Potential prospect is a controlled group, 2 employers each with a plan, plans started a couple years ago.

ER 1 plan: safe harbor match, 60 eligibles total, 10 are HCEs, no profit sharing.

ER 2 plan: non-safe harbor match. 450 NHCEs, no HCEs, no PS.

Matching formula is the same structure as the match formula in plan 1.

Can't aggregate a SH plan with a non-SH plan.

Coverage for plan 1 is 10%

Suggestions for passing coverage?

The Form M-1 asks whether the entity is a plan MEWA or a non-plan MEWA. However, the 2014 Form 5500 does not make any distinction between the two The instructions to the 2014 Form 5500 simply says that the MEWA file the forms and attach a list of the employers, their EINs and an estimate of each employer's percentage of contributions.

So the $ 64 question is, in the case of a non-plan MEWA, does each employer have to file their own Form 5500. An argument could be made (a bad result for the employers) is that the non-plan MEWA is a DFE and each employer has to file their own Form 5500. Assuming the non-plan MEWA is self funded with a trust, there would be no exemption from the filing requirements for each employer regardless of size since the plan would be "funded."

As a practical matter, each employer would not be able to complete the financial data on the Form 5500 and those with over 100 participants would not be able to obtain an audit reporting listing their own claims, etc. In short, we do not see how the individual employers would be able to comply with the reporting requirements. Our review seems to strongly suggest the Form 5500s are being filed at the MEWA level and individual employers are not filing their own Form 5500s.

Any insight would be appreciated!!!!!

Regarding the AFN, under what conditions is a supplement NOT required?

Does our well-funded little 25-participant frozen DB plan need one?

An investment fund in our 401k plan is being liquidated on July 14th. We mailed a notice in early June, advising participants that assets in and elections to this fund will be mapped to another fund on July 14th. The new fund is already an investment option in our plan, but it is not the default investment option.

While transmitting contributions today, it was discovered that though the fund's liquidation date is July 14th, the fund stopped accepting new monies on June 12th.

The question now is what to do with these contributions. Should we direct them into the new fund, even though we informed participants the date was going to be July 14th? Or should we put it into the default investment option?

On a broader view, we have met the 30 day notice requirement for the blackout and the mapping of assets to the new fund, but we did not provide a 30 day notice for the fund stopping contributions. Wondering what liability we face and what resolution to take.

I have a plan that has two separate employers. As of Nov. 2013, the ownership structure changed and are no longer considered part of the controlled group (they are still somewhat related just not to the point of being a controlled group). So I now have a multiple employer plan.

How should testing be handled? Do I have the option of testing them together for all of 2013 and 2014? The client want to apply the transition rule which I believe applies to coverage only. I am also not sure they are applying it correctly.

I am thinking for 2013 the could test employer A for the entire plan year and include employer b through November. Then test employer b from Nov-December. Or they could test them separately for the entire year. I don't think they have the option of testing them together for all of 2013. Although, I may be incorrect.

Then depending on the above answer determines how 2014 should be handled.

Thanks for you help!

Is this a breach of fiduciary duty under ERISA?

Company sponsors a group term life plan. Company provides a basic life benefit at no cost to employees. Employees may purchase supplemental life.

Basic and Voluntary life are with the same insurer.

The basic life loss ratio runs pretty consistently around 150-200% per year.

Voluntary life loss ratio runs a pretty consistent loss ratio of about 30%.

It is clear that the voluntary life is subsidizing basic life, is this a breach of fiduciary duty?

Thanks

The owner of a small company with a defined benefit plan dies in 2014. There is no spouse. Beneficiary is owner's brother who inherits the business.

Beneficiary plans to sell the company and is terminating the DB plan.

Owner and Beneficiary both younger than 70.

PBGC termination forms are being submitted shortly.

The Beneficiary is going to elect to begin taking distributions under the Life Expectancy rule rather than the five year rule. I believe the RMD must begin by 12/31/2015?

