What is the TPA's responsibility when a client indicates in the TPA's year-end paperwork that there were no late deposits of deferrals (and/or loan payments), but upon review, the 12/30/16 payroll was not deposited until the beginning of April?

We are preparing the 5500 for the ER to sign. 

What is our exposure if we do not indicate late deposits because we are filling out those questions per the client's direction?

A company is looking to reduce its workforce through voluntary retirements.  Their current pension plan offers early retirement benefits before age 65, with a 1/20th reduction in the NRB for each year a person retires before age 65.

Is there any problem with offering employees who are over age 60 that retire during a 90-day window (e.g., June-Aug 2017) that their retirement benefit will not be reduced?

Example - an employee age 61 could normally retire, but the NRB would be reduced 4/20ths.  If they were to retire between June-August this year they would receive their full benefit.

Is there guidance on how to calculate affordability if a multiemployer plan uses a blended/composite rate?

We had a terminated participant's distribution get flagged by OFAC and received a request for additional information before the distribution could be paid. That's never been a problem before, but this participant stopped responding to e-mails, the phone number she used while employed is no longer working and no one who worked with her knows where she is. The bank holding the funds is now proceeding with their blocking procedure for this payment.  She will have to prove to the government that she is not on their restricted list to get her funds.   Question is, does this affect the 1099-R reporting? She elected a direct distribution and the 20% withholding was deposited.   The blocked amount is the net payment.  Has anyone dealt with this before?

An employee terminates from Employer A and starts working for Employer B.  They are not related.  Both plans allow Plan-to-Plan transfers into and out of the plans. 

What is the benefit of this participant doing a Plan-to-Plan transfer instead of it just being done as a rollover?

Thanks!

Plan uses a 5 year cliff vesting window.  So contrbutions made on account of work performed in 2017, 2018, 2019, and 2020 will vest on 12/31/2021.  So the 2020 contribution might be in the Plan for less than 12 months.

I know it's a facts and circumstances situation, and I think the structure of this is clearly vesting after future performance of substantial services when you look at the overall structure.  But what about the fact that the last  contribution might be funded during 2021 and vest mere months thereafter?  Is there a minimum period of time that a particular years contributions must be subject to risk of forfeiture? The trail would be very clear that regardless of the timing of the deposit the contribution in the last year is allocable to services rendered in 2020.

I'm surprised I was not able to find anything on point about this...

Is there guidance on how to calculate affordability if a multiemployer plan uses a blended/composite rate?

 One man show starts an LLC this year. Must he have 3 years of compensation in companies he had ownership in to start a DB plan?

I was divorced 17 years ago. A QDRO was ordered in our divorce decree. This year (2017) my ex-husband, the plan participant became eligible to retire. He is opting to work for two more years. Do I have to wait until he retires to receive payout?

S     

        Sorry for the long post.. our client A  acquired Client B in 2013 and applied the transition rule through 2014

·         The transition period expired at the end of 2015

·        Client A sponsors a 401(k) plan which funds a match and service-based profit sharing contribution

·         Client A's 410b ratio and General ratios are below 70% and require ABPT

·         Client B sponsors a 403(b) and MPP

·         At the time of the acquisition, Client A informed us that the acquired group “lost its church status” and subsequently became subject to ERISA.

               Here are some of the questions that I have:

·         What contribution sources from the 403b/formerly-church-MPP would be included in the ABPT? They have 3 sources labeled “mandatory”, “matched”, and “voluntary”. Below are the source descriptions that have been provided.

·         Mandatory – 4% Employee contribution required to receive the 6% Match

·         Matched – 6% Employer Match

·         Voluntary – Employee contribution above 4% for eligible employees. Also includes voluntary EE contributions for those ineligible for match. All       contributions are pretax.

·         Several employees have contributions over $18,000 – does this sound reasonable?

·         If the acquired company has lost its “church status”, does this have any other implications on the Client A plan beyond combined 402g and 415 limits? What exactly does it mean to have lost “church status”? Would both the 403(b) and the MPP be subject to 410(b) testing?

Can a Limited Liability Company that is not a bank or trust company be named as the trustee of an ESOP?

The ESOP Trustee for a client's ESOP has been an LLC that provides ESOP fiduciary and trustee services. Client is refinancing loan and being told by lender that the trustee technically should have been the individual owner/manager of the LLC in his individual capacity and not the LLC itself. I cannot figure out why.  Any thoughts?

Can loan requests be signed electronically by a participant and his/her spouse? If so, what are the rules/requirements that need to be or should be followed to satisfy legal requirements and ensure a participant’s identity?

