On of my client administers  a small plan and files From 5500-SF.

Therefore, a check mark was put for the last section of Part II - Section 6(b) of the Form 5500-SF that asks whether the plan calims small plan audit waiver.

On the SAR and AFN, there is a similar question about whether the plan claims a small plan audit waiver. 

One of my co-worker is telling me it is not required to list the names and amounts of the publicly traded mutual funds that the plan asset is invested in those regulated financial institution.

Don't I have to list the names of the regulated financial institution , for instance WellsFargo Government Securities, and the amount were the plan asset is invested on the SAR and AFN?

Hi -

I have a cash balance plan that has terminated, and most of the distribution has been completed (95% or so of the plan participants either took their balance or elected to start an annuity). There are, however, some participants remaining who have either not responded or who have actively elected to defer commencement. They are not missing participants.

The facts are as follows:

* the benefits are cash balance based, with some grandfathered annuity benefits payable if more valuable than the accumulated balance. Unfortunately, the prior actuary and their legal counsel amended the plan so that participants may elect to receive their benefits earned before a certain date in a different form than benefits earned after that date, so participants could potentially elect two different annuity forms, or elect to take part of the balance as a lump sum and part as an annuity, etc. - that is rare in practice, though. 

* the remaining balances are about $2 million for the group of non-responders and participants deferring. Grandfathered benefits make the actual total lump sum value slightly higher than that, but not much.

* the interest crediting rate is treasury-based with a floor (the floor applies and has for five years prior to termination, presumably it would apply indefinitely since the regulations don't state that the rate ever goes back to the index base - at least not that I've read)

* the annuity broker has not been able to find someone who is willing to quote for the remaining deferred participants

* Legal counsel has determined that every aspect of the plan is protected and must be provided for in the annuity contract

My questions are this:

1) Has anyone had any luck transferring benefits similar to the above (or any cash balance benefits where all plan options stay intact) to an insurer. If so, can you let me know who the insurer was so that we can direct the broker to them?

2) Can anyone confirm that the 5-year average interest rate applies in perpetuity now? This seems like a given, but just checking.

3) I have heard others claim that legal counsel has allowed them to water down plan options for participants who refuse to respond when it makes the benefits unattractive to an insurer. The client probably doesn't want to do anything like that given the opinion they've already received, but I'm curious if anyone has experienced that in practice.

So I work for an RIA - we are the investment advisor on retirement plans. We have created risk-based models for our clients to invest in (Conservative, Moderate, Aggressive, Etc.)  Every time we present to employees on education or do trustee meetings, we present a sheet showing those models performance the last 1,3,5,10 years.

We have begun changing how those models are constructed, for example like 10% of our models is in US Small Cap Funds, we are moving from a Fidelity Fund to a Vanguard Fund.

For the investment performance presentations we give EE/Trustee, it would be easiest for me to just show the 1,3,5,10 year performance of the updated model allocation, disregarding the old models.  My boss claims that according to ERISA - we need to show how the plan models actually performed, so I need to track when each plan switches their funds within the model, and calculate the actual performance. (Much like how GIPS would require past performance to be presented).

I'm new to retirement plans - this sounds crazy to me - does ERISA require actual historical performance of models to be shown, or can I show the returns of our models once their plan switches?

A client for whom we are the advisor, but not the TPA, claims they were not told that they would be top heavy for 2016. They now say there is no way that they can afford to make the top heavy minimum contribution. We have explained repeatedly that they don't have a choice. In response we are being asked to describe the consequences of not making it. They are apparently willing to accept the risk of being caught because they believe it is unlikely. Beyond disqualification, what are the consequences?

In the past, I satisfied my requirements with McKay Hochman's annual Retirement Insights class (15 hrs CE) supplemented with some recorded webinars from ASC.

ASC webinars mostly repeat and update each year, and McKay Hochman is no longer (2016 was last class).

I need ideas on where to look for CE and especially a source for several hours credit at a reasonable cost (like I got from McKay Hochman).

