do you think it is a plan sponsors responsibility or duty as fiduciary to monitor the reasonableness of fees and services for a brokerage window provider? 

now take it one step further, accounting and administrative issues aside, lets say the sponsor allows participants to do business with whatever broker they want to. do they still have the fiduciary duty to monitor the reasonableness of each broker chosen by participants and does it matter that it is the participants making the choice?

oh joy of joys

guess I will wait for someone to build this into the spreadsheet if this goes through for 2018!

https://www.ssa.gov/OACT/solvency/TCotton_20170601a.pdf

Thank you for your letter of April 12 regarding the implications for Social Security of reducing the employee portion of the payroll tax. The proposal would cut the payroll tax rate by 2 percentage points on Social Security-covered earnings up to:

· $28,258 for workers filing an individual income tax return,

· $56,512 for a married couple filing a joint return, and

· $28,258 for a married worker filing a separate return.

The proposal would reduce the employee portion of the payroll tax rate from 6.2 to 4.2 percent on annual earnings below the applicable threshold; the employer portion would remain at 6.2 percent. The tax rate for self-employed workers would be reduced from 12.4 to 10.4 percent on annual earnings below the applicable threshold. The dollar levels indicated above would apply for tax year 2018, with the thresholds increased by price inflation after 2018; that is, by the annual COLA increase percentage determined for December of the prior calendar year.

As we have discussed with your staff, this tax rate reduction would be implemented by way of a credit associated with the workers’ income tax filings. The reductions could not be efficiently applied in payroll withholding for at least two reasons. First, the employer would not know for certain the tax filing status the worker will use for the year. Second, for individual workers or married couples with more than one job during the year, it would not be clear to which job’s earnings the reduced payroll tax rate should be applied. As a result, the reduction in payroll tax would be received in the form of a credit included in workers’ federal income tax returns for the

year.

DB plan is terminating and it seems there may be some differing opinions on how to treat active participants.

- Actives cannot receive benefits until they terminate employment

- Early retirement subsidies starting at age 55 and 5 years of vesting (all have 5 years of vesting)

- As part of the Plan Termination, lump sums will be offered

- The plan was not amended to offer in-service distributions

Question #1

Do active participants that have met the age and service requirements for retirement (55 & 5) receive only the QJSA and QOSA Immediate Annuity options or do they get treated the same as Vested Terminated Participants and have the full allotment of annuity options as if they terminated employment and are retiring?

Question #2

If the answer to the first question is "NO", do the Actives that meet the age and service eligibility requirements get the subsidized QJSA and QOSA options or are the subsidies only available for those that "retire"?

Can anyone help me here please? We are getting divorced in the UK (it has to happen in the UK because this is where we currently live). My pension plan in the US states that the QDRO must be signed by a judge in a US court. We plan to attached the agreed QDRO to the UK court documents that will be signed/stamped by a UK court. How do we then get the QDRO signed by a judge in a US court? I don't know where to start with this last step.

For example, how do we find the relevant US court that would sign it? I am hoping the US court signature is a formality based on my belief that the US court will recognize the divorce as it has been approved by a UK court.

Thanks for any suggestions in advance.

We have client where wife has her own company (100% owner) and husband has his own company (100% owner) - unrelated businesses.  Wife is also on husband's payroll and he has DB, PS and 401(k) for his company.

Does anyone see a problem with wife benefiting in husband's plans and also having a SEP for her company?

Are not Defined Benefit Plans required to file form 8955-SSA as Defined Contribution Plans?

Question has come up as to whether a new 401(k) plan, either SH or traditional, can have a plan year off calendar year.

SH 3% would be using W-2 for cal year ending w/in plan year.

Have never seen a 401(k) off calendar year, but see no reason why not.

client would like to set up an LLC for the sole purpose of investing in an alternative investment for the plan. he would allow participants to invest in the alternative investment through the LLC?  what are the main issues?

For the 60 days requirement, is the day the notice provide included in the 60 days? For example - if the NOIT was provided September 2nd and the Plan Termination Date was November 1st - does that satisfy the 60-day requirement? Looking for definitive answers and they are hard to come by.

Can a benefit formula with a fresh start date with an add-on benefit satisfy the fractional accrual rule?  It has recently been suggested to us that such a formula doesn't satisfy the fractional accrual rule.  Has anyone had any issues with this?  If so, a cite would be appreciated.  Thank you.

Any help on this issue would be greatly appreciated, I am trying to understand this legal subject better.

In state X, state employees pensions forms do not required notification of election to spouse. However, non state workers are required to get signature of spouse. State X in recent years began recognizing QDRO's to override elections of state workers, in order for spouses to be able to reach the "marital assets" of the pension. What about spouses that due to religious reasons do not seek divorce, but then are left out of the "marital assets" of the pension as they did not select a beneficiary to inherit after death? 

In contrast

If the party filed for separation, but made inaccurate statements about the election selected, could the courts order a QDRO after the death of the spouse to cure the separation order? If so, what would the spouse be entitled to receive?

