A 61 year old active participant that has a loan balance wants to rollover her balance to her IRA and continue to pay back on her loan. Is this permitted?

Hi All,

I want to know exactly what should the "compensation" amount be against which 25% limit of employer contribution is calculated . This is for a single owner/employee S Corp. eg. Let's say the employee has 100k as wages and FICA taxes are 8k (for the sake of simplicity). And the employee contribution is the maximum allowed 18k. Would the 25% be against 100k or 92k (100-8=92k after FICA taxes) or 80k (100-8-18=80k after FICA and employee contribution) ?

From the research on this forum and also from the IRS publication at https://www.irs.gov/pub/irs-pdf/p560.pdf , it appears that it should be 100k in the above example. But I haven't seen a clear answer anywhere yet. Can someone confirm this or shed some more light on this ?

Thanks in advance for all the inputs.

I haven't worked much in the DB area and have a question. I've read that the IRS requires a new DB plan to exist for 3 or 5 years before termination, depending on who I talk to. What are the IRS guidelines? Thanks.

Companies A, B, C and D are in the investment advisory/insurance business and are all LLC's. Company A has ownership in Company B, but C and D are unrelated. The four companies together formed company XYZ. A,B,C and D will continue to operate under their individual business names, but technically will no longer have employees as all will be paid by XYZ. Basically a D/B/A type situation. Due to the nature of their businesses, my conclusion is that they have formed an affiliated service group. Company A has an existing 401(k) plan and wants to change the plan sponsor to XYZ and cover all 4 entities. Do A,B,C and D need to adopt the plan as participating employers? They will still have separate EIN's but won't have any employees.

Due to an over site one of our locations of 122 employees should have had a deposit made on 11/15/2016. It did not get posted to employees 401k accounts until 12/13. Can anyone tell me if I have any next steps to take.

I'm looking at an amendment to a 403(b) plan - not our document - and I'm finding the wording puzzling. Or maybe I'm just reading it wrong. It says:

"Notwithstanding the provisions of this Section (I've deleted the section numbers to preserve some semblance of anonymity to the document provider)..., pursuant to the direction of the Employer, as Plan Administrator, if the value of the terminated Participant's accounts that is attributable to non-Roth contributions (including his Rollover Account, if any) is not greater than $5,000, the terminated Participant shall receive a distribution of the value of the entire vested portion of such Accounts attributable to non-Roth contributions and the non-vested portion shall be treated as a forfeiture."

Now, what this is supposed to mean may not necessarily be what it says, or what I read it to say. But to me, it seems to be saying that you are completely excluding Roth accounts when determining the $5,000 threshold. I don't think this is correct or allowable under 411(a)(11). For example, if you have $4,000 pre-tax and $4,000 Roth, you can't force out the $4,000 pre-tax. (and what good would that do anyway???)

I wonder if perhaps, instead, this is really meant to encompass the guidance in 401(a)(31)(B), and 1.401(k)-1(f)(4)(ii) where the $1,000 threshold is applied separately to Roth and non-Roth?

Maybe I'm just tired, but this one has me scratching my head.

Thoughts? Thanks!

Putting in my first plan for a financial advisory firm, and the owner (which is a registered financal advisor) wants to be the trustee and have self-directed brokerage accounts for each of the participants (at least one NHCE). He is OK with giving advice to his participants since that is literally his specialty.

All the bells for self-dealing and the sponsor giving participants advice started going off, but there has to be a way this is OK. It doesn't seem reasonable for this employer to have to call a competitor to have them be the advisor on this plan. But the PTEs don't seem to be specific to this situation. Any thoughts? Thanks.

I posted this in another thread and thought this is probably the correct placement for this topic.

A small SH401 is currently in arbitration. A former HR employee who had access to the plan was found to be an embezzler. Apparently this employee was setting up double accounts for a few participants in order to access them at a later time. One of these participants put in a distribution request in August and the distribution was never issued as the plan sponsor is of the opinion the participant may not be entitled to all the funds. The participant was never issued a written notice why the distribution was not processed. The claims procedure in the plan document addresses a plan administrator's decision to not provide participant claims. My question is what exposure, if any, does the administrator have for not providing written notification.

We administered a plan in 2011. Went to another vendor. We just got the plan back with a new investment advisor. The plan investments will be different as well as the models. How is the best way to set up in Relius?

As a new Plan under the ER or should I roll forward the old plan six years? About 25 participants. Since investments have changed, would it be cleaner to set up as new plan? Daily Valued plan.

I have a client who set up a ROBS (don't worry, I have disclaimers all over the place in my engagement letter, and lengthy emails each year about how risky it is) and I need to know the easiest way to get a cheap valuation to enable them to check the box that all assets were determined by an independent third-party appraiser.

I know there are internet services out there for a few hundred dollars. Anyone had any direct experiences on this?

Who are the top non-qualified plan Deferred Comp plan recordkeepers (with funding thru a COLI)? i.e. I don't think a mutual fund company (like Fidelity or T Rowe Price) can offer this type of plan due to the funding arrangement.

I have a bit of a quirky one that should be a lot simpler.

