Owners son would have entered plan 1/1/2017 but was allowed to defer in 2016 against our advice, and now I am dealing with the fallout.  The owner insists on a correction method other than refund.  

I have 2 or 3 NHCEs who did not get the opportunity to participate early.  Can I retroactively amend to bring in the son and 2-3 NHCEs since it would benefit more NHCEs than HCEs? And if I do include the NHCEs, would they also need to get QNECs for missed deferral opportunities + match since they weren't given an option to defer?

We have a plan that is on the Sungard VS document.  Comp defined as w-2 wages.  As part of the Prevailing Wage requirement they give a 3% SHNEC and the rest is given as a Profit Sharing contribution.

My question is when determining the amount for the 3% SH what compensation is used? Lets say the job calls for $20 total and $4 has to be the PW benefits.  Would the comp be the $20 or the $16 because that is what they are paying their employee in wages?

TIA

Do retirement plans' recordkeepers include in a service agreement a provision for arbitration of disputes.

If a standard service agreement includes an arbitration provision, can an employer negotiate to delete that provision?

How big does a plan need to be to have negotiating power on that point?

Hello. I have a plan that forgot to withhold 401k on an extra payroll run for 4 employees last week. What is the best way to fix this? Can they withhold the amount from an extra check?

I am told that if the Plan is under audit, the IRS can impose an increased higher excise tax than the statutory 15%. Has anyone had this happened?

Thanks.

Appendix B, Section 2.07(3).

It says you can limit the corrective amendment just to those who actually made contributions improperly.  Instead of developing some convoluted system of identifying the "one" person (an NHCE) can we just name their name?

A public entity is doing a golden handshake. The ER is making non-elective contributions into a 403(b). The 403(b) will then offer the participants the ability to rollover payments via a Period Certain annuity (qualified) over a period of 5 to 9 years. All payments will be sent to an IRA (or 403(b) or 457(b)) as rollovers or exchanges). My question is what happens if the participant turns 70 prior to the payments ceasing? It seems to me that the payments can only be rolled over prior to 70, but must be income after. Can someone please help clear this up.

"This document extends for 60 days the applicability date of the final regulation, published on April 8, 2016, defining who is a 'fiduciary' under [ERISA] and the Internal Revenue Code of 1986. It also extends for 60 days the applicability dates of the Best Interest Contract Exemption and the Class Exemption for Principal Transactions in Certain Assets Between Investment Advice Fiduciaries and Employee Benefit Plans and IRAs. It requires that fiduciaries relying on these exemptions for covered transactions adhere only to the Impartial Conduct Standards (including the 'best interest' standard), as conditions of the exemptions during the transition period from June 9, 2017, through January 1, 2018. Thus, the fiduciary definition in the rule (Fiduciary Rule or Rule) published on April 8, 2016, and Impartial Conduct Standards in these exemptions, are applicable on June 9, 2017, while compliance with the remaining conditions in these exemptions, such as requirements to make specific written disclosures and representations of fiduciary compliance in communications with investors, is not required until January 1, 2018. This document also delays the applicability of amendments to Prohibited Transaction Exemption 84-24 until January 1, 2018, other than the Impartial Conduct Standards, which will become applicable on June 9, 2017. Finally, this document extends for 60 days the applicability dates of amendments to other previously granted exemptions. The President, by Memorandum to the Secretary of Labor dated February 3, 2017, directed the [DOL] to examine whether the Fiduciary Rule may adversely affect the ability of Americans to gain access to retirement information and financial advice, and to prepare an updated economic and legal analysis concerning the likely impact of the Fiduciary Rule as part of that examination. The extensions announced in this document are necessary to enable the Department to perform this examination and to consider possible changes with respect to the Fiduciary Rule and PTEs based on new evidence or analysis developed pursuant to the examination."

Link to full text (63 pages, PDF)

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I have a plan we are taking over (It is a 403b ERISA) for a Jesuit School High school. The plan is currently at TIAA-CREF (I know, hard conversion anyways).

But I was looking at the investments and it looks like the funds are held within CREF Variable Annuities instead of CREF Mutual Funds. (Example: https://www.tiaa.org/public/pdf/ffs/194408407.pdf)  Thus the 6-letter tickers for the funds.

Does anyone have experience pulling a plan out of funds like this and into a regular Vanguard/Fidelity mutual fund lineup?  Any fees associated with exiting these funds like surrender charges?  I would appreciate any insight.  I'm obviously not listed as advisor yet for client.  I cant be an advisor at TIAA.

I moved to ERISA space after several years or personal wealth management, I've never seen anything like this before.  Thanks for any help.

A calendar year plan has $0 Credit Balance and $0 Prefunding Balance.
Quarterly contributions are required.
The sponsor has standing elections to increase the Prefunding Balance and use it to meet quarterlies and minimum requirements.

The sponsor has been timely contributing the quarterly requirements when due.

It is now September 18, 2017.  The actuary has confirmed that all of the required contributions for the 2016 plan year have been timely made.  The April and July quarterlies for the 2017 plan year have also been timely made.

The actuary decides that if the April and July 2017 quarterlies are deemed 2016 contributions, then a Prefunding Balance will be automatically created.

