We have a client who is converting their 401(k) plan from Valic that is invested in an annuity platform contract. The contract provisions do not permit loans to transfer to the new recordkeeper and instead requires the collateral to remain in a security reserve account. The loans are made by Valic to the participant and must be paid back in full in order to transfer from the security reserve account.

Has anyone dealt with this issue on 401(k) plans? It seems more common for 403(b) structures. The loans are assets of the plan and should be allowed to be transferred along with the other assets in my mind. Valic is treating them as policy loans which doesn't follow 401(k) loan procedures. Any insight is appreciated.

A plan has a maximum of one loan per participant (and it's a large plan, so they don't want to expand that). A participant defaulted in early 2011 on a loan issued in 2010... and now she is asking for a new loan.

For loans that are still within the original five-year term, I'd have the participant make the plan whole with an after-tax deposit to payoff the loan (plus interest) before issuing a new one. Can the same apply with a loan past the maximum five years? Thanks.

What are the implications of exceeding the incidental limits for life insurance in a Profit Sharing Plan? Are there corrective mechanisms, penalties, excise tax, govenernment forms to report the excess?

Does anyone know how to upload an Excel file that includes just PlanID, a dollar amount, a fee description (for disclosure purposes) and maybe a date to Relius as a Fee Transaction so that it will apply that fee, pro-rata, to all participant accounts? I don't want to upload by fund, source, etc. which is what I see in the help file. Just a straight fee. But I need to upload because I have many plans at once where I need to do the calculation outside of RA.

Just for some background: I, and Relius Support, cannot figure out a way for RA to calculate a fee such as $____ for the first 20 participants with balances and $___ for each additional participant over 20 where RA calculates the total and then assesses the fee pro-rata. It can do several parts but not the whole thing. Hence why I need to do the calculations outside of Relius and bring them back in.

Any assistance would be most appreciated.

Year End Discretionary Matching Contribution amended to x% payroll by payroll Matching contribution effective June 1.

Client made the 1st payroll by payroll matching contribution in June for the payroll period ended March instead of the effective date of June.

Is this permissible to back date (effective date was June 1st for payroll by payroll) and match deferrals as far back as 3 months?

If yes, should it from the beginning of the plan year.

I didn't find any language in the amended & restated plan document regarding the possibility that the plan sponsor has discretionary power to back date and match deferrals on X% payroll by payroll.

Thanks!

Buyer in an asset deal has agreed to credit prior service with target for various benefit plan purposes including general eligibility / vesting requirements for the 401(k) Plan. The Buyer's 401(k) Plan does not have a minimum service requirement per se (new employees are eligible right away); however, the Buyer's 401(k) does generally limit entry into the plan to the first day of the month following commencement of employment.

How should a plan address this issue when crediting prior service with an acquired company. Administratively, the buyer would prefer to have the acquired / transferred employees just start in the 401(k) as of the first of the following month but transferring employees want to come in immediately upon commencing employment arguing that with credit for prior service their "first day of the month" should be construed as having already been satisfied.

Would it be in violation of any rules to offer a gift card to former employees who still have money in the Plan incenting them to roll out so that Plan participant count drops below 100 and they can avoid an audit?

Brokerage commissions are reported on Schedule C but I have received differing responses with respect to reporting brokerage commissions (ether those paid to the firm or to the advisor)on Schedule H, either lines 2(i)(3) (advice to the plan), 2(i)(4)(miscellaneous expenses) or not at all as commissions are not expressly stated in the instrucitons..Thoughts? Thank you..

Privately-owned C corp bank sponsors an ESOP and wants to give participants an election under Code Section 404(k)(2)(A)(iii) to reinvest cash dividends paid to the ESOP in shares of Bank stock.

All other issues aside, anyone have insight whether this will cause Bank stock to constitute a "designated investment alternative" under the ESOP for purposes of the 404a5 participant disclosure requirements? Based on a strict reading of the 404a5 regs it appears so - insofar as the ESOP is a "covered individual account plan" and the ability for a participant to direct dividends paid on shares in his account to be reinvested in Bank stock causes Bank stock to qualify as a participant-directed "designated investment alternative" (i.e., an investment alternative designated by the plan into which participants may direct the investment of assets held in, or contributed to, their individual accounts).

Any other thoughts out there?

Thanks in advance.

A company called Securian Financial has a program using daily valuation but takes loan payments directly from participant's personal checking accounts rather than run them through payroll.

Client has plan that allows too many loans and has constant battle keeping them straight. The savings in clerical seems to be worth the switch. Any thoughts on that porcess and possible employer liabilities?

Anybody with experience with this company?

We have a prevailing wage plan and the document states that hardships can be taken but I have read that hardships are not allowed from Prevailing wage funds. Any thoughts?

Shareholder X of a corporation which sponsors an ESOP owns 4.8% of the NUMBER of outstanding shares of the company. This 4.8% is based on his non-esop shares only, and the total outstanding shares includes the ESOP shares (all outstanding company stock).

Shareholder X is turning age 70-1/2, so determining his ownership % is important. If he is a >5% shareholder, he must take a substantial RMD for 2016 and all future years. If he is not a >5% shareholder, he does not have to take RMDs until he retires.

