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!

We are helping a client who is managing a new facility with a separate 401k plan where it was discovered that they have not filed the Form 5500 for a couple of years. We are working on gathering the information to file the forms;however, we are missing some key pieces such as contributions during the years as well as year end balances.

What is an option for filing the Forms while missing holes of data?

We recently took over a large safe harbor 401K in which the employer amended the plan prior to us, to eliminate an hours requirement for entry, effective 1/1/2014.

On May 1st of this year, the client tells me they had sent a "maybe" notice to the participants in November 2014 for 2015 but no-one seems to have a copy.

August 1st we received the W-2s for 2015 as well as census data.

Of course ADP failed.

Question, and I haven't done this in a while. This is why we do Safe Harbor.

The plan allows for Roth contributions.

Can the HCE employee contribution overage be recharacterized as employer contribution to the accounts of the NHCEs to the extent ADP is passed; and if ADP is still not passed, an additional QNEC would be required???

deferral only plan wants to add an auto enrollment feature. Is the pre-PPA option only allowed to be amended prior to the beginning of the plan year?

A 401k PSP has Enhanced Safe Harbor matching with the employer contribution performed "Each Payroll Period". Here and there an employee might miss out on some potential matching if deferrals are large early in the year and are forced to stop before the year ends because of the $18k limit. The match is calculated on compensation per pay period and not over the entire year.

Is there a way to solve this issue so that the employer match is based on annual compensation regardless of the timing of an employee's deferrals throughout the year? Maybe a true-up? This would seem to be more fair to employees who defer irregularly due to a one-time bonus or for some other reason.

If there is a solution, are there any downsides to the employer for making the change to a match based on annual comp vs. each pay period?

I have two takeover 403(b) plans that have Student Employees listed as an excluded class. It was my understanding that this exclusions would not apply unless the plan was for a school, and that employee was a student of that school.

the prior TPA had been excluded all employees that were currently and regularly attending class. But neither plan is an educational instutiion (or auxillary to one)

Agree or disagree with me that this is incorrect and that all of those employees that otherwise satisfied the eligibility requirements should be in the plan and eligible for all contributions?

Is it good advice for the CEO (and perhaps the organization) to avoid naming the CEO as the Trustee? I am suggesting this to a client based on the logic that hey, if you're named, it's not even up for discussion. It is YOUR fault and yours alone.

On the other hand if there was a directed corporate trustee, now there will be inevitable finger-pointing and a burden of proof to try and figure out who was a fiduciary.

I know people are going to respond and say the "CEO will always be a fiduciary, have good intnernal policies" and blah blah blah. But that's not really what I'm wondering. What I'm wondering is, am I right that the benefits to the individual merely by not being named a trustee meaningful from a personal liability perspective. [again, not asking about fiduciary insurance, etc].

My mother passed away May of 2015. She had a retirement account but apparently named no beneficiary. She is survived by her only two children, My sister and I. However she was also survived by her own brother and two sisters, my aunts and uncle. I am attempting to settle her accounts. I received a packet from fidelity informing me to complete the packet in its entirety and have it, along with a copy of my mother's death certificate with a raised seal mailed back to them.

I have the official death certificate along with a copy to be sent.

My mother has no spouse no partner etc. However, she was once married to my father and divorced when I was young. The packet asks for the date of divorce. My father cannot remember a date or year and doesn't have any files as they have been divorced for over 20 years. What am I to do if I cannot accurately suply fidelity with the information on the divorce?

The packet also asks who has survived my mother, and asks for these people's social security numbers to be listed. For various reasons, her siblings are unwilling to provide me with the social security numbers. My sister is also unwilling. What do I do in this situation?

My sister is the oldest of the two of us.

401k plan provides for 90 day eligibility to enter the deferral portion of the plan. The plan later amends to 1 year of service. The people who came in because they had met 90 days, but never do work 1 year of service, are they no longer allowed to defer?

1) What is a normal turn around time to get a response? I have on outstanding for a year.

2) Is there any phone number I can call to check on the status?