An employer  under calculated and under deposited two participants' deferrals for the entirety of the plan year.  When discovered at year end,  they put in 25% of the missed (under deposited) deferrals.

Do they prepare a 5330?  - and do they calculate earnings/amount involved  based  on the 100% that should have gone in or the 25% that got put in.  The employee did not make up any deferrals - just the employer. 

We met with a prospect yesterday that wants an interesting plan design I haven't seen before. I've been going in circles with the definition of "collectively bargained employee" while trying to decide if their idea works. It's a new company.  Currently, all employees, including the owners, are union employees and are participating in the union plan based on their service with the employer. For a variety of reasons, none of them will leave the union. They want to adopt an additional plan that will cover some, but not all of the union employees. It will also cover non-union employees when they eventually hire some.  One goal of the plan is to entice those they use as supervisors to work for them exclusively.  The other union workers are provided by the union for each job and it may not be the same workers for the next job. The by-the-job workers are the ones they want to exclude.  My initial reaction was that this design shouldn't work, but now it looks like it probably does.

I see two different scenarios, depending on how you interpret the definition of "collectively bargained employee" in 1.410(b)-6(d)(2).  

Scenario 1:  The new plan covering some of the union employees doesn't affect the determination of status as "collectively bargained employee".  In addition to any possible benefits from the new plan, they are still included in a unit of employees covered by a CBA that includes retirement benefits.  Under 1.410(b)-2(b)(7), a plan that benefits solely collectively bargained employees is deemed to satisfy 410(b).  The 401(a)(4) exception under 1.401(a)(4)-1(c)(5) would not apply because this plan would not be a collectively bargained plan, since it would not be maintained pursuant to a CBA. Their idea looks like it works.

Scenario 2:  The new plan covering some of the union employees does affect the determination of status as "collectively bargained employees".  Those excluded from the new plan would receive all of their retirement benefits under a CBA and would appear to still be considered collectively bargained employees.  For those included in the new plan, I think you could read the definition in a way that they would not be collectively bargained employees with respect to the new plan since their benefits under the new plan are not covered by a CBA.  Under 1.410(b)-6(d)(1), collectively bargained employees are excludable with respect to a plan that benefits solely noncollectively bargained employees.  They are not wanting to exclude any noncollectively bargained employees, so they should be able to pass 410(b). Their idea looks like it works.    

Does anyone see anything I'm missing?  Any opinions about which scenario applies?  It would affect how the plan document is set up.

a little over 38 years ago 7/12/1979

the crowd 'celebrates' but not from a pennant win, or all star game

but rather disco demolition night in Chicago.

a promotion gone really bad. between games they blew up records, the crowd stormed the field and Detroit wins the second game due to a forfeit.

Sparky Anderson had become manager mid season that year, only 1 month before this game.

Actuarial vendor performs the annual actuarial valuation for a DB plan, and delivers the report to the sponsoring employer (i.e., the PA).  Actuarial vendor then sends its invoice for services rendered. 

The plan provisions have always permitted the plan to pay reasonable expenses if not paid by the sponsor.  "The trust fund shall be used for the exclusive benefit of the participants and their beneficiaries and to pay administrative expenses of the plan and trust to the extent not paid by the Hospital."

In prior years, the sponsor has elected to have the plan pay some expenses, including fees from the actuary, but not necessarily the same each year.  In some years the plan has paid expense X, Y, and Z, while in other years the plan has paid expense X and Y.

For the current invoice, the sponsor does not pay promptly, nor is the invoice paid by the plan.  A few months later, the sponsor declares chapter 11 bankruptcy.  The sponsor also files for a PBGC distress termination (without involvement of this actuary).  Sponsor refuses to pay the actuary's invoice, and refuses to send the invoice to the plan trustee for payment.  Bankruptcy attorney says, “get in line, like everyone else”.

