We have come across a prospect who currently has a 401(k) plan with an employer match equal to 50% on the first 4% deferred.  They also have a 403(b) plan that they said is used for deferrals of HCEs that want to defer more than 4%.  They do this to avoid/limit failure of the ADP test.  They are treating the 403(b) as a Non-Erisa plan.  This doesn't seem right to me and was hoping to get others' opinions. 

Hello,

I'm a US Citizen working for an American company that is owned by a Dutch company. I have no idea what the exact legal status is, but we are "XXX LLC, an YYY Company" . I applied for a position in the headquarters in Netherlands, and I'm about to get transferred there on a permanent, local NL-based contract. According to my HR my 401k in XXX will be terminated and the unvested balance will be lost.

Why is that considering I'm not changing companies? Thanks!

An employer maintains a 401(k) plan.  On June 1st there is going to be a stock sale in which the change in ownership is going from 60% owner A, 40% owner B to 100% owner A.  Owner A is being advised to terminate the current 401(k) plan and after the stock sale start a "new" 401(k) plan.  Would this be in violation of the successor plan rule?  The employer name and tax id is not changing. 

It's clear a cash balance plan contribution can be set to be a percentage of pay (with I guess limits by age). Why is the usual advice for 'defined benefit' that business/owners income be stable still applicable ? What happens with a one person business that has highly variable income and sometimes looses money for the year ? 

http://www.great-westclassaction.com/frequently-asked-questions.aspx#a1

Just curious what other people are telling their clients who are getting these letters.  I assume those of you who work with Empower are getting these.  It's a class action suit surrounding their Key Guar. Portfolio fund (i.e.,. their guaranteed interest fund).

From what I have read, the impact of this suit could be wide reaching.  It is essentially a rebuke of investment gains that exceed the crediting rate, even though of course if returns are less than the crediting rate the fund investors receive no losses (which is kind of the definition of insurance).  The excess of course is compensating Empower not for the recordkeeping costs, but for the additional risk they are taking.

It seems to me Empower was picked for this suit because they are the number 2 recordkeeper, and not because they are the only ones who have a product like this.  I am especially curious to know if any write-ups have been done in the context of what this means for the industry as a whole.  To me the implications seem vast. 

I have a client who filed as a large plan in 2015, however, in 2016 they went bankrupt, all employees were terminated and the business was sold to a liquidation firm. They need to file as a large plan for 2016, but they have told me that they are not engaging a firm to do an audit. Does anyone have suggestions as to how to get the 5500 filed without the accountant's opinion?

DB plan (CB format, but that doesn't matter) for law firm has multiple terminated former partners who are among top 25 restricted HCEs/former HCEs and cannot get a lump sum because plan is not, and will not after distributions, be 110% funded. Employer is interested in funding up the plan to be able to pay one particular restricted HCE, but not all of them. All the regulatory guidance I've seen appears in the context of "a" restricted employee. Favoring/discriminating for one HCE over another HCE may not have any qualified plan ramifications, but the danger may be other legal implications. I don't know if the partnership agreement stipulates anything in that regard - let's assume it does not, otherwise the answer would be easy, right?

Spouse and I agreed to divide all assets and holdings prior to non contested divorce. I gave up everything on my side within the first 90 days. The other side dragged their feet and it took a year, The last remaining piece we were negotiating was their ESOP. I had agreed to equalize everything on my side so as to be entitles to 50% of their account balance. I tried to get the QDRO drafted and approved, with the correct language, prior to the Decree but was given the run around on the actual language of the "plan" multiple times. Spouse was able to get a "default decree" signed by the Judge without my knowledge. I was served papers and didn't have a valid QDRO in place.  I was able to contest on the ground of misrepresentation, but only allowed to file a QDRO post Decree, The Plan administrator finally accepted the QDRO after a year of attempts and is giving me some harsh feedback on my ability to get any information as to distribution of any kind. What are my rights? They are setting up a sequestered account at the trustee bank. I have only the amount of shares I am entitled under the ESOP. With shares value under the equalization, it is supposed to be over 245K. No other papers have been sent to me as of Dec 24 2016.  Any help would be greatly appreciated. I am 30k into legal fees and exhausted.

