A client has terminated their 403b plan and paid out all assets. The final 5500 has been filed as well. In reviewing the filings I noticed that an ACP failure from two years ago was not corrected properly...specifically the ACP excess was refunded, but the client never made the one-to-one QNEC contribution required for late ACP failure corrections under EPCRS self-correction procedures. Questions:

1) I believe the client is past the "cure period" for SCP under EPCRS. Given they started the correction during the cure period, but did not completed, would they be allowed to make the required one-to-one QNEC correction or do they need to go under VCP?

2) Can they even do the QNEC to a terminated plan where all assets have been paid out?

Also, the client would technically be in a new plan year had it remained open...not sure if that matters.

Thanks!

We typically exclude all items of compensation listed under Treas. Reg. 1.414(s)-1©(3), such as "reimbursements or other expense allowances, fringe benefits (cash and noncash), moving expenses, deferred compensation, and welfare benefits."

It occurs to me that amounts deferred under 125(a) could be a welfare benefit, which we would typically include in comp under our plans. Does anyone know if 125(a) elections are included in the exclusion as welfare benefits?

I have found nothing that clearly defines what a welfare benefit is under the reg. Most people seem to believe that, whatever it is, it is an employer (not an employee) funded benefit.

Thanks

A client has chosen to use 1/1/14 - 6/30/14 to determine if it is an applicable large employer for 2015. They have chosen to use this time frame because they are a farming business with more employees in the later half of the year. If they have biweekly pay, how do we count full time employees on a calendar month basis? Are you allowed to use the weekly rule, where the period measured for the month must include the week that includes the 1st day of the month or the week that includes the last day of the month but not both? So it would essentially include 2 payrolls per month? Or is the weekly rule not allowed to determine ALE status?

FTWilliam has added an Adoption Agreement item requesting the identification of a "special trustee" responsible for determining and depositing contribution deposits. The DOL requested they add it so that it can "identify the fiduciary responsible for timely deposits."

The Adoption Agreement options are: "CEO of Plan Sponsor," "Trustee," or "Other."

Obviously, in most cases we don't necessarily know who at the company is actually making the contribution deposits, and whether that person is even who the DOL considers to be responsible. We obviously can't make a payroll clerk (or even an HR Manager) a fiduciary.

What are other TPAs doing as a reasonable solution for this? For one-participant plans we're fine selecting "Trustee" since it's obviously the same person. For others, we're thinking of just stating the top officer (CEO/Managing Member/Managing Partner/Proprietor) since they're ultimately responsible for delegating the contribution deposit responsibility -- though that's probably not exactly what the DOL is looking for.

Thanks.

A typical prototype or volume-submitter document's adoption agreement often includes a fill-in-the-blank choice for specifying a State's law to govern whatever ERISA doesn't preempt (if anything).

Imagine that a user prefers not to fill in this blank. (The plan's sponsor is worried that a specification could be argued to constrain the administrator's discretion to a narrower range than would apply if the plan states nothing about State law.)

The rules for relying on the IRS's letter for a preapproved document call for staying within the confines of what the IRS approved. But the Revenue Procedure suggests that a user might vary some "administrative" provisions without losing reliance on the IRS's letter.

What do you think? If a user's adoption agreement leaves blank the State-law line (or responds "none"), does the user keep or lose reliance on the preapproved document's IRS letter?

We're installing an HSA for 1-1-2016 that will have a frontloaded employer contribution of 1000.00. I know that the trustee will need to get the HSA approval process in place and that will take time after Open Enrollment starts ( you have to elect the HSA, then agree to the Bank regs, then the trustee sets up your accunt , and finally deductions begin.

In the event that someone needs care on 1-1 and wants to use the employer contribution,and the employer knows that the employee has elected an HSA can the employer deposit those dollars into an employee account?

Hi BLink members:

For a plan that is not terminating, can a funding method be changed from EOY to BOY? I asked 2 different actuaries to cross-check the answer and got 2 different answers.

Thanks!

Craig Schiller, CPC

If a small plan has Schedule A information - must they file the 5500 instead of the 5500-SF? just can't remember.

The new EPCRS procedure release in Rev. Proc. 2015-28 specifies the following:

(b) notice of the failure that satisfies specified requirements in new section .05(9)© of Appendix A of Rev. Proc. 2013–12 is given to the affected eligible employee not later than 45 days after the date on which correct deferrals begin;

Anyone know of a sample notice floating around out there?

