Employer filed a Form 5310 to terminate its 401(k) plan effective September 2014. Form 5310 was filed April 2015.

During the review process, IRS agent analyzed the data in question 16 (6 year turnover rate / non vested participants). Agent now takes the position that there was a partial plan termination in 2009 and 2010 and is requesting that all partially vested, terminated participants in those years be retroactively fully vested.

Assuming agent is correct that there was a partial plan termination in 2009 and 2010, would asserting a statute of limitations defense be viable? The 2009 and 2010 Form 5500s were both filed more than 3 years before the Form 5310 application. There is no question on the Form 5500-SFs that were filed asking about partial plan termination (i.e., the returns are accurate as filed).

One of our clients made a mistake with an elective deferral for one of their participants. This participant wanted to put in a rather large (a few thousand dollar) contribution at the end of the year, but somehow the request was not processed due to payroll company error. It's now past the end of the year and the participant missed out on maxing out their elective deferrals for 2015. They also did not receive the match that was attributable to that contribution. What should be the correct correction method?

I realize that there was recently a revenue procedure from the IRS stating that if the error is corrected within the first 3 months, the QNEC is not required to replace the missed deferrals. However, the match that would have been attributable to the deferrals is still required, correct?

Thank you.

A DC plan has a dual vesting schedule (result of a merger). Would this trigger availability testing? Thanks.

It is my understanding that if a participant goes from FT to PT and works more than 500 hours and is employed on the last day of the year, that individual must receive a contribution.

What is the cite for this??

We're telling our health insurance carrier we want a copy of all the 1095-Bs that they're sending to our 2015 covered employees.

We're identified as the "employer" on the forms and the forms are going to our employees due to their relationship with us.

Plus the employees will be calling us (and not the carrier's 800 number listed on the form) when they have questions.

So far the carrier is refusing our request (citing privacy issues) and I'm wondering what others are experiencing with their carriers.

Thanks

A company has a board resolution saying a plan will be merged as of April 1st, with contributions into the plan ceasing before that, at the prior year end.

If administratively the actual conversion of assets cannot happen until April 30th, is that an issue? Does a new resolution need to be enacted?

Have a plan that has eligibility measured from anniversary and then switches to plan year. It's the basic document language that I'm sure most doc modules read but I attached it.

So here is a scenario and I'm not sure the answer. Eligibility is 1 year of service with 1000 hours and age 21. Entry is monthly, calendar year plan.

Scenario - Hire date May 2, 2014 so anniversary date is May 2, 2015 but they didn't work 1000 hours in that first period for whatever reason. In my client case they employee a lot of interns that then turn full time. So based on my scenario, we switch to the plan year because they didn't meet the 1000 hours in the anniversary period. Plan year is January 1, 2015 to December 31, 2015. Well the client is arguing they should come in June 1, 2015 because between January 1 and May 2 2015 they became full time and worked 1000 hours so why do they have to wait for another full year. My thought is no we measure January 1 to December 1 and yes they worked 1000 hours and they come in January 1, 2016. It does seem to be a gray area in my mind. Thoughts and help please?

I'm submitting a determination letter application to the IRS and there are a lot of documents. If I submit the relevant plan documents in a (printed) double-sided format to save paper, will that be acceptable? Or is it going to be kicked back for not being single-sided?

Can non-profit board members be covered by benefits that are offered to employees? Being paid, are they considered employees?

Have a plan sponsored by one employer with a September year end with a participating employer with a December year end. They are related employers. Plan assets are pooled.

We have suggested they spin off and create two separate plans. They mentioned that it will be a disadvantage from a plan investment standpoint to do this.

We are thinking they could have two plans and a combined trust. The document is silent on the subject. We have certainly seen combined trusts before but all had the same plan year. Does anyone see problems with having two plans sharing a combined trust with different year ends?

Thanks.

So I am working on my first 5500-SF for 2015 - just adore those changes

Part IX - Compliance Questions - some of these are a bear; especially asking about last amendment/restatement dates and codes. But looking at the instructions, I see that entire section is Optional.

Does anyone have a sense of what might happen if we simply don't complete it? Is anyone completing it?

