I am trying to ascertain the effect of the language in Treasury Regulation 1.401(a)-20, Q&A-16 which requires that the QJSA be the most valuable form of benefit.

Our client is faced with a situation where--due to a significantly older spouse (20+ years) and the actuarial conversion factors set forth in the plan--there is no reduction to the monthly benefit payable for the participant's lifetime in order to convert to any of the J&S forms. Essentially, the plan's benefit formula is giving the spouse such a slim chance of surviving the participant, that they're not going to reduce the participant's monthly benefit to account for this contingency.

The problem is that the plan specifies the 50% J&S form as the QJSA. However, if the participant can get a 50% survivorship piece or a 100% survivorship piece on the same lifetime benefit, obviously the 100% J&S is going to be actuarially more valuable.

Treasury Regulation 1.401(a)-20, Q&A-16 provides that "if a plan has two joint and survivor annuities that would satisfy the requirements for a QJSA, but one has a greater actuarial value than the other, the more valuable joint and survivor annuity is the QJSA." (emphasis added) The way I read this language, the more valuable form would automatically become the QJSA. So, in my case, the 100% J&S would be the QJSA with respect to this participant, notwithstanding the language in the plan calling for the 50% J&S.

Am I reading this reg correctly?

anyone recommend a document provider I could use. I have heard good things about ft William but would like to hear other opinions. much appreciated!

plan sponsor amends plans benefit formula effective january 1, 2014 to increase benefits from 2% to 2.25% x years of benefit credit. the plan was rewritten at the time and the benefit formula in the new plan doc is equal to 2.25% of avg. comp. times yrs. of ben. srvc. it appears the new formula applies to yrs. of ben. srvc. for years prior to 2014? the plan does not specifically say that the formula only applies to years after january 1, 2014. also does the more generous benefit formula apply to terminated participants that have yet to be paid but severed employment prior to 2014?

Participant is married to wife A for 15 years, divorces and marries wife B. Wife B signs prenup that all assets up to marriage will go to other beneficiaries upon Participant's death. Participant and Wife B married for 20+ year. Participant dies. Is Wife B the beneficiary of Participant's DC account balance, or does the prenup rule? Participant did not sign a beneficiary designation form for the plan.

Plan is a 401k with CT PS contribution. When plan first started in 2010, elgibility was 6 mos and age 21. Participant A came in during 2010because she worked 6 months/age 21. She has never worked 1000 hours though (been employed since 2010) until 2015....

The PS contribution requires a year of svc and employed on last day. in 2015 since she finally worked over 1000 - is she eligible for 2015 PS or 2016 PS? There is some disagreement amongst our ranks.

Eligibility has now changed to age 21 and 1 yos (since 2012).

Comments..cites...

When processing loans, if participant has already received approval to borrow 50% of their vested balance determined at the time they requested the loan. They have signed and returned the paperwork. Now with the market drop, do we need to recalculate the amount the participant could borrow. What if the paperwork has been sent to them, but they have not returned it.

Here is a proposed match formula. Appreciate any thoughts on whether non-discrimination testing of the availability of each rate of match would be applicable.

The match rate would remain the same at 50%.

The cap on the match would increase with each year of service earned.

Less than 1 year of service, no match.

More than 1, less than 2, 50% match capped at 1% of compensation

More than 2, less than 3, 50% match capped at 2% of compensation

and so on up to 5 year and beyond, with the cap staying at 5% of compensation.

So the rate of match remains consistent. It seems to me that the increasing cap is more of an ACP issue.

Thanks.

Does anyone know of a requirement to file a notice with either the IRS or DOL when instituting a new health plan? Client got the idea that if they start a new health plan (after not offering one in the past) they must file something with either the IRS or DOL notifying them that a plan has been implemented. I cannot find anything on this. I initially thought the client was referring to the 6055 and 6056 reporting requirements but they assure me they "heard somewhere" that they have to file something "with the government" to show they are now offering a health plan or they will be subject to a penalty. Any ideas?

What if there are 5 HCEs, and only one NHCE in a plan & you would like to use restructuring rules?

Can this be done?

I believe that each employee can only be considered in one component.

How does that work if there is only one NHCE?

Here's the information on the plan:

HCE 1- 2.12 EBR 13.21% PS

HCE 2- 2.94 EBR 13.21% PS

HCE 3- 3.92 EBR 4.40% PS

HCE 4- 10.44 EBR 4.40% PS

HCE 5- 8.87 EBR 4.40% PS

NHCE 5.90 EBR 4.40% PS

Thank you

We have an ESPP that has offering periods that go from the first to the last day of each month. Over the offering period, we deduct money from paychecks. On the last day of the month, the stock is purchased.

