I have an employee who's wife left him and moved back to Mexico and, of course, now he wants to remove her from his benefits. They are not legally divorced yet. We are in Texas and there is no legal separation in this state. But, he says they're going to be legally separated in Mexico prior to being divorced (in Mexico).

My question is whether or not a life event currently exists. I know one will exist once he's divorced or legally separated but he's wanting to drop her now. Changes in lawful immigration status can be a life event to enroll in coverage under the new ACA rules, but I can't find anything on the opposite situation.

Does anyone know if a spouse moving out of the country could possibly be considered a life event to allow him to drop her from his plans? I've never run into this particular scenario before and not really sure how to proceed...

If an employer needs / desires to limit number of participants in a newly designed disease management program providing benefits to employees diagnosed with heart disease or hypertension, could the employer:

1. Limit participation in the program to a maximum number of participants at any one time on a "first come, first served" basis such that not all similarly situated employees (i.e., employees diagnosed with hypertension or heart disease) are treated the same?

2. Impose a minimum age requirement (e.g., 50+) as a way of further concentrating the benefits of the program [or further limiting eligibility]?

If there is an issue under ADEA or otherwise with excluding some otherwise eligible participants based solely on age (e.g., employees aged 40-49), could you possibly address the ADEA issue by dropping the minimum age down to 40 such that you were still favoring older employees (reverse discrimination?) but not excluding anybody 40+ protected by the ADEA?

Thanks

I have a participant whose only W2 wages for 2016 are going to be auto reimbursements but wants to defer into the 401(k) Plan. Since no 'paycheck' is actually issued or going to be issued, any idea how the logistics of deferring into the plan would work?

Just curious, anything on this or it's just fine.

I know the general fees have changed (generally reduced) under Rev. Proc. 2016-8. But, have the special fees indicated on the last 9-2015 8951 remained the same?

Thanks.

Eligibility for plan is 1 year, age 21 and 1/1 and 7/1 entry dates.

Participant started working on 1/20/2014. She had her one year of service on 1/19/2015. terminated 5/29/2015 before her entry date of 7/1/2015. She was rehired on 12/28/2015. Since the participant met the eligibility requirements before she was terminated, does she enter the plan on her rehire date? Plan is FT. Wm non-standardized. She had 1,000 hours in 2014 and 1,000 hours in 2015.

If she does enter on 12/28/2015, her comp from 12/28/2015 to 12/31/2015 will be considered 2016 comp and is on her 2016 W-2. so she would have zero comp for that period. Plan is safe harbor with a 3% SH non-elective contribution and additional profit sharing contribution. Plan is also top heavy, would she get a top heavy minimum contribution on her wages from 1/1/2015 to 5/29/2015, her date of termination? And no safe harbor for 2015 since she had no comp for the period after her rehire date?

Can someone provide me with the regulations that states that after-tax contributions that are matched need to restricted prior to distribution.

A state wants to provide a health FSA for employees. State law requires that the state cannot pay for it and that all admin fees must be passed on to employees. What is the tax-treatment of the costs that are passed onto the employees?

401(k) with 3% nonelective that goes to everyone and cross tested profit share allocation. profit share has last day rule but those receiving the 3% SHNEC would normally be bumped up to the gateway if necessary.

The employer is not putting in a substantial profit share for 2015 and as a result everyone (HCE and NHCE) is getting the same allocation percentage. Therefore It won't be necessary to perform nondiscrimination testing.

Since each person ends up with the same percentage can those who termed but received SHNEC be excluded from the profit share as they would, for example, under a comp to comp profit share allocation, as long as coverage passes?

This seems as though the answer should be obvious but am in a busy season fog.....

Does anyone know that if an amended filing if it replaces the original or would you be able to see both versions?

Governmental 457(b) plans are not subject to 415©(1)(A) defined contribution limitation. Governmental 401(a) plans are subject to the limitation. For the governmental 401(a) limits test do you include deferrals made to the employer's 457(b) plan? I don't think so. Can you please provide a site.

Thanks!!

