Have a prospect which has about 10 current employees with accounts at Schwab and 5 prior terminees with accounts at Schwab. Client wants to require all current and future employees to transfer their Schwab accounts to accounts at T. Rowe Price on a website, but keep all the 5 accounts for prior terminees at Schwab, while trying to find them and hopefully paying them out.

I read below from 1.401(a)(4)-4 that I test these 5 separately as to BR&F, so it doesn't matter if all 5 "frozen participants" cannot move their money, and all 10 currently benefiting must, even if all 10 are HC's and all 5 are NHC's or vice versa. (See below for definition of a frozen participant.).

Just want to make sure I am reading this correctly. Anyone agree? Disagree?

Thanks,

Craig Schiller

(2) Frozen participants. A plan must satisfy the nondiscriminatory availability requirement of this section not only with respect to benefits, rights, and features provided to employees who are currently benefiting under the plan, but also separately with respect to benefits, rights, and features provided to nonexcludable employees with accrued benefits who are not currently benefiting under the plan (frozen participants).

Terminating plan is in an audit. Auditor wants proof of the hi 3 yr avg. Client and CPA say they don't have records that old (somewhere mid 90's). The years are before the plan effective.

Doesn't IRS have records going back that far?

This seems like it should be a simple question, but I'm not so sure it is.

Suppose you have 4 separate welfare plans 501-504. Client decides to consolidate them under 1 "wrap" document so that only one 5500 form has to be filed.

Two questions - would you create a new, separate plan number for the wrap plan, or would you appropriate one of the existing plan #'s and "merge" all the plans into that?

For the 3 (or 4, depending upon your answer to the question above) plans that "merge" or "terminate" - how do you handle the final 5500 filing? Just do it is a final form? There are no assets to distribute. I don't really see any other alternative, but perhaps I'm missing something obvious.

Thanks - any thoughts/opinions appreciated.

Terminating custodial account (mutual fund) 403(b) and offering new 401(k)(realize merger not possible). Same custodian in each plan.

Current 403(b) participants will be offered cash-out, rollover

to IRA or rollover to new 401(k).

For participants NOT making an affirmative election sponsor

wants to make the default a rollover to the 401(k). Also, since the same funds will be available in the 401(k) sponsor wants the default investment election to be the same elections the

participant had made in the 403(b).

Assuming all appropriate disclosures are made are there any

problems with this approach?

These refinanced loans can get a bit confusing. I think I know the answers but seeking comment if you agree or disagree with any of my conclusions.

1. We have a participant with over 100K balance who had an outstanding loan of $12,000 due October 2017. The plan only allows one loan. In December 2015 they refinanced and withdrew $25,000 to bring the loan balance to $37,000 still due October 2017. Now, the participant has decided they cannot afford the loan payments. They did pay in a lump sum payment of $9,600. I have been asked if the October 2017 date can be extended out to December 2020 (5 years from the loan refinancing) but my understanding is that it cannot as 10/17 is the latest permissible date for the loan. Does anyone disagree that the maturity date has to remain 10/17?

2. The ironic thing is if the participant had just taken around $10,000 or less when they refinanced they could have had a brand new 5 years and then came back and taken more a week, few weeks, months later as long as maturity date was the same. Am I missing anything?

3. When a loan is refinanced is only the actual outstanding loan counted towards the $50,000 look back? For example, if a participant has a $12,000 loan and refinances and withdraws another $25,000. Then six months later, the participant asks for another $5,000. Was the highest balance in the last 12 months just the actual outstanding balance of $37,000 or due to the refinancing considering both loan outstanding for a total of $49,000. (Replaced Loan $12,000 plus Replacement Loan of $37,000). I believe it is just the $37,000 but wanted to see if anyone had another opinion.

4. Does the entire new loan counted towards the $50,000 look back or just the additional amount being issued? For example, a plan allows two loans and the participant already has two (loan #1 $6,000 and loan #2 $15,000) and the highest outstanding loan balance in the last year was $30,000. The participant wants another $10,000. Since loan #2 has a later maturity they would like with that one but would the new loan balance of $25,000 exceed the $50,000 look back? They are only taking $10,000 more dollars but it appears that the entire new balance of the replacement loan must be taken in to account. If so then the participant could only take $10,000 if it was added on to loan #1. It could not be added on to loan #2. Correct?