Question, can the RMD be taken before the PBGC determination, or must the Beneficiary, now owner as well, until the PBGC determination and the other participants are paid out?

Thank you.

Folks:

I wasn't sure this belonged in this group (M&A) or in the DC group...so I started here. The below is as I understand the issue. I have simplified some things.

In the early 2000s (prior to EGTRRA and it impact on the same desk rule...later made "permanent by PPA), the company developed a JV with an unrelated company. Ownership in the JV was 50/50. Several hundred employees were moved from the company to the JV entity. The JV entity had/has its own benefit plans.

For purposes of the DC/Savings/Thrift plan benefit at the company from which these employees moved, the "term date" was coded as 1-1-01. If the participant was age 55 (or would be in that same calendar year...not sure if this nuance was used back then or not), the 72(t) exception to the additional 10% tax penalty for leaving at age 55 applied. If the participant was under that age, then that exception did not apply.

Recently a person who moved to the JV before age 55 but is now age 56 took his prior employer company benefit and objected to the distribution being coded such that it was an early distribution (i.e., no 72(t) age 55 exception).

So...the basic question is whether such a person could "grow" into the 72(t) for his prior employer benefit exception while at the JV? Did the same desk rule (in place when the JV was formed) but later repealed (but the plan could elect to retain it but did not do so in this case as far as I can tell) somehow impact this? EGTRRA replaced the separation from service concept with severance from employment....so that an employee who works at the same job for a different employer after a transaction can take a distribution from the prior employer's plan. I am not sure how that impacted the 72(t) age 55 eligibility

There has been some analysis of this matter where three revenue rulings were identified that applied the same desk rule to M&A transactions...RR 79-336, RR 81-141 and RR 80-129. RR 79-336 (the most helpful) discusses a distribution to an employee of corporation X, which had transferred its assets to corporation z, a wholly-owned subsidiary of corporation Y, in exchange for stock of corporation Y. The transaction resulted in the employee continuing at the same job but now working for corporation Z (and corporation Y). The IRS ruled that the since the employee remained in the same position for corporation Z after the acquisition of the former employer (corporation X), the distribution was not on account of the employee's separation from service. While this ruling discussed whether a separation from service had occurred for purposes of Code Section 402...but since the same words are used in 72(t) and 402, it seems that this ruling would apply to 72(t)...? Some secondary sources agree with this thought about the language applying to 72(t).

Hopefully, the issue I am getting at comes through here. It is complex and hopefully I articulated it well enough for any of you experts who have dealt with similar situation can recognize it and opine. Thanks.

A thread on this issue was posted in another forum but I wanted to post here as well. I'm curious how others are interpreting / complying with the SBC's 60-day advance notice requirement when required to terminate a health plan with limited lead time.

In looking at the general SBC rules and particularly the requirements for notices of material modification, it would sure seem a termination of a plan altogether should clearly constitute a material modification of the SBC (and the plan / coverages) within the scope of the regulation thus requiring 60 days advance notice to participants in order to terminate.

We have seen similar advance notice requirements in other contexts (state laws) and they can sometimes create real problems in sale situations because the target does not generally have a clear timeline in place until a deal is signed and announced and either cannot provide notice or doesn't want to provide any advance notice prior to that out of fear of disclosing that the company is in play.

We also see this come up in cases where a company is insolvent or otherwise forced to shut down without significant lead time. In those cases the company is often working right up until the end to save the company / right the ship, etc. so doesn't know when / if the plan will actually shut down until just before it does. The employers there are, of course, generally willing to give participants as much notice of the temination as they can--it's just not usually any where close to 60 days.

Curious what position the regulators have taken (may take) in these situations. I know there is a "willful" component here but I'm not sure that is likely to get anyone much quarter.