Have a new client that is a Governmental Hospital in the state of Texas.    Presently has a 403(b) plan and moving to a 457 Govt Plan.    Under the Hospital umbrella they have a subsidiary that is a 501(c)3 organization (with a separate EIN#) and would be considered part of a control group.   Currently those employees are all participating in the same 403(b) plan, however, the 501(c)3 entity is not listed on the present adoption agreement.   I have reviewed the Advisory Opinion 2003-16A and Section 501(r) Compliance.    Could they be considered an agency or instrumentality of the Hospital and be included in the 457 Govt Plan under same document?

I have a plan that uses the Prevailing Wage contributions to offset the Employer Contributions.  The plan has safe harbor matching contributions and a profit sharing contribution.  Can the prevailing wage contributions offset both contributions (if there is enough available) or does the offset limit you to 1 type of ER contribution to offset?  I can't find anything definitive on this.  Our testing software (DATAIR) only uses it for one and kicks it out of the other depending on which the PW is chosen to offset.

A firm has around 30 employees and requires one year of service before an employee can participate in the plan. A new partner was brought into the firm who will become a HCE at some point in the next year. He has been allowed to join the plan without fulfilling the 1 year of service. Is this possible? Are they breaking any discrimination testing rules? Are there impacts to other HCE employees or NHCE employees? or Employees who have yet to get the 1 year of service rule. 

Thanks! 

A DB participant terminates employment before RBD and dies at least 15 years before first RMD is due.  Surviving spouse does not answer correspondence for years and is not found until well after RMD date, more or less ten years (facts are a little murky as to how often plan administrator reached out to surviving spouse - spouse has been living both in and out of US for years, but there have been numerous attempts - although first one may have been several years after first RMD was due).  Surviving spouse never made election regarding form of benefit.

1) I believe surviving spouse should receive first payment that represents actuarial equivalent of missing RMDs.  Anyone disagree?

2) Q&A 4 of CFR 1.401(a)(9) says that when participant is deceased, and a spouse fails to consent to a distribution, the plan may distribute in the form of a QPSA and 411(a)(11) and 417(e) will be deemed satisfied if plan has made reasonable efforts to obtain consent and the distribution otherwise meets the requirements of 417.  Is there any reason that spouse should be given opportunity to choose another form of benefit? It may be that plan administrator's first attempt to reach spouse was late, but there were many attempts afterward.  Spouse's son has responded to plan administrator's queries from time to time so plan administrator knows that documents went to right house.

Thank you

Anyone know how to to treat a "743(b)" election?  It's something like depreciation.  If anyone can point me to something on point I would appreciate.  Trying to see if I treat it like section 179.

"Anyone know how to to treat a "743(b)" election?  It's something like depreciation.  If anyone can point me to something on point I would appreciate.  Trying to see if I treat it like section 179.

So...

Box 14A $250,000

Sect 179: 0

"743(b)" related to a step-up in basis in the acquisition of a business:  $25.000.

Participant received a single life annuity payment for several years from a qualified plan. 1099-R incorrectly indicated that the annuity payment was eligible for tax-free rollover and the payments were made to the IRA.  Does anyone have any experience correcting this type of error?  Does it fall under EPCRS somewhere? It seems like there will be an excise tax issue on the excess contributions unless they can be waived under EPCRS.

Thanks.

Participant received a single life annuity payment for several years. 1099-R incorrectly indicated that the annuity payment was eligible for tax-free rollover and the payments were made to the IRA.  Does anyone have any experience correcting this type of error?  Does it fall under EPCRS somewhere? It seems like there will be an excise tax issue on the excess contributions unless they can be waived under EPCRS.

Thanks.

If a defined benefit plan is terminating and it has an Early Retirement Age of a certain age plus a number of years, do they have to continue to count years of service after the termination date to determine when someone is eligible for an early retirement benefit?

We have a client who thought their CPA had been filing the 5500 for the last 27 years.  No one (client or CPA) can find a copy of a form ever prepared.  I searched Freeerisa and was unable to find any filings.  Any suggestions?  Do you think I really need to file 27 returns?  I do have the records back to day one and I certainly would not mind the fees.

If a terminating plan has a short final plan year due to the completion of distributions, but files a 5558, is the extended due due what it would otherwise be if the plan wasn't terminating (9 1/2 months after the normal end of plan year), or is the extended due date based upon the end of the short plan year? Would you happen to have a citation?

Thanks for any responses!

We are working with a new 401(k) client and in reviewing the ownership structure, we see a number of IRA's listed as owners in the C-Corp. Is this permitted? The IRA's belong to employees (mostly with little or no ownership %). However, one of the IRA's belongs to  an officer/co-founder/employee who has 5% ownership in the company. Could this pose prohibited transaction violations?