Anyone have practical experience regarding filing Form 8928 and specifically, for instance:

-- whether the IRS challenged the filing's characterizations (i.e., failure due to reasonable cause and not willful neglect, etc.)

-- whether the filing of Form 8928 triggered an audit

Hi - I believe there is a difference between the conditions one can impose to receive a Gateway minimum in a standalone DC Plan versus conditions for Special Gateway (in combo DB/DC Plans). I believe the Special Gateway is more liberal because you cannot condition entitlement on whether or not an NHCE is "Benefitting" (within the meaning of 1.410(b)-3).

If my impression is correct, there may be a need for different language in standalone DC's versus DC's that are part of a combo.

I have attached a memo outlining the issues. I will greatly appreciate any feedback.

Thanks.

Q re Gateway Minimums in standalone DC plans versus DB-DC combos.pdf

Company A is a professional corporation with a Safe Harbor 401k Plan.

The son of Company A's owner is interested in buying the practice via an asset sale, mid-year, and he would like to acquire the 401kSH Plan with the purchase, as all employees will continue on with the "new company" or successor employer.

It is my understanding the transfer of the Plan should be addressed in the buy / sell agreement, including service to be credited, contributions/deductions for year of purchase.

Questions/Concerns:

With it being a "401k Safe Harbor" plan is there any problem with the new company amending the Plan to reflect the successor Plan Sponsor's Name, EIN mid-year, coincident with the buy/sell? The new company does not intend to "change" any of the Plan's provisions -- simply wants to become the successor plan sponsor.

I am not familiar with any "mid-year" Safe Harbor Notice provisions. Other than providing an SMM to participants, is there any other Notice requirement? My concern here is the SHMatch -- Company A will fund the SHM for all payroll through Company A; the successor Company will fund the SHM for all of its payroll -- is this considered an impermissible change mid-year. They do not anticipate a PS contribution for this year.

Assuming the new company is permitted to Amend the Plan mid-year to reflect its successor sponsorship, Name and EIN (no other changes are intended), is there anything further necessary to affect this transfer of Plan from old sponsor to new sponsor?

Thank you

Estate is bene. of IRA. The IRA owner's will says everything in estate goes to adult son.

Can't the IRA be moved over to the son as an inherited IRA of which he is the sucessor bene.?

Thanks in advance for any responses.

What is the minimum rate allowable for participant loans?

We normally set at Prime +2%, but at 5.75% this is higher than participants might be able to get elsewhere.

Self-directed plan participant directed "investment" of portion of his account ($40,000) to individual, secured with a promissory note. Individual has not been making payments for two years. Participant is also a co-trustee. Other trustee not comfortable with this. Have not seen plan document yet, but initial question is whether this is even allowed as an "investment"? Can a participant direct the plan to transfer a portion of his account balance to an individual and "secure" the investment with a promissory note? Is this any different that using plan account funds to invest in a business? real estate?

We have a plan that permits IDAs. In 2014 a participant requested a transfer to a brokerage account at Fidelity that the plan trustee understood would be an IDA in the name of the plan. In fact, the account at Fidelity was set up as a rollover IRA. It is not clear if the error in titling the account was Fidelity's or the participant's. The funds were not eligible for distribution.

All of this was discovered over a year later when we (as TPA) requested copies of the 2014 IDA statements to prepare the 5500-SF.

The plan did not issue a 1099-R, as it was not understood to be a distribution. Fidelity has issued a 5498 showing receipt of a rollover.

Fidelity is unwilling to re-title the account in the name of the plan. Instead, they propose to open a new account in the name of the plan, liquidate the assets, and have the participant request a distribution from the IRA to the plan as a "return of excess contribution". I am afraid that doing it that way will trigger some sort of tax liability. Since the distribution in question is large, we'd like to avoid that if possible. And if I'm incorrect about this detail, I'd love to hear that!

Any suggestions about how to fix this?

The 401(k) plan permits 3 loans at a time. A participant took a loan previously which was then deemed. If the participant has enough assets to take another loan, can he since the plan permits 3 loans? Does the deemed loan need to be repaid first? Thank you in advance for your advice!!

A plan has a full-time employee who is moving to Puerto Rico. They have no other employees in Puerto Rico. They want to keep him, but do not want to get involved in having a dual-qualified plan. If the plan excludes leased employees, would it work if they fire him and rehire him as an independent contractor? It seems the only down side to that is he would be missing out on company match. Also if he becomes a terminated participant with a balance in the plan, would they still need to amend the plan to become dual-qualified in Puerto Rico?

