For various reasons, a client wants to do a one-time diversification in it's ESOP where the company buys stock from participants up to a certain limit.

We know this can be done, but we don't know a couple details.

First, can we do it so only vested shares are redeemed? If so, how would we allocate who gets to redeem what? Is it based only on their vested account or is it based on their entire account balance?

Second, can we do age-weighted allocation, so older participants can diversify more than younger participants? If so, what are the traps? Is this a discrimination issue?

Third, can we do diversification in the three typical ways (1) distribution, (2) cash in the ESOP, (3) cash to another qualified plan?

If anyone knows of any guidance I can use to help find answers to these questions, please let me know! Thank you in advance!

Facts: 401(k) non-safe harbor plan with allocation conditions of 1,000 hours and last day w/waiver of those conditions for Death, Disability and Retirement. Plan Year is 10/01.

Question: Can I remove the waiver of the service and last day requirement for Retirement mid-year?

I'm thinking no, because even if an employee hasn't retired yet and does in the future; he/she would have already earned the benefit.

I'm I over thinking this?

Thank you,

Spodie

If you have a takeover plan, that has many previously terminated, deferred vested participants, but you have no idea that they were ever properly reported on the form 8955-SSA, what is your philosophy on reporting them?

Assume they were reported correctly and not report until they get paid out with code D?

Report them with Code B just to make sure they're in the system?

Something else?

Thanks!
Dennis

Suppose you have an 100% leverage esop in which the same number of shares are released and allocated each year; there are no forfeitures available and there are no shares available for purchase.

If USERRA doesn't apply until the employee returns from leave, would it appropriate to allocate the shares on the imputed compensation and placed into a suspense account? The employee would then be credited with the shares upon return. Or do you have multiple years of imputed compensation in the year of rehire?

I have found a few old threads on this topic but want to clarify the termination of a SIMPLE IRA.

Company A maintains a SIMPLE IRA. Company B acquires Company A in a stock purchase effective February 1, 2016. Company B maintains a 401k plan.

Question: Can the SIMPLE IRA be terminated mid-year? Based on what I have read I don't believe it can be terminated until December 31, 2016. Does anyone disagree? Is there anything that I may be missing that would allow us to terminate it?

Thank you

Does Notice 2016.16 imply that adding loan provision to a safe harbor plan mid year is an allowable mid year change, since it is NOT specifically listed as prohibited change?

There have been many cases brought against employers/plan committees, etc. (i.e., "in-house" parties rather than outside service providers) based on so-called high cost funds in the plan's line-up. Does anyone know if any of those cases involved plans where there was a brokerage window or similar "open architecture" structure? In other words, while X number of funds were available in the plan's primary line-up, participants could invest in hundreds/thousands of other funds and individual securities through the brokerage facility.

Company A sponsors plan, with Companies B, C, and D adopting employers as a controlled group. Calendar year plan. 3% Safe Harbor allocation.

On Oct. 1, 2015, Company B is sold. One participant leaves Company B and starts working for Company C. She made $75,000 for B and $25,000 for C.

The sponsor wants to know if Company C can pick up the entirety of the Safe Harbor for the participant. Or must the cost be proportionately shared between B & C?

Wonder if I am missing anything.....Document as always allowed a match. They want to put in a match for 2015. The document has prior ACP testing. I think these 2 things together mean the HCE's would get nothing. The NHCE's can receive a match though.

over the years I've ended up with a number of these. I think maybe 14 or 15, saved here and there on the computer. what a disorganized mess I have.

Here is one of the Beatle's songs. 'They' did a song for both 401k plans and another for DB plans so I'll have to find the files for that version as well

The Beatles - Yesterday



Yesterday, sixty-five it seemed so far away
Now it’s come today, it’s here to stay
I wish I had a 4-0-1 k

Suddenly, I’ve not half the cash I used to see
The bill collectors shadow me
Retirement came suddenly

My sa-vings are so low, I don’t know just where I’ll stay
I did something wrong, should have saved and put away

4-0-1(k)s, oh it’s such an easy way to save
now I need a place to hide away
and it’s too late for a 4-0-1 k

My sa-vings are so low, I don’t know just where I’ll stay
I did something wrong, should have saved and put away

4-0-1(k)s, oh it’s such an easy way to save
now I need a place to hide away
and it’s too late for a 4-0-1 k


Mm mm mm mm mm mm mm

good yesterdy.mid

I have a government client which offers all employees health insurance at retirement until they are eligible for Medicare. All employees have to have 10 years of service, with the exception of the CEO which only has a 3 year service requirement. The client subsidizes 100% of the cost for management employees and zero for all other employees.

