Plan sponsor will terminate its pension plan in a standard termination. The plan currently has no lump sum distribution option, other than forced cash-outs for small benefits under $1,000, and other cash-outs (e.g., to an IRA) between $1,000 and $5,000.

The sponsor wants to add a lump sum distribution option for participants who are not in benefit payment status, to be used in connection with the standard termination. So far, so good.

The sponsor, however, wants to specify a lookback month for determining the applicable interest rate to be used in determining the lump sums under the new distribution option that is different than the lookback month used for determining small benefit cash-outs.

Is this do-able? Or, does it violate the 417(e)/411(d)(6) rules? Specifically, does it run afoul of the regulations at 1.417(e)-1(d)(4), which provides in relevant part: "The time and method for determining the applicable interest rate for participant's distribution must be determined in a consistent manner that is applied uniformly to all participants in the plan."

Would it be OK to get by this issue by "protecting" the participants with small benefits by giving them the benefit of the greater of lump sums determined under the two interest rates. (Everyone else will have a lump sum calculated under the new interest rate.)

Thanks!

When is the following participant deemed 100% Vested:

DOB 1948 (age 65 in 2013)

Entry Date 1/1/2012

Resigned 2014

Plan's NRD is 1/1/2017

"Normal Retirement Age" as elected in the Plan's Corbel Adoption Agreement is the later of the Participants 65th Birthday or the 5th Anniversary of the first day of the Plan Year in which participation began

We are reviewing a deminimus benefit defined benefit plan for a sole proprietor, age 74.

The first year of the plan was 2013. An individual from an insurance company prepared the calcs for this individual. The TNC was 103% of the net Schedule C.

Net Schedule C $3,900 - TNC $40,000?

Isn't the deduction limited to the net Schedule C?

When a non or partially vested contribution is made to a 403(b) custodial account what are the practical implications to the custodian/record keeper?

A participant loan fails to meet the repayment requirements of IRC 72(p)(2) and is deemed distributed to the participant in April, 2014. A year later, the plan sponsor now wants to:

1) Un-do the deemed distribution, which I would presume includes amending / cancelling the previously issued 2014 Form 1099-R.

2) File a VCP Application to ask that the outstanding balance of the loan (including accrued interest) be reamortized over a remaining period that does not

Cash balance plan defines monthly benefit as the cash balance divided by annuity rate using 417(e) Applicable Mortality Table and Applicable Interest Rates.

Plan is frozen.

Do post-freeze changes in these rates create 411 issues? Should the accrued benefits payable at later age such as NRA be grandfathered based on AMT at time of freeze?

What about a vested terminee?

Does anybody think these equivalency factors present cutback issues?

In December of 2014 - Trustee and business owner hosts a conference call with his spouse and legal counsel on the line and indicated that he was traveling out the country to attend to family overseas on an emergency and that he left discretion to the retirement plan to his wife.

Since then the TPA has received 2 requests for in-service distribution for him signed by him. The TPA verified the legitimacy of the request with his wife and his legal counsel.

However, due to the large requests for the in-service distributions, the compliance manager did some research due to a "gut" feeling and discovered that in Feb. 2014 the owner/trustee pled guilty to health care fraud. In August of 2014 the trustee / owner was sentenced to 15 months in federal prison and had to turn himself in in December of 2014. Part of his sentencing was to pay restitution in the amount of $325k. On March 31, 2015, the State Dept. of Health formally revoked his medical practice license. All of this was discovered on the internet via public records.

Since the TPA has yet to formally be notified by the "owner/trustee" or their spouse or legal counsel and has yet to receive any inquiry or notification by any government agency, what is the obligation of the TPA since the business and practice was shut down by the government?

