Jake Linney, Regional Director, Pentegra Retirement Services, to Speak at The Knowledge Group/The Knowledge Congress Live Webcast Series, the leading producer of regulatory focused webcasts. Jake will speak at the Knowledge Congress’ webcast entitled: “ERISA's Fiduciary Trap: An Update on What Service Providers and Plan Sponsors Should Know LIVE Webcast” This event is scheduled for May 26, 2015 @ 12:00pm-2:00pm (ET).

For further details, please visit:

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I had a plan recently that failed Top Heavy testing. This is nothing new for the plan sponsors and they are used to making the 3% top heavy contribution.

The problem that I ran into, was that after allocating a 3% top heavy contribution to all eligible participants, I ran top heavy testing and they were still failing both the ratio percentage test (401a) and the average benefits test.

My question is this, does the plan need to do something beyond simply funding the 3% Top Heavy contribution to all eligible participants?

Thanks,

Andy

Have a great weekend everyone,

and remember to remember.

I am going to soon be buying a small business and will offer a Safe Harbor 401(k) plan.

My question has to do with the 3 owners (2 + myself).

At the end of the year, let's say we are going to give ourselves a $50k bonus ea. (profit sharing), can we do this even though the rest of the 6 or so employees will not be receiving this bonus?

Employees will be getting a merit based bonus, if they "earned" it.

Thank you.

Plan is currently a (New Comp) PS/401(k) plan with no exclusions. Sponsor wants to amend to exclude one class of employees effective 01/01/16.

What happens to an NHCE who is currently a participant in the plan and becomes a member of the excluded class on 01/01/16?

I haven't posted this for a while. I don't know if FT William still has it available - at one time they had pulled this custom report and had it available. I have never had a problem with it as far as pulling data from Relius and then pasting it into the FT William file and then importing it into the SSA file on FT William. (after just running it for a particularly large plan I am thankful for it)

the notes my be a little old, but heck, I'm getting to lazy to post something for nothing. sorry, I can't attach the 8955sample.csv because benefits link doesn't allow a csv attachment..

notes on SSA report.doc

SSA .rpt

Here's the situation:

An employer sponsors a company 401(k) plan, covering collectively bargained and non-collectively bargained employees. The collectively bargained employees also participated in a multiemployer money purchase plan, with an hourly contribution set out in the CBA.

The multiemployer money purchase plan converted to a profit sharing/401(k) plan. The profit sharing component is essentially the former money purchase contribution. The employer does not want to participate in two 401(k) plans for several reasons. It might be open to participating in the newly converted multiemployer plan if it only has to continue the employer contribution (the profit sharing contribution) and its employees will be prevented from making deferrals to the multiemployer plan. They would continue to be able to make elective deferrals to the company 401(k) plan.

Would excluding these employees from the ability to make elective deferrals to the multiemployer plan violate the one-year elgibility requirement? I think it would, but one could argue that a blanket exclusion is different than an eligibility period.

Even if this would otherwise violate the one-year eligibility requirement, the employees will still be able to make deferrals to the company 401(k) plan. Would this be enough to justify prohibiting deferrals to the multiemployer plan?

Finally, if there is a way to do this, is there an advantage to having the prohibition on deferrals to the multiemployer plan included in the CBA and/or adopted by the multiemployer plan's trustees (e.g., "participants who are eligible to make elective deferrals to a company plan shall not be permitted to make elective deferrals to this plan").

Thanks.

A 401(k) Plan that we are the TPA for does not consult is when issuing hardship withdrawals. The auditors for the plan, during their fieldwork, found a hardship withdrawal being granted to pay high school expenses for a student; and have flagged this as an impermissible hardship withdrawal, which is correct.

Two questions:

First, at a recent seminar it was mentioned that there is new (possibly proposed) legislation that deals with this; in essence, if the withdrawal was for a proper amount had the withdrawal been permissible, there is no corrective action or VCP filing required; the auditor should reference this internal control deficiency in their communications to the plan sponsor. Does anybody have a cite for this legislation?

Second, is there a good "template" for submitting this VCP, assuming it comes to that?

Thanks for any replies.

When a plan does a dependent eligibility audit and does not receive supporting documentation it requests for participants it now assumes may not be covered, what are the rules for removing a covered person or their beneficiary? What documentation can a plan request?

Brain Scramble time. An LLC taxed as C Corp acquires an LLC taxed as a partnership. That gives issue one. True or false - Since there is no stock in the LLC-P, it is my understanding that this has to be classified as an asset purchase. (see, I am in trouble already!)

It so happens all of the people in the LLC-P are on the payroll and are now contributing to the LLC-C 401(k) Plan because t he LLC-P is defunct. But wait, it gets better! The LLC-C agreed to take on the 3% non-elective Safe Harbor plan of LLC-P (which LLC-C had to become the sponsor), and so they want to merge the 3% SH plan into to LLC-C matching SH plan.

The 'plan to be merged away' not only has the 3% SH, but it has a different vesting schedule. It was also a spin-off from a PEO plan, but I do not think that presents any issues.

So we now have issue two - Current IRS thinking would require this merger to happen at the end of the year because there will be amendments to the LLC-C document to effectuate the merger mid-year - True or False.

