Participant retires Monday. Submits distribution form to roll over to an IRA on that same Monday. The form is faxed over to the provider let's say on Wednesday. He dies on Friday (poor guy...) and the rollover is processed by the recordkeeper on the following Tuesday or Wednesday, after he was already deceased.

The good news is that the beneficiary in the Plan and the IRA beneficiary are one and the same. But has anyone ever had this before? Is the rollover invalid because he was deceased at the time of processing? Thank goodness the beneficiaries are the same, but assume for the sake of discussion that they are not.

I am aware that there are similar threads already started (e.g., benefitslink.com/boards/index.php/topic/58007-100-deferral), but they all seem to gloss over the particular issue I'm focused on.

My question is: Where a plan permits a participant to defer up to the maximum amount that will not cause a 402(g) or 415 violation, and a participant elects to defer 100% of his compensation, can the plan administrator administratively apply the deferral election to compensation after payroll taxes and other similar deductions, absent something in the plan document to this effect? That approach seems a little aggressive to me, but I'm guessing it happens frequently when someone defers 100%.

Employer with many drivers provides access to counseling for alcohol issues by means of an Employee Assistance Program. But rather than offering the EAP in the standard manner, they pay for it on a per use basis with HR approval, without promoting it company wide, though in theory anyone from the company can request approval. Think this would this be considered an ERISA benefit?

We have a client that has maintained both a Union Plan and a separate 401(K) plan for their Salaried Employees for many years. The question has arisen from the financial advisor as to whether the plans can be combined to obtain a better price with a new recordkeeper/custodian. Here are some quick details that I am hopeful can help with some advice.

Salaried(Non-Union) Plan- 1 HCE, 5 NHCEs Salary Deferral Only- No Employer Contributions have been made for years

Union Plan- 15 NHCEs Salary Deferral and an Employer Contribution collectively bargained based on number of hours worked.

My concern with combining plans would be Union individuals receiving an employer contribution while Non-Union employees receive no employer contributions.

Any input is greatly appreciated.

Thanks!

Client wants everyone either "in" for 7% or out at zero, nobody allowed to defer 1, 2,3,4,5 or 6%... Can't say I've ever had anyone ask me that before. Do-able?

Thanks in advance!

The client's last payroll, a participant reached the $265,000 compensation limit. However, he did not reach $18,000. As of the last payroll, the participant deferred $14,500 and hit $265,000 in comp.

They do payroll in house and believe that since he has not reached his deferral limit for 2015 deferrals can continue, however, he will not receive any match on the deferrals since he is at $265,000

Question, - I realize the $18,000 is an individual limit and the $265,000 is a plan limit, But if the participant has reached is compensation limit, can deferrals be withheld from his pay??

My thought was the participant is out of luck and can only defer $14,500 for 2016. But I am questioning my thinking.

Thoughts

I'm concerned about the taxation of this beneficiary designation. I don't know why, but the IRA owner named his Living Trust as his IRA beneficiary. There is no language in the Trust addressing the receipt of IRA money or discussing the creation of an Inherited IRA or giving the Trustee the right for the Trust to disclaim the IRA proceeds. The Trustee of the Living Trust is the son of the decedent, he son is age 50, the decedents only child, and he is the sole beneficiary of the Trust.

What happens when these IRA proceeds are paid to the living Trust? Will the Trust owe the income taxes? It's a traditional IRA and is fully taxable.

Thanks.

Can someone tell me whether this IPS is required or just suggested?

If required, who prepares it normally, and is there a generic version with some fill-in the blanks or is each plan's IPS custom?

Does anyone have a sample?

Thanks

Hi All -

I recently saw 403(b) Plan documents stating that that it is a non-ERISA Plan. I am looking for some clarification related as to whether it is in fact a non-ERISA 403(b) Plan. (The documents were from 12/2008.) The documents state:

WITHDRAWAL RESTRICTIONS: Except in the case of hardship, disability & distributions [from a separate account under a TSA for rollover contribution...] no distribution will be made to a Participant under any TSA maintained under the Plan until the Participant has attained age 59 & 1/2 or had severance of employment with Employer ... whichever is earlier.