Any feedback or help is appreciated

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Situation;

a). We understand that under the 401(a)(9) Regs, a formal RMD election has to be made as to the form of benefit. If no election is made, then the default distribution method is the QJSA.

b). We understand that the death benefits payable could be (de-facto) forfeited, if the participant chooses a life annuity and then dies unexpectantly. This is not appreciated by the expectant heirs who were looking for their inheritance.

c). We understand that RMD election is permanent, with "Re-annuitization" under 1.401(a)(9)-6, Q/A #13 only allowed if: the participant terminates employment, terminates the plan, or terminates his/her bachelorhood and gets married, with a QJSA.

d). We understand that a term certain payout of 20 years could be reduced, (if the client changes his/her mind) but not increased.

Questions:

1). Is there an easier, operational way to handle this administrative quagmire?

We are seeing all sorts of complications with some clients wanting an in-service distribution before the RMD starts, and of course, wanting to change it, as they earn additional credits.

2). On small family plans, it is tempting to merely pay it out as a LSD, roll to an IRA, and let the bank deal with the far simpler DC - Account Balance method of handling the RMD issues?

Thank you, in advance, for your client savvy/ERISA conversant solutions to real world issues.

where does the time go?

that long for this 'link'

of course, I am a bit of a missing "link" but

thanks to all who share their knowledge.

Plan is a Medical/Dental health & welfare plan with benefits fully paid from the general assets of the employer. There is a stop-loss policy to protect the school.

The instructions for the exemption for filing Schedule C read (see below).

School is wondering if

• 2(b)(1)(i) AND 2(b)(1)(ii) both have to apply, or
• 2(b)(1)(i) by itself being true is enough to qualify for the exemption.

(Client says, “(b)(1)(i) does not end with “or” and we are 100% (b)(1)(i) so do we need a Schedule C?”)

Thank you for any help you can give.

Schedule C instructions:

Tip. Health and welfare plans that meet the conditions of the limited exemption at 29 CFR 2520.104-44 or Technical Release 92-01 are not required to complete and file a Schedule C.

29 CFR 2520.104-44 - Limited exemption and alternative method of compliance for annual reporting by unfunded plans and by certain insured plans.

(a) General.
(1) Under the authority of section 104(a)(3) of the Act, the Secretary of Labor may exempt an employee welfare benefit plan from any or all of the reporting and disclosure requirements of title I. An employee welfare benefit plan which meets the requirements of paragraph (b)(1) of this section is not required to comply with the annual reporting requirements described in paragraph © of this section.
(2) Under the authority of section 110 of the Act, an alternative method of compliance is prescribed for certain employee pension benefit plans subject to part 1, title I of the Act. An employee pension benefit plan which meets the requirements of paragraph (b)(2) or (b)(3) of this section is not required to comply with the annual reporting requirements described in paragraph © of this section.
(b) Application. This section applies only to:
(1) An employee welfare benefit plan under the terms of which benefits are to be paid—
(i) Solely from the general assets of the employer or employee organization maintaining the plan;
(ii) The benefits of which are provided exclusively through insurance contracts or policies issued by an insurance company or similar organization which is qualified to do business in any State or through a qualified health maintenance organization as defined in section 1310(d) of the Public Health Service Act, as amended, 42 U.S.C. 300e-9(d), the premiums for which are paid directly by the employer or employee organization from its general assets or partly from its general assets and partly from contributions by its employees or members, provided that any plan assets held by such an insurance company are held solely in the general account of such company or organization, contributions by participants are forwarded by the employer or employee organization within three months of receipt and, in the case of a plan that provides for the return of refunds to contributing participants, such refunds are returned to them within three months of receipt by the employer or employee organization, or
(iii) Partly in the manner specified in paragraph (b)(1)(i) of this section and partly in the manner specified in paragraph (b)(1)(ii) of this section;

Currently have two plans (4101k and 401a) each adopted by the two employers of the controlled group. Currently non-discrimination testing is performed on both plans together. The plans will be amended to change from a controlled group situation to a multiple employer situation and tested separately. If a participant works for both employers, earns less than the HCE compensation threshold from each, but combined earns above the HCE compensation threshold, is that participant considered an HCE based on compensation? Thanks.