I do not think the merger (and therefore termination) of the LLC-P plan presents a problem as the original sponsor is defunct, even though the LLC-C is the new plan sponsor.

If there is any official guidance I am always happy to learn. Thank you all.

From the instructions:

"The information reported on Forms 8955-SSA is generally
given to the Social Security Administration (SSA). The SSA
provides the reported information to separated participants
when they file for social security benefits."

My question is...if a separated participant is over NRA and already drawing SSN is the SSA information still provided to the Social Security Administration and if so, do they send a letter to those people?

I'm thinking no if the prompt for the SSA is the participant applying for social security benefits.

I have a 401 (k) profit sharing plan, where the forfeitures are reallocated.

For 2013, the forfeitures did not get transferred out of the forfeiture account and into the participants accounts.

The transfer is going to be made now. It's not a lot of money, the top earning participants got about $650.

For 2014, do those amounts have to be included in the 415 test?

3 person PSP where the owner has a life insurance policy within the plan.

She paid the premium of $6500 by moving assets out of the profit sharing pooled account. The life insurance policy is titled under the plan.

Would you put this $6500 on line 8d - benefits paid including direct rollover and insurance premiums to provide benefits, or maybe on line 8g - other expenses?

Background: We have an employee that wants us to prove that all wages being used in their pension is accurate for the last 30 years. The company I work for is in an industry where there are lots of mergers/acquisitions, etc. We hold the records in our payroll system for about the last ten years. The prior wages (mostly from other companies) came over on file feeds from prior retirement plan vendors. We do not have any other prior pension plan benefit offsets, our pension actually calculates the benefit for the entire 30 years (all wages, not a final 36 month pay pension). Most of the hourly employee eligible wages are for their normal scheduled work hours and excludes certain overtimes. The W2s wont really be much use to us in this situation.

Question: Do we only need to provide proof for maybe the last three or maybe it is seven years of the wages being used in the calculation? We are able to print paychecks for the last 10 years. I just wanted to get your opinions before we double check with legal.

The employer sponsors a plan that allows for davis bacon contributions. Recently, there has not been any davis bacon work, but the company has other non-DB projects for the employees.

The company continues to compensate these employees at the DB prevailing wage, even though the work is not DB work. For purposes of the retirement plan, can the employer continue to "treat" these wages as DB wages, taking out fringes and making contributions to the plan? This doesn't sound right, but any comments are appreciated.

This is the first sentence of the text of the model COBRA Election Notice as revised by the DOL to incorporate information about the availability of coverage in the Marketplace. I am copying it verbatim from the DOL website:

This notice has important information about your right to continue your health care coverage in the [enter name of group health plan] (the Plan), as well as other health coverage options that may be available to you, including coverage through the Health Insurance Marketplace at www.HealthCare.gov or call 1-800-318-2596.

(The underscore/underlined text after "call" is as in the original.)

It seems to me as if there are words missing after the word "Marketplace" because the sentence does not make grammatical sense as written (although the intent of the sentence is obvious). I have not seen any discussion of this.

Has anyone encountered this? If so, what, if any changes did you make to this language when customizing it for actual use?

Thanks.

Taking over a 401k plan. Plan effective date 1/1/2014-12/31/2014. Clients fiscal year is 2/1-1/31.

Plan Compensation is W2 and the compensation computation period is paid to participant during the plan year eligible.

Client mentioned that they put in a $75000.00 contribution in May of 2014. This Profit Sharing Contribution was deducted on their tax return for 1/31/2014 and was based on participants compensation for 2013.

1. Could they do this? My thought is that they should have matched the plan year with the fiscal year and have put in a contribution based on compensation from 1/1/14-1/31/14.

2. I am now asked to allocate PS for their fiscal year of 1/31/15 based on 2014 compensation. Do I need to change the definition of compensation in the plan document? Or do I add both contributions together for 2014 and make sure that 415 is satisfied?

Plan sponsor has active defined benefit and profit sharing plan. At present time both plans are safe harbor (same accrual rate/allocation for all participants)

Starting 2016 the DB plan will amend the formula to 5% X avg comp X years of service for the HCEs and 0.5% X avg comp X years of service for NHCE.

All benefits accrued tio the date of change will be preserved (frozen), etc.

Using the fresh start with wear away, some of the participants will not accrue any benefits until the benefits accrued under the new formula will equal the frozen accrued benefits.

The DB and PSP will be aggregated for testing purposes.

The profit sharing allocation for NHCEs will be whatever is needed to pass the aggregate discrimination tests.

Question:

In the discrimination tests; should the participants that do not accrue benefits due to the wear away be considered as benefiting (0.5%) or non-benefiting due to the fact that practically they do not accrue a benefit during the year?

We are using current year accrual method for discrimination testing.

Help is greatly appreciated.

We have a plan for which the sponsor has always filed a 5500-EZ, even though it has been under $250,000.

If he stops filing the 5500-EZ, should we expect a notice from the IRS?

Plan has lump sum distribution only. Can employer amend plan to add installment option? If so, would installment option only be available for amounts deferred after effective date of amendment?