Plan had a terminated employee as of 4/1/16 who needed (and did) take first RMD. Person has since been rehired by same company. Does employee have to continue taking RMDs where he has been rehired and is not an owner?

Plan wants to add auto enroll and escalate for 2017 so we set up a conference call to discuss.

Get this: Based on an auditors recommendation, the employer requires that ALL employees acknowledge and sign documentation each year for their 401k deferral percentage. So Joe comes meets with HR and HR says, "I see you are deferring 3%. Would you like to do that for next year?" "Yes, I would." "Great, sign here."

We don't see where auto enroll would come into play because everyone is making an affirmative election. Same thing with auto escalate; employee is effectively making an election to increase, decrease, or stay the same each year.

It appears that I would need to have the HR department repeal some of their procedures.

Anyone have any suggestions or run across this before?

If a VS DC plan has DL for EGTTRA and now is submitting for PPA.

What amendment must be stated on 5307 item g?

What amendments must be sent to the IRS with the 5307?

Thanks

Hello,

As a final exam I've been allowed to write a 15 page paper on any ERISA topic. The thing is I have no idea what to write about. I do have Lexus Nexus, which should make the process of writing the paper easier, but I have no idea what to write about! Possibly something easy to understand.

Best,

Hambbino

Has anyone matched the apr rates for 2016 vs 2017 at age 62 assuming a lump sum at 5.5% or at 5%?

Not being lazy, but I have not loaded the new tables yet.

A client of ours is a physician who is 100% owner of her private practice and sponsors a 401(k) plan. She and her husband bought 80% of a liquor store, not realizing that they might have to cover these employees under the plan. I don't see any way around this being a controlled group but I wanted to make sure I'm not missing something. They asked about transferring all ownership to the husband, but I told them the attribution rules applied. I'm sure they couldn't pass coverage by excluding them, as there are more employees at the store than the clinic. Is there any creative way to structure this to avoid a controlled group?

Does anyone know of a website to go to in order to check your CE status for ERPA? Someone I met mentioned checking to see that all her credits were properly reported.

Why would a TPA have the file Form 5500 instead of Form 5500-SF for a small, 8 participant plan, other than to charge a higher fee??

The investments are with a broker.

If an owner is limited due to 401-k testing on his EE contribution, can he make a deductible contribution to an IRA to at least get his total contribution to the IRA limit ($6,500 in his case) even though he is over the MAGI limit on making IRA contributions while having a qualified plan at work?

Plan says that benefits shall commence and be made in accordance with the RMD rules and that the Participant's entire interest will be distributed, or begin to be distributed, to the Participant no later than the Participant's "required beginning date". The 457(b) plan allows participants who have severed employment 60 days after severance to elect when to begin distributions and in what form. The plan document says if the participant does not make an election the benefit will commence on the participant's required beginning date (RBD).

The plan also says that benefits shall commence and be made in accordance with the RMD rules and that the participant's entire interest will be distributed, or begin to be distributed, to the participant no later than their RBD.

Does this mean the participant's entire account balance is taxable in the RBD year or that the participant will just be taxed on the RMD calculated amount each year?

The only HCE (age >50) in a top heavy plan is deferring $4K on his $100K comp = 4% and is considering not being SH this year. The ADP for the NHCEs is 0.5%.

If I run ADP, this will clearly fail, and all of the excess will be recharacterized as catch-up. Fine. But does that affect the TH minimum? It seems a bit chicken-and-egg to me: if you look at TH first, then he deferred 4% so he has to give 3% to the employees. But if you look at the ADP test first, the net "non-catch-up deferral" is only 1% or so, so the TH minimum is less.

What I'm finding online and in the EOB is not 100% clear (to me) if "recharacterized as catch-up" is the same thing for this purpose as "catch-up". Is the TH minimum really only going to be 1%?

Thanks.

Are people sending out distribution paperwork to participants with a notation on the paperwork regarding the fees? We've got "a lot" of plans now, and many recordkeepers negotiate the fee separately for each plan, so it's getting overwhelming to be able to do that.

What are other people doing?

in a combo plan, can the stability and or lookback periods be changed without any

testing implication under 401(a)(4)?? Could the stability and lookback periods be considered a brf?? any thoughts are appreciated...I am trying to eat up some surplus...

I understand that normally RMD needs to occur prior to Roth conversion.

Does this also apply to partial conversion? In other words, can RMD occur after partial Roth Conversion in the same year?

Will appreciate any clarity on this.

Thanks.

small SH 401(k) while transitioning to new owner failed to withhold 401(k) from participants checks in Sept. Using SCP should the sponsor fund a QNEC equal to 50% of what the deferral would have been as well as the accompanying SH match?

Please tell me if this is reasonable. A certain (well-known ) recordkeeper has told a client that based on their history of not failing ADP/ACP testing, the testing, which they pay an extra fee for, cannot be scheduled for completion within the first 2 1/2 months of the plan year end. If they do end up needing refunds, the Plan will be responsible for the risk and responsibilities of any failure.

Am I wrong for thinking this is totally unacceptable?

The proposed regulations have a section that talks about allowing a DB/DC combo plan to utilize the average NHCE match (but not over 3%) as being counted toward the minimum gateway.

When can that portion of these proposed regulations be relied upon?

