Participant terminates employment in 2008.  Receives a distribution, including surrendering a life insurance policy that he had in he plan.

Participant dies in 2013.  His named beneficiary dies in 2014.

The plan received a dividend check a few weeks ago on this policy.  Essentially the insurance company overbilled on the premiums and is refunding about $1,000. 

Who gets the money?  Had the money been in the plan at the time of the participant's death then it would have passed to the beneficiary, but it wasn't.  It wasn't in the plan until after both the participant and the beneficiary died.  Does it now go to the participant's contingent beneficiary or still pass to the original beneficiary's estate?

Thanks in advance for any guidance.   

Hello,

A client of mine wants to set up a clause to exclude employees with invalid SSNs and only allow for valid SSN employees and count this as the definition for resident aliens, how could this be better worded so it doesn't make obvious the possibility of invalid SSN employees working? 

Some ideas I've come up with are that don't satisfy the latter requirement are:

Only allow for employees legally residing in USA.

Exclude employees who use ITINs to file taxes.

Exclude employees without valid SSNs.

Only allow employees with valid SSNs.

Thank you for any ideas.

Johnny has a $5,000 loan s of 1/12/2017.  He terminates employment as of that date.  His 1099-R is:

a) $5,000

b) $5,000 plus any interest that accrues between 1/12/17 and the end of the "grace period" 

I realize that for loans that default when there is no distributable event the interest is accrued through the end of the grace period.  Is the same thing true for terminations (i.e., when there is a distributable event)?

Where would it say if interest from a participant loan in a pooled trust goes to the participant's portion of the trust or allocated across the entire trust?  Is the former possible in this situation?  It's been a long time since I've had a pooled trust with loans.  And I believe I would allocate interest to each participant who had a loan rather than the trust as a whole.

Assuming a DB/DC combo where everyone participates in both plans.  When the DC contribution (not including deferrals) exceeds 6%, then the total deduction limit to both plans becomes 31% and the DB 'loses' it's otherwise larger max.  Say the sponsor contributes 8% of pay to DC and 40% of pay to DB.  My initial assessment is that 17% of pay is not deductible.  To the extent it does not exceed the amount of matching contributions, no excise tax is due.  If it was made in the following plan year, they can take the deduction in the following tax year and avoid any non-deductible contributions. (But that eats into the next year's 404(a)(7) limit)  My question is this, is there a provision such that they do not deduct 2% of pay contributed to DC plan, leaving the amount at 6% and thus preserve the larger DB deduction?  My read of 404(a)(7) is no.  But I'm open to other interpretations or solutions to the problem.

Any insight on whether sponsors of self-funded health plans are sharing in rebates paid to the TPA when specialty drugs are run through the medical benefit instead the pharmacy program?

We are capturing the rebates paid to the PBM when run through pharmacy benefit. 

Facts:

Husband and wife each own 100% of separate companies (have a child under 21 so they are related). His is a Sch C, hers is an S-Corp.

The husband current contributes to a SEP based on his Sch C income (the max 20%). The wife set up a 401k PS Plan through her S-corp and contributes the max to it.

Issue:

Are you allowed to have SEP and 401k in same year? If you are not allowed to have both, we thought we would just have the husband contribute to the wife's 401k plan since they are related and figured he could get the same 20% in the 401k PS Plan.

Any issues with the above?

Thanks in advance for your help.

We have a plan that has a "safe harbor" formula of 100% of first 3%, then 50% of next 6%.  I believe this formula satisfies the ADP safe harbor, but not ACP. Unfortunately, that formula does fit on to the volume submitter document that we use.  The document was drafted for the "qaca" contribution of 100% of 3% 50% of next 3%.  Then a "supplemental" match of 0% up to 6% and 50% on 7-9%. 

Does this make sense? Is there any other discrimination testing that is needed? BRF?  If this is permitted would it be ok to recordkeep the "2" matches in same source?

Any thoughts would be appreciated...

We have a 401(k) plan that just keeps giving all year long......

If I use some incorrect terminology, please bear with....

We have a 401k plan (Jelly(k))for a group of attorneys. A org setup, PC.  Pretty straight forward at this point. 

However, there is an attorney in the same building/floor that is NOT part of the A org PC, not an employee of said employer, that is practicing too.  He has 3 employees that are run under the Jelly(k) employer for benefits and payroll.  So the 3 employees get a w-2 from Jelly(k).  The attorney then reimburses Jelly(k) for the 3 employees expenses.  The interesting part is that the 3 employees deferrals go to the separate attorney's 401k plan.

I don't think this is correct.  Can this work?  I'd think the 3 employees deferrals would belong to Jelly(k)'s plan, not the other.

What are your thoughts on this?