Research includes ERISA sections 403 and 404, and DOL Advisory Opinion 2001-01A, Distress Termination instructions.  Nothing appears to restrict the payment of reasonable administrative expenses in the event of bankruptcy.  My view is that plan provisions require the sponsor to direct payment from the trust since the sponsor has not made the payment, but I’m willing to consider other viewpoints.  Any comments or experience that you are willing to share?

Hello all,

We just picked up a new plan, and the document indicates that the profit sharing formula is integrated at the taxable wage base. The client sets a percentage that they want to contribute for all of the staff (say 5%), and then run the calculation from there. The individual partners (all Key or HCEs) then select their own contribution level (all below what the integrated formula says it would be). For example, if the formula to get all of the staff 5% of pay, the contribution for one of the partners might be $15,000. However, he decides to only contribute $10,000.

The prior administrator was then running the contributions through the general test, and passed.

However, unless there is something I do not know about integrated formulas, this is an operational failure, correct? They didn't follow the terms of the plan document, which indicate an integrated formula. I am not aware of any provision that says you can reduce the integrated formula benefit (even if it is only hurting the HCE or Key Employees).

In terms of correction, how would we go about this? The only ones who were shorted in contributions were key employees or HCEs. It is my understanding that they have done this for 2 years (2015 and 2016).

Thank you all for your assistance.

TPA had designed a 401(k) with SHM for 2015.  Client insisted on a 3 month waiting period for new entrants, but all employed as of effective date were grandfathered. Elapsed time vs. hours worked.  Client was told the only way to exclude PT was to have a 12 month service requirement so the plan was re-drafted. Plus, the plan was designed with a default deferral of 4% so they could get the 4% SHM.

Safe harbor contribution made for all that met the eligibility, Form 5500 was filed as there were more than 100 participants.

I believe another organization was going to buy the company AND compared this plan to theirs.

At that point, client realized that the original intent was to exclude part-time and seasonal employees and was told he could do this with the 3 month service; and wants us to go back and redo as he says that some of the employees were truly part-time and seasonal., which would bring the number of participants to less than 100.

Q#1, since we are in 2017, I doubt whether we can go back to 2015 to correct.

Q#2, what is there to correct, how would the client know when an employee was hired, that he would be part-time?

Q#3, since client made the 4% match for people that default deferred 4% to geT the match, how is that handled, as client states they should not have; and in fact, should not be in the plan.

401(k) Plan sponsored by LLC taxed as partnership.

When computing (1) the 1/2 Self Employment Tax offset and (2) the resulting "plan compensation" for allocation purposes, are Box 14 code A  Self Employment Earnings first reduced by the Box 12 Section 179 Deductions before computing the Self Employment Tax? I do not see this reduction (adjustment to Box 14 SEI) on Schedule SE (Form 1040) in the computation of the self employment tax.

Thank you

A partnership sponsors a 401(k) Plan.  Partnership consists of multiple partners receiving a K-1.  Three of the partners in the partnership are winding down their practices.  They are still considered equity partners but are paid a percentage of their collections (reported on their K-1s). 

Due to some of the partners winding down their practices, the ownership shares have changed mid-year.  For determination of the allocable share of qualified plan deductions for each partner, should I use the beginning percentage or ending percentage found in Part II, Box J?

Any feedback is greatly appreciated!

Thank you.

We recently took over a single employer client from a prior actuary and found out that they have not provided the Annual Funding Notice for the past three years. This exposes them to a sizable penalty ($110 per day, per participant). Is anyone aware of a correction procedure or method to remedy this situation? Also, aside from DOL/IRS/PBGC audit is there any way that this requirement is enforced? As always, any cites are appreciated.

I have a straight profit sharing only plan where the prior TPA used the Accrued to Date method for cross testing. I don't see where Relius offers that method. If it does, where do I code it?

401(k) Plan with no safe harbor provisions. Current NEC PS allocation is an integrated allocation. Participants employed at the end of the year have a 0 hours service requirement. Participants that are not employed at the end of the year have a 500 hours of service requirement.  

As of today no participant has terminated employment in 2017 with greater than 500 hours.