We have an executive with one of our plan sponsors who is waivering between manufacturing a hardship situation and getting a DRO to pay for the final annual installment of his alimony. Because we know he would be deliberating creating the hardship, we're a bit uneasy with that option.

His attorney is telling him that the DRO won't work either because it would require the ex to roll the money to an IRA. There is nothing in the plan documents to support that suggestion, and it is contrary to everything I've heard about QDROs. Have I missed something?

I hope that someone can help me. I need to correct 11 late deposits and I was reviewing the process. In September 2014 I attended an ASPPA webinar on the topic Late Deposits by Janice Wegesin. In her presentation she said that you have to use the Plan Earnings rate in computing the lost earnings. I knew about the IRS deficiency rate which I believe is the DOL calculator and the Restoration of profits, but the Plan Earnings rate is new. Can anyone tell me where in IRS or EBSA published guidance the use of the Plan Earnings rate is found?

Can FSA Deferrals fall outside the Plan Year?

For example. in a 1/1/15 - 12/31/15 Plan Year, is the employer permitted to take the final deferral in the 1/5/16 pay check (for pay period ending 12/31/15)?

Where is this cited in the Regs?

Thank you!

Anne

Dear Folks:

I am seeking a greater understanding of the "highest early rule" with respect to FAE DB plans. I am minimally familiar with this requirement but have reviewed IRC 411(a)(9) and Treasury Regulation 1.411(a)-7© which, I believe, comprise the guidance that "requires" this rule for compliance.

First, I am trying to understand the rationale for the rule...which might help me understand the "how and when" to actually perform this requirement. In other words, what is the rule trying to prevent...or other rationale.

What I am dealing with is a DB plan that is comprised of the merger of several plans due to corporate mergers and acquisitions and resulting in the merger of the plans. Each of the former separate plans is a title in the merged plan. Three of the titles consist of FAE DB designs integrated with SS in an offset arrangement and another of the titles is an FAE DB design integrated with SS in an excess arrangement. All of these titles have participants continuing to participate with active accruals.

Of the three titles integrated with SS in an offset arrangement, one has the FAE determined using the eligible earnings in the highest 3 consecutive plan/calendar years of the last 11 years prior to employment ending (including the year that the employment ends.) This title limits the amount of credited service to 576 months (48 years) even if employed and actively participating longer than that. Another of these titles with a SS offset arrangement determines the FAE from the highest 36 months of earnings in the last 120 months of employment. In this title there is no limit to the amount of credited service. The third of these titles with a SS offset arrangement determines the FAE as the greater of 1) using the highest 36 consecutive months of annual earnings or 2) using the highest 3 calendar years (not necessarily consecutive). This title has no limit to the amount of credited service that one can accrue.

From what I can tell, the prior record keeper was doing the highest early comparison for the first two of the FAE titles (as referenced above) but not the third one (as referenced above) and not for the plan/title that is integrated with SS in an excess arrangement. Again, from what I can tell,for those titles for which the prior record keeper was performing this comparison, it would calculate the benefit (normal retirement benefit at normal retirement age (65)) at the end of each plan/calendar year at or after which the participant became eligible for early (subsidized) retirement and then compare those values to the benefit (again the normal retirement benefit at normal retirement age) at the employment end date and use the largest benefit. It would then use that age 65 benefit, apply any applicable early receipt discount and then use that amount to convert to the available forms of benefit per the specific title.

For the third FAE title integrated with SS in an offset arrangement and the title integrated with SS in an excess arrangement, again, I can't see that any such comparison was done in the past although each of these titles have serial determination letters and, I believe, at least one IRS audit and DOL audit/investigation in the past without this issue having been mentioned by the regulatory entities.

If these is publicly available info (examples) available on the Web and someone knows the URL for such, I would appreciate it. Otherwise, I look forward to whatever help/guidance/understanding you wise folks can provide. I have spent a fair amount of time on the Internet and in some hard copy sources and can't find much detail about this rule.

Thanks so much.