I have a controlled group with two entities, both with eligibility less than a year. NHCE "A" hired and gets in around November of 2015, gets a huge bonus 12/31/15, quits in March of 2016. A is an NHCE for 2015, but bonus comp pushes him to be an HCE for 2016 due to 2015 comp being around $150K.

The whole period, A is excludible. Obviously for 2015, A would be an NHCE in the otherwise excludible group for testing. For 2016, is there anything that would allow A to still be an NHCE for testing?

I can't fathom there is, but there's some internal debate. I've combed through the 410(b) regs, as well as 414, but can't find anything supporting that he'd be an excludible NHCE for 2016.

Thanks!

A plan sponsor had a former employee embezzle funds. It appears as if phony accounts MAY have been set up in their 401(k) to allow this employee to have access to additional money. One of the participants(not the embezzler) with an account in question is requesting his money and submitted distribution paperwork in August 16. The plan sponsor ignored the request and the distribution request expired in November. The plan sponsor did not provide the former employee written notice regarding the plan going into arbitration and the fact that his account is under scrutiny. The former employee has since submitted another request for distribution. Should the Plan Sponsor provide written notification now or should alternative action be taken (EPCRS)?

Does $25 per day late penalty include weekends?

My boss gave me an adoption agreement to review for a possible new client. This was an individually designed document. I don't believe that a determination letter was ever acquired. The document was done in 2009 with an amendment to add safe harbor in 2010.

There was stuff in this adoption agreement that made me want to run away. I was not comfortable with some of the language. I asked if there was a new adoption agreement that was restated to the PPA,etc.

The response was he added in the PPA language when he amended the plan for safe harbor in 2010. He stated that since it was only a few sentences, the TPA would have a hard time finding the PPA provisions within the document unless the TPA actually drafts documents and knew where to look.Hence,

That was 6 years ago. Shouldn't the document have been restated again? Should I have reason to worry other than it makes me want to run away?

Please confirm the compensation earned from all members of a controlled group of businesses is aggregated for purposes of allocation, coverage, ABT and General Testing.

Facts:

LLC (single member, taxed as S-Corp) sponsors a Safe Harbor 401k with Discret PS features. The LLC controls all plan provisions. There are several nonHCE covered by the Plan in addition to the "owner"

C-Corp (owned by same person who is Member of LLC) adopted the LLC's Plan, follows the LLC's provisions as stipulated, is a "participating employer."

Suppose for this question the LLC Member's elig compensation is $50,000 and his/her C-Corp is $100,000. Total earnings $150,000.

1. Is compensation for purposes of SHM $150,000, irrespective of which source of income (LLC or Corp) it was deferred from, meaning if the 401k deferral is deferred from the LLC source, wouldnt you still determine the SHM on the aggregate of both compensation sources? In this instance, the SHM w b $6,000...
2. Further if the Corp fails to contribute its proportionate share of the SHM, the LLC will (be forced to contribute it to satisfy the SH) and can deduct it?
3. Is compensation for purposes of the PS allocation $150,000? Deducted by entity who contributes it, correct (Same as above)?
4. Further if the Corp fails to contribute its proportionate share of the PS, the LLC will (be forced to do so) and can deduct it (subj to 25% limitation)?
5. For purposes of the ABT and Rate Group testing, the aggregate compensation is used for the Accrual Rates, correct?
6. For determination of HCE status, aggreg is used?
7. Each entity tests based on its compensation for 25% deduction limitation?

Thank you

If an individual has exhausted FMLA leave but remains out on an unpaid leave of absence as a reasonable accommodation under the ADA, is the individual legally entitled to continued coverage under the employer's group health plan?

I know that under the FMLA an employee is entitled to continued group health plan coverage for the FMLA period under the FMLA / COBRA rules. I have not found clear guidance, however, whether a similar legal requirement exists for those out on leave as a reasonable accommodation under the ADA. I see discussions suggesting that once FMLA has been exhausted, the right to guaranteed or protected health coverage generally ends suggesting that ADA leave is not necessarily protected. There are, however, other references to EEOC guidance that say health coverage should continue to be provided during ADA leave if the employer normally provides continued health coverage in other similar leave situations. In this case the employer does not have other similar leaves or generally provide continued health plan coverage but it's unclear to me whether the EEOC thinks the ADA requires continued plan coverage or not.

I understand that group health plans might provide for continued coverage for individuals out on ADA leave or on STD or LTD following exhaustion of FMLA but our question is whether there is a strict legal obligation / requirement for providing such coverage beyond the FMLA (rather than merely whether an employer might negotiate and arrange for such continued coverage as a policy matter).

CFO has been W2 for years & has a loan outstanding, now he's switching to 1099. Company wants to withhold & keep making his repayments, but 1099 Employees aren't eligible for the Plan. What would your answer be?

Non QJSA 403(b) spousal waiver for beneficiary - Participant found on line where she does not need spousal waiver if Husband is 50% beneficiary. Is this correct? If this is not right, where can I find in writing the rest of the story?

Non QJSA 401(k) spousal waiver for beneficiary - Participant found on line where she does not need spousal waiver if Husband is 50% beneficiary. Is this correct? If this is not right, where can I find in writing the rest of the story?