Controlled group, 2 companies, new comparability plan.  Must use component plans (restructuring) to pass a4 testing.

So far so good - oops gateway rears up and says you must give me to those involved in the cross-testing.  In the cross-tested, restructured plan, those who are in the OTHER plan are treated as if their contribution is zero - therefore no gate way.

In the OTHER plan, testing on a contributions basis, there is no need for gateway. 

So is this true - we can avoid giving some people only their real contribution and not the gateway.

We have a plan that has a 21/1, quarterly entry policy.  However, they started letting a bunch of people defer early.

I know one correction is to amend the plan retroactively to allow them in.  We have four people involved and 1 will become an HCE in '17.  So, it's a 75%-25% HCE/NHCE ratio.  Is that ok?

My main question is:  do they have to let everyone in whom the ALLOWED to defer?  Or just those who CHOSE to defer.  For example, if we have 12 people hired in '16 who were given the chance to defer, but only the aforementioned 4 people chose to do so, whom do we have to structure the amendment around?

Hi I'm new to this forum (I just signed up). I hope I can contribute from time to time.  I am a California QDRO Attorney.  I want to share a recently completed project that I think will be useful to pro per litigants (and maybe a few attorneys).  It's an online 'Joinder Generator' and it generates joinder packets (groups of judicial council forms required to join a plan) after answering a few questions via online form.  

Please check it out and give me any feedback about it.  Do you like it? Would you use it?  Did it work?

Thanks so much for your time and feedback.

http://www.qdrodivision.com/joinder-generator/

-David T. Ruegg

The TPA charges 700 to review and approve QDROs submitted by plan participants.  Can this fee be charged to the plan and allocated to all participants or must it be either paid by the client or split between the plan participant and alternate payee?  Most concerned about if it can be paid by the plan.  Thanks!

Is 20% withholding required on distributions to qualified trusts who are beneficiaries of a qualified plan (e.g., a 401(k) plan) ? IRS Notice 2007-7 Q&A 16 states:

• A plan may make a direct rollover to an IRA on behalf of a trust where the trust is the named beneficiary of a decedent, provided the beneficiaries of the trust meet the requirements to be designated beneficiaries within the meaning of § 401(a)(9)(E). The IRA must be established in accordance with the rules in Q&A-13 of this notice, with the trust identified as the beneficiary. In such a case, the beneficiaries of the trust are treated as having been designated as beneficiaries of the decedent for purposes of determining the distribution period under § 401(a)(9), if the trust meets the requirements set forth in § 1.401(a)(9)-4, Q&A-5, with respect to the IRA.

https://www.irs.gov/pub/irs-drop/n-07-07.pdf

I know that qualified trusts can be directly rolled over to IRA - so they are eligible rollover distributions. I also found reference in 402(c)(11)(A), which states, in part: 

• (11)Distributions to inherited individual retirement plan of nonspouse beneficiary

I received an interesting question on whether state mandated short-term disability benefit payments should offset a qualified plan's definition of compensation. My gut feeling is that since most compensation for such purposes is driven by employer-provided payments via its payroll system, and such amounts are or are not subject to federal income tax withholding, that the state mandated disability benefit payment should not even enter into the compensation definition in any way and therefore, should not offset the employee's other compensation which is taken into account for qualified plan purposes.  I know that the mandated benefit is taxable to the employee to the extent that the employer paid the premiums for the benefit.  However, this should not affect my conclusion on whether such payments should offset the employee's compensation for qualified plan purposes, or am I missing something?

A key employee of a corp. has comp of 70,000,  defers 20,000 (18,000 plus 2,000 catch up).

415 limit   70,000 x .25 = 17,500

If a profit sharing contribution is made to another plan of the same corp. is this key emplyee entitled to 

an allocation?

My thought is no. because the employee reached 415 in 401K plan and PSP doesn't have catchup??

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!