An employee was working for City A and was covered under a union contract hat provided she was an eligible employee for purposes of Plan X (a defined benefit plan). After ten years of service, Employee became a certified teacher and took a job with the Board of Education for (same) City A and is now covered under a statewide retirement system for teachers of State S and no longer an eligible employee for Plan X. Assume that her last day of work with the City was on Friday and she started teaching in the schools of City A on the following Monday.

Did this employee terminate service with City A when she became a teacher or has she continued to work for the same employer and just stopped being eligible for Plan X?

Must she wait until she retires as a teacher (totally leaving employment with City A or its Bd of Ed or any other subdivision or related employer) in order to commence benefits? The plan does not permit in service commencement of benefits.

The plan (which is based on statutes, ordinances and collective bargaining agreements) has very imprecise language so it's really not helpful at all in determining whether or not she terminated employment.

If anyone can point me to guidance on how to determine separation from employment or application of controlled group rules as may be applicable to governmental plans in such a case, I would be appreciative.

Thanks!

Does anyone have any "inside" anonymous contacts where they have heard anything about how the process is moving along, tentative guesses as to approval, etc.? The silence has been deafening...

It is my understanding that an employee's contributions to a governmental defined benefit plan cannot be refunded to an employee who is no longer covered by the plan if he or she remains employed with the sponsoring employer unless he or she reached normal retirement age. This issue arises in the context of a collectively bargained employee who leaves the bargaining unit to become part of management.

Does anyone know of any exceptions or is there any authority that supports the refund of employee contributions to someone who transferred to a position not covered by the plan but has not separated from service?

I have a client who is trying to argue with me that vacation is a taxable fringe benefit and thus not eligible for contributions based on their plan provisions (which do exclude taxable fringe). I know it's ridiculous but its hard to point to something concrete...

I know there has been some discussion on this before, including David Rigby's reference to a gray book question, which was very helpful, but I'd just like to confirm something.

So, Plan A merges into Plan B effective 1/1/2014 - that is the formal date on all merger documents. Question is, does Plan A have to file a final 5500 for the 2013 Plan Year, or for the 2014 Plan Year?

It seems like one could argue that the assets don't transfer to Plan B until 1/1, and are there in Plan A on the last day of the Plan Year, so the "final" form would be filed based on a short Plan Year beginning on 1/1 and also ending on 1/1. And it would therefore be due in 7 months, rather than the otherwise normal filing date.

Now, this seems ridiculous to me, and I'd argue that the filing for the prior 12/31 could be filed as a final form, showing zero assets on 12/31 (even though not "technically" true) and be done with it. But I've never seen this situation, and I wondered how the DOL might view this, since this is DOL and not IRS.

I'm just taking the temperature of folks here to see what they would do, or what they have seen/heard?

Thanks.

I have a weird situation, it's a 6/30 plan year end, where the employer contributions are funded each pay-period and are substantial. So the HCE neds to limit his 403b contributions. Problem is, they way everything plays out, he never generates any catch-ups. He never exceeds 402g, and because of the way he scheduled his deferrals, he doesn't have enough 403b in the plan year to reclassify enough of his 415 additions as catch-ups to pass (he barely contributes 403b in first 6 months of calendar year).

Options:

a) Go back to 2015 and reclassify some unused catch-ups??

b) Take the position that his 403b was limited for 415 to ~$8,000 (he gets around $45K of Profit share, for a total of $53K). Therefore, he can cotnribute $14K and treat the extra $6K during the year as a catch-up.

I know b) works for an ADP limit, what about 415?

Plan started early 2000's and had elective and match only... match was suspended several years after the plan's effective date.

Forfeitures of match instead of being used to reduce future match were allocated across participants resulting in many balances under $10 - some even below $1. Many of these are only 20% vested.

Plan only has $150k in it.

Any participant with a balance under $25 will have their balance 'eaten up' by the plan admin's processing fee.

The plan sponsor never requested that the provider involuntarily cash out the small balances over time so the participant count has grown to 122. Yes, 122.

Should someone whose balance will be eaten up by processing fee really be considered a participant?

I'm not sure this is a cafeteria plan issue--I think it might be more of a straight tax issue. In any event, the situation is as follows:

Employee covers domestic partner on health plan and pays for domestic partner benefits on an after-tax basis. Employee produces marriage certificate indicating that the employee and domestic partner married two years ago. Does the employer have to change the tax treatment of the amount paid for the domestic partner/spouse's coverage, and if so as of when (date certificate was produced, beginning of year, back to the date of marriage)?

Anyone have any insight? Obviously this is not a permitted election change event under the cafeteria plan rules, as the marriage happened two years ago. Thank you!

If you have less than 100 participants at the beginning of the plan year, but over a 100 at the end - do you still have to file the regular 5500? This is for fully insured welfare benefit plans.

Since the 5500 has a line for number of participants at the end of the plan year, this has made me unsure.

We have an hourly fee for the processing of a QDRO distribution. Is there any guidance on who is responsible for paying the fee - the Participant or the Alternate Payee? Does anyone out there have the Participant and the Payee split the QDRO fee?

A 401(k) Plan that is top heavy. The two owners are the only participants because their 3 other eligible employees have waived participation in the Plan prior to becoming eligible. Does the employer have to give them a top heavy contribution?

I have never been asked this before and don't believe there is a way to do it, but I thought I would ask to see what you think.