What are the RMD rules for non-spouse (child) rollover to inherited IRA?  His father died at about age 62, but would turn 70 1/2 in a few years.  Son and daughter are trying to get money out of plan now and this would be a consideration in the rollover.

We have a client that had a defined plan that provided that if a participant could not be located, the benefit would be forfeited, and then reinstated if the participant reappeared.

The client terminated the plan, and made no provision for the participants it couldn't locate.  Now, some previously missing participants have appeared.  The client is perfectly willing to pay them from its own assets. However, clearly the money can't go into the trust, since the trust no longer exists.  And we're trying to figure out whether there is any way to set things up that the money can be rolled over.

In case it matters, it's a governmental plan, so we're not concerned about ERISA rules.  And qualification is not really an issue, for a number of reasons:

• The statute of limitations has passed.
• The plan got a determination letter with the provision disclosed.
• Because the employer is governmental, no deductions are at issue, and the trust would be tax-exempt even if the plan were disqualified.

So the only real issue is the taxation of the participants who just turned up.

With the new opinion/advisory letters being sent out, do public school 403(b) plans have to restate their plan documents onto the new pre-approved plan documents, or can they still rely on the model language in rev. proc. 2007-71?

My employer is switching our group insurance provider mid year, effective June 1st. This is after I've met my deductible and max out pocket, I will only get credit for my deductible with the new insurance plan. I have a medically fragile daughter and she has many medical issues and diagnoses. Open enrollment closed on May 19th, today I received an email requesting that I fill out this questionnaire for each one of my daughter's diagnoses and have it to them by tomorrow. I need to know why they would be asking me for this and is it something I have to provide? It would definitely take me longer than one day to provide the information accurately. This is a group health plan through my employer and I thought denying insurance on preexisting was not allowed anyhow. We live in Texas if that makes a difference.

addition health questionnaire (1).pdf

Plan terminated and all assets distributed in December, 2016.  I have not filed a 2016 5500SF yet, because in March of 2017, a  distribution check was returned and deposited into the Plan's investment account.  My question is how do I handle the 2016 return?  Do I file a final filing for 2016 and then amend the 2016 return without marking "Final Return" or do I file the 2016 return originally with zero assets, but not marked "Final"?

For 2015 calendar year Plan, my client chose to put the max. away for the HCEs between deferrals, SH Match (enhanced formula) and discretionary PS contribution.  They do not pay their ER contributions until September of the following year (9/2016).  

Also, in anticipation of terminating the Plan on 6/15/2016, they amended the plan to eliminate the SH Match effective 1/1/2016 and all appropriate amendments and notices were given to participants in November, 2015.  Ultimately, all assets were distributed prior to 12/31/2016.

When it came time for them to make the 2015 ER contribution in September, 2016, they didn't have enough money to contribute for themselves, so they just funded the SH Match and PS discretionary contributions for the NHCEs ONLY, and not themselves (I advised against this, so it was their decision, not mine!)  The 2015 5500SF and Corp. tax return were both filed using the reduced deduction for contributions made to the NHCEs only.

How do I solve this?  They now have contacted an attorney to "tie up loose ends" for the company, and it seems they are looking to somehow pin me to the wall for it!

Thanks for any help!!!

Plan has age 21, 1 YOS, dual entry eligibility requirements for all contributions except prevailing wage contributions which have to be made whenever an employee works on a prevailing wage job.

For purposes of counting participants on the first day of the year do we have to count all employees since they potentially could be assigned to a prevailing wage job or can we somehow split the baby and only count those employees who haven't met "regular" eligibility but who are in fact working on a PW job on the magic date?

What is basis of compensation for a small business person who does not take wages or salary out of business?  Can they make a contribution based on gross sales even if they don't take any designated pay?

Stand alone 401(k) plan is merging into the PEO plan of an employee leasing organization.  Stand alone plan is a 3% Safe Harbor Nonelective, calendar year is plan year.  Merger is happing effective 6/30/2017.

Do people agree that I do not need to fund the safe harbor to the "stand alone" plan pre-merger, because the PEO's plan is the continuation of the stand alone plan anyway? As such we can just fund the 3% Safe Harbor once at year-end.

Any articles on this?

