A plan sponsor lost a "large contract" in September, 2016, which has caused the dismissal of a significant portion of their workforce.  Let's say that more than 20% of the workforce terminated October 1, 2016.  We know that a partial plan termination has occurred.  We know we have to fully vest those affected.

Question:  Who is considered "affected"?  This is what we found in one research resource: 

"...all employees who experienced severance from employment during the applicable period should be made fully vested, including those whose terminations were voluntary.  The applicable period is the plan year."

Does this mean that if a participant terminated voluntarily in March, 2016 that was NOT fully vested needs to be made 100% vested? 

This participant took a distribution prior to knowing of the partial termination. The non-vested portion was forfeited (and subsequently used to reduce 2017 contribution).  Do we need to restore the forfeitures?

Thanks in advance for any input!

If there is a DB Plan that is covered by the PBGC and eligible to file an EZ, are they required to get an AFN? It is not clear since this Plan would not be required to distribute a SAR, and the AFNs are "in lieu of the SAR".

Employer sponsors stand alone safe harbor non-elective, can the plan be amended to safe harbor match the folowing year, assuming all notices are timely given?

A client with a traditional DB plan is interested in filing a for a funding waiver. I have tried to explain some of the pitfalls, but they are still interested in pursuing the waiver. One of the biggest disadvantages (based on my own experience) is the IRS makes no promise on when they will respond to the application. This raises the question of how the plan should be funded while the waiver application is pending. Should we assume it will be approved and run the risk of missed contributions, later quarterlies and excise tax if the waiver is rejected? Or should they continue funding assuming the waiver won't be approved (in which case what is the point)?

I am interested to hear both about any guidance as well as what people have seen/done in the past.

Retiree only HRA provides that eligible retirees are entitled to obtain coverage under any plan sponsored by the Employer, or any other health insurance plan of their choice, and will be reimbursed their premiums subject to limits (i.e. $700/per month).  An eligible retiree obtains coverage through his spouse's plan and requests reimbursement for the increase in cost from employee only coverage to employee plus spouse coverage under the spouse's plan (i.e. $250/month).  Is this expense reimbursable?  I was under the impression that only premiums for single coverage were reimbursable under a retiree only HRA.  I can't find any guidance on this.  Any help would be appreciated.

A terminated participant in a 401(k) plan elected to receive her distribution from the plan (all non-Roth 401(k) pre-tax salary deferrals) as a Roth Conversion Rollover (to her Roth IRA).

I understand that this money will be taxable income for the year so I assume that box 1 and 2 will both be the amount of the distribution.  What would the distribution code be?  I'm thinking a code 1 since it's taxable income but it's a Roth conversion rollover so it's confusing me.  Don't see how it can be code G for a rollover since it's taxable income.  Any thoughts?

A plan will file a voluntary correction for late RMDs. Some of the late RMDs are due to lost participants.  Is the inability to make a payment due to inability to find a participant (despite multiple and varied efforts) a plan error? 

Partner set up and contributed to a 401k plan in her sole name as a self-employed person. Fortunately partnership had no common law employees so we're proposing to fix under VCP via retroactive adoption of a plan in the name of the partnership. 

Is this a plan document or an employer eligibility failure?

Discretionary plan amendment for defined contribution plan is adopted after the end of the plan year during which is became operational.   Assume it's operational during 2015 (calendar) plan year and adopted July 1, 2016.  Amendment says it's effective 1/1/15.  

What is the effect? Is the amendment entirely void?  

or

Is the amendment deemed effective 1/1/16 (first day of the plan year in which it was adopted), limiting the operational failure to only 2015?  

Or - is there another possibility? 

I have been contributing the family maximum to my HSA for the last 4 years and have seen the account grow significantly.  My intention is to avoid dispersements as long as I can to build up enough pretax money in the account to be used in my later years to either bridge the Medicare gap for early retirement or pay for supplemental insurance once I reach Medicare age. Currently, my Wife and last eligible child is on my HDHP plan.  Our contribution to the HSA is directly deducted from my paycheck. We file our taxes jointly. My son is not a dependent on my tax return but is eligible for my health insurance until he is 26 yrs old.

Questions:

1. If my wife takes another job and is signed into another health plan and off of mine, can I still use the money we contributed as a family to the HSA to cover any of her healthcare expenses going forward? 

2. If my eligible child signs into another healthcare plan but it does not cover dental or vision, can I use my HSA account for any of his expenses?

3. If I pass away before my wife and there is still money in my HSA, can she use the money for her medical expenses or the does the HSA have to be dispersed and taxed to the estate?

Any info would be helpful.

We have what should be an easy audit for a tiny plan, but the auditor works from her home and insists on everything being faxed for security.  She says the IRS says that using Sharefile or something similar is "disclosure."  Maybe I'm being stubborn but we're not faxing 80-100 pages from a fax machine, and I'm not inclined to spend even $1 on some program that will convert efiles to faxes.  I hate to be antagonistic but I'm inclined to talk to the supervisor on this...anyone have similar experience/solutions?