For a sponsor that sends in deferral deposits by check, does the IRS/DOL consider them segregated/deposited as of the date the check was mailed or as of the date the check was actually deposited?

Hi.,

I am new to this forum, so I apologize if I post on the wrong area.

Anyways I was trying to get a hardship withdrawal from my 401K but plan administrator denied the evidence I gave them.

it is a letter from my MORTGAGE company saying

they will accelerate my loan , sell my property.

if I understand this that means they are going to start foreclosure.

this is happening by 9/24/15

Do I have to be in Foreclosure for them to help me? or the letter good enough

to prevent foreclosure?

and also what is acceleration

please clarify

If an amount is withdrawn under the 60 day rollover rule, must the "loan" be repaid to separate IRA or can it simply deposited to the originating IRA?

It seems to me that the point of the rule is to allow you to move from one IRA custodian to another. Is there anything clear on this topic from the IRS or some other big time source (perhaps the large accounting firms)?

If the plan document defines comp as gross W2, can the ADP test be run using net W2 (so that deferrals aren't included in comp)? Is this a discretionary option that can be decided each year, or does it have to be hardwired into the plan document?

Participant is rolling a portion of her balance from her Roth 401k account to a Roth IRA. Do I transfer a ratable portion of the basis? I couldn't fid anything on tis scenario in the EOB. Can anyone point me to some literature?

During open enrollment, an employee elected to make HSA contributions on a pre-tax basis through payroll deductions under the employer's cafeteria plan. A month or so ago (i.e., mid-year), the employee requested that her HSA provider liquidate and close her HSA account. The employee never requested that her employer stop the HSA deductions from her pay. The employee remains employed and covered by the qualifying HDHP.

The employer has just become aware of this situation. A few payroll periods have passed since the employee closed her HSA account and the employer deducted the elected amount from her pay. (The employer is not sure where the amounts deducted actually are now.)

Any idea what the employer should do now with respect to these amounts? Should the employer treat the closure of the account as an election to stop payroll deductions and refund her the withheld amounts even though she did not comply with the plan's election change procedure?

Thanks!

Can a DB plan allow for partial withdrawal as a distribution option?

Distributions from a profit sharing or 401-k are subject to mandatory withholding. Does the mandatory withholding apply to a small amount like $300?

I am an employee of a large tech company. I have worked there over 5 years and have accumulated quite a bit of cash in my 401k. I have decided to take out a loan for a very favorable real estate transaction.

In looking into this process, I have been informed that I must submit a form to the third party (non-financial) 401k administrator for my firm. I have to obtain forms from the financial 401k firm, then submit them to the non-financial 401k firm, who blesses them and sends it to the financial firm, who sends it back to me.

This is annoying but I guess I can live with it.

What has me very worried is that the actual check, which will be large as it relates to real-estate (over 10k), is sent to my non-financial 401k adminstrator first, then from them, to me.

Is this legal? It must be. If so, why? Why should anyone else but the financial institution know what my loan status is? Why should my check be sent to anyone but me? What about identity theft - isn't this situation begging for it?

What possible value could there be in sending checks across country to administrators? This is my money.

FACTS: participant takes early withdrawal from 401k plan and does a direct rollover into an IRA. Based on the documentation, the IRA that accepted the rollover is owned solely by the participant's wife.

Is this a valid rollover/IRA contribution? I have taken for granted that a direct rollover from a 401k plan can only be made to an IRA that is owned by the plan participant. However, I cannot find any statutory authority for this. Everything I have read states that you can rollover over a 401k distribution to "an IRA". I have found discussions on contributions to spousal IRAs but nothing specific about the source of the contribution. Any revelations on this subject would be greatly appreciated!

Entity "B" separated from entity "A" about 14 years ago. Employees B continued participating in the 457 plan of entity A for the past 14 years and B is named as a participating entity in A's plan docs. A has also been providing payroll services to B, which facilitated 457 participation. Effective 1/1/16, B is getting its own payroll system, which seems like an opportune time for them to get their own 457 plan as well. B represents about 7% of A's total employee count at present.

I've never faced this type of situation and am hoping for some guidance from the group, either Code based or experiential.

Should B form a new plan starting at "$0" or can B's current employees (and their assets) be split off to form a new plan? If "splitting" out B's participants and assets, dealing with current employees seems pretty straightforward. But what about B's former employees? Do they stay with A's plan, move to B's new plan, or does it matter? (B's current and former employees represent roughly $30M in total assets.)

Looking for info on what's usual and customary ... and legal, of course.

Thanks!