Reg 1.416-1 T-17 says a 5% owner is any employee who owns (or is considered as owning within the meaning of 318) more than 5 percent of the VALUE of the outstanding stock of the corporation . . .

To determine whether shareholder X is a >5% owner, can I do a pure number of shares owned over number of shares issued calculation, or do I need to know an appraised dollar value of shares for each of the other shareholders? In other words, the stock valuation for the ESOP may say ESOP shares are worth $10, but another owner may have a different per share value based on his specific discounts applied, depending on minority/majority and deemed marketability. If some shareholders' stock is worth say $8.00, then the math could work out that shareholder X owns more than 5% of the VALUE of all shares.

Assume voting rights are equal for all shares. Which way does the 5% determination need to be made - number of shares or dollar values - and has anyone heard of the non-esop shares being valued for a purpose like this?

Thanks.

My understanding of late deposit reporting applies to employee contribution.

My client auditor thinks the late payroll by payroll matching contribution associated with the late deferral contributions deposits need also to be reported on Form 5500 Schedule H line 4a.

do late matching contributions deposit (associated with late deferrals) added to the late deferral contributions and reported on Form 5500 schedule H line 4a?

I had it burned in my mind that once someone is in a plan, they are in. I think I am slowly learning otherwise.

The situation is a safe harbor match 401(k) with immediate eligibility. If we change that to one year of service, do all of those part-timers/short-timers just cease to be participants? Is any documentation other than the amendment itself required in order to achieve that result?

(I know - it is, um, uncertain if these folks were given the opportunity to defer.)

I know this has been asked before, but could not find it (easily) on a prior thread, so...

Employer wants to have a safe harbor plan eff 1/1/17. Its 12/1/16 and the safe harbor notice is due. Or is it? Is there an exception to the 30 days before the plan year starts requirement for start up 401k SH plans? We'd like to have this effective for all of 2017, but there a some plan design questions not settled yet so we cannot have the document signed by 12/1/16.

Thanks

HATFA section 2003©(1) amended Section 436(d)(2) of the Code to provide that if an employer sponsoring a defined benefit plan is in bankruptcy, no prohibited payment may be made unless the plan's actuary certifies that the AFTAP of the Plan is not less than 100%. For this purpose, the determination is to be made without regard to the amendment to extend the minimum and maximum percentages of the segment rate to 90% and 110% from merely 2012 to 2012 through and including 2017 (a subsequent amendment extended the application of such percentages through to 2020).

In working on a sale of the employer, the lawyer for the buyer suggested that the plan has to be amended prior to closing to provide for such an amendment. The proposed amendment seems to be merely parroting the statutory change made by HATFA and not adding anything to facilitate the implementation of such change.

I looked further into this. While IRS Notice 2015-84, which contains the 2015 cumulative list, references certain changes to Code Section 436, there is no direct reference in the Cumulative List to the HATFA changes, other than a cross-reference to a 2014 notice dealing with the HATFA changes. Since the proposed amendment appears to be merely parroting the statutory change, I would conclude that such an amendment would not be required since it would already apply by statutory operation.

Any thoughts either way on this?

I am considering taking over administration for a plan into which one of the doctors rolled his nonqualified IRA balance in a prior year. Is a rollover from nonqualified (not 457) accounts permissible in any 401(k) Plan (or any qualified plan)? I believe the answer is no, in which case, the next question would be - what to do about it? I don't want to recordkeep these assets, so should I just suggest the doctor roll the money back out as soon as possible?

Thanks!

Hi, I'm hoping someone is able to confirm or deny what I've been told regarding limited purpose FSAs.

My husband and I work for different companies. We are both covered by an HDHP with HSA through his company.

I wanted to open a Limited Purpose FSA for each of us for next year. I couldn't open one through my company because I have to be enrolled in their medical plan. We were able to open one for him through his company, but we could only contribute for him (max of $2600). I was told he couldn't contribute for me because I needed my own account (by law).

Who is in the wrong here? Should my company allow anyone to contribute to a LPFSA or should his company allow him to contribute for me or is this just a no-win situation?

To add to the confusion, assuming I enrolled in my company's plan, they said they allow the employee to contribute for both the employee and spouse.

Plan year end was 12/31/15. 5500 has not yet been filed. What is the best way to proceed at this point? Electronically file the return and wait to be contacted/fined? Or use the delinquent filer program? No 5558 was filed, so $25 per day penalty is already in the $3000 range.

I am preparing for a conversation with a DOL investigator and am looking for thoughts. Plan receives the DOL late deposit letter discussed in a thread a few weeks ago. The letter states we noticed you have late deposits..... you can file via VFCP..... go this class in your area.....

The contributions in question were all deposited within 7 business days. The company who prepared the 5500 shows them as late. The plan is a small plan filer with a beginning participant count of 115.

Here is the question. Federal Register Vol. 75, published January 14, 2010 says the 7 day rule can only be used for plans with less than 100 participants. I could not find any reference to the 80/120 rule in that register. The EOB also says the rule can only be used for plans with less than 100 participants. I assume the 80/120 rule cannot be used or the F.R. would have said so. I always thought of this as a small plan rule, but I think I am wrong??

Thoughts?

Thank you