Cross tested plan. The allocation groups are going to be 1) Any employee who is under 59 and contributes at least 2% in deferrals will receive 2% PS contribution and 2) any employee over 59 will reeive 2% PS contribution irrespective of elective deferral.

Other than the general test, is there something wrong with this "formula"? Is it really a match? Is it BRF? Something about it just doesn't feel right.

Thanks

To whom this May concern...

I am looking on feed back to find out if what my husband's employer did was legal. I am a terminally ill and disabled 38 year old female living in Cedar Rapids, IA.

We recently received word from our land lord out of the blue that we had a preliminary inspection coming up within 48 hours after the notice. My husband has never had a problem with using FMLA in the past. He has never abused FMLA nor has he constantly had to use it. Only if I have had doctor appointments then he does.

He also had 2.5 hours of paid sick time left for the year before his time re started and his sick time, personal time, etc. all renewed themselves. We only had 2 days to prepare for this preliminary inspection.

As stated above, I am terminally ill and disabled and am on oxygen full time. He told his job that he needed to use the rest of his sick time and use two of his FMLA time. He never ran out of FMLA at all because he used it sporadically.

His employer questioned the use of FMLA after never having done so in the past and told him it looked suspicious to use FMLA when he was sick. My husband is the type of person who never gets sick often but did as a result of emotional distress and duress.

When he returned to work on friday that week, his main boss came to him and told him that he was being asked to show up at what is known as downtown taj ma hal the begining of the following week. When he showed up at the meeting the following week, they questioned his need for FMLA which in Iowa is against the law to do. They told him that he was being put on administrative paid leave until they could figure out how to deal with the situation.

They called him in on Thursday the 24th of May and fired him for trying to take FMLA and said it was improper use of FMLA because it was helping me. They told him to get it priorties straight and that he shouldn't let his personal life interfere with his professional life working.

the problem is, that I have had multiple strokes, I have had several heart attacks, I have heart problems, and kidney failure and my lungs are failing. They told him that because our situation dealing with the land lord was not important enough to warrant time off and he misused FMLA and took time off he was not entitled to.

I cannot do alot of things for myself as a result of my health conditions and now after filing for unemployment, the school district is trying to fight my husband on unemployment benefits trying to say he's not entitled to them. He has a meeting this coming tuesday with the school district and law judge over the phone to determine if he is qualified for these benefits... (although I don't understand why he wouldn't be in the first place since he was fired wrongfully rather than a legitimate reason)

So I am wondering if I have an FMLA violation lawsuit case against the school district as well as a wrongful termination case against the school district for what they did to us. I would like people to give me some feed back. Please no mean or negative comments here. We need help and have to figure out what attorney to use if we do have a case. Thank you all for your feed back! Please note this information WILL be passed on to my husband.

By the way, my husband's employer tried to pry into my medical records to find out if FMLA leave was being used properly which we found out they cannot do without a subpeona and the HR has taken it upon herself to try and create a clause in the FMLA when applying for it in the school district that mandatory disclosure of medical records is necessary to qualify you for FMLA when they have never done that in the past. I don't think they can do that. I in my heart believe everything they have done is illegal and have had prior law suits before for medical related stuff. If you have been in this situation or can give me feed back on this, situation, please let me know. Thank you! P.S. our land lord is still holding the lease over our heads and now my husband has no job as a result of this surprise inspection. Is it legal for him to be fired for something beyond his control?

One-person, owner only DB plan document was signed and set up for 2014.

Owner has had a change of heart and no longer wants the plan. Would like something written to terminate / undo / close the plan.

No deposits were made, nothing exists other than the plan document and I believe a TIN that was applied for the plan.

I found this thread: http://benefitslink.com/boards/index.php?/topic/45372-er-changed-mind-no-contributions/

Are there others I should looking at? A colleague seemed to think there was a form that could be filed with the IRS but I'm not familiar with any.

Does anyone know or have additional suggestions?

... and so ends another sleepy, dusty delta day ...

It is possible to apply an automatic escalation feature to non-ACA participants? In other words, can a sponsor automatically escalate participants that have made an affirmative deferral election? Plan sponsor wants to have an ACA (at 3%) with an escalation provision of 1% per year up to 8%, but also wants to auto-escalate participants who have elected to defer less than 8% by 1% every year till they hit 8%. Example: Participant affirmatively elects to defer 2% on July 1st, sponsor wants to auto-escalate this participant to 3% on the following January 1st. To me this is like an having a new auto-enrollment date every year for participants that have made an affirmative deferral election, however, instead of being autoenrolled at 3%, they just get increased by 1%.

