I have two Employers part of a controlled group; both have 06/30 year end

Plan A- 401k and Profit Sharing Money source

Plan B-401k and discretionary Matching

401k Coverage

Plan A can pass 401k coverage on its own (176%)

Plan B fails 401k coverage on its own (27.44%)

therefore it must be permissively aggregated with Plan A in order to pass- and it does

401m Coverage

Fails when calculated separately by each plan and on a combined basis since Plan A has no Match.

Profit Sharing Coverage

Plan A can pass on its own

Plan B fails on its own since there is no Profit Sharing

Combined testing passes.

So does this mean Plan A has to have a match and fund it?

A QDRO was filed but was written as a shared interest but this needs to be amended to be a separate interest. Can this be done?

An advisor has a prospect with about 300 EEs, and this employer wants a NQDC plan to cover only about 20 non-highly compensated employees who are managers. This is to have a long vesting schedule as an incentive to retain them. No HCEs and no executives would be in this plan.

I don't see how this could be considered a top hat plan. What am I missing?

I have a 403(b) account with a company that I have defaulted loans on and I am basically trying to transfer/exchange/rollover to another qualified 403(b) company. I have enough money in the account to pay off the defaulted loans and transfer the remaining balance to this other company.

I submitted all the paper work to the third party which is the TSA Consulting Group and received a certificate of Approval stating that "TSA Consulting Group, Inc. hereby certifies that this transaction is permitted under the provision of the employer's plan", but yet the company is that they need a letter of acceptance from the new custodian stating the funds will be accepted for deposit into a specific plan (WHICH IS INCLUDED) and also a reason for withdrawal which the options are:

1. Attainment of Age 59 1/2

2. Termination of Employment

3. Disability

4. Payment to an alternate payee....

5. Plan termination by job

6. Qualified Reservist Distribution

I guess I am not looking at this as a withdrawal, but a transfer of funds after the defaulted loans will be paid off.

I know this is a lot of information, but I am just trying to figure out why this company is asking for this when it received an approval from the 3rd party in which everything for 403(b) has to go through in order for anything to happen. We have to go through this company to get approved for loans, etc. I mean anything dealing with 403(b).

If anyone can shade a little light on this for me, I will greatly appreciate it.

Frustrated

New here. Thank you everyone for all of your posts. This board has been a life saver for me over the past few weeks as I just got asked to potentially be a plan sponsor for my company. Have been trying to get up to speed and familiar.

Question is.. In Part IV, Line 9 of the 5500. For Plan Characteristics. If the plan sponsor believes the plan to be 404© compliant, would there be any reason to not put Code 2F "ERISA section 404© plan – This plan, or any part of it, is intended to meet the conditions of 29 CFR 2550.404c-1."

After looking through some various 5500 filings from other companies to compare, there are some fairly large plans that do not have this 2F code. I would have to imagine plans of significant size have multiple eye balls on them and TPA's and what not that wouldn't allow for this to happen. Thoughts?

An active partner in a professional firm, who is age 66, has a loan outstanding of $30,000 and an account balance of about $100,000 in addition to the loan. NRA is age 65. How much can he withdraw as an in service withdrawal?

Thank you

Hi. This was a paired MP/PS plan that we merged in 2010. A participant who is 53 (with 15 YOP) wants to take an in-service distribution of their money purchase money. The plan document and SPD say that for sources that are not subject to the age 59.5 restriction, isw's are available on the earlier of age 59.5 or 10 YOP. Is "no isw before NRA" something that had to be preserved from the MP plan? Thanks.

Can a participant request a distribution of RMD that's greater than the required minimum if the plan does not otherwise allow for in-service distributions? It is my understanding that the plan has to distribute just the minimum and anything above that is not allowed (as long as in-service distributions are not allowed). Would you tend to agree with that?

Also, do you use 10% as the default withholding (plus state withholding) if there was no indication of what the participant would like to withhold?