Companies A and B are not related. Owners of companies A and B are best friends and work together on many projects. Both have a 401k with a match and a 5 year graded vesting schedule.

Employee works for Company A for 3 years. Both company A and B agree that this employee would be better off working for company B. Employee terminates from A and goes to work for B. Owners don't want employee to forfeit match from company A.

Question: is there a way to credit service with an unrelated company after termination? I know how the predecessor service rules work prior to current employment, but what about in reverse order? I have never seen this and am guessing it is not possible. Our document does not have the option to write this in, but is it even possible using another document?

Any other ideas? Could we fully vest one non HCE via amendment? (there are a handful of other non HCE's who would not be impacted)

Thank you in advance

Hello,

My company is evaluating two options: whether to sponsor in Canada RRSP or combined plan DPSP/RRSP.

There will be 10 employees, employee will aim to contribute annually $10,000, employer will contribute $5,000 regardless.

So can someone walk me through the costs and benefits of both plans FROM EMPLOYER's PROSPECTIVE.

My understanding is that if the employer contributes under DPSP - it will be separate from RRSP and can be deducted as operating expense. If the employer contributes into RRSP - it will be part of the salary and thus taxable to the employer as a salary. So what is the bottom line for the employer in each scenario? Also, how much does it typically cost to open/maintain the plan, etc...

I would appreciate any information or links to some useful sources, besides BenefitsCanada.

Thank you,

Kseniya

If an employer started a calendar year 401k plan in 2000 and only just started doing 5500's in 2014 - therefore, missing 2000 to 2013 filings - essentially missing 14 filings in all, do all 14 need to be submitted through EFAST2 - or do you just submit for open years... it may be difficult to locate the information for the initial plan years... i see that there is a $1500 cap for a single plan if multiple years were missed, but nothing that says if you need to file all returns back as far as missed.... (since it doesn't say that, perhaps it's because they all need to be filed...) Any thoughts would be appreciated! Thanks

I have a client who, when requesting his RMD, sent a W-4P "so I could calculate the withholding". Huh?

Usually, participants complete a distribution form that lets them indicate a percentage or amount to withhold. Is this really the way it's supposed to be done? Is there some kind of easy conversion chart from "W-4P deductions" to "percent to withhold"? Thanks.

Maybe this belongs in the termination thread, but it's so obscure that I think there is a better chance of somebody here having an informed opinion.

DB plan with excess assets terminates. Plan had mandatory employee contributions years ago and many of those with employee contributions remain as participants.

Employer wishes to transfer 100% of excess assets to a qualified replacement plan.

Must part of the excess assets be allocated to employees with mandatory employee contributions or may all of the excess be transferred? There will be no asset reversion to the employer.

ERISA 4044(d) seems to require a prorate excess allocation based on employee contributions in the case of a reversion to the employer, not a transfer to a replacement plan. Is this required under some other provision of the law? Is a transfer to a qualified replacement plan a reversion to the employer for this purpose?

Plan sponsor currently maintains a 403(b) plan, deferrals only. Plan Sponsor wants to adopt safe harbor provisions. Is it permissible for plan sponsor to terminate the 403(b) and adopt a new safe harbor 401(k) mid-year? I'm not clear enough on 403(b) rules to know if I am going to run into issues.

Thanks in advance for any guidance.

I am interested in others' interpretations of the IRS regulations and guidance on potential penalties for incorrect SSNs on Form 1095-C.

Specifically, if an employer receives a TIN Validation Error when filing a 1095-C electronically, indicating there is a mismatch between an employee's SSN and Name in the IRS database (either a mismatch or no record), is the employer required to verify the SSN with the employee and make an attempt to correct the return, in order to demonstrate a good faith effort to comply (and thus avoid a penalty for failure to file a correct return)? Or is documentation of the initial receipt of the incorrect SSN from the employee enough to demonstrate good faith effort (i.e. a Form W-4)?

Does the 2015 relief from penalties for filing incomplete or inaccurate information based on a "good faith effort" to comply mean that the regulations under 26 CFR 301.6724-1 pertaining to a waiver of penalties due to reasonable cause don't apply for 2015?

Should an employer receiving a mismatch error notice thru the efile system verify the SSN with employee now, or wait until a formal penalty notice is received?

I'm setting aside the myriad of immigration and discrimination issues this presents for purposes of this discussion.

Any input or discussion would be greatly appreciated!!

One of my clients is in the process of terminating their DB plan in standard termination using Alternative treatment of majority owner's benefit.

Can the father who has large sum of benefit in the plan forgo receipt his benefit to the extent necessary to enable the plan to satisfy all other plan benefits?

Long ago the father inherited his business to his son.

However, the son (who is 100% owner) has very little benefit in the plan.

I read some of the discussion about Majority Owners and attribution rules (IRC 1563) on this forum particularly Mike Preston excellent explanations.

I also researched some DB Plan Termination notes including 2015 ASPPA conference - Workshop 20: Plan Termination, Course 55441 – EP CPE Winter FY14 Plan Terminations, 29 CFR 4041.21 - Requirements for a standard termination, 26 U. Code sec. 1563 - Definitions and special rules, etc....

Hello,

Maybe someone could help?

My ex-wife recently passed away but her attorney never sent the Qdro to my 401k PA. The only thing that was sent was the divorce decree, which has frozen my account until December.

What happens to the money awarded to her?

Thanks, robb