, I  paid exhusband 9 years maintenance, plus 50/50 split all other assets.  His attorney requested the QDRO in addition to  above list.

We have two adult daughters, one disabled, waiting for a determination from SSI.

At time of divorce my attorney considered listing daughter as a "Castle Child", an adult child not likely to ever be self supporting.  Didn't persue, daughter's health continued downhill, medical bills $300,000+ ++ out of pocket. QDRO needs to be dropped due to this life changing inequity as I completely care for our daughter physically and financially.  The QDRO is inequitable based on these facts.

Suggestions? Facts? Direction?

Thanks,

R 

I will update my post as I learn and make progress.

Participant A participates in DC plan Z.  Participant A dies. During year end valuation work we learn that her assets in the plan are just transferred to her beneficiary (her spouse) and kept in the plan. But the beneficiary is not an employee of the company sponsoring Plan Z.  We don't believe the Alliance handed the distribution correctly. The funds should have been distributed. Do you agee?  

Hello.  We have a client - 2 person (solo-k husband and wife) with a DC plan . Each deferred 18,000 and at the same time client contributed $5,000 match to their accounts. Well, we come to find that their gross compensation for 2016 was 19,500 each. 

So we have 2 limit issues.  Each has excess annual additions but the client also exceeded their maximum allowable deduction of 25% of eligible compensation by $250. Which problem is taken care of first?  Do we forfeit $125 of match from each participant's match account and then determine the excess annual additions?  Or the other way around?

 We are so somewhat lucky as wife is over 50 so we can reclassify her excess as 'catch-up ', but not so for the husband.  

My sense is you fix the deduction limit first, but I thought that once the employer funds are assets of the plan they cannot be removed.

Please advise. 

A participant's wife has passed away and he would like to rollover the 401k balance from his wife's company to his 401k account at his company.

Can 401k plans accept spousal death benefit rollovers or must he rollover the balance to an IRA?

Thanks!

1.401(a)(4)-5 provides that benefits otherwise payable to restricted employees (generally the 25 HCEs with the highest compensation)under a defined benefit plan are limited if the plan is not at least 110% funded after the distribution.  If the value of the benefit is less than 1% of the plan's current liabilities, the restrictions do not apply.

Is the 1% exemption only applicable at benefit commencement date or (like the "110% Test") is the 1% exemption applied at every payment date and the full amount can be paid once the value falls below 1%.

For Tom Poje in Jacksonville, and anyone else, and their families and friends who may end up in the path or suffer the after-effects, my heartfelt best wishes for you all to come through this unscathed, or relatively so. We'll be thinking about you!

A terminated participant was provided a distribution check for $150 in December 2016.  In  2017, the investment company determined that the check was never cashed and has reversed the transaction and is including the funds in the plan's assets.  A new check was written in June to the participant and he is cashing the check.

For 5500 reporting, at 12/31/16 should the stale check be included in the ending asset balance?  Also, should the 2016 1099R for the participant be amended to reflect $0 distribution and a new 1099R prepared for 2017 showing the payment?