The Proposed Applicability Date section says:

Except as described below, these regulations are proposed to be applicable to plan years beginning on or after the date of publication of the Treasury decision adopting these rules as final regulations in the Federal Register. Taxpayers are permitted to apply the provisions of these proposed regulations except for those described in section III of the Explanation of Provisions portion of the preamble for plan years beginning before this proposed applicability date, but not for plan years earlier than those beginning on or after January 1, 2014. Accordingly, the ability to rely on a provision of these proposed regulations for periods prior to the proposed applicability date for these regulations applies to the disregard of certain defined benefit replacement allocations in cross-testing; the exception from the minimum aggregate allocation gateway with respect to certain closed plans; the special testing rule for benefits, rights, and features with respect to certain closed plans; and the rule applying the ratio percentage test to a rate group in the case of a benefit formula that does not apply to a reasonable business classification. Taxpayers may rely on these provisions (that is, the provisions that the proposed regulations would permit a taxpayer to apply before the proposed applicability date for these regulations) in order to satisfy the nondiscrimination requirements of section 401(a)(4) for plan years beginning on or after January 1, 2014, and until the corresponding final regulations become applicable.

The plan's definition of compensation was the safe harbor 414(s) safe harbor definition that excludes: reimbursements or other expense allowances, fringe benefits (cash and noncash), moving expenses, deferred compensation, and welfare benefits. The plan is deferral only, but deferral percentages were applied to all compensation. As of November 1st, the plan has been amended to be W-2 only, no exclusions and everything is being done properly.

I need to fix the error for the period from January through the end of October. The IRS Fix-It Guide clearly states that we can distribute the deferrals that were withheld on excluded compensation and treat as excess deferrals. My question is: If I have these deferrals distributed before year-end, will the employees be able to bump up their deferrals and still reach the maximum of $18,000/$24,000? I am not sure because, if they net the maximum amount into the plan, their W-2 will show deferrals exceeding the 402(g) limit. But is this okay because they will also be showing the distribution of excess deferrals in the same year?

Thank you!

Kathryn

I know that the ACA has adopted the controlled group rules for purposes of the employer mandate. What about for the nondiscrimination rules? I have reviewed the final regs issued 5-18-16 and cannot find any discussion about it. I have a group the does not provide health services and receives no federal funding; however, they may be in a controlled group with an entity that provides health services and receives federal funding. Does the fact that the two entities are in a controlled group mean that the "non-health care" entity is now subject to the nondiscrimination rules just by virtue of being in a controlled group with the health care entity? Any guidance would be greatly appreciated!

I am interested in hearing how members would apply Treas. Reg. § 1.411(a)-5(b) to the following situation.

The plan sponsor terminates qualified Plan A on December 31, 2011. The sponsor then establishes another qualified plan, Plan B, on January 1, 2015. Plan B is a successor plan under Treas. Reg. § 1.411(a)-5(b)(3)(v)(B). Participant began employment in 2010, has 2 Years of Service under Plan A, and is a participant in Plan B. Participant remained employed and performed at least 500 hours of service (determined under Code § 411(a)(6)) in each of 2012, 2013, and 2014.

Does Participant have zero Years of Service under Plan B, or 2?

The relevant portion of the Treasury Regulations provides:

(A) General rule. In the case of an employee who was covered by a predecessor plan, the time the successor of such plan is maintained for such employee includes the time the predecessor plan was maintained if, as of the later of the time the predecessor plan is terminated or the successor plan is established, the employee's years of service under the predecessor plan are not equalled or exceeded by the aggregate number of consecutive 1-year breaks in service occurring after such years of service. Years of service and breaks in service, without regard to whether the employee has nonforfeitable rights under the predecessor plan, are determined under section 411(a)(5) and (6) except that years between the termination date of the predecessor plan and the date of establishment of the successor plan do not count as years of service.

….

© Example. The rules provided by this subparagraph are illustrated by the following example:

Example.

(1) Employer X's qualified plan A terminated on January 1, 1977. Employer X established qualified plan B on January 1, 1981. Under paragraph (b)(3)(v)(B) of this section, plan A is a predecessor plan with respect to plan B because plan B is established within the 5-year period immediately following the date plan A terminated.

…

(3) Employee D was covered by the A plan. On December 31, 1976, D had 4 years of service. D had 4 consecutive 1-year breaks in service because during the years between the termination of plan A and the establishment of plan B, he did not have more than 500 hours of service in any applicable computation period. Because D's consecutive 1-year breaks (4) equal his years of service prior to his breaks (4), plan B is not maintained until January 1, 1981, with respect to employee D.

(4) Employee E was covered by the A plan. On December 31, 1975, E had 6 years of service. E had a 1-year break in service in 1976. E also had 4 consecutive 1-year breaks in service for the period between plan A's termination and plan B's establishment. Because E's years of service (6) are not less than his consecutive 1-year breaks (5), plan B is maintained for E as of the establishment date of plan A.

(4) Break in service. A year of service which is not required to be taken into account by reason of a break in service (within the meaning of section 411(a)(6) and §1.411(a)-6)).

Treas. Reg. § 1.411(a)-5(b)(3)(v).

One could interpret Examples (3)-(4) as deeming 2012-2014 to constitute 1-year Breaks in Service. If that's the case, Participant in the example has three 1-year Breaks in Service, exceeding service credited under Plan A. Therefore, she will receive no credit for prior service for vesting purposes under Plan B.

On the other hand, one could read the last sentence in (A) to mean that one determines whether a Break in Service has occurred according to the rules of the Code, since no plan exists. So long as a participant performs at least 500 hours of service, no break occurs. However, the participant's years of service for vesting purposes do not increase in the years where no plan exists. Under this interpretation, Participant has two Years of Service for vesting purposes under Plan B.