I'm sooooo glad I found this forum! Thank you in advance for any help you guys can give. Very timely indeed!

Just this month, I have changed jobs from an employee (W2) to an independent contractor (1099).

With my former employer (Company X), the following was contributed to my 2015 401k:

Employee (tax-deferred) contribution: $12,838.56

EmployER Safe Harbor contribution: $5,646.70

As an independent contractor, I have elected to open a individual (solo) 401k for my small business (single employee - myself). I chose the solo 401k route because I can rollover my SEP-IRA into the solo 401k... which will allow me to make backdoor RothIRA contributions in the future.

Question:

I understand that my employEE (tax-deferred) contribution limit is maxed at $17,500 $18,000 across ALL plans. However, what is my solo 401k employER contribution limit for 2015? Is it $40,500 $35,500? Does the Company X Safe Harbor contribution count toward my solo 401k employER contribution?

(corrected errors above)

Thanks everybody!

Received a call from CFO of a client with 300 employees, 260 eligible,40 deferring...CFO filed 5500's 2009-2014 -- thought that plan did not need an audit.

Hired a new CPA who asked about copies of audits. Nada!

Frankly, I've never had anything but late audits...with no meaningful consequences.

4 questions:

Is this similar to a DFVC event [since I was always told that the DOL considers a failure to attach the audit as a non-filing]?

Can they get just one massive audit that covers all years and just refile the 2014 5500 + 2009-2014 audit attached, as an amended 2014 return, with DFVC and amended return boxes checked? -- or--

Must they refile every separate 5500 and have separate audits, year by year?

Does the CFO need to commit hari-kari, kamikaze or "It's a Good Life" type action???

Thanks in advance.

Any guidance or opinions on whether offering an in-plan Roth rollover/conversion/transfer becomes a protected benefit that will be difficult to remove once added?

Anybody keeping a list of which recordkeeping platforms are now capable of doing the recordkeeping? We're concerned about adding the feature in the document without confirming the recordkeeping capabilities.

I have a plan that has a current set match. They would like to add an additional disc match with a vesting schedule. I have never had this come up. Is this possible?

The vast majority of DOL guidance about when it may be appropriate to pass through eligible administrative expenses to the participant directly affected by the administrative action is limited to defined contribution plans. Question has come up whether you could do the same under a cash balance plan (assuming the expense is reasonable, it's reasonable to assess it to the particular person involved, etc.), which is, of course, a defined benefit plan but does have individual accounts. The only thing I can find on whether you could pass through expenses in a DB Plan is an informal DOL staff comment saying yes, specifically for the expense of QDRO administration, but would need DOL and IRS guidance on the issue. Has anyone seen any other guidance or comments on the issue?

I am currently assisting an auditor in reviewing another TPAs ACP testing for a large 401(k) plan with a discretionary match. The employer decided to give a match for the 2014 plan year after 3/15/15. They told the TPA what they would like to do (100% match on up to 6% deferrals), but also said they did not want to have a failed test with refunds. This original formula was failing ACP by a long shot, so they then told the TPA that they wanted to spend a total of $200,000, and they wanted the TPA to figure out a match formula that would pass ACP testing. Through what the TPA called "trial and error" they ended up giving all eligible NHCEs a match of 95.4% on deferrals up to 6%. The 10 HCEs on the other hand received various matching percentages from as low as 37.5% up to 82.5% on deferrals up to 6%.

Does anyone see a problem with this? We have never done anything like this at our firm before. As long as you give the NHCEs a better matching rate, is it okay to adjust individual HCEs in whatever way the TPA... oh, wait, I mean "plan sponsor" decides, and then declare that as their discretionary match?

New Comparability Plan:

Comp from date of participation.

Employee enters on 7/1/2015, and comp is exactly half of his full year. let's say full year is 20,000, partial is 10,000.

Can the participant receive an allocation of 20k and therefore have an allocation % of 200%?