Our provider (etrade) reports that "grant date" and the "exercise date" as both being on the last day of the month. They are not easily able to report on Form 3922 that the grant date (Box 1) is the first of the month and the exercise date (Box 2) is the last day of the month. Rather, they'd like to use the last of the month for both the grant date and the exercise date.

Is there any problem with reporting both the grant date and exercise date as the last day of the month?

If we can get comfortable doing it this way this year, should we keep it that way for 2016, or should we try to get etrade to change it going forward?

NOTE: The purchase price under the ESPP is 85% of the fair market value on the purchase date.

We are consulting for a company that sponsors two 401(k) plans - one for the partners and one for the non-partners. The partners' plan has been filing form 5500-EZ, which I think it is allowed to do, even though there are 80 partners. Two questions:

1. One of the partners has a QDRO and his account has been split into one account for him and one for the ex-spouse. Does the account for the ex-spouse make the plan ineligible for an EZ filing?

2. I haven't seen too many of these before (EZ filing for large number of partners). Is it true that even if the partner count got to over 120, they wouldn't have to get an accountant's opinion on this plan?

The controller for a company that sponsors a 403(b) asked whether he could be personally liable for errors or problems that might occur with the plan. He said that at a recent seminar, the speaker suggested this is the case. I know that if he were to take any criminal action he could be personal liable. But the Speaker mentioned that if, for example, contributions are late to be deposited, he could be personally liable. I do not believe that this is correct. Any thoughts on this would be appreciated.

Have a plan that is auto everything crazy. I guess not such a bad thing in some ways. First I think they would go bundled if it weren't a complex plan but they want the financial institution to track hours and reach out to the newly eligible to invite them to enroll so they don't have to worry about enrollment. I wouldn't be so concerned if there weren't a 1000 hour requirement on the plan. The requirements are age 21, 1 year of service where 1000 hours is worked and then monthly entry. We have a meeting this week with the financial institution, myself, the client and a few others to implement this and address concerns. My concerns are bottom line, it being done wrong and me not finding out until year end. I am looking for thoughts and concerns and others experience with this. I'm sure I'm not thinking of everything. I just see a lot of room for auto error. I

It has been explained to me that the institution will receive a payroll feed every week and hours and when it hits the requirements, that a notice will go to the participant to enroll. I'm just leary, maybe needlessly. Can someone offer me their experience and maybe topics I should discuss in regards to this.

Apparently Sungard was acquired in August by a company called "FIS." Have they made any press releases or sent any emails reassuring us that nothing is going to change? For example, what if new management decides to phase out Relius/server environment in favor of its on-line ASP platform?

I'm not worried, but I sure would like something in writing telling me I have nothing to worry about. Depending on what you all have to share, I will obviously ask them too.

I honestly did not even know about this deal until I logged in to Relius Documents today and saw the new logo.

I think I'm suffering from some sort of brain cramp. Probably normal Monday morning...

New plan for 2015, non-safe harbor, current year testing. Deferrals were not permitted until, say, July 1.

When running the ADP test, is it run using full year compensation, or compensation only from July 1? There's technically no short year.

While it seems "reasonable" to only consider comp from July 1, I'm not finding regulatory support jumping out at me - but then, I'm probably missing something. Thanks!

Hmm - under 1.401(k)-6, the 414(s) compensation may be limited to the period the employee is eligible, provided it is applied uniformly, etc...- but I would think that this would require the plan to exclude "pre-participation compensation" in order to use only comp. from July 1. Thoughts?

NQDC Plan provides only for lump sum payment at a specified date. The Plan does not permit or even address the subject of participant elections. Can the Plan be amended to permit a "second election," obviously in accordance with the 409A limitations on second elections, or is it too late because vested benefits have accrued and the Plan does not permit elections?

too early in the year to be confused and yet I am. hmmmm...

anyway - I have a cross-tested profit sharing allocation formula.

allocation conditions for active participants are 1000 hours, last day rule.

If termed due to death, early retirement, retirement or total and perm. disability then hours/last day requirements waived for allocation. Plan is not top heavy.

Participant termed in 2012 under the early retirement provions - was over 55 and had 10+ YOS. Participant received an allocation in the year of early retirement. Same participant rehired 11/23/2015. Active on rehire. Participant had 243 hours in 2015 and was employed on the last day.

Is participant excluded from the profit share allocation or no?

appreciate any feedback....

Working with an advisor who says he has a solo 401k with an owner and their child both participating. I was under the assumption that only an owner and spouse could participate in a solo-k.

Are there any exceptions that allow children to participate in a solo-k?

A university has several small plans they are merging into their main plan. The recordkeeper that is receiving the funds says the accounts can be merged in as a rollover. We argue that records should come over as in a normal conversion (i.e., ee and er money broken out by source). Thoughts?