Currently the retirees are included in the active employee plan, active employee's number 60. The active employee's group will pass the discrimination testing, all benefits and subsidies are the same for active employee's, but will not pass with the retirees being added to the testing.

If the client "carves" out the retirees and develops a separate plan for retirees only are they still subject to discrimination testing?

Thank you for your assistance.

Edie

We have just taken over a 401(K0 plan from a payroll provider.

Eligibility 3 months, entry semi-annual.

Would terminated participants who work less than 500 hours be included in ADP/ACP tests?

Sunrise Sunset (from Fiddler on the Roof)

Originally this was going to be for EGTRRA and the Sunset provisions, but EGTRRA changes were made permanent, so it 'devolved' into the following expressing my feelings about the work load and all the other headaches at this time of year.

Thanks to Dave "Good job Walt" Baker for making it possible to attach MID files. I'll have to post the other ones I created as time goes on.

This job it seems to be so harried

Why has my bushy hair turned gray?

I don't remember growing older

I work all day!

My balance used to be a beauty.

When did it shrink to be so small?

I work for little pay

And thats not all!

Sunrise, sunset

Sunrise, sunset

Swiftly flow the days

A-D-P failures and loan defaults

Ive never even seen a raise

Sunrise, sunset

Sunrise, sunset

Swiftly fly the years

One plan is following another

Laden with too much work and tears

What words of wisdom can I give them?

How can I help to ease their way?

Now they must learn about their failures

Day by day!

The IRS they want an audit.

And I know who theyll blame its me!

Is there an excise tax

in store for me?

Sunrise, sunset

Sunrise, sunset

Swiftly flow the days

A-D-P failures and loan defaults

Ive never even seen a raise

Sunrise, sunset

Sunrise, sunset

Swiftly fly the years

One plan is following another

Laden with too much work and tears

sunrisesunset.mid

We have one plan that has an allocation condition for profit sharing contributions of 1,000 hours. However, the plan started towards the end of the year (in existence for last 4 months of the year) and everybody worked on 700 hours or so. Are the allocation hours prorated (to 333 hours in this case)? The plan document provides no guidance on this issue.

Thanks.

This is related to a question I posted recently under Defined Benefit plans.

Client recently discovered a few participants who appeared to have exceeded compensation limit.

Each of these participants was participating prior to 1/1/96, and the plan had no compensation limit in effect on 7/1/93. The plan was amended back in 1995 (the TRA 86 restatement) to incorporate the limit effective 1/1/96 for all participants.

Did the grandfather rule for eligible participants need to be set forth in the plan document for the plan to be able to use it?

TIAA document has option:

After completing ___ consecutive Months of Eligibility Service (no more than 12.)

How does this work?

Does employee have to work in each of 12 months to become eligible?

So if the EE works 5, takes 2 off and then works 5 more and actually works over 1,000 hours; EE is not eligible?

This employee would go in the denominator of the coverage fraction but not the numerator?

Plan Doc is no help that I can find. "Month of Eligibility Service", if not counting hours, is deemed to be 83 1/3. Didn't think that was a legal equivalency amount.

Thanks for any thoughts.

I have a client who would like to adopt a nonqualified plan that will act to allow highly compensated employees to defer an amount equal to the excess contribution refund that the employee will receive from the employer's qualified 401(k) when the plan fails its ADP/ACP testing.

I understand that 409A requires that the employee make an irrevocable election to defer compensation on or before the last day of the year prior to the year during which compensation is earned.

Under the contemplated nonqualified plan, the amount deferred under the nonqualified plan would only be equal to the amount that the employee receives as a refund from the 401(k) plan. However, the deferral would be taken from current year wages and the refund would be refunded to the participant and reported on Form 1099-R.

Does anyone know if it is acceptble under 409A to allow the highly compensated employee defer an amount equal to the refunded excess contribution on or before December 31 (the last day of the prior service year) when the employee does not yet know who much the excess contribution refund will be? I guess I am concerned that the dollar amount of the election is not certain at the time the deferral is made. On the other hand, if the deferral is equal to 100% of some formula/amount, then this seems like a "determinable amount".

Any direction would be greatly apprecaited! Thanks!

DB Plan. Participant over age 70 1/2 received a lump sum in 2015, with the RMD portion deemed to be not eligible for rollover. It was determined that due to an error on the administrator's part, $10,000 of the payment that was deemed to be an RMD and not eligible to be rolled over was in fact NOT an RMD and could have been rolled over. Participant received a 1099 for this payment. How could a situation like this be rectified?

We are trying to terminate DB plan that is subject to PBGC coverage. We have 2 vested terminated participants who terminated employment in the 1970s. The employer does not have any records from back then. We don't have social security numbers for these individuals. How do we do a search for them or purchase an annuity for them without the social security numbers?