Is it possible to design a plan using a Safe Harbor basic match for anyone who is contributing and also simultaneously use a Safe Harbor non-elective for anyone who does not contribute?

Plan design is this: Participants are able to choose between a cash bonus today, or an Elective Deferral to the Plan in the same amount as the bonus PLUS a matching contribution.

The idea is that if people would prefer the cash in their pocket they can take it, but if someone is comfortable with a 3 year rolling vesting schedule they will get the extra match as a kicker.

Anyone have a problem with the participant signing this election form on or before the date the contribution is funded? 1.409A-2(a)(5) seems to suggest that this is ok.

Now I also have a provision that the participant will vest upon termination without cause. I believe in order to comply with the above, I have to "insist" that the termination without case take place greater than 12 months after the initial deferral election.

Thoughts?

My understanding is that the pension deduction for a partner should be reported on that partner's 1040, but the partner's accountant thinks that it should be reported on the K-1. Does anyone have a citation that states how it should be reported?

Thanks for any responses!

Sharing a sad story involving a local church in case it might help your clients avoid the "trap".

Its generally understood that the Medicare Secondary Payer (MSP)rules don't apply to small employers under 20 employees.

Small church (5 employees) thought they were exempt from MSP and reimbursed age 65 employee for premiums for Medicare Part B and D and Medicare Supplement.

Turns out their group health plan is a self-funded multiple-employer plan sponsored by the national church and they've now learned that since the plan covers at least 1 employer who has over 20 employees they are not considered a small employer exempt from MSP.

Lesson learned: small employers participating in a multiple-employer health plan are very likely subject to MSP.

A small non-electing Church DB has been frozen for several years. The plan will be terminated at some point, but that is still a few years off. They have a couple of ministers who will be retiring in a couple of years and are discussing designating the retired minister's monthly payments as housing allowance so they can claim it on their tax returns. That's not a problem while the plan continues, but what happens when the plan terminates? Does anyone know if monthly payments from an annuity purchased by the plan when the plan terminates would be treated the same as payments from the plan for purposes of the minister's housing allowance? I haven't been able to find anything that mentions this situation.

IS THIS ALLOWABLE?

An on-going calendar year 401k plan (no employer contributions) with ordinary eligibility = Age 21 and 1 YOS with Quarterly Entry Dates -

Plan waived the eligibility requirements as follows:

If you are an employee on 11/1 (regardless of age or service) you may enter the plan and begin 401k deferrals as of 11/6. Your opportunity to begin 401k deferrals expires on 12/6.

If you have not signed up to begin 401k deferrals by 12/6, and you have otherwise not satisfied the plan's eligibility requirements, you must then wait until you satisfy the ordinary eligibility requirements and may begin 401k deferrals on the entry date coincident/next following satisfaction of the eligibility requirements.

If you elect to begin 401k deferrals during this special/open period you will be considered an eligible employee and a participant in the plan. If you do not elect to begin 401k deferrals during this special/open period you will not be considered eligible and will not become a participant until you satisfy the eligibility requirements.

Have you ever seen a plan with eligibility of "the earlier of 12 consecutive months of service, or 1,000 hours of service within any plan year." ???

7/31 plan year for medical plan 5500 filing did not file form 5558 by 7-month due date (2/28). Filing itself will be filed as 'Final' with no Schedule A's. Employer's fiscal year is not 7/31. Filing itself will be filed by extended due date of 5/15, even though there is no extension.

Question is: Any chance the late penalty can be waived, in light of this being essentially a blank 5500? (Would not be asking this question regarding a regular ongoing 5500 that missed filing form 5558)

I have an active 401k participant who divorced (respondent). No QDRO. In the judgment of dissolution of marriage, respondent is required to pay the petitioner $xx. Petitioner was not awarded any portion of the respondent's 401k. Respondent is wanting to withdrawal such amount from respondent's 401k. Respondent is not eligible for an in-service distribution (under 59.5) or hardship. Loans are not allowed. I have informed the respondent that the respondent is not eligible for any distributions from the plan. The participant had an attorney draft a petition to allow the respondent to invade the 401k account. The petition is not a QDRO. Would this petition be enforceable?

Employer has 1 HCE (the owner) and 75 eligible NHCEs. Wants to adopt a 3% safe harbor 401(k) plan.

Owner's compensation is normally paid as $120,000 base pay and $150,000 year-end bonus.

The NHCEs receive tips amounting to about 50% of their compensation.

If the plan excludes bonuses and tips for purposes of all allocations, would this still retain its safe harbor status?

If so, it seems like the employer is getting away with a safe harbor contribution of only 1.5% of compensation. We understand that it might eventually become top heavy with all the turnover they have, but that could take several years.

Employer's has a QACA Plan and makes the SH Match each payroll period. The SH Notice states the SH Match is made each payroll period.