We have a client who terminated their  401k qualified retirement plan in 2014.  However, they did not pay out funds until January 2015.  Their funds were with a brokerage account.  Unfortunately the 1099R's were never done for all 9 participants.  This was strictly an oversight since the TPA at the time and the brokerage house thought someone was preparing those (along with the 1096 and form 945) 

Is there any way to get penalties for non-filing abated?  Has anyone every had this happen in their practice?  How did you resolve?  I assume we need to do the late 1099rs, etc and send those out asap.

This means that all affected may have to file amended 1040's.

This is a mess.

Thanks for any comments/helpful suggestions on how to fix this asap

Hi All.  What is a good standard today to establish a fixed interest rate for 401(k) loans? The Plan is just now adding loan availability.   Prime rate + x?  5 year Treasury + X?

And, If employees are on straight commission, and sometimes receive no paycheck, how would  we handle loan payback?

Thanks, all,

Ray

We received a separate interest Order for our Pension (Defined Benefit) plan that allows the Alternate Payee to elect any form of benefit available under the plan an applicable law except that "the Alternate Payee may not elect a joint and survivor annuity where her current spouse, at the time of election, is designated to be the surviving spouse."

Have you seen this?  Is there any issue with accepting the Order as a QDRO with this language that limits the Alternate Payee's distribution options?

Does anyone know off the top of their head if there's a corresponding section in ERISA for the definition of an exempt loan found in Treas. Reg. 54.4975-7(b)(1)(iii) ?

TYIA

Is there a 1099-R code for an early withdrawal (under 59 1/2) of Roth Deferrals (assume 5-yr seasoning satisfied)?

All I see in the instructions is early distrib from Roth IRA (code J).

As a "moderator", I have often edited message titles (or occasionally, the message itself) for clarity, misspelling, etc.  Do moderators still have that ability?

Safe Harbor Definition of Hardship

Participant provide a notice of failure to provide rent.  He also provided a letter from his bank providing the routing number.  This letter states its a joint account.  List names of both the tenant and the supposed landlord with the same address as on the eviction notice.

Employer thinks he wants money to purchase something and that the notice of eviction is "fake". 

I have a problem with the joint bank account.  It appears that the Tenant and the Landlord are both using the same address and live together. 

Upon further investigation - Landlord is also his Mother and beneficiary.

Do you think that this qualifies? 

EPRCS Section 6.02(5)(b) states that if a corrective distribution is less than $75 the plan sponsor is not required to make the corrective distribution if the cost to make the distribution exceeds the distribution amount.  This section goes on to state that it does not apply to corrective contributions "with respect to a participant with an account under the plan."  Can I apply this "de minimus" rule in the following situation: employee is improperly excluded from auto enrollment in plan with 2% contribution but the mistake is discovered after employee has terminated and therefore does not have an "account under the plan" (assuming the amount of the QNEC is less than $75)?  EPCRS requires a corrective contribution (100% vested QNEC plus earnings) which should be distributed to the employee ("corrective distribution"?).  

A plan has a matching contribution of 50% of deferrals up to a maximum match of $500. During the 2015 plan year, the old TPA (the plan changed TPA 's on 1/1/16) found 20 participants who received match in excess of the $500, to the tune of $3,800. The old TPA and the plan auditor provided the amount of the excess to the new TPA and has requested the new TPA to move the excess to the Plan forfeiture account. The new TPA now asks whether earnings should be included in the amounts transferred to the forfeiture account.

I don't think earnings are applicable here, but want to see opinions nonetheless. Thanks for any replies.

I'm not sure how to proceed and appreciate the assistance.  My previous employer's 401(k) plan allows participation after 1 month of service and employer safe harbor matches (100% up to 4% of comp) after 1-year of service. 

I joined the company in July 2014 and in 2015, I maximized my deferrals early in the year and had contributed the full $18k by April.  Starting July 2015, I began receiving safe harbor contributions in each payroll cycle which equaled $6k by year-end.  I recently received a letter stating the administrator had removed $6k to correct the ineligible safe harbor contributions.  The company said I was only eligible to receive a match for deferral contributions that were made following my 1-year anniversary (July) and since I had already maxed my contributions by April and had no further contributions, I wasn't due any match.

The plan states that "For purposes of calculating the safe harbor matching contribution, your compensation and deferrals will be determined on an annual basis", wouldn't deferrals made at any time in 2015 be eligible for a match, based on compensation earned after my 1-year anniversary? 

If, on the other hand, this was an error and I received a match I wasn't entitled to, is the only remedy to remove the $6k from my account or could/should the plan implement the early inclusion amendment as per the Early Inclusion of Otherwise Eligible Employee Failure correction protocol?  The majority of fund shares purchased with company safe harbor contributions had negative returns from the date of purchase until they were sold to raise the $6k.  Couldn't the company sell the number of fund shares purchased with safe harbor matching funds rather than taking the full $6k?  It doesn't seem fair that I should be worse off because of the company's error. 

Hi,
Can someone tell me how to calculate the gain/loss of profit sharing 401k plan,when we do not have the statements to calculate it from? Is there any historical annual interest we can use? Thanks.