Questions regarding a proposed S-ESOP structure. Individual X owns 100% of Corporation Y and 5% of Corporation Z, each an S corporation. ESOP, which forms a portion of Corporation Y's 401(k) plan (the KSOP), owns the other 95% of Corporation Z. Corporation Z will have two officers but no other employees, although some of the services provided by Corporation Y employees benefit Corporation Z. Plan participants will receive a non-discriminatory discretionary employer contribution and will be given a one-time election to invest the contribution in Corporation Z stock. Afterward, participants may not enter or exit the stock fund except upon a distribution event or to satisfy ESOP diversification requirements. No participant will own 5% or more of Corporation Z through the KSOP.

1. Does the KSOP meet the requirements of an exempt employees' trust under section 1.1563-2(b)(4) and section 1.414©-3©(2), which would mean that the ESOP stock in Corporation Z is excluded and would make Corporations Y and Z members of a controlled group? Might Corporations Y and Z be treated as a single employer for this purpose?

2. If future contributions are not made to the ESOP portion of the plan for several years after the initial contribution, but substantial and recurring contributions continue to the 401(k) portion of the plan, has the permanence requirement of 401(a) been satisfied?

We have a small 401(k) with only 3 participants. The owner is the only one who deferred in 2015 - $3,800. She is over 50, so since all her deferrals exceed the maximum allowed under ADP testing, it seems that technically all her $3,800 deferrals may be re-characterized as catch-up.

So - owner has $3,800 catch-up, 2 HCEs have no deferrals and receive no ER contribution of any sort. Does anyone see any problems with this???

Calendar Year 401(k) Plan - deferrals are contributed throughout the Plan Year. After December 31st, it is determined that the Plan failed the ADP Test and corrective distributions were made.

For the same Plan Year, the Employer has decided to make a Profit Sharing contributions (decided after above corrections).

A colleague states that the Employer may contribute Profit Sharing over the 415 Limit to make up for the corrective distribution of deferrals that were made.

Is this possible? It seems unreasonable.

Hi-

I have an employee who elected the Roth within our plan and had one deduction. She is stating she didn't mean to sign up for it and changed back to all pre-tax. She is reqeusting a refund for the one pay period where the Roth was withheld. Since she made a Roth election which was correctly withheld in PR are we allowed to refund her? I have always gone with we need to withhold based on the elections made. Are we able to refund the deduction based on her reqeust? I can't find any wording to back up either way.

Thanks!

Is it possible for a deferred comp plan to change from a lump-sum payment following termination to 5 annual installments?

The current document indicates that participants are paid 100% of their balance 90 days following termination of employment. There are payment elections permitted of any kind.

We want the executives to be paid in 5 annual installments to help ensure that they will be in a lower tax bracket when they receive the payments, as the participants are generally expected to remain until retirement anyway.

It seems as though to allow this we are required to defer the first annual installment until 5 years AFTER their termination date. Is that accurate?

Ran into a very odd (to me, anyway) situation yesterday. A non-profit corporation has an ERISA 403(b) plan, which is deferral only, immediate entry, with some excluded classes, but has the "fail-safe" language so that if anyone in these classes ever works 1,000 hours, they are in.

The Money Purchase plan is unusual. 1 year/21 for eligibility, once eligible, no service or last day requirement to share. But, the employer contribution is a fixed 9%, but it is contributed ONLY to anyone deferring 3% or more to the 403(b) plan. It states that this contribution shall be considered a matching contribution for ACP testing purposes.

Now, don't ask me why it was designed or set up this way in the dim and distant past - I have no idea.

I think, in spite of the odd formula, that this satisfies the "definitely determinable" formula requirement of 1.401-1(b), but I haven't yet considered how this would work for coverage or nondiscrimination testing.

Anyone have any thoughts they care to share, or have you handled/encountered one like this?

Just had a chance to look at this in a little more depth for the first time. Turns out that (for now at least) coverage/nondiscrimination testing isn't even an issue, as there are no HC whatsoever! But based on the census/participation, looks like they would pass anyway. Strange case...

My employer is merging with another company and our benefits are to be terminated soon and then picked up by the different benefit providers by the new company. I currently have an FSA and the other employer's most attractive medical plan is the HDHP with the HSA.

I believe my FSA at my current company is subject to use it or lose it when my job officially terminates. I won't have enough medical expenses to use up hardly any of my FSA at the moment since this is occurring in January, but I'd like to contribute to a pre-tax health savings account this year, as I'll need it eventually. When my FSA terminates, I'm assuming I'll forego any funds that are left in the balance of my FSA, but am I able to enroll in the HDHP with the new company and begin contributing to an HSA?

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!