Have a 1 participant plan with $6 M of private investments. For the first time the one employee will be eligible for the plan. However, it is a profit sharing plan and no contributions are intended.

We are thinking about changing it to a 401(k) plan. Suppose the 1 eligible employee never makes salary deferrals and never receives a profit sharing contribution. Would the small plan audit be required if the employee never has an account balance?

An audit would probably run $4k to $5k. We are thinking the bond premium would also be about $4k to $5k.

I have been reading the ACA regs on seasonal employee (not worker) trying to make a determination as to whether an uptick in business (summer months or spring etc) which is pretty predictable and the workers hired to deal with the uptick would qualify as seasonal employees. For example, could an accounting firm hire a bunch of accountants for 80 hrs a week for 4 months over tax season. Or do UPS drivers hired for 3 months to deal with the X-mas / Holiday rush qualify for seasonal status. What about a manufacturing company who has a busy season based upon demand (people buy product X usually in spring) who hire workers for 6 months. The nature of the work isn’t seasonal (not based upon a time of year such as fruit pickers or ski instructors) however the busy season is based upon a business seasonal increase in business.

Any thoughts would be appreciated. The regs aren't that helpful ...

Hi gang,

I have done a little rearranging and pruning of the message boards:

* Moved all messages in BLAZE SSI message board and all messages in the the ASPPA C-1 through C-4 Courses message board into a new Continuing Professional Education message board, located in the Retirement Plans category. Deleted the separate category called Continuing Professional Education; deleted the separate Blaze SSI message board and ASPPA C-1 through C-4 Courses message board.

* Moved the Nonqualified Deferred Compensation message board out of the Retirement Plans category and into the Employee Benefits in General category.

* Renamed the Employee Benefits in General category to be Employee Benefits in General; Executive Compensation.

(The Nonqualified Deferred Compensation message board seems happier in this category, where 409A Issues and Securities Law Aspects of Employee Benefit Plans have been and continue to be living.)

* Added some "see also" verbiage to the descriptions of several message boards (Governmental Plans, IRAs and Roth IRAs, Distributions and Loads Other than QDROs), pointing the reader to related and sometimes more specific message boards.

* Shortened some of the descriptions (for Relius Administration, ERPA).

* Moved Retirement Plans in General to appear as the first message board in the Retirement Plans category rather than being down in the list of message boards (alphabetically).

* Renamed the Global Benefits message board to be the International, Expat Benefits message board.

If I've done anything that seems ill-advised or wrong, please let me know. Thanks very much for using the BenefitsLink message boards!

Dave Baker

Administrator

This past month a client acquired a medical practice (Sub S corp) that has an existing safe harbor 401k plan. My client currently maintains a SEP under an LLC. The SEP is a prototype doc which allows acquired employees to be excluded pursuant to Sec 410(b)(6)©. For 2015, my client wants to contribute to both the SEP & 401k plans. The 401k plan receives only elective deferrals & a safe harbor match. Will my client's SEP contribution disqualify the 401k top heavy exemption under Sec 416(g)(4)(H)? Does Sec 410(b)(6)© extend the transition period to top heavy minimum requirements?

New plan for 2014. Effective date of plan per the adoption agreement is 1/1/14, however the plan was not adopted until 5/5/14 and deferrals started after this date.

Can we use compensation from 5/5 or must it be from 1/1 for the ADP test?

Here is the document language from the ADP testing section of the plan:

We are a New York company. An unmarried employee and participant in our 401(k) plan retired three years ago, and maintained his participation in the plan and his existing beneficiary designation after retirement. A year after his retirement, we merged our 401(k) plan into another independently administered plan, and the retiree's account was transferred. The retiree continued his participation in the new plan and made no change to his beneficiary designation at the time of the merger. His account with that plan never received salary deferrals from us due to his retired status.

