Just wondering - suppose several school districts, (so non-ERISA plans) who all sponsor 403(b) plans, merge their plans into one 403(b) plan, effective in, say, May of 2017, using an IRS pre-approved prototype - should be available by then...

Do all of the individual plans have to be restated retroactively to 2009? I presume not, but I've never thought about it! Could get messy screwing around with 4 different plans with different provisions going back years and years.

I've got a plan with a non-safe harbor discretionary match that is calculated per payroll with no true-up.  Halfway through the year, the plan sponsor now wants to cut the rate of the match in half.  Is there anything that would prevent this?  I don't see anything in the plan document that discussed this specifically.

I know they'd still have to pass the ACP test, so if this is a ploy to lower the match after the HCEs have maxed their deferrals, they'll just fail that anyway.  Is there anything else that could come into play?  Thanks.

Only contributions are Employee Deferrals and Employer Safe Harbor Match, our documents ask which test the safe harbor is intended to satisfy, just ADP or both ADP/ACP.

Our old documents from McKay Hockman noted that the ACP was automatically satisfied if the only employer contribution was a safe harbor match.  Was I correct in drafting the safe harbor match with only the ADP safe harbor selected to be satisfied and assuming that ADP/ACP election was only for a safe harbor match with additional discretionary/fixed match or after-tax contributions.  Wanted to know for our new docs.

401k Plan with PS only  (no match)  Client wants a design to benefit some more than others.

NO HCE's by ownership or compensation.

Want Group A to get 10% PS    

Group B to get 5% PS

Group C to get 0% PS

1.  What do I have to look at?  Does it matter how many are in each group?

2.  Is it better to exclude Group C (smallest number of EE's) from the plan by definition or just exclude them from the PS by definition.

No HCE's in plan, plan is not Top Heavy.

We're dealing with a situation in which a participant named his spouse as his beneficiary of his 401(k) plan.  He later divorced, but did not at that time change the beneficiary designation.  (Under Egelhoff v. Egelhoff, 532 US 141 (2001), the divorce would not itself change the beneficiary designation.)  However, after he died, his sister sent a signed beneficiary designation in favor of the sister.  The plan is now asking us whether they can honor a beneficiary designation signed by the participant, but not received until after the participant's death.  The plan document is silent on the issue.

My gut reaction is that the plan should simply refuse to pay until this is straightened out, and file an interpleader action if one of the parties sues for benefits.  But has anyone seen any guidance as to whether a beneficiary designation not received until after death can be honored?

Our Benefits in the News web page displays previously published news items as always, but now you can view them in a new, optional compact format -- you can hide the excerpts, at your option. Just look for the "Hide excerpts" checkbox. (The full list, which includes excerpts, continues to be the default view.)

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I just saw a release from last week where Datair says they have received an Advisory letter.

We haven't heard a peep yet, but presumably it is coming soon.

We have a NQDC Plan.  When a distribution comes due, the Administrator sends the money we have set aside to us, we cut a check to the participant, and we issue a W-2.

The Administrator said it can cut the check to the participant itself, but since the check will be coming from them, they will have to issue a 1099.

I've always understood that NQDC distributions are to be issued with a W-2, since the money represents compensation earned from an employer for work performed.  Would it be appropriate to allow the Administrator to cut the check and issue a 1099?  Can the Administrator legally issue a W-2?  

Another option might be for the Administrator to cut the check, send any withholdings to us, and then we issue a W-2 from that point.  But the point of the change to to have the Administrator take over the entirety of the distribution process, so that is not ideal.

An employer's plan year is 10/01 - 09/30. However, their medical and life policy year changed to 12/01. How do I report this on the Schedule A? The system that we use will not accept the policy year because it extends beyond the plan year end date. I really hope my question makes sense. Thanks in advance for the help and advice.

As of May 1st, 2017, my status will be RETIRED.  And many will say it's about time.  It has been a looooong fun run folks.

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!