Part II: Does the escalation of non-ACA participants feature need to be in the plan document, or can this simply be an administrative policy and be described in the enrollment form? Our Volume Submitter document is not well suited to incorporating this feature as the only auto-escalation language is tied to the auto-enrollment feature.

Part III: Must a participant be able to elect out of the auto-escalation feature? Is there a way to avoid allowing a non-ACA participant to opt out of auto-esclation?

Believe me, I would never recommend this feature to a sponsor, but as you know, some sponsors are a lot smarter than the rest of us.

Any insights would be appreciated.

I have a situation where a company will perform certain services for another company. The company performing the services will hire the other company's employees, but just renting their building. This is NOT an acquisition. The newly hired employees have asked to grandfather their original date of seniority as it relates to their accrued vacation. Does this create a risk where these employees could argue this should also count toward vesting in the 401k plan?

I have a safe harbor plan with an enhanced match of 100% up to 4% of deferrals. The plan excluded too many on-call employees last year and failed both Ratio Percentage Test and Average Benefits Test under 410(b) for deferrals and safe harbor match. How do you correct - an 11(g) retroactive amendment to bring in some of the on-call employees - 1. how do you determine which ones to bring in and 2. what is the corrective contribution for the missed deferral?

Acquirer maintains a qualified 401(k) plan and Target also maintains a qualified 401(k) plan but it requires spousal consent with respect to certain distribution elections and plan loans (even though it does not provide for an annuity form of distribution except as applied to a merged money purchase plan). Acquirer would like to merge Target's plan into its own. May Acquirer delete the provisions of the Target plan requiring spousal consent even though it is not legally required?

Hi everyone,

I've been quiet on the site for awhile. Had a job change for the better but have lost time to keep up with the board.

I know that making mid-year changes to a Safe Harbor is tricky stuff so I wanted to run this past the resident experts....

New SH plan started in late 2013, no plan comp in 2013 so first real year was 2014. People before me interpreted the way the adoption agreement was completed as saying the SH match was funded after year end but before filing of tax return. I concur w/ that interpretation.

A management consultant is encouraging us to reduce liability and smooth cash flow by funding SH match more frequently. He first said quarterly until I said pointed out "why not by payperiod?".

So, acknowledging we would still have to do a true up based on our current adoption agreement, can we make a mid-year change to fund SH match on a payperiod basis rather than after year end? Or is that a change that can only be made for a future plan year?

(And yes, we've put the question to our TPA but I felt his first answer was shot from the hip because he thought we were currently funding by payperiod.)

Thanks,

masteff

We have a plan in place for Company A, they are a Management Company and wholly own Company B which is a Dentist Practice. Company B is currently and adopting employer of Company A's plan. Easy right! But now they have restructured the company and want to split everyone in to separate plan. I think we're ok but any advice would help.

Company B (the Dentist Practice) was dissolved and 3 new companies were created as of 6/1/2015. The employees from Company B will be split up amongst these companies. Although there's common ownership between Company A and the three new companies (Let's call them Companies C, D & E) they are not a controlled group. However A (B dissolved) C, D, & E are considered an affiliated service group. Company A being the Management company and services provided amongst the C, D, & E which are all Dentist Practices.

Company A will leave the current plan in place, but they want to create separate plans for C, D, & E. I think we are ok here, as long as testing etc. passes separately. Let me also state that all provisions amongst the separate plans will be the same.

Here's what we aren't sure about.

1. Company C, D, & E will set up as of 6/1/2015 and as i stated employees will be moved over from Company B that was dissolved. Although the companies didn't exist effective 1/1/2015 can we still set up the new plans with this effective date to avoid a short plan year.

2. No employees are terminating they are simply moving from one company to another so do you agree that this can be done by a trust to trust transfer and would not constitute a distributable event?

Participant is a former employee of Lockheed Martin. He will be receiving a settlement check relating to fiduciary breach (excessive fee litigation) by Lockheed Martin plan fiduciaries. Fiduciaries are paying settlement into a Qualified Settlement Fund (QSF). The check to the participant is coming from the QSF. Participant asks "Can I rollover the check into my new employer's qualified plan?"

Seems to me that because the check is not coming from the Lockheed Martin plan, the distribution cannot be rolled over. I'm thinking that this check will simply be taxable income to the participant.

This seems like it should be a rather common question, considering the amount of excessive fee litigation going on right now, but I can't find a definitive answer.

Any thoughts? Thanks.