We need a crash course in cafeteria plans. We have done strictly retirement, but have an opportunity to take on a client with a plan covering dental, health and disability. Plan has over 100 people and so would require a 5500.

I would be particularly interested in any course that would give ERPA credits (kill 2 birds with one stone?).

We need to address both testing and reporting.

Participant has loan and is transferred to another division. During his time with the new division ( they also participant int he plan), his loan payments were not withheld. Participant has now returned to his original division.

Participant wants to bring the loan current and continue making payments.

Participant is past the cure period.

1. Platform will issue a 2016 1099R for the deemed loan

2. Is the only way to avoid the 2016 1099R to file under VCP?

3. Any provisions in the self correction to cover missed loan payments due to management error ( transferring between divisions)?

I can not find any why to prevent the 1099R from being issued unless they file under VCP. Just looking for some thoughts?

Thanks

If an on-site clinic is a stand-alone welfare plan - for line 8b on the 5500, is it appropriate to use code 4Q for other and write in "onsite clinic". Not finding much guidance on this other than the clinic definitely needs a 5500 filing. Other thoughts?

A client provided census data on their plan back in February. It turns out that they included some "historical" data (overstated some compensation and deferrals). This of course, affects the ADP test results, and it changes the refunds that should have been made to the HCE's.

One HCE's refund is only overstated by $1.94, but the other one was paid $989 too much in corrective refunds. At this point in 2016, what are the options to get this corrected?

Tax-exempt 457(b). Employee terminated in June 2009. Because he made no deferral election, entire account balance was to be distributed 90 days after termination. No distribution was made, and error not discovered until 2016! We have no idea what participant knew or thought at the time.

1. Was it "made available" in 2009 and therefore taxable?

2. If so, was it reportable on W-2 and subject to withholding in 2009, even though there was no actual distribution? IRS Notice 2003-20 implies that it was.

3. Is this an operational error that places entire plan at risk? If so, any ideas as to what to do other than distribute the entire account balance now and report it on a 2016 W-2 with income tax withholding?

Profit Sharing Plan holds real estate. Trustee wants to subdivide and sell lots. Jurisdiction requires that a Home Owner's Association be set up before the real estate can be subdivided. Interests in the HOA will be conveyed to each buyer. Trustee's real estate attorney asks if the Plan can own interest in the HOA? At some point the Plan would no longer have any ownership interest, even possibly before all of the lots are sold. The plan document, of course, does not address this specific issue, and I've not found any prohibited transaction addressing HOAs. Where should I look?

Thanks in advance!

Wrap plan document incorporates all benefits offered by employer which are subject to ERISA. It never references any benefit type or provider, all of which are mentioned in the SPD.

If Employer makes a change in benefits, when is it subject to a plan amendment & SMM if there is no actual change to be made to the Wrap Plan Document?

Sample situations are:

• Change in carrier
• Removal of benefit
• Change of benefit from ER sponsored to voluntary
• Change in portion paid for by ER

The SPD will need to be updated for any of these.

700 Hours of Service within the 4 months time period following the Employee's Employment Commencement Date seems like an odd combination to me.

Anyone agree?

I have a doctor group. Company A has 41 doctors/owners participating, all owning equal shares. 19 doctors own company B and the other 22 own company C. Company B and C's plans are for the employees of the imaging centers the drs. own.

It has been determined that this is an Affiliated Service Group, not a controlled group.

****They want to continue to have three separate plans but have the assets combined in one. Is this allowed? The trustee/custodian would have to split the assets by company to complete the individual 5500s.

Employer match is only employer contribution, and it has a 1000 hr/last day requirement. Plan fails coverage (at 69% - grrr!). It's probably going to fail ACP as well, but that's a separate issue.

So if using the average benefits test for coverage, you do NOT include elective deferrals as per 1.403(b)-5(a)(2). Agree?

Now, assuming it still fails on an allocations basis, the coverage testing can be done by cross testing. As I read it, the same applies even if cross testing - you don't include deferrals. Agree?

Imputed disparity won't help, I don't, think, as there is only one HC, who still falls just below the taxable wage base.

Am I missing anything? Other thoughts? Thanks!

So we just picked up a new plan and the prior consultants were aggregating a 403b plan and a 401k plan for the ACP test. All of the HCE's are in the 403b (and their match goes there too) and all of the NHCE's are in the 401k. So no ADP test, but we do have an ACP test.

The problem is, the 403b is calendar and the 401k has a fiscal year-end.

Any suggestions? The match is identical in both plans (small payroll to payroll calculations). Is this something the IRS would entertain allowing a fix for under VCP?

1065 was filed without deducting anything for profit sharing last week. Can an amended be filed "today" (before 9/15) to take an additional deduction? Or has the ship sailed?

