We have a plan that withheld 401(k) deferrals from bonuses, which are excluded in the plan document. So we need to return the deferrals to the participants.

For corrective contributions, that is, when we need to GIVE the participatn something, we've been using the DOL calculator for earnings out of convenience.

Can this same method be used when calc'ing earnings on funds LEAVING the plan? If the participant experienced a loss in real life, then using the DOL figures will jsut serve to exacerbate the losses.

So how do you figure out the earnings for funds leaving the plan in practice?

(My software cannot accomplish this)

Good afternoon, All - We have a client looking to:

1. Exclude from 401(k) plan eligibility lawful permanent residents (LPR's) of the U.S. who are on both U.S. AND home country payroll, and

2. Exclude from 401(k) plan eligibility certain visa holders -- just as a general rule on its own in the plan document or in combination with being on both U.S. and home country payroll.

Knowing that it's a Safe Harbor Plan that passes minimum coverage testing, can one or both of the above be done without being deemed discriminatory?

Help and guidance is GREATLY appreciated. Thank you.

Brian

We just took over a plan from another TPA. Client has been allowing ROTH deferrals but there are no Roth provisions in current AA. Client informed us that they would like us to include the ROTH change in the PPA AA, but to backdate the Roth effective date to the date they stated allowing ROTH. I am not comfortable with this. Has anyone else encountered this issue and how have you addressed it?

Also, this client has been allowing pre-tax deferral amounts less than what was stated in the AA. AA imposes a 1% minimum deferral rate, but client has ignored it. What is done in this instance? We will be taking the lower limit out going forward when plan is restated for PPA.

Some recent news on the VEBA front which doesn't seem to appear in these boards:

http://www.thinkadvisor.com/2015/02/18/fiduciaries-to-pay-39m-for-raiding-death-benefit-p

https://www.courtlistener.com/opinion/2898304/odc-pet-v-john-j-koresko-v/

Plan A is less than 100 participants at BOY. In June, Plan B (also sponsored by the same employer) merges into plan A. Now there are 150 participants.

Seems clear to me that no audit is required for 2015, since the BOY count was less than 100. However, I've been wrong once or twice in my life, so I thought I'd just see if folks agree that no 2015 audit required?

Thanks.

We have a client who is a member of an Affliated Service Group. Law Firm X owns some of Title Company Y. We have determined that a ASG does exist. X and Y are both covered under Plan XY.

Now we have learned that Title Company Y is a control group with Real Estate Company Z. There does not exist a control group between Law Firm X and Real Estate Company Z (not enough common ownership). Company Z has a Plan Z that covers only Company Z employees. We are not the TPA for Plan Z.

What effect does the control group status between Y and Z have on the ASG between X and Y and the Plan XY?

A fiscal plan (5/31PYE) with Safe Harbor Match, pre-tax 401k

The employer rehired a former participant on 9/1/2015. This participant was not paid his VAB in the period between former termination date and rehire, and has numerous past service years to his credit. Based on plan terms, this participant was eligible immediately upon rehire.

In the past, this participant did contribute 401k deferrals.

Upon his rehire, the employer failed to provide the SH Notice and 401(k) Deferral Election Form.

The Plan determines the SHM on an annual basis, therefore, the Participant could "increase" his 401k amount for the remainder of the Plan Year so as to capture the full SHM. Upon discussion of this matter, the Participant has told the employer he does wish to make 401k deferral contributions to the Plan.

What is the correction necessary for the period 9./1/2015 to date?

Thank you.

I have a client who previously had a Mater Trust account prior to moving to our company. When they moved to our company in 2014, the master trust was dissolved and just the individual plans remain. A final 5500 filing was submitted for the master trust; however, it was well past the due date. The individual plan 5500 filings were submitted on time. I understand that there is not a DFVCP process for master trusts; however, does anyone know if there will be IRS penalties for late filing? DOL suggested we write a letter to attach to the 5500 filing requesting the fees to be waived. Where can I find such a sample letter? Thanks!

For an individual-account retirement plan, an SEC-registered investment adviser is provided to all participants, without any incremental charge.

(The employer/administrator approves an arrangement in which the recordkeeper pays the investment adviser. The recordkeeper gets its money as indirect compensation paid by investment funds' distributors, transfer agents, and managers. Assume everyone involved has done thorough 408b-2 disclosures.)

The investment adviser's fee thus is not a charge against a participant's account that is not reflected in the total annual operating expenses of an investment fund.