Thanks!

I was searching for info and found a topic on this message board that fits closely to my situation, so I'm posting to get more specific opinions about my next course of action.

My wife and I both have ROTH IRAs that suffered bad trades and fairly large losses on stock option trades. Each account had roughly $25,000 and each lost roughly $9,000. I am age 60 and my wife is age 53. We are currently unable to fund our ROTH IRA this year or for the next two years.

I would appreciate opinions on the positive or negative effects of the following:

The way I understand ROTH IRA rules, we can close the ROTH IRAs - move our $16,000 each into normal brokerage accounts - and take an income itemized tax deduction for the combined $18,000 in ROTH IRA losses.

Then we each would re-deposit our remaining $16,000 in funds into two new ROTH IRAs - spread over the next three years using the maximum allowances.

In the meantime, I would continue investing and trading this money in one of our normal trading accounts - and paying whatever capital gains apply.

So we would end up roughly right back where we are today, except that we can benefit from the one time tax write off for our losses. Is it worth the trade off?

Would that scenario sound like a reasonable time to use this kind of ROTH IRA cashout and restructure? Or is there another way to recapture any equity related to this kind of on-paper loss?

Payroll person uses/embezzles employer funds to pay her 401(k) loan. Terminates employment, receives her full vested distribution from the plan. Since embezzled money was deposited to the plan on her behalf, then distributed to her from the plan. Employer has discovered this issue recently in 2015, transactions occurred 2013 & 2014. What is the responsibility of the plan? Or is this an internal employer issue?

CPA called with a creative question....can the taxpayer contribute his 2015 MRC on 3/16/2016, 1 day after filing his 2015 return and still meet the MRC requirement for 2015 but push the deduction into 2016, if so what happens to his 2016 pension deduction which he expects to be large.

A former Profit Sharing Plan client recently returned as his new TPA refused to assist in an IRS audit. While away, the new TPA amended the Profit Sharing Plan effective 1/1/2015 to add 401(k) Safe Harbor provisions.

• Maximum Deferrals made by 2 HCEs were incorrectly deposited to the profit sharing plan's trust in December, 2014.
• 2014 W2s reflected the deferrals.
• Deferrals were then distributed in March, 2015.
• New TPA reported the distribution (no tax withholding) via 2015 1099Rs (coded P) in January, 2016.

Was this the proper correction? Shouldn't the deferrals have been returned to the employer to run through payroll with proper tax withholding and correction of W2s?

Does the cross over to a new year change the correction method? Is a VCP submission required for failure to follow the plan document?

A follow up to this discussion

http://benefitslink.com/boards/index.php/topic/35611-hce-determination-question/

It appears that 414(q)(8) only determines if a person is considered an employee for HCE determination. So if a person begins having U.S. Income in mid-2016, they are considered an employee for plan purposes. 414(q)(1)(B) says, "For the preceding year (i) had compensation from the employer in excess of $80,000, and..."

What are your thoughts on including the non-resident alien's income earned outside the U.S. with the same company for the purpose of 414(q)(1)(B) for 2015 and 2016?

Seems like a simple question ...

if a plan purchases a policy covering a plan participant with the plan as the beneficiary, what happens when the participant terminates employment?

Thank you!

I'm hoping someone else remembers this and has a link!

There was an article a while ago (possibly several years) that very helpfully laid out why the current year testing method was better than the prior year testing method.

I cannot find it anywhere!

Does anyone have a link to it they could share?

Thanks!

I have plans that payout participants with under 1000.00 for the automatic cash out provision.

Lately it seems several participant don't cash the checks or the check is returned due to the address being no longer valid. Usually these checks are under 200.00.

What are other administrators doing with these checks? For a plan to use extensive steps to try to locate the missing participant - it seems expensive for such a small balance. And we don't want to put them back in the plan.

Before rolling them to an IRA using the last know address - anything else we should consider?

Thanks for any guidance.

