We have a terminated participant who recently received a lump sum distribution of his entire account balance who now has a trailing distribution of earnings. We just found out the participant passed away unexpectedly. The financial institution is requiring the name of the participant's estate and the tax ID number for the estate before it will process the trailing distribution. The participant's relatives say they will not be opening a formal estate because it is not required in the participant's state.

Can't the financial institution issue the trailing distribution to the participant just like the original distribution?

Can the financial institution really require the opening of an estate just for purposes of making the trailing distribution? 

Say you have a KSOP in a privately held company. The stock in the ESOP portion is fully allocated and the employer doesn't anticipate contributions for at least the next several years. The 401(k) portion allows deferrals and also has a discretionary match and discretionary profit-sharing.

I understand the 401(k) side of the plan won't violate the "substantial and recurring" contribution requirements even if the employer makes no PS or matching contributions. Does the same logic extend to the ESOP portion of the plans?

I'm having difficulty pinning down exactly what constitutes "the plan" here. Is it the entire KSOP plan collectively? Does the ESOP portion need to be separated from the 401(k)/PS side of the plan? Any cites (formal or otherwise)?

Say you have a KSOP in a privately held company. The stock in the ESOP portion is fully allocated and the employer doesn't anticipate contributions for at least the next several years. The 401(k) portion allows deferrals and also has a discretionary match and discretionary profit-sharing.

I understand the 401(k) side of the plan won't violate the "substantial and recurring" contribution requirements even if the employer makes no PS or matching contributions. Does the same logic extend to the ESOP portion of the plans?

I'm having difficulty pinning down exactly what constitutes "the plan" here. Is it the entire KSOP plan collectively? Does the ESOP portion need to be separated from the 401(k)/PS side of the plan? Any cites (formal or otherwise)?

I am working on the termination of a DB plan. There is one participant who is active and receiving a benefit. On the Form 500, would he be counted as an active or as a retiree?

Thanks for any responses!

Suppose you have a sole proprietor who adopts a regular non-prototype SEP (I believe form 5305 SEP). They have no employees. Now several years later he is also a 50% partner in another non-related entity. No controlled group, no affiliated service group. The partnership provides him with a K-1 with earned income. Does he automatically include that K-1 income along with his net schedule C profit when determining the SEP contribution? Or does the partnership need to somehow also adopt the SEP?

Thanks.

Non-safe harbor 401k plan legally began 10/1/2016 (plan document shows that as the effective date).  Due to issues w/ getting the investments going, no salary deferrals were withheld during 2016 from any paychecks.  No employer contributions planned for 2016.  

Company plans to file a short year first plan year 5500, showing no contributions or assets, for 2016.  Salary deferrals were begun during 2017.

Question:  the Plan was set up for prior year ADP testing.  For ADP testing, is 2016, or 2017 considered the first plan year?  It seems that 2016 would be the "first" year, thus causing the prior year deferral % for 2017 too be zero, which would mean the HCE's could not salary defer.  Remedy would be to recommend amending the plan document for current year testing, to allow the HCE's to contribute.

Any better ideas?  Would prefer that 2017 be the "first" year, but not sure there is an legal basis for doing so under the circumstances.  Thanks for any assistance.

Our company is considering selling to a buyer that will continue to use the Union workers and continue paying into all Union Benefit plans.  Can the company (current shareholder) sell it's shares to this buyer without liability to ERISA's Pension program involving "Withdrawal Liability"?  The company has been incorporated for many years.  Thank you - Don

As a hypothetical, a small company with two participants in a 401K has one employee leave the plan, thus leaving the plan with a single employee.   Assuming this small business wants to move forward with no employees, is there any path for converting the existing 401K into a Solo 401K?

At first glance, you might think that the new Solo plan could be created (and that might be done at an online brokerage due to simplicity), and then the assets could be transferred from the old plan to new plan, and then at that point the old plan could be terminated.    The problem is there are regulations that forbid you from opening a new 401K within 12 months of closing the old one.    That seems to suggest that the only safe paths would be to do some kind of in-place conversion of the existing plan, but is there even an allowed process for that?

Another solution might be to rollover the plan assets to IRAs, then sit on your hands for 12 months and open up a new 401K.

What's the best solution here, keeping in mind that a small firm with under $250K in assets in a plan probably is not going to hire an ERISA lawyer for $20K to break new ground in interpreting seldomly-used corners of regulations.

Is there any guidance for determining the associated match (ADP refunds also cause match forfeitures/refunds) when the match formula changes during the year? The plan matched per payroll at one rate for the first 6 months, then increased the match somewhat for the next 6 months.

Let's say the participant is terminated and has a loan outstanding of $10,000. The company then does the loan offset and the participant receives a 1099-R with code "1" or "7" for $10,000. Can the participant then rollover these $10,000 within 60 days to another 401k or IRA as if that amount was a direct distribution?

