EGTRRA restatement didn't change to the option not to require RMD's if still working (an oversight, apparently) so missed RMD's are applicable for one person for 3 years for an employee. Total of maybe $25,000 or so, since the "RMD" in a DB plan is the monthly benefit...(Governmental plan, no HC's)

I've found the IRS to be pretty reasonable about waiving the penalties in DC situations, but haven't happened to request a waiver in a DB situation. Anyone have similar luck with DB's?

Has anyone tried writing a letter since the voluntary program was started? I have a farmer that went over $250,000 in 2013. He did not file an EZ for 2013 or 2014, calendar years.

This attachment is from a discussion draft dated 10/26/15. Apparently, the ability to count PBGC premiums as "general revenue" is so attractive to Congress that they will continue to abuse sponsors of DB plans.

Proposed Budget 10.26.15.pdf

There is a cash balance/PS-401k combination being tested for nondiscrimination.

Cash balance has statutory 21 & 1 eligibility but PS/401K has a 3 month wait.

Do all participants need to be included in the General test or only those meeting the 21 & 1 eligibility requirements?

Would it matter if only the 401k part had a 3 month wait and it was 21 & 1 for the PS portion of the DC plan?

Client has informed us that the President of a Non-profit, which sponsors a 401k plan, will be retiring on 3/31/16. On 4/1/16 and 4/1/17, the Non-profit will be paying the President X dollars in deferred compensation. Is this money eligible compensation for plan purposes in the 2016 plan year? What about the 2017 plan year?

FYI: the plan is a safe harbor 3% plan.

We have been asked to restate for PPA an EGTRRA AA which has safe harbor matching provisions written into the AA. It is a basic safe harbor match. We have not done the administration for this plan in any prior year and have not been hired to be the TPA going forward. We have only been hired to restate for PPA.

The client then provided us a copy of the last 3 safe harbor notices provided and each notice specifically states that the Employer will NOT make the safe harbor match for the upcoming year. The client indicated that each notice was provided timely. The AA was not amended to remove the safe harbor match language. The client believes that providing a notice that they intended NOT to make the safe harbor match was sufficient.

We will remove the safe harbor language going forward but believe this client has a larger problem. Where do we go from here? What advise should we provide this client?

Employer X operates a number of elementary schools within a specific geographic area. To limit costs and expenses (especially with respect to health care), it has proposed to limit employees it classifies as assistants to work no more than 29 hours per week. Assume that assistants are given one hour off for lunch for each day that they work, of which 30 minutes are paid and the rest is unpaid. Does Employer X have to include the lunch break in determining whether assistants are full-time employees? If so, would it only count the paid hours or would it also have to count the unpaid 30 minutes during an assistant's lunch break? Thank you.

Equity partners form a committee to determine my income for the year. They give me guaranteed payments and a K-1 at year end. I am referred to as a partner.

Does this really make me a partner to the extent of my pay as a ratio of total K-1"s, and if so, should the numbers (pay and ownership percentage) make me a KEY employee and thereby missing out on the Top Heavy Contribution?

This could get interesting if I go in and out of KEY with my account sometimes in the calculation and sometimes ignored!

I know that a 3% Safe Harbor contribution can be used to offset part of a New comp Profit Sharing Contribution. What I couldn't remember was if a Safe Harbor Matching Contribution could be used the same way? I'm thinking no, but I wanted to be sure.

Thanks in advance!

New company...2 owners are younger than 13 other ees and make around $100k each....less than FICA limit....

So under permitted disparity, this falls into category where all ees make less than the FICA $118,500.

It sounds like the allocation rate for the hcees can be 2x the nhcees and they would pass if permitted disparity was invoked...but I cannot get my arms around exactly what the regs are saying....can someone clarify the procedure.

Would 415(b)(2)(E)(ii) apply to adjusting all optional forms of benefit including lump sums or does it not apply to lump sums? I am getting conflicting opinions.

Here is the wording (also attached):

(ii) For purposes of adjusting any benefit under subparagraph (B) for any form of benefit subject to section 417(e)(3), the interest rate assumption shall not be less than the greatest of -

(I) 5.5 percent

(II) the rate that provides a benefit of not more than 105 percent of the benefit

that would be provided if the applicable interest rate (as defined in section

417(e)(3)) were the interest rate assumption, or

(III) the rate specified under the plan.

Example:

High 3-year average salary/annual benefit: $100,000

Participant age: 70

Plan interest rate: 5%

AMT15 mortality table

(i) 5.5% factor - 10.2

(II) 417(e)(3)/1.05 = 11.4

(III) plan 5%: 10.5

Would the maximum lump sum payable be $1,020,000 = 10.2 x $100,000

or does this section not apply to lump sums?

Related question: any limits on the mortality table that can be used? For example, instead of AMT15 can GAR94 set back 30 years be used for (i) and (iii) above?

415b.pdf

Judging by my inability to find anything useful about this anywhere on the Internet, I'm assuming this situation is anything but common.

Here goes:

I have the following benefit plans with the following plan years:

125 plan: calendar year

FSAs (GP, LP, DCA, CE): calendar year

Medical: 11/1 - 10/31

All ancillary: 10/1 - 9/30

And I don't even have a guess as to what my ERISA plan year is but I'm guessing it's calendar year.

Basically, I'm cleaning up a giant mess left over from years of people who had no business administering benefits.