501© adopts a 457(b) Plan - employee contribution only. We know discover the doctors who are deferring are not employed by the Plan Sponsor, but a wholly owned subsidiary. Problem is the wholly owned subsidiary is a for profit organization.

Does the plan return the deferrals and income to the doctors ( taxable for 2015) since they were never eligible to begin with.

Suggestions on how to correct this matter would be greatly appreciated.

Thanks

I have a plan that is on a McKay Hochman document. The plan does not allow in-service withdrawals. There is a participant who is 69 and wants to withdraw his money and is still working. The base document looks like it allows for that. I can't see anything referenced in the adoption agreement, but the SPD seems to agree with the base document. My co-workers say no, because there is no in-service provision, he cannot take his money. Thoughts?

Thank you in advance!

Brasher Excess Fidelity Rollover 032714.pdf

I know I've seen articles and ads about companies that specialize in receiving force out distributions as IRAs for unresponsive plan participants. Of course, now that I have a terminating plan with 3 unresponsive participants, I can't find any of them. The plan is bundled with ADP and they are no help.

Any suggestions?

If employee switches to a PPO plan and had a HDHP/HSA the prior year (same employer), can they use the HSA to pay for eligible medical expenses for the new plan year on the PPO? If they are covered under a PPO with an FSA (not limited) can they also access the HSA funds previously contributed a prior year under the HDHP (of course not double dipping on same expense)?

This probably isn't that uncommon, but...

Found a governmental plan using a normal ERISA VS document. The document has all the normal provisions and specifications including that it is an ERISA plan, etc...

Now, as far as I know there is nothing preventing a governmental plan from adopting provisions that aren't legally required - nondiscrimination testing, whatever, whatever. The employer, being governmental, isn't subject to ERISA, so doesn't file 5500 forms, but otherwise operates the plan according to its provisions, even though it doesn't have to adopt a document containing many of the provisions it has.

Only problem I see is that they have never filed for a d-letter (which of course isn't required either). So I suppose they could re-adopt a VS document, updated for PPA, by 1/31/2016 (going from memory, that's the Cycle E deadline) and continue to not file. Since they don't have reliance, because the VS isn't a governmental plan document, then I don't think they are in a position that is any worse than they are now. And probably better than not adopting anything, because it at least shows some efforts at good-faith compliance.

Or, do you think they would be better off just waiting until someone like Sungard gets IRS approval for a prototype/VS governmental pre-approved plan, which I think is coming in the next year or two, and adopting that?

A self-employed individual with a handful of employees adopted a 401(k) profit sharing plan effective January 1, 2014. The plan was timely adopted in December 2014 and only has a discretionary profit sharing feature for the 2014 plan year. The client inadvertently filed his 2014 personal tax return prior to making a profit sharing contribution for 2014 and without taking a deduction on the returns. It's not likely the client will have the ability to make the contribution before April 15, 2015. Can the client still make a contribution for the 2014 plan year and deduct that amount for 2014 and also count the allocations towards the 2014 415 limit? If it's still possible to make a 2014 deductible contribution, will the client need to file an extension for the 2014 personal tax returns to give himself the ability to make the deposit prior to October 15, 2015. I'm not sure it's even possible to file an extension for a return that has already been filed. Of course, the accountant is willing to amend the 2014 personal tax returns to pick up the deduction assuming it's still possible to make a contribution.

I am just curious if benefit plans (retirement or health & welfare) are ever penalized for filing inaccurate information (as opposed to issues related to filing late or incomplete)?

examples:

bad employee counts on main form or Schedule A

used wrong date for asset totals

wrong outstanding year end loan amount

recorded expenses in the wrong field

etc. etc.

if so how much are such penalties?

I have a plan with a basic safe harbor match. The plan sponsor also does NEC PS contributions. The plan document is a VS doc from a major vendor.

The plan is TH.This is a DB/DC combination so the TH minimum is 5%. Can the SH Match be used towards satisfying the 5% TH minimum contribution?