Can the plan sponsor do an amendment now to change the allocation formula to individual classes?

Is it just me, or is this one heck of a labyrinth to figure this out?  I've got a participant who was overpaid by about $1,000 in an individual account (i.e. on a platform) 401(k) plan (erroneous deposit combined with immediate distribution - every TPA's nightmare).

I started with Appendix B, Section 2.05 "Correction of Other Overpayment Failures".  That says that for a DC plan, I go to Appendix B, Section 2.04(2)(a)(iii).  Flipping back a few pages, I find that section is headed "Return of Overpayment Correction Method" and is generally talking about a 415(c) refund, but it directs me to Section 6.06(3).

6.06(3) is "Correction of Overpayment (defined benefit plans)" - !?!?  That's a little odd, since 6.06(4) is the same section for defined contribution & 403(b) plans.  I'm sure the IRS wouldn't make a typo, though, so I'll stick with 6.06(3).  This kicks me back to Appendix B, Section 2.04(1), keeping in mind that I might want to consider Section 4.05 (correction via plan amendment - no, I don't want that), and also keeping in mind that I don't violate Section 6.02 (general correction rules, like don't favor HCEs, etc.).

Appendix B, Section 2.04(1) talks about "Failures Relating to a 415(b) Excess".  Again, we're back to 415 violations, and the examples are all DB-esque.

This is the worst "Choose Your Own Adventure" book ever.

Can anyone help me make sense of this?  Or point me to something that makes the steps to correct this clearer?  Thanks!

Is it permissible to have one plan document for a 403(b) plan, but different provisions at different vendors? For example, can Roth contributions be added only at Fidelity and not TIAA or Valic, if it's written into a custom plan document?

lets say the plan was a one person profit sharing. the sponsor was the sole participants medical PA.  the participant died in 2014. the plan provides that the plan terminates upon dissolution of the plan sponsor. i believe the corp might have been dissolved in 2013.   the plan was never formerly terminated or paid out.  Would the plan need a PPA restatement?  

Assume the only 403(b) failure an employer seeks IRS relief on is the employer's failure to adopt a written plan.

If an employer adopts a written plan and files a VCP submission and pays the $500 (for 20 or fewer participants), is there anything the IRS will require ?

My federal employer excludes overtime when calculating the amount that's deducted from my pay for 401-K plan contributions. They use my base salary. Is that correct? I thought it should be calculated on gross wages.

We have a 401(k) plan that provides for matching contributions made on a per-payroll period basis (50% match on up to 6% of eligible comp), with HCEs subject to an $3,000 annual limit on the match.  We have certain HCEs who front-load their deferrals so that they don't get the benefit of the entire $3,000 match for the year. Our TPA suggested that we implement a true-up provision for the HCEs.  It seems like there would be a discrimination issue if we allowed a match to be allocated on a plan year basis only for HCEs. Any thoughts? 

Tripped across this.

I'm a bit fascinated by stats.

Miguel Cabrera had hit 2598 last night and I was looking up to see where that was on the all time list.

with 2605 was someone name Rabbit Maranville.

well, with a name like that I had to look it up.

played in the 10's and 20's.

Played the most number of seasons as anyone until Pete Rose.

but the story about him...

Maranville appeared in all 156 games during the miracle season of 1914, driving in 78 runs out of the cleanup spot even though he batted only .246. He came up with many big hits during the Braves' pennant drive, but none was more important than the game-winning home run he belted in the tenth inning on August 6--even though he was suffering from a severe hangover from drinking too much champagne at a dinner party the night before. "In the clubhouse while I was undressing Stallings came over to me and said, 'You go back to choking up; you are no home-run hitter,'" Rabbit remembered. "Truthfully, I never did see the ball I hit, and years later Babe Adams, who was the pitcher that day, asked me if it was a curve or a fastball I hit over the fence. I told him I never saw it and he said, 'I know darn well you never did.'"

Are there any tax withholding requirements when it comes to Federal criminal garnishment distributions from a plan?