Effective 6/15/2016 the Employer would like to make the SH Match at year end.

any issues with this?

employer will provide 30 day notice and an updated SH Notice with this change.

Thoughts

An employer maintains an ERISA-governed group health plan. An employee pays a cafeteria plan’s salary-reduction contribution toward the employer’s cost for the employee’s health coverage. There is no trust. The plan uses no group health insurance contract; every benefit is paid from the employer’s general assets. The employer uses an “ASO” service provider to serve as the plan’s claims administrator. An affiliate of that service provider provides a stop-loss insurance contract.

The employer pays upfront amounts described as its maximum liability. If the experience for a year (after some set-asides, including fees, stop-loss premium, an incurred-but-not-received reserve, and some further margins) is more favorable to the employer than what invokes the maximum liability, the service provider returns money to the employer.

The people who advise the employer are familiar with ERISA Technical Release 2011-04, which includes a little guidance about whether employees might be entitled to some portion of a health insurer’s rebate.

Those advisors disagree about whether employees are entitled to a portion of this “rebate” from an arrangement that involves no group health insurance.

• One believes the employees should get a portion that approximates the ratio of the participant contributions to the whole “cost” of the health coverage.

• Another believes the self-funding adjustment is wholly the employer’s property, and nothing should be allocated to participants or employees.

Who is right? And what reasoning supports the conclusion?

Employer with FSA wants to amend their plan year to match the insurance coverage year. This would result in a short plan year. What implications does this have for participant salary reduction elections? Should the election be pro-rated to match the short year? Should salary reductions be decreased? Thoughts?

Line 9 on PBGC Form 500 asks for the percentages of the active participants who will be covered by other plans. I assume that this refers to other plans sponsored by the same employer who sponsors the terminating DB plan - correct?

Thanks for any responses!

Employer allowed an HCE (owner's son) to begin deferrals sooner than the employee met the eligibility requirements and reached an entry date. Plan is Safe Harbor Match and such matching contributions were provided.

A retroactive corrective amendment seems available if the affected employees are predominately NHCEs. However in this this case the only affected employee is HCE.

How to correct?

I understand that if a safe harbor 401(k) plan limits the safe harbor contribution to only the statutory employees and disaggregates the otherwise excludable employees, then the plan cannot use the special rule deeming the plan to not be top heavy as it no longer is solely a safe harbor 401(k) plan.

Does the same thing apply if the plan does not provide safe harbor contributions to union employees.

An employer with a top heavy safe harbor 401(k) plan is considering allowing union employees to participate. If the union employees do not receive the safe harbor contributions is the plan no longer deemed to be not top heavy?

Thanks.

• Plan will be terminated .
• Plan subject to PBGC
• Plan valuation AFTAP is greater then 100%.
• Plan assets less than total termination benefits
• Owner want to waive part of his benefits rather than make additional contribution.

Does this plan qualifies for a standard termination filing?

Thank you for your help.

We have a PS plan with insurance that pre-dates our involvement.

One of the participants dealt directly with the insurance company to take out a loan on the policy in his name and claims that the insurance company says he doesn't need to repay it.

I don't understand how he managed to get the loan without the trustees consent, but that is a question for another day.

I contend that since it is a plan asset, the loan needs to follow the same rules as any other loan i.e. have a loan agreement with the plan and be repaid in installments over 5 years.

The loan is almost 3 years old now and I have been telling the client the whole time that there need to be repayments. I contend that the loan is in default and should be taxable to the participant.

Is there any exception to the qualified plan loan rules for insurance????? This is our only PSP with insurance, so maybe there is something I'm missing.

I've been asked to help interpret an ADP test done by someone else - always a potentially scary thing - and predict how much the HCEs can defer in 2016. The plan covers about 20 companies that are part of a controlled group. Overall, the test appears to me to fail with an HCE ADP of 1.43% and an NHCE rate of 0.57%.

The bundled service provider is saying it passes by using disaggregation. I initially thought they were referring to disaggregating the otherwise excludables. Looking at the actual test, it appears that they are disaggregating by geographic location or possibly by job title (not enough information to tell for sure) in addition to excludable and non-excludable categories. The test shows Group A excludable, Group A non-excludable, Group B excludable, Group B non-excludable, etc. Each group passes.

I thought the point of the controlled group rules was to require combined testing of the related companies. Is there some rule that I've forgotten about that allows this sort of disaggregation?

----------------------------

Background Info:

----------------------------

Employees are notified that, if you are an employee on a specific date - the plan will waive it's ordinary eligibilty requirements and you may begin deferring immediately. If you do not elect to defer by a 'certain date' (ie: within 30 days) you will be subject to the plan's ordinary eligibility requirements and must wait until you satisfy eligibility and then you will enter on the plan's next entry date and can begin deferrals then.

----------------------------

Specific Question:

----------------------------

Can a plan waive 401k eligibility requirements temporarily, and for those who do not elect to defer require they wait until they do satisfy eligibility?