The only thing I want to do is term everything in December and start over on 1/1, but for various reasons let's just assume that none of these plan years can change. I cannot bring the medical in line with the ancillary, I cannot bring the 125 in line with anything else, and the FSA cannot be anything other than the calendar year. On top of all that, everything but the medical is MEWA (not Taft-Hartley).

I can't find anything to tell me one way or another whether there is a problem with having all of your plans renew at different times than your 125 plan. I've never heard of anyone doing this so for all I know it could be perfectly fine but my gut tells me there are about a thousand ways for this thing to go wrong.

So my question is:

Is this legal? Are there any compliance concerns with having your underlying plans renew at a different time than your 125 plan? Do I have to allow employees to change their medical election when the 125 plan renews (since they're taking medical in lieu of cash under the 125 plan) in January even though the insurance contract doesn't renew again until November? If I allow employees to make an election change (with respect to pretax premium deductions) when the medical plan renews in November, is that technically not permitted under the 125 plan? Unless maybe if it also happens to satisfy the change in costs/coverage LE? If I can't let them change their election with the underlying plan changes in the middle of the 125 plan year, I'm assuming we would just have a midyear rate change? What? No....

I'm so completely confused right now I'm not even sure I worded my questions correctly. In all the years I've been doing this I've never heard of an employer who decided "hey I think I'll have all my benefit plans renew at different times of the year because that's fun for me...three open enrollments every year...splendid plan, Bob! Pass the biscuits!"

Ugh. Help?

Working on a 401(k) profit sharing plan that has NRA of 55. 2 HCEs and 1 NHCE, all of whom are fully vested due to years of service.

My first question is, as a profit sharing plan, is it necessary to comply with 1.401(a)-1(b) (as revised in 2007)? The language there is concerning "pension" plans, and I wonder if they mean that in the strictest sense or more general.

If this plan does have to meet that requirement, what kind of problem do we have? None immediately, it seems, but the second that another NHCE is hired, he will not benefit under the old plan NRA definition, so won't we fail benefits/rights/features coverage testing?

Finally, can I actually do this? Is there a problem with this kind of cut-back?

Thanks.

Facts: In 2010, forfeitures from Plan A were used to offset employer contributions to Plan B. In 2011, Plan Sponsor realized this was not allowed and repaid the funds back to Plan A but in the process some funds from Plan C were used to repay the funds from Plan A to Plan B. In 2015, the funds were returned to Plan C.

I think there are two prohibited transactions: (1) forfeitures from Plan A to Plan B used as employer contributions and (2) funds from Plan C used to repay the forfeiture from Plan A to Plan B.

Both transactions are considerate continuous transactions and need to file Forms 5330. Is this correct?

I have a few force outs to accomplish. Does the initial notice need to be sent by certified mail?

Also, regarding lost participants, if we run their name through an internet search, is that enough due diligence?

Finally, I have a lost participant with an account of approximately $6,000. We had done a few searches with no luck. What is done in this case? He has been lost for 12 years.

A plan is written so that if a participant (not a >5% owner) turns 70 1/2 but still is employed, he does not take an RMD until he actually retires. If that plan terminates in a year after the participant has turned 70 1/2, is he required to take an RMD before he rolls over his distribution to an IRA? He is still employed; it's the plan that terminated.

Thanks.

We have a plan that has one participating employer. Up until June 30, 2015, they were controlled. As of July 1st, the ownership changed so that the two companies are no longer controlled. In previous plan years, we did coverage testing by aggregating the employees of both companies. I know in MEPs, they must be tested separately. How do we handle coverage testing in 2015?

Thanks.

On terminations where we have filed a form 501 with the PBGC within the last 3 months they are asking for:

1) A copy of the current plan document; and

2) Proof (cancelled checks) of each distribution

Does anyone know why this is happening or why there is no announcement?

Thank you.

This is a variation on a common theme - ADP testing failure ($7900), but participant already rolled over the money.

In this case, he terminated and rolled over in 2014. They just did the ADP testing and issued a 2014 1099-R with code 8 (it was actually an amended 1099-R b/c he already got one for a 2014 refund of 2013 excess, plus the rollover; two separate ones of course).

If it were a plan, we'd say "too late" and he'd have to pay tax on the excess but leave the money in the plan and pay tax on it when it comes out.

Since it's an IRA, I was (originally) thinking he had to (but now think he can) leave it in, but could call 6500 of it a non-deductible contribution for 2014, pay a 6% penalty tax on the other 1400, and call that a nondeductible contribution for 2015 and be done with it (except for the hassle of having nondeductible contributions). Is that an option?

I'm also thinking that it's not really too late to take it out if he wants - he "just" has to pay the 6% tax for 2014 on the entire amount, then can take it out in 2015. Is that also an option?

Employer A has set up an office in a different state. Due to payroll tax issues, they will use a PEO to handle payroll for the employees in the different state.

The PEO issues the paychecks each pay period. The W-2 will show the PEO's name and EIN

The 401(k) plan excludes Leased Employees.

Am I correct in saying the employees covered under the PEO are NOT leased employees and therefore are eligible to join the plan after meeting the eligibility requirement?

If they are eligible to participant, what changes need to be made to the document to show these employees are covered?

The bundled platform, told the client to ask their attorney for guidance with PEO issue.. The client is an attorney and asked us their Investment Manager!!!

Seems to me, employees under the PEO belong to the employer and therefore since the employer is not using the PEO's retirement plan, they are covered under the existing plan.

Thoughts

Thanks