Does a frozen profit sharing plan, to which contributions have not been made for several years (and every participant is 100% vested) need an Independent Auditor's Report if there are over 100 participants at the beginning of the year.

Plan appears to be frozen for all participants, so I would think there would be no new participants.

The question appears to be - ADP did the 5500s for 2015 showing 84 participants as of 1/1/15 with 248 as of 12/31/2015, how does this make sense, given the above.

We recently took over a safe harbor non-elective plan.

Accountant called to tell me client did not make their 2015 or 2016 safe harbor contribution because "no one told them how much to contribute."

Then asks if the plan is "out of compliance".

As far as I know, as long as the SH contribution for both years is actually made, and ASAP, there is no issue?

I have been practicing in this area since ERISA became the law of the land, so it is interesting to find something that seems like it should be obvious, but apparently isn't. 

The question is When does a participant loan failure become reportable on Schedule G of Form 5500.  The filing instructions say not to report the following:

Do not report in Part I participant loans under an individual account plan with investment experience segregated for each account, that are made in accordance with 29 CFR 2550.408b- 1, and that are secured solely by a portion of the participant’s vested accrued benefit. Report all other participant loans in default or classified as uncollectible on Part I, and list each such loan individually.

But, ERISA Reg. Section 2550.408b-1 requires that the loan be made in accordance with the plan's written procedures. 

Which, if any, of the following would you consider a prohibited transaction?

a. Written loan program satisfies conditions of DOL regulations and IRS standards to avoid taxation, but:

1.  A loan is made in excess of $50,000.
2. A loan is set up with semi-annual payments.
3. The loan payment schedule is o.k. but payments are inadvertently not started on time.  Issue is discovered and corrected before the end of the default period.

b. Written loan program does NOT satisfy the conditions of the DOL regulations, loans may be made up to 50% of vested balance of NHCEs or 100% of vested balance for HCEs.

c.  Loan is made that is consistent with IRS requirements, but written terms of plan do not permit such loans.  Errors is corrected under EPCRS.

It seems to me that case b. would trigger reportable PTs.  It seems that case a.3. should not be a PT.  But, things like cases a.1. and a.2. happen and I rarely/never see them reported on Schedule G.  They are either treated as taxed or corrected under EPCRS.  Case c. can be corrected under EPCRS, but sure seems like it would not be an exempt transaction.  Remember for purposes of schedule G - all employees of the plan sponsor are Parties In Interest.

So - what do you guys think? 

Thanks in advance - Becky

I'm new to the governmental plan area, and am having trouble wrapping my head around a defined benefit retiree health plan offered by a city.  The municipal code provides a retiree is entitled to obtain health care coverage under any city-sponsored plan, or any other health plan of their choice, and will be reimbursed for health care premiums subject to certain limits.  The code goes on the prescribe reimbursement rates based on length of service.  The reimbursements are made out of the city's general assets.  I believe the reimbursed amounts are not included in retirees' gross income under section 106 of the Code.

My concerns/questions are there really is no plan document or plan summary available to retirees that sets forth rules for what expenses might not be reimbursed, or how reimbursement amounts are calculated.  For example, it is my understanding certain retirees are obtaining coverage through their working spouses' plans and are seeking reimbursement for the cost difference between employee-only coverage and employee plus spouse coverage.  Is this allowed under the Code?  I can see if the employee bought coverage through the city's plan for himself/herself and spouse that the city would reimburse the employee-only rate (or if the retiree went out and bought other coverage for himself and spouse), but I'm not sure if coverage is obtained the spouse's plan.  What if the the spouse uses flex credits under 125 plan to pay to add retiree?  Isn't this "double-dipping" so the reimbursement would be income to the retiree?  Shouldn't this all be explained to retirees in some sort of plan summary?

Is anyone else encountering situations where a non-profit organization's non-ERISA 403(b) plan document has for some unknown reason been restated onto an ERISA 403(b) plan document, even though nothing about the organization or its plan provisions changed that would subject the plan to ERISA?

Am I missing something? Why are the document providers not using a non-ERISA 403(b) plan document for these plans?