Doctor plan has 4 partners and two HCEs, no NHCEs. They work at a variety of hospitals, so it is highly unlikely that the company will ever have NHCEs, so there aren't any discrimination issues with regard to counts or amounts testing. 

We have generally determined benefits by job classes, so the initial plan was set up using one formula for partners, one for non-partner HCEs. Could they further refine the formulas to be by person? 

Plan uses a discretionary match formula based on the plan year. Plan fails ADP test and refunds have been processed. 

TPA calculated the match excluding the ADP refund amounts, therefore reducing the HCE's rate of match on their entire deferral. This seems odd to me so I questioned the TPA as to why the match is being calculated after reducing the total deferral by the refunded amount. They told me the match can be calculate either way (before refunds or after refunds). Is that accurate? The plan document does not specify before or after.

Thanks

Have a DB client PYE 6/30/16 where form 5558 was not filed (was due 1/31/17) and they now have a late filing. The issues we have are:

• They still need to contribute to the 2015 plan year;
• The audit report will not be ready to file until April - possibly later;
• They have a bad history already with the DOL/IRS for missed filings, etc - the audit reports have not been on time for the last 4 years and the 5500 was filed without them. They have paid  penalties to correct those filings.

I would like them to avoid having to pay excessive penalties for the missed filing. Would it be best to just wait until they can make the contribution and file without the audit report or wait until they have the audit report as well? When the filing is completed - we intend to use the DFVCP.

In everyone's experience, how quickly will the IRS/DOL notice the late filing? Would it be risky to not file for another month until the contribution and audit report are complete?

Is it allowable for an employee to purchase an individual dental insurance policy through a cafeteria plan? I'm having a hard time finding clear guidance on this question. Any cites, if you happen to have them, would be great! Thanks.

I'm attending a cafeteria plan seminar in May, which will hopefully help to educate me so I won't have to ask quite as many stupid questions.

as per usual this time of year I'm getting a very clouded mind!  anyway - if the plan states that participant consent is not required for distributions under $200 (those get forced out) is it still required that the Plan Administrator provide the "special tax notice" to termed participants under $200 before processing the distribution? 

Question:  HCE's 403b/match was miscalculated.  So we under-withheld for a period of 18 months or so. The Plan has a matching contribution too, and pursuant to EPCRS we are contributing the match he missed as well.

The question is: How does this affect the ACP test?  if you haven't already guessed, we historically have testing issues.  I read through EPCRS and it does not mention this at all. Do we need to back and run ACP testing?  Do we include in the current year ACP test? Or do we just not do anything because, hey, I corrected in accordance with EPCRS.

 A participant terminates on 12/31/2015.  His receives pay in 2016, and also match and a profit sharing contribution on that pay.     He is failing gateway as he only received a 1.07% employer profit sharing contribution.  and 1/3 of the HCE is 1.93%.   Is there anyway to exclude that participant from the gateway test?    I don't think there is, but thought I'd check.    The client allocates the profit sharing contribution based on years of service.   

thank you

It seems that in the old days (10-15 years ago), it was common to find FSA plans filing small plan 5500's with < 100 participants and a Schedule I, often with very small balances remaining in a General Assets bank account. In line with IRS Notice 2002-24 which eliminated the requirement to file 5500 for small Cafeteria plans, it seems many of these plans simply stopped filing, no Final filing, no 4R code.

So my curiosity today is, do we revive these 5500's so as to Final them, particularly where a wraparound document has been created which would incorporate this plan?  In so doing, should the last filing from years ago be amended to imply 4R? Or just leave them as is from many years ago?

Is the payment under Rev Proc 2015-32 for delinquent filing of Form 5500-EZ a penalty (and therefore nondeductible)? Or is it a fee for filing the application which results in the waiver of potential penalties?

thanks,

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