Sgt Pepper's Lonely Hearts Club Band was released 6/1/1967.  A co-worker of mine for the last 15 years said he's never heard of it.  Inconceivable. 

A client offered a Simple IRA to his employees.  Now he is offering a regular 401k plan.  I know that there are specific distribution rules for Simples, but if the participant has met the 2 year participation requirement and decides to roll his money to the 401k plan, are these assets considered related or unrelated rollover funds?

I just spent two hours going through every thread I can find on here on the topic, and couldn't find a conclusion.

I have a plan sponsor that wishes to (1) reimburse the plan for investment advisory fees that are automatically deducted from participants' accounts and (2) reimburse for investment sales commissions.

I believe 1 is ok, but I do not believe 2 is ok, however, I can't reach a conclusion as to why for either.  The plan sponsor wants to deduct these, and not as part of a contribution.  Everything I'm coming up with is relatively gray.  

Thoughts?

Plan has an AFTAP of 70% and is comprised of two components (1) a traditional benefit that does not have a lump sum option and (2) an account balance type benefit that has a lump sum.

Assume a participant has a traditional benefit of $200,000 per year plus an account balance of $15,000.   Participant elects an annuity from the traditional and a lump sum from the $15,000.  Can the $15,000 be paid or is it restricted to $7,500 under Section 436?

Hello. Can anyone tell me who offers a prototype SEP IRA. I need to find a financial institution that does so I can also open a solo 401 k. 

Here is the information from the IRS website. I currently have a 5305 SEP. 

"You can maintain both a SEP and another plan. However, unless the other plan is also a SEP, you cannot use Form 5305-SEP; you must adopt either a prototype SEP or an individually designed SEP."

Plan excludes several forms of compensation. ADP/ACP is tested on gross less exclusions

HCE has total gross comp of 270,143.14.  14,373.96 is excluded

do you 1. use limit of 265,000 less 14,373.96 excluded and test on 250,626.04

2. use 270,143.14 less 14,373.96 excluded and test on 255,769.18

3 use 265,000 less a prorated exclusion of 9230.82 (14,373.96 less 5143.14 diff between 265000 & actual) and test on 255,769.18

or, is there another correct option that I am not aware of.

This one has me going in circles.  If the plan has a high limit investment which is offered to all participants, but and only one HCE takes advantage, does it fail the 410(b) component of the RBF test?

Does anyone know if State Retirement Plans are required to file 5500's?  Like I'm trying to find a 5500 for the Missouri State Employee Retirement System (MOSERS) and I can't find anything.  I did find their annual report on their website which gives me most information. Just seeing if they would have a 5500.

Someone at my work is asking about it - I have no idea why....

Scenario:  TPA uses Relius Administration for their pension clients.  However, they choose not to use the software past the point of inputting basic census data.  Meaning, they choose not to input or import investment data (account balances, distribution/transfer activity, etc.) into Relius for their clients.  Instead, they use a rudimentary Excel spreadsheet to perform Top Heavy testing and basic trust accounting for ALL their clients' plans.  

For audited plans, they provide the Relius SSAE SOC-1 or SOC-2 reports to independent auditors.  If they are failing to utilize their pension software, they are failing to adhere to the accounting standards which the reports are essentially certifying.  Correct?  If auditors do not realize that plans are being manually tested in a spreadsheet (and hence, not necessarily conforming to proper controls & standards, not to mention the increased risk for HUMAN ERROR if this is the TPA's ONLY method of testing), then isn't there potential for HUGE liabilities for all involved? 

The TPA knows they are not using the software as intended/designed, yet continues to supply the reports as though they do.  Management actually made the comment that "auditors and clients wouldn't know the difference anyway..." and "after all, we are technically performing the test... just manually."  When brought to their attention, their response:  "We've always done it this way.  It's too much work to get the trust data into the system.  We tried that one year..."

Wow.  

Now, imagine that two of this TPA's owners/managers hold ASPPA credentials.  Heck, one is even an ERPA.  

Could most of us manually complete a Top Heavy test in our sleep?  Sure.  Conversely, some admins on TPA staff don't have the foggiest notion.  But, that's not the point.  Regardless of staff experience to complete a test accurately (we hope), the FACT is that they are not adhering to accounting standard procedures because they are too lazy, overwhelmed, inept, or all-of-the-above to simply input the trust accounting into a software package which they pay good money to use, and then knowingly try to fly under they radar and pretend that they are following those standards.

Their failure to disclose that they choose to deviate from the controls addressed in the pension software's SSAE SOC reports is deceptive and could potentially cause significant public harm.  They are fully aware they are allowing clients and auditors to infer that they follow applicable procedures for the software they use to provide their services.  Like I tell my kids, allowing someone to infer something that is contrary to reality is the same as lying.  Plain and simple.  At minimum, this is a professional ethics concern.  

At the very least, think of the added expense (time and money) for the clients if this must be addressed.  I guarantee that if the Top Heavy tests for all these years were reviewed, you'd find errors.  You'd find plans that were top heavy and not treated as such.  What if that jeopardizes a plan losing their qualified status?  Think of all the employers and participants who could be affected.

Your thoughts???  How would you handle this?