Shortly before the retiree's death, someone claiming to be the retiree contacted our HR department and asked for a blank beneficiary form for the new plan, which we sent to the e-mail address that the person provided. The retiree never had an e-mail address of record in our files. The blank form we sent was used to submit an executed beneficiary form to the administrator of the new plan. Three months later the retiree died.

Now the formerly designated beneficiary who lost the benefits because of the new form is claiming that the person who contacted us was an imposter and the e-mail address did not belong to the retired employee, and that the executed form submitted to the new plan was fraudulent (including a forged signature, etc.). The former beneficiary says it was unlawful for us to issue a blank beneficiary form under these circumstances, or to issue a form at all because we never had a direct connection to the retiree's account with the new plan through salary deferrals.

Do we have legal exposure to claims by the former beneficiary under ERISA or otherwise? Or are the former beneficiary's claims limited to the new plan for recovery of the benefits?

Thank you for any thoughts.

I have a client who wants to increase normal retirement age from 55 to 60 in its 401(k) Plan. Does the anti-cutback rule apply? Can this change only apply to new hires?

I am a FA and I was referred to clients of a CPA. These individuals own multiple business entities, primarily in real estate. The only EEs of all companies are the owners (parents, 60's) and their two children (30's), also owners. Ignoring control group/affiliate service for the purpose of this thread, they are interested in starting a CB or Combo plan for the purpose of defraying taxes and purchasing Real Estate. They have no interest in investing in "traditional" securities or any other assets other than RE.

Aside from the the usual issues related to owning RE in a retirment plan (PTs related to income/expense flow, management, can't "contribute" RE assets, etc etc) I have a few concerns because I have never had a client with an interest in investing solely in RE in a QRP. First, I am concerned that it would, at a minimum, violate ERISA's "duty to diversify". Second, I am concerned that the IRS will view this unfavorably by default. Third, I believe that legal issues, valuation issues and related expenses may outweigh the benefits. Fourth, I am not aware of any trustees and/or custodians, apart from SD-IRA's and some uni-k's, that work with this.

Has anyone else had or heard of a situation like this? Is there something else that I should also be concerned with? I will undoubtedly be reaching out this week to local TPAs and ERISA attorneys I have worked with in the past, but I am interested in some feedback from the community.

Thank in advance for your responses.

If a 401(k) retirement plan allows a choice between Roth and non-Roth elective deferrals and provides an automatic-contribution arrangement, how often is the default Roth elective deferrals and how often is the default non-Roth elective deferrals?

Had an eagle-eyed client bring this to my attention, which was issued today.

http://www.irs.gov/pub/irs-drop/n-15-53.pdf

which IRS issued in IRS GuideWire dated today (inexplicably the 7/31/2015 IRS Employee Plan News doesn't have this in the issue).

Entered 417 rates for 2016 and just ran and looks like fairly trivial impact. From cursory reading of 2015-53, looks like punting the generational tables (and presumably big impact on liabilities) to 2017 (post-election).

Question,

Can a participant receive a hardship distribution ( safe harbor hardship used) to pay for a Special Education Certificate Program. This is an 18 CE course that will ultimately be applied towards a masters.

Thanks

401(k) Plan has elected Section 415 definition of Compensation for plan purposes. Definition (unlike others) expressly excludes "amounts realized from the exercise of a non-qualified stock option" and "amounts realized from the sale, exchange or other disposition of stock acquired under a qualified stock option."

Company undergoes change in control and outstanding stock options (both NSOs and ISOs) are "cashed out" in the transaction. So technically there is no exercise of any NSOs and no stock ever acquired under an ISO. The cash is getting paid to optionees in two installments--the first at closing and will be a straight cash payment reflected in W-2 income and the second a year later pursuant to an escrow arrangement.

Are these cash payments in or out of the 415 definition of Compensation. While the cash payments do not arise from an actual exercise of any options, they are all related to the disposition (without exercise) of the options. Does the 415 definition distinguish between these situaitons?

Thanks