Am reviewing Form 5500-SF for American Funds Recordkeeper Direct Platform.  On their trust report the only fees that are broken out are the distribution fees we charge as TPA to participants.  Instructions for  Line 8f of Form 5500 SF would imply we need to report administration fees paid to American Funds and investment fees paid to advisers (brokerage services).  This information is not readily available.

Wondering what anyone else may be doing other that reporting what is on the Trust Report.

Thanks.

I'm back after a loooooong time.

jevd

If an individual has multiple plans from different employers, does the $ 50,000 overall loan limitation apply to each plan or to the individual. IRS website seems to indicate it is a plan limitation & not an individual limitation.

I have had a client ask if they can invest in Bitcoins.  My initial reaction was "no way".  However, there is a Bitcoin Investment Trust on the OTC market.  What do ya'll think?  Do you see this as being an allowable investment in the near future?

BTW, I have let my client know that I do not give investment advice, but I can try to keep them out of trouble

Can anyone give me the names of financial institutions that will work with a small employer to set up traditional IRAs for employees and accept contribution via payroll deductions?  Client's bank seems unwilling to do it.

Thanks in advance!!

I'm not sure whether this issue is better placed in EPCRS 403(b) or Form 5500 because it applies to all.  

A client has a 403(b) plan that is now a large plan requiring an audit.  The auditor uncovered several operational errors and a lack of adequate procedures to make sure the plan is compliant.  The client has investigated the 3 prior plan years and has found similar errors.  These are pretty typical errors: the employees may not have been made aware that they were eligible to defer upon hire, some employer contributions didn't start as soon as the participant became eligible for them, some late deferral deposits, contributions weren't always calculated using the correct compensation definition, some investment directions were not followed and contributions were invested in a default fund.  The client will be correcting operational failures under EPCRS with a VCP application, with assistance of counsel.   They expect to correct the late deposit of deferrals by calculating interest and depositing in participant accounts, without a VFCP application. 

But here's the more immediate issue.  The 5500 is now overdue because the auditor will not issue a report.   So a new late filing error has occurred and the penalty amount will continue to increase.  The auditor wants all of the failures quantified, and won't proceed until the entire 30 year history of the plan has been investigated to uncover all errors.   

This appears to be unique to the first audit year because opening balances have to be verified.  But when corrections are made, aren't they deposited and credited to the account in the current year?  I have submitted many VCP applications that correct for multiple years (for large plans) and have never heard that the 5500 should be redone for prior years because the errors mean that the opening balances aren't correct.  

Is an auditor able to issue a qualified opinion in these circumstances - stating the types of errors that were found and indicating that the sponsor is working with counsel to make appropriate corrections?  May be a separate question whether the DOL/IRS would accept this.  

There has to be  a way to move forward and get the 5500 in (even if it needs to be corrected later) before the investigation is completed for prior years, the VCP application filed and a compliance statement received. 

Hi everyone,

Straight to the point.  I urgently need a 401K withdraw to cover emergency home repairs. I have no other means to pay for the repairs and they're not for improvements but will not qualify for the home repair hardship due to it's not caused by a disaster.

I'm considering submitting an eviction notice.  Will the 401K admin research the validity? Besides not approving my withdraw, what other actions may they take if invalid?

I realize this may come across as nefarious but I do not have anywhere else to turn and the money is NEEDED for repairs to my home.

Thanks in advance for any advice.

The client is part of a PEO which handles all the HR functions and paid through PEO. Employees can make 401(k) contributions to PEO calendar year 401(k) Plan. The client sponsors a separate PSP for employer contributions. The PSP is an off-calendar year plan that uses calendar year comp for contributions and testing. The PSP contribution is cross-tested. I believe I need to include the 401(k) contributions for non-discrimination purposes and the 401(k) account balances for Top Heavy Testing. Is that correct?

Here are the scenario and the questions:

• Company A acquires 100% of Company B (stock deal).  Each company maintains its own 401k plan.
• After the acquisition, Employee X is transferred from Company B to Company A.  As a result, Employee X begins to participate in Company A's 401k plan and stops participating in Company B's 401k plan.
• Question 1:  For purposes of vesting employer contributions under Company A's 401k plan, must Company A give vesting service credit to Employee X for his service with Company B prior to the corporate acquisition?  I think no, but would appreciate some thoughts.  (I think it is agreed that vesting service credit must be granted for the period of time after Company B joined Company A's controlled group.)
• Question 2 (this question assumes that the answer to Question 1 is no, otherwise this question, I think, is moot):  If, after Employee X begins working for Company A and participating in Company A's 401k plan, Company B's 401k plan is merged into Company A's 401k plan, must Company A's 401k plan give Employee X vesting service credit for his service with Company B prior to the corporate acquisition?  I think so based on IRC 414(a) and Reg 411(a)-5.  Again, would appreciate some thoughts.

Company A bought Company B in 2014 so we are out of the transition period.

They are both calendar year plans, both used current year testing and both are safe harbor. The only differences are company B has after-tax contributions and the compensation definitions are different. Can the plans still be aggregated for coverage?  I think that those are 401(a) issues - that still need to pass nondiscrimination but must do so together if we aggregate for 410.    Can anyone confirm?

Also, does the ACP test for the after-tax must be done on an aggregated  basis?

Thanks in advance