I have a plan where a participant took a 5-year loan in 2015 and dropped back to part-time effective January 2016. At this point he is not terminated due to the part-time/on-call nature of his position so the loan is not officially due and payable per the loan policy. Since his paychecks are sometimes very small, his net pay is not often high enough to cover the loan repayment (or results in a very high percentage of his paycheck). The plan only allows for one loan and, while the policy allows for refinancing, his original loan was for the full 5 years so we can't refinance to extend the life of the loan beyond the original term. Should the payroll department be withholding as much as they can (even if it results in a $0 take-home check)? Or at what point does the employer determine that he's actually terminated and then rehired upon the next time he is accruing a paycheck (and the loan would therefore be due and payable and therefore defaulted upon)? Thanks for your input!

Employer merged a 401a plan into a 403b plan at the end of October. During March next year, employer removed the 401a assets from the 403b plan and merged the 401a assets into another 401a plan (this was part of an acquisition). There were no plan amendments/resolutions drafted. The TPA who helped them thought that they were working with two 403b plans.

If the 401a plan merged into the 401a plan last year, as intended, we would have had a late amendment that could be corrected under VCP by adopting a retroactive amendment to memorialize the merger.

Because the assets are merged during the current year, there is no late amendment issue for the 401a merger.

There is an error but not sure how to correct. Any suggestions?

According to the PBGC Standard Termination instruction, sample NOPB needs to be attached.

Does the sample NOPB needs to have actual plan participant info and plan benefit or can it a generic blank statement?

Any information related to this item is appreciated.

Good morning. I have a plan with 45 HCEs. The plan has immediate entry for 401k. When I test the Otherwise Excludable employees (includes 4 HCEs) separately the test fails. I have 2 questions:

1. Can an HCE be an Otherwise Excludable employee? The McKay Hochman website seems to say No.

2. If HCEs can be an Excludable Employee, do they take a refund, or do I just go with the Non-excludable test, which passes?

Thanks in advance!!

Assembling detailed Sched H information .. any resource with detailed instructions, e.g. how do company stock, stock dividends, annuities, insurance get reported?

As a practice, we always try to discourage plans from using "payouts on demand" for termination, especially for HCEs. Waiting until after the close of the year of service termination is the plan design we recommend, when possible.

Of course the one Client that decided to ignore that advice is the one that has an ADP Test failure where the person due a distribution of excess contribution has already rolled out 100% of his account balance. They want the person paid almost when the person walks out the door!

Any advice on how to correct a rollover of excess contributions to an IRA would be much appreciated. Thanks!

A Plan Administrator of a 401kPSP received a phone call from a former participant who has a large balance ($100k) that he wants to take a distribution (which he is otherwise eligible to receive) so he doesn't lose his home, and, that he and his wife are splitting and she wants half of his Plan account.

The Plan's QDRO Procedure states,
"Procedure prior to receipt of order: The Plan will apply the following procedure prior to the Plan's receipt of a Domestic Relations Order.

1. Suspension of Participant distributions or loans. If the Plan Administrator is on notice (verbal or written) regarding a pending domestic relations action (e.g., a divorce) and has a reasonable belief the Participant's account may become subject to a QDRO, the Plan Administrator may suspend processing the Participant's distribution or loan requests pending resolution.
2. Removing hold on the account. After placing a hold on the account, the Plan Administrator should notify the Participant of the hold on the account. In order to remove the hold, the Plan Administrator should request the Participant to provide written confirmation that a court will not issue a QDRO with respect to the account, such as a property settement agreement awarding the entire account to the Participant."

Questions:

1. Is such a phone call sufficient to place the Plan Administrator "on notice" of a pending domestic relations action, such that a "hold" should be placed on the Participant's account, for which he is otherwise eligible to receive a distribution?
2. Can the Plan process (at least) a partial distribution or a hardship distribution in amount necessary for the hardship (house) up to an amount equal to no more than 50% of the account, essentially only "holding" 50% of the account pending the purported domestic relations action?
3. If a "hold" is appropriate at this time on the Participant'saccount (full or partial), for how long should it remain on "hold" before the Plan releases it for inaction by either party?
4. What if the Participant does not ascertain a court order but he (and his wife if necessary?) does contact the Plan Administrator and say they were arguing and the phone call made today was without merit and should be ignored? Or would something more concrete be preferred such as a sworn affidavit? Could the Plan Administrator remove the "hold" on the account?

Thank you.

A safe harbor 401(k) plan with basic match formula wants to switch to 3% nonelective for the current year 2016. Is this permissible? It does not appear to be prohibited. Thank you for your comments!!

Can anyone point me to a chart with the PPA restatement deadlines for various types of plans?

Thanks!