For a solo 401(k) plan with no deferrals or match , I believe the following expression is correct for the determination of the maximum deductible profit sharing contribution :

Net Sch. C Profit - 1/2SETax - (.25)(Earned Income) = Earned Income  and so the max profit sharing contribution is 20% (i.e. 25/125 ) of (Net Sch. C Profit -1/2Se Tax ) .

Now , if there are deferrals and match , are they both , or only one , or neither subtracted from the left side of the equality shown above ?

Thanks , in advance , for any replies .

I just came across this article in today's Benefitslink newsletter.  I'd be curious to know if others agree that it is factually inaccurate, and significantly so. The author purports that merely because the loan repayments are made with after tax dollars that the comp needed to repay the loan represents a double taxation (i.e., because of every dollar of loan payments = $1.33 of comp).  But the analysis does not take into account that the $10,000 of pre-tax money was received without paying any taxes.

So if I take a $10,000 loan and put $10,000 in my checking account, and then pay it back the next day, it does not cost me $13,000. that transaction is 100% tax neutral.  The fact that principal might be repaid through payroll deductions does not change the fact that $10,000 came out tax free and $10,000 goes back in without a deduction. 

I have heard many people suggest (and I think it is true) that the interest is in fact taxed twice (I think others have "proven" this is mitigated by other considerations).  But that's a lot different than what this article is saying.  But who knows, maybe I am missing something...

http://lawtonrpc.com/401k-loans-double-taxed/

We have a plan where a participant took out a $50,000 loan many moons ago, and it's set up as only interest payments are due (while he's employed).  Evidently this set up was, at one time, acceptable.

Really?

What is the corrective procedure when for when someone did a direct rollover of all of their IRA accounts into a self-directed solo 401k, including the entire balance of an account with some after-tax basis from a nondeductible contribution? The rollover was done at the end of 2016, the original IRA account was closed. The 401k funds haven't yet been invested so have no earnings. 

401(a)(31)-1, Q&A 14 indicates that "the amount of the invalid rollover contribution, plus any earnings attributable thereto, is distributed to the employee".  But how do you complete the 1099-R for this situation, are taxes or penalties owed, and do they take the distribution as an early withdrawal, or can the funds be re-deposited into an IRA?

In light of the recent spread of 3(16) service providers in the 401k industry, I think the subject has earned another look (we haven't discussed since 2014 that I can find).  Full disclosure: I have recently switched from a TPA shop to a national 3(16) provider, so I may be a bit biased!  

I always had a similar view to those expressed in the 2014 thread linked below, but since joining the 3(16) space I've really been surprised by just how much we take out of the Sponsor's task list & the amount of thanks we constantly receive from clients.   

I'm sure plenty of you have run across 3(16) providers in various capacities over the last 3 years, so have any of your opinions changed?  Do you have any questions about the blurry line that exists between us, the TPA & the client?    

A controlled group has maintained a PS plan for several years. They recently opened a location that they want to exclude the few employees from the PS plan. The owners no longer benefit in the PS plan either.   They recently established a DB plan where the excluded location is benefiting. The sponsor was advised of controlled group/participating employer issues. Question is...is it permissible to exclude a location(a few employees) in this situation?

Lest I forget to post:

22 years on April 20

I can never say it enough, I am very appreciative to those who have shared (including those who merely asked questions) for in either case it has helped me learn more, either by providing answers I didn't know or rousing my curiosity to research a question that was posed.

my apologies to Dave over the years for all the bad dry humor that he wasn't able to stop me from posting. Having met him once, in regards to the Links I can say "Good Job, Walt, good job!" keep up the good work! 

my apologies to others if I unintentionally provided misinformation or in any way offended or stepped on someone's toes along the way.

Hello all!

I have a participant, who also happens to be the president of the company, (we are the trustee) who is considering a hardship. He is past due on his mortgage and has the past due notice for proof. It is not in a foreclosure status yet. But he knows it will get to that point and he is being proactive. He is requesting a hardship amount that equals about 6 months of mortgage payments to prevent any foreclosure to happen. He is putting the house on the market and hoping it sells before then.

I read somewhere that the hardship event doesn't have to be unforeseeable and he is deeming this as necessary to not lose his home.

In someone's expert opinion - Would the 6 months worth of mortgage payments be allowed? OR - his other option is to request a hardship every month when he is past due? With that second option he will be prolonging his ability to contribute to the plan for a long time.

Thank you in advance!