a small plan is looking to save the employer cost. Currently satisfy Safe Harbor using the 3% non-elective. It is permissible to amend and notify participants in advance to change to a safe harbor match mid plan year and still satisfy non-discrimination requirements and Top Heavy, yes?

A governmental employer gives a 5% employer contribution into their 457(b) plan. The employer wants to give employees the option of receiving a 2% raise or in lieu of a raise the employer will put an additional 3% employer contribution into the plan. Thus, employees who elect their raise will get a 5% employer contribution and employees who elect no raise will get a 8% contribution.

My gut tells me this may be against state labor.

Has anyone see a governmental employer do this?

I'm running testing right now for one of our plans and it specifically states in the document that it excludes key employees from participation (there are 3 key employees). However, because we're excluding these employees from testing, the ADP test is failing. If they were included in testing, the ADP test would pass because there would be 3 extra participants with 0% ADR which would lower the HCE ADP. Question: can the document be amended retroactively (for 2014 plan year) to not exclude the key employees?

I just came upon a PS Plan with a NRA of 60 - normally fine in a PS plan, BUT, this was formerly a MP plan that was amended and restated to a PS plan. Since there are pension assets, the NRA of 62 isn't allowable in this case (it isn't an industry that can reasonably demonstrate or argue that NRA of 60 is normal or representative of the industry)

So here's the conundrum - easy to amend to 62, but it seems to me that this is an impermissible cutback. What does one do in this situation? If you leave it alone, it is noncompliant and you can't rely on the pre-approved language. If you amend, it is a prohibited cutback. Do you have to submit to IRS under VCP as a document failure? And even if you do, what "fix" can reasonably be proposed?

Should have known better than to review a plan on Friday the 13th!

Companies B and C are subs of mothership A. The mothership has told Company B that one of its subs (call it D) has been transferred to Company C.

Effective 1/1/15 D is no longer contributing to plan B and deferrals are going to plan C. The natives in sub D want their assets in the plan with Company C and out of the plan with Company B.

• Is C required to take all assets or just actives of those in D?
• Can ppts in D elect to keep their money in B if they so choose (I'm told B has a brokerage window and C does not)?

It seems on paper that this should be pretty straightforward but C's RK is talking blackout on both sides. B's RK doesn't know this is happening yet either.

What is the difference on 5500 SF Participant count difference between line 5a and 5(d)(1)?

There are 5 members of a control group, and only 2 out of the 5 companies give a Profit Sharing contribution. The formula is 2% of Compensation.

Assuming that the control group passes the Ratio Percentage test, does the Gateway test and 401(a)(4) still apply?

Any guidance is greatly appreciated.

Alex

An employer currently is part of a PEO. Employer has made the decision to exit the PEO for all benefit purposes. The employer currently participates in the PEO 401k plan. As part of the exiting documents, the TPA and PEO state that all employees of client/employer organization will incur a distributable event. The employer will maintain their own 401k plan.

I am having a hard time finding an answer to the following in the EOB

Question: Is it accurate that all participants of the client organization/employer will incur a distributable event when a 401k plan will be sponsored by the employer? As an adopting employer of the PEO plan, wouldn't you have successor plan issues if the assets are distributed?

My thought was to have the assets transferred directly to new plan without the option for participants to elect a distribution.