I have a plan that has had an independent audit done over several years but is now under the 100 participant rule. Can the plan just switch to the 5500-SF now that the beginning number is under 100? Or is there anything else to consider? Thanks.

I am looking for suggestions on a consultant my company could hire to review our 403(b), 401(k), and 457 block of business. We are an annuity provider and the majority of our plans are 403(b)'s. Still figuring out the exact scope, however in general we are looking to review our operational procedures for regulatory compliance and identify any risks we may be facing. Thanks!

Participant makes voluntary deferred compensation contributions to a 409A Plan. His gross wages are $100,000 (just to keep it simple) and he contributes voluntarily $5,000.

Is his 3% Nonelective Contribution based on $100,000 or $95,000?

Note that "deferrals to a NQDC Plan" is NOT an add-back listed the way other pre-tax deferrals are.

I am pretty sure it is $95,000 but can't understand why that doesn't get more press. I've had it crop up as an issue more than once.

Does the $5,000 small lump sum cashout threshold apply only to the value of employer provided benefit? How does employee contribution money play into the $5,000 cashout threshold? Thank you.

another Karaoke

perhaps no one heard of this group


D Beatles

unfortunately they didn't copyright things and this song was stolen by another group that arguably stole their band name as well (it is so similar) and when asked if it was somewhat dishonest they simply said "Let it Be"

Unlike a certain unnamed pension website master who was so impressed he changed his name so his initials matched this group's name. I am impressed!






My 4-0-1(k) it is in trouble
And I just turned age 50
How can I save up quickly?
A D-B.

And in my hour of darkness
The solution’s right in front of me
Yes there’s an easy answer
A D-B.

A D-B, a D-B, a D-B, a D-B
A great big tax deduction
A D-B.

And when the broken hearted people
Living in the world agree
Yes there will be an answer
A D-B.

For though the company defaulted
Still there is P-B-G-C oh
Yes there will be an answer
A D-B

A D-B, a D-B, a D-B, a D-B
A great big tax deduction
A D-B.
A D-B, a D-B, a D-B, a D-B
A great big tax deduction
A D-B.

Pause (instrumental)

A D-B, a D-B, a D-B, a D-B
A great big tax deduction
A D-B.

And when the night is cloudy
There is still a benefit for me
Yes there will be an answer
A D-B.

I’ll wake up to the sound of money
Monthly checks are mailed to me
Yes there’s an easy answer
An-nu-i-ty!!!!

A D-B, a D-B, a D-B, a D-B
A great big tax deduction
A D-B.

A D-B, a D-B, a D-B, a D-B
A great big tax deduction
A D-B.

A D-B, a D-B, a D-B, a D-B
A great big tax deduction
A D-B.

letitbe.mid

I've worked on the TPA side (or PBGC field benefit administration) in Defined Benefits for over a decade, but I've been out of day-to-day administration for the past few years. I'm now on the client side working to help improve procedures with our TPA, clean up records, and various de-risking projects.

With the DOL now cracking down on plans that do not do enough to find missing participants, we are in the process of working with our TPA to improve some of the processes they use to administer our pension plan.

What are your best practices for finding missing participants (or finding out if they are deceased)? What resources do you use? Do you have different amounts of work you do based on the age and status of the participant? For example, young (not near NRD) term vested participant / term vested nearing NRD / term vested nearing 70.5. How often do you try to find missing participants? Do you review them all at the same time, or on a schedule based on when they became “missing”? Do you do more if the person is in payment status and their payment is suspended due to uncashed checks?

What are your best practices for processing a death notification? Do you accept notification of death from financial institutions (for example, a direct deposit is returned with a notice that the account holder is deceased)? What other notifications do you accept? Do you utilize the internet and search obituaries? What free versus paid resources do you use (free being defined as only taking someone’s time)? What do you do for participants that you think are deceased but are not on the Social Security Death Index and you may not have received a notification?

If you are at a TPA, are there things that your company does not do and sends to the client to do instead?

Are there checklists you use for either process that you would be willing to share?

Just trying to get clarification for a few of our employees that are Medicare Primary. Does anyone know if both Medicare and the secondary will be providing 1095-Bs or will it just come from Medicare?