An overfunded DB Plan was terminated 10/31/2016.

Not everyone has been paid out as of today (2/17/2017) but there is clearly enough money to pay all benefits and then some.

I want to use the excess in the PS Plan.

Do you think I can use some for 12/31/2016 Profit Sharing or do i have to pay all liabilities first?  (So I would have to wait until 12/31/2017 to start using the reversion.)

Thank you

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Suppose a plan document was drafted and executed to allow both pre-tax and Roth deferrals, but the sponsor wasn't ready to handle Roth yet internally so the initial enrollment materials did not show that Roth was even available, but the SPD did describe Roth. About 3 months after the plan had been in effect, they communicated that the Roth deferral option was not available to the participants. What do eligible employee participants "get" or what is the correction?

Does anyone know the actual IRS revenue code that allows for discretionary matching contributions in a 401k plan?

Thank you.

Certain classes of non-immigrants are paid W-2 wages but are exempt from U.S. social security and medicare taxes.  Assuming these employees are resident aliens, are they eligible for the 401(k) plan just like other regular employees?  The plan statutorily excludes non resident aliens.  Thank you!

A question similar to this started quite a debate at the ASPPA Annual Conference a few months back, but I don't think there was ever a clear answer...

Small plan with immediate eligibility, the participants are the owner, his son, and one non-related worker.  The son was not employed when the plan started  in 2015 (he came aboard in 2016) and has never worked more than 1,000 hours per year.  The company is expanding and now wants to change the eligibility provisions to have 1 Year of Service (1,000 hours).

If the plan provision is changed to require a YOS, is the son grandfathered in the plan, or is he now considered an excluded employee (i.e., no future contributions) because he has not met the new eligibility requirements?  Could the resolution (if the adoption agreement itself doesn't give you the flexibility to do it) be written to grandfather him in?  Is that discriminiatory?

If the son is terminated (and hopefully paid out) before the change, does it even matter?

Thanks.

Please help please.

I calculated x = $159,120 which is answer A.                                                                                       Based on the answer key form Joint Board, the correct answer is B.

DATA

Normal retirement age: 62.
Early retirement eligibility: Age 60 with 5 years of service.
Early retirement benefit: Unreduced accrued benefit.
Pre-retirement death benefit: Present value of accrued benefits.

      Plan assumptions:
           Interest rate 7%
           Mortality Applicable mortality under IRC section 417(e)

    Selected data for Smith:
        Date of birth 1/1/1956
        Date of hire 1/1/2006
        Date of participation 1/1/2007
        Date of retirement 1/1/2016
        Compensation for each year of service $178,000

   Selected annuity factors based on the mortality table:
        Interest rate        5.0%            7.0%
         ä60                    13.25          11.08
         ä62                    12.68          10.68

X = Smith’s annual IRC section 415 limit as of 1/1/2016.

Question: In what range is X?
(A) Less than $160,000
(B) $160,000 but less than $165,000
(C) $165,000 but less than $170,000
(D) $170,000 but less than $175,000
(E) $175,000 or more
 

Plan doc terms: Eligible on 1st of month next following 1 year of service
Payroll periods:  Twice monthly, but paid 5 days after end of payroll, so 1/31 payroll is paid 2/5

Question: Employee is hired 1/15 and becomes eligible 2/1 of following year. Would participant begin participating on payroll paid out on 2/5, or 2/20? Justification for 2/5 is that it is paid after eligibility date. Justification for 2/20 is that 2/5 is based on pay earned prior to eligibility date.

I understand this can be a complex matter and I will be seeking professional advice from an ERISA attorney, but i'm trying to develop a basic understanding of the relevant issues so that professional fees can be put towards developing and executing a plan instead of educating me.

My father had a business which has not been active since the 1980s.  They established a defined benefit plan in 1984 and it was frozen in 1985.  The plan has 2 participants.  My mother and father.  They both made contributions to the plan.  My father recently passed away(2017).  The plan is overfunded by ~800%.  The plan assets are cash and liquid securities.  The company has no assets other than the overfunded pension.  My father was trustee of the plan.  The stock is 100% owned by my fathers estate which I am representative.   The massively overfunded pension is not the ideal instrument for my mother's retirement. 

Can anyone direct me to online resources that provide a good overview of various termination excise tax mitigation strategies and the related issues.  I want to be informed when I contact the plan administrator and retain an advisor.

Plan started 07/01/2016; they are using the current year testing method for the ADP test. (per the document)....they have failed the ADP test based on current year actual data.

Is there any way to use the assumption that the average ADP for NHCE is 3% and pass?  Or is that reserved only for plans that use the prior year method for ADP non-discrimination testing?

Thanks