This Prefunding Balance can then be used to meet the April and July quarterlies. (Assume the excess contributions create sufficient Prefunding Balance to do so.)

My question is, is this allowed?

When was the Prefunding Balance created?

If used to meet the April or July quarterly, didn't it have to exist when the quarterly is due?

A plan sponsor has a Cash Balance Plan and 401(k) PS plan with a 3% safe harbor allocation.  The PS plan has a cross-tested allocation with 7 different allocation groups.  The plan was not designed to have one group per participant because the plan sponsor is a Partnership and the IRS has stated that this may not be appropriate (separate discussion). 

The two owners and two employees are included in the CB plan.  4 additional NHCE employees are excluded from the CB plan, but are included in the 401(k) PS Plan.  The special gateway is 7.5%.  For the 4 employees NOT in the CB plan, they receive the 3% safe harbor plus 4.5% profit sharing to meet this gateway.  The 2 employees in the CB plan only need 2.7% in PS to pass testing.

This leaves employees in the same PS allocation group receiving different PS percentages (4.5% vs. 2.7%).  I would not have thought that this was okay because the 401(k) plan document states that all employees in the same group should receive a pro-rata allocation with the group (i.e. same %).  Are there special rules that allow us to give differing % in the same PS group if it is merely bumping up the allocation for some employees to meet the minimum gateway?

If we are allowed to give different percentages, does it require an 11(g) amendment?  Our actuary says no, but I am not 100% convinced.

Plan allowed someone to participate early. Deferrals were refunded, rather than amending plan to allow early participation. Investments selected by participant lost money - no earnings. Employer paid the participant full amount of incorrect deferrals - the reduced amount  in the plan, plus a make-up outside the plan, through payroll. So, for example, $100.00 deferred, $80.00 left at time of correction. Participant received full $100.00.

IRS is saying that the participant is owed interest on the deferrals. This doesn't seem reasonable to me, (the amount is meaningless - a dollar or two, but for future reference I'm trying to determine if there's any "proof" that earnings aren't required when there is a loss in such a situation) - I'm sure I've looked right at it, but it is eluding me. Anyone recall where (if) in 2016-51 it specifically says that earnings aren't required? Or is the auditor correct? I can find where corrective ALLOCATIONS need not be adjusted for losses, but I'm not finding what I'm looking for in this situation.

Thanks.

DB plan where the only death benefit is the required QPSA, payable to a spouse. A participant terminated in the '80s with a $19 benefit. He died in 2006 and his required beginning date would have been 4/1/2008. 
The pre-retirement QPSA was never paid to the spouse, and she died in 2015. 

Does anyone know where the plan sponsor would go from here? I assume an "operational failure" has occurred (in terms of not paying the QPSA timely) but don't know that there is clear guidance in the EPCRS on how to handle this type of failure. I know it addresses what to do if a participant is not paid by their RBD, but what kind of options exist for this situation? Can they forfeit the benefit and move on? Do they have to pay this benefit to the participant or the spouse's estate?

Back when we filed extensions for the 6/30/2016 PYE Form 5500, we didn't think carefully about the date and we used 4/15/2017 as the requested extension date.  Since that falls on a Saturday with Monday as Emancipation Day holiday in DC, are we ok to file on 4/18 or does the F5558 lock us into 4/15?

Maybe you can settle a debate I am having with my supervisor.

When doing a new comp contribution calculation, should it be an automatic red flag if an owner is getting less of a contribution % than a non owner?

Employee's COBRA coverage was terminated on April 1 retroactively to February 1 due to nonpayment of premiums.  Is the employee precluded from obtaining Marketplace coverage now because his coverage was terminated outside the 60-day window Special Enrollment Period?  

I believe this is the case but am wondering if anyone has run across this situation.

Husband owns a company 100% that has a 401(k) plan with 1 non-NHCE. His wife has a SEP for her sole prop (she's the only employee). They're in a community property state, so the businesses are a controlled group.

I do know the SEP is required to cover all employees in the controlled group (which it's not), and be aggregated with the 401(k) plan for top heavy determination (and may not be allowed to co-exist with a qualified plan, depending on the SEP agreement). I'm pretty sure that SEPs are not subject to 410(b), BRFs, and 401(a)(4) testing (since a proper SEP would always automatically be non-discriminatory), and so the 401(k) plan does not have to be aggregated with it for testing. The 401(k) plan has a non-standardized document that doesn't cover other controlled group companies. So my understanding is that the 401(k) plan is not negatively impacted by the SEP or the other controlled group company.

Is this correct?

Thanks.

How is this disbursement handled/ calculated per tax penalties:            An open 401k loan. But, then subsequent resignation with hardship request for balance of 401k funds??

We are establishing a SIMPLE using the 5305 form as a business that has been in operation for years, but we have never had a retirement plan.  The IRS notes that the election period can be amended if the plan is established between January 1, and October 1.  Does this mean that we can reduce the 60 day election period, and enroll our employees immediately if they all turn in their form?

Seems to me that it would be helpful for a newly registered user of the message boards to be given an email that welcomes him or her to the community and that provides certain information that would be especially helpful in getting started.

Maybe a Q&A format.

Does this sound good? What information would you have enjoyed having?

Dave