May a 401(k)/PSP force participants to self-direct the investment of their account? The plan currently has a menu/platform but the sponsor wants to get rid of that and have each participant get their own broker and direct their own investments. I'm concerned about participants who either are not that savvy or do not want to self-direct.

If it is permissible, is it correct to say that a blackout notice be required when eliminating the menu?

Thanks.

I know I'm very late to the party, but I've been doing some reading on the not-so-new changes regarding the inability of small employers to reimburse their employees for health insurance premiums. The topic just came up at work, so I started looking into it for the boss. I got excited when I read that a cafeteria plan would do the trick, but then that's been ruled out, too?! Since this all started a couple of years ago, it seems no one has figured out a sure-fire way for a small employer to help out his employees aside from adding more taxable money to their income and saying "use it for health care if that's what you want." I feel like I must be missing something. Perhaps I'm not reading the right articles?

A DB plan currently passes 401(a)(26) easily (they're not top-heavy). The plan just now was frozen to new entrants and will freeze accruals for HCEs only. Thus it will only continue accruals only for the NHCEs that entered before the close date. It intends to stay closed and to not allow accruals for HCEs (including stopping accruals when a NHCE becomes an HCE later on). In many years, the number of non-excludable employees will dip below the 40%/50 EE threshold under 401(a)(26). The plan is not aggregated with any other plan for any purpose.

Under the current rules, is there an exception for passing 401(a)(26) if the plan only has benefit accruals for NHCEs? What about the proposed rules?

401(a)(26)(B)(ii) has this:

If employees described in section 410(b)(4)(B) are covered under a plan which meets the requirements of subparagraph (A) separately with respect to such employees, such employees may be excluded from consideration in determining whether any plan of the employer meets such requirements if

(I) the benefits for such employees are provided under the same plan as benefits for other employees,

(II) the benefits provided to such employees are not greater than comparable benefits provided to other employees under the plan, and

(III) no highly compensated employee (within the meaning of section 414(q)) is included in the group of such employees for more than 1 year.

and 1.401(a)(26)-1(b) has:

(1) Plans that do not benefit any highly compensated employees. A plan, other than a frozen defined benefit plan as defined in § 1.401(a)(26)-2(b), satisfies section 401(a)(26) for a plan year if the plan is not a top-heavy plan under section 416 and the plan meets the following requirements:

(i) The plan benefits no highly compensated employee or highly compensated former employee of the employer; and

(ii) The plan is not aggregated with any other plan of the employer to enable the other plan to satisfy section 401(a)(4) or 410(b). The plan may, however, be aggregated with the employer's other plans for purposes of the average benefit percentage test in section 410(b)(2)(A)(ii).

Holding company owns 100% of Employer A (our client).

We find out that Holding Company also owns 60% of an International Company (I will call them Employer I) and 40% of another US Company - Employer B. No issues so far. Do you agree?

We now find out that Employer I owns the other 60% of Employer B. I think I now have a control group with another US Company - Employer B. Do you agree?

I'm told I should include a cover letter with the QDRO when I file it with the court for the judges signature/approval. Any advice on what should be in the cover letter would be greatly appreciated. Thanks in advance!

Plan effective date: 1/1/2008.

Type of plan: Applicable defined benefit plan (cash balance).

Vesting service: Plan years in which the employee works at least 1,000 hours.

Normal retirement age: 62.

The plan has the most restrictive method allowed under IRC section 411 for determining vesting.

The employees shown below were originally hired on 1/1/2011.

No employee has left service under the terms recognized under the special rule for paternity and maternity absences.

Employee 1 Employee 2 Employee 3 Employee 4

Age at hire 18 25 16 60

2011 hours 1,901 1,956 1,325 1,254

2012 hours 1,850 0 700 565

2013 hours 1,251 1,210 1,743 779

2014 hours 1,801 355 943 1,645

2015 hours 1,583 1,479 1,100 560

How many of the employees listed above are vested by 1/1/2016?

(A) 0

(B) 1

(c ) 2

(D) 3

(E) 4

According of SOA answer key, D is the correct answer.

I have difficulty to understand because if I exclude service prior to attaining age 18 under IRC section 411(a)(4)(A) then I will end up 2 employees by applying the 3 year cliff vesting for cash balance plan.

Am I missing something hear?

Please help.

A participant terminates in one plan year and receives a distribution of their account balance early in the subsequent year. After the valuation is completed for year of termination an additional contribution is deposited for that participant. What is the rule for determining if this additional contribution can be cashed out or must be combined with the original amount distributed to determine if the $1,000 has been exceeded?

I have a take over plan that is a single member LLC that is taxed as a sole prop. The owner pays himself W2 wages in payroll throughout the year and then also files a Schedule C reporting his net income. For plan purposes, is his compensation W2 or Schedule C or a combination of both? Everything I have found states you cannot pay yourself W2 wages when you are a Schedule C filer, however this is how the CPA is doing it.