HARDSHIP WITHDRAWALS: As part of its certification, each Provider must agree that it will not approve any hardship withdrawal unless the participant has provided the Provider with specific information to support the existence of an immediate & heavy financial need that qualifies for hardship withdrawal and the amount necessary to meet the financial need. In the absence of information to the contrary, the provider may rely on a Participant's representation that the immediate & heavy financial need may not be reasonably satisfied from other sources. However, the Provider must promptly notify the Employer (or designated representative) of any hardship withdrawal by a Participant. The Employer will notify the Provider if the Employer has information inconsistent with the Participant's hardship request, and the Provider must agree to take corrective action if so notified. A Participant will not allowed to make salary reduction contributions during a 6-month period commencing no later than 30 days after the date such Participant receives a hardship withdrawal under a TSA.

DISABILITY: As part of its certification, each Provider must agree that it will not make any distribution to a Participant by reason of disability unless the Provider has received satisfactory evidence that the Participant has become disabled within the meaning of Code section....

While it appears that the language in the documents is statutory in nature, I want to be certain that the Plan document(s) are not violating the rule that "all rights under the contracts & custodial accounts are enforceable only by the participant" as is required for non-ERISA PLans.

What do you think?

Also, if you think the Plan is non-ERISA, do you believe that no Form 5500 needs to be filed, even if the total PLan assets exceed $250,000 (over $500,000) w/ 15 paticipants?

Your comments are appreciated.

JD

The client wants to avoid the pain of auto escalation, so that requires an initial auto-enrollment of at least 6%. They also want the match formula to be simpler than 100% of first 1%, followed by 50% of each add'l percent. Can we not just do a flat match of 50% up to 7% to get to the required QACA level of 3.5%?

In January, our client will change payroll providers. I think I would rather have a root canal!!

Everyone is working diligently to be sure the correct information is transferred to the new payroll vender. But we all know it is inevitable something will go wrong!

Question: would there be any protection if the employer gave a blackout notice to the participants about the upcoming change in the payroll vendor, and while they do not expect any issues, there could be a delay with processing the first two payrolls of 2017. Would this allow a cushion in the event a payroll is not timely submitted and avoid filing the Form 5330.

OR is the client SOL and if there is a late payroll due to the vendor change, he will need to fund the lost income ( small as it may be) and file the 5330.

Thoughts.

Thanks

I have what seems to me like a very simple question that must come up every day of the week, but I'm getting totally bogged down. Here's the situation:

• Employer has self-funded health plan.
• Participants make pre-tax contributions.

Plan has thousands of participants. Other counsel I'm dealing with is telling me that the plan doesn't have to file an audit report with its Form 5500, because the plan is unfunded. But I'm not 100% sure an exemption applies, and would like to figure out what others are doing.

Here is what I've found:

• ERISA § 103(a)(3)(A) provides the general requirement of an audit report.
• 29 CFR § 2520.104-44(b)(1) provides an exemption for an employee welfare benefit plan under the terms of which benefits are to be paid solely from the general assets of the employer or employee organization maintaining the plan. However, "the exemptive relief would, in the absence of additional relief, be available only to those contributory welfare plans which apply participant contributions toward the payment of premiums in accordance with the terms of the regulations." Technical Release No. 1992-01. Since the plan is self-funded, participant contributions are not used to pay premiums, so the 29 CFR § 2520.104-44(b)(1) exemption does not apply.

Thus, if there is an exemption, it must come from Technical Release No. 1992-01, which states as follows:

In the case of a cafeteria plan described in section 125 of the Internal Revenue Code, the Department will not assert a violation in any enforcement proceeding solely because of a failure to hold participant contributions in trust. Nor, in the absence of a trust, will the Department assert a violation in any enforcement proceeding or assess a civil penalty with respect to a cafeteria plan because of a failure to meet the reporting requirements by reason of not coming within the exemptions set forth in §§2520.104-20 and 2520.104-44 solely as a result of using participant contributions to pay plan benefits or expenses attendant to the provision of benefits.

In the case of any other contributory welfare plan with respect to which participant contributions are applied only to the payment of premiums in a manner consistent with §§2520.104-20(b)(2)(ii) or (iii) and 2520.104-44(b)(1)(ii) or (iii), as applicable, the Department will not assert a violation in any enforcement proceeding or assess a civil penalty solely because of a failure to hold participant contributions in trust.

However, I can come up with two possible interpretations of the above language. Does it mean:

1. The first paragraph applies only if the plan contributions consist entirely of participant cafeteria plan contributions. If the plan also has employer contributions, then there is an exemption only if the second paragraph applies (i.e., the plan is insured).
2. The first paragraph applies if all of the participant contributions are cafeteria plan contributions, regardless of whether there are also employer contributions.