What, if anything, should a participant-level 404a-5 disclosure say about the arrangement for the investment adviser's services?

There is a social club that wants a 401(k) plan for its employees. Since it is a non-profit corporation it appears there would be no key employees participating in the plan. In addition, it turns out there would be no highly compensated employees participating either.

I would think there would be no non-discrimination testing since there would only be non-key and nonhighly compensated employees. They have about 20 eligible employees but may want to more heavily benefit two employees who have worked there for many years. They will probably want to have salary deferrals and a good match for all eligibles. In addition, maybe they could provide an additional profit sharing allocation just to the long term employees. Have I missed something?

We have worked so extensively with plans that need to be general tested that I wonder if I am missing anything.

Thanks

I just picked up a 9/30/2015 plan and the compensation listed for owners was 265000 - so I was wondering if that is correct or if the compensation is based on the year the plan began - as in 260000?

Plan will be entering Blackout 11/23/2015 and exiting Blackout 12/13/2015 - Changing Platforms.

Enrollment for new particiapnts is 12/1/2015. Platforms said the participants will not be able to enroll until the plan exits blackout.

This means the participants will miss 1 - 2 payrolls and not be able to defer.

Any issue with this. Does the Blackout "protect" the plan from not enrolling the participants until the middle of the month??

Typically when we do distributions out of the country we withhold at 30%. Question came up for a participant with a ROTH balance. I am thinking that this would be exempt form the mandatory 30% withholding, but am not having any luck finding a cite.

I am tempted to forgo the withholding as taxes have already been paid, but would feel better if I knew the IRS was on board as well. Any thoughts!=?

A non-profit (NP) is spinning off employees who are creating a for profit company (FP).

The FP will be owned 75% by a venture capital firm and 25% by the NP.

The FP will have representation on the NP's board.

Can anyone tell me at what level of representation would a controlled group exist?

Is it 80% of the board controlled by the FP, or is it only 55% since the NP owns 25% of the FP?

Or am I completely off base altogether?

Thank you so much.

Interesting question here. A person is a director of a corporation. As a portion of compensation for that person, stock options are granted. This person receives 1099 income, and files as a self employed using a Schedule C.

First, my understanding is that "Qualified" stock options can only be granted to employees, so I'm assuming these are non-qualified stock options.

The question is: does the exercise of these stock options produce income includible on a Schedule C, and constitute "earned income" for qualified plan purposes?

Director's fees are considered earned income, so it seems to me that it does (although if the options are exercised and the stock is bought and held for more than 1 year, then there could be Sch. C income for plan purposes in the year of exercise, and capital gains on a subsequent sale after more than a year, with the capital gains not being eligible.)

Whether the compensation is "reasonable" or not is a separate issue, and I'm not concerned with that, at least at this time.

Thoughts?

New client - previously had testing done by a large, well-known payroll company who shall remain nameless. Said company incorrectly performed ADP test for several years. Test failed for those years, but no refunds were made within the normal allowable correction period. Small plan - 20-30 eligible employees overall.

So, we've given them the option of a QNEC in an amount sufficient to pass testing (very expensive) or the "one to one" correction method which involves a much smaller contribution. They don't like this either, and want to know if there is another VCP correction that can be done.

Aside from the expense and uncertainty involved in any such filing, I have a hard time imagining that the IRS would accept a proposal that allows a lower correction amount than the one to one correction amount for a small plan like this. But I just thought I'd ask if anyone has successfully proposed a different solution, and what that solution might have been?

I am searching for a new plan document provider. Most clients are on their TPA prototype/VS documents, but I still have a few stragglers. Used Accudraft and was not happy with system issues - customer support was generally fine, though. Any opinions on SunGard or FT William? Thanks

A former employee requested that their 401k benefit be rolled over to his new employer. According to the plan set up with the fund carrier, all checks are sent to the former employer who is then supposed to forward them appropriately.

In this case, the former employer supposedly accidently threw the check out. He was supposed to have the check reissued but never did. Now this sizable benefit has been sitting in limbo for almost 2 months without being invested.

Is there some recourse to being able to get some earnings on that amount?

This Plan will be set up in December and then in January be merged into the main line plan so it will exist for only 1 year.

Does constructing a new home constitute "acquring a dwelling unit" for purposes of exrenidng a loan term beyond five years? It is not entirely clear to me that it does.

Thank you in advance for any guidance.