To be honest, neither interpretation makes a lot of sense to me. With regard to the first interpretation, if a plan with only participant contributions would be exempt, and a plan with only unfunded employer contributions would be exempt, why would putting both of them into the same plan eliminate the exemption? But with regard to the second interpretation, why would having participant contributions be cafeteria plan (pretax) contributions be different from having them be after-tax contributions?

A safe harbor plan wants to allow for employee after-tax contributions. The ADP safe harbor match is enhanced at 100% up to 6%. Also, the plan is top heavy. Two questions:

1. The plan must perform the ACP test with respect to the employee after-tax contributions only? Or, can you include the ADP safe harbor 100% up to 6% match in the ACP test along with the employee after-tax contributions?

2. Is the plan deemed top heavy exempt since the only employer contribution is the safe harbor match of 100% up to 6% or does the existence of employee after-tax contributions trigger the minimum top heavy allocation requirements?

The concern is that the only individuals expected to contribute the employee after-tax contributions are the key/HCEs.

Thank you.

Hello,

Need to know how to handle income/taxes of a Single-member LLC taxed as a Corporation. Requirement is to have some Retained Earnings in LLC as well as contribute as much as possible to a 401k plan.

Do I need to take wages out of LLC in order to contribute upto 25% of compensation for Employer Profit Share?

Are both wages and distributions included in compensation or just wages? What if LLC had some retained earnings i.e. LLC earns 100K, I take out 60K as wages, LLC contributes 15K as 401k profit share, I take 10K as distribution and leave 15K in LLC for operation needs. Since I've set LLC to be taxed as Corporation, how does the above scenario work?

Thanks,

Why do clients always have obscure questions late Friday afternoon?

Normally we tell people that the deadline to deposit their employer contributions is the extended due date of their tax return so that it can be deducted on the return. I seem to recall that the deadline to count the contribution in the 415 limit is 30 days after that. (unless that has changed or my memory is faulty)

What if you are dealing with a non-profit? Since they don't file a tax return, and can't deduct the contribution anyway, how do you know when the contribution must be deposited?

Hey fellow actuaries, the 2017 HATFA rates are available:
https://www.irs.gov/retirement-plans/funding-yield-curve-segment-rates

Hi. We terminated our DB plan last year. We have been notified by our trustee that there are about 10 participants (that all made affirmative elections as to their account balances) that have not cashed their checks. These checks range from 9 to 12 months in age. The trustee says they need to return these funds to us (the employer/plan sponsor). But the plan trust is closed. We have filed Form 501.

We are trying to track these people down to find out why they haven't cashed their checks. The trustee is saying that even if we find some or all of these people, they (the trustee) cannot re-issue a check. They say that they have to send the funds back to us.

With the plan trust closed, can we (the employer) even take these funds back? If so, how do we hold these funds. We are confident that we can find all of these participants (4 of them are active employees).

Thanks for any guidance.

Concerning the short-term deferral rule, if a performance goal is required to be reviewed by the compensation committee and the compensation committee does not meet until the year following the year in which the performance goal is met, would the date of the committee compensation meeting be considered a SROF? For example - the EE meets the performance goal on 7/15/15, the compensation committee meets on 3/25/16. In order to satisfy the short-term deferral rule, must the payment be made on 3/15/16 or could it be paid on 3/15/17?

the Consumer Price Index was released today

July was 240.647

Aug was 240.853

so unless Sept drops below 238.5

the comp limit will be 270,000

415 limit 54,000

db limit 215,000

key ee 175,000

assuming my spreadsheet is still working and I plugged the numbers correctly

We have a takeover plan. The prior administrator only prepared the Schedule SB, but the plan sponsor prepared the 5500-SF each year. for 2015, we prepared the 5500-SF. The plan sponsor makes one contribution, which is deposited shortly before the extended deadline. In past years, when the plan sponsor completed the form, they listed the prior year's receivable as the contribution, so the contributions on the 5500-SF didn't match the contributions on the Schedule SB. When we prepared the 2015 form, our trust accountant decided that, in order to bring up the 5500-SF to date, he counted the prior year's receivable and the current year's receivable. This way, when we prepare the 2016 form, the contribution on the 5500-SF will match the contribution on the SB. The 2015 form was filed and we explained what we did to the plan sponsor.. My contact at the plan sponsor just sent me an e-mail. She is very upset that we switched the methodology without asking her first. She is concerned that, one day, when she prepares the form, she'll switch back to the old method and list $0 contributions, which will look bad. It sounds to me that she is making a big deal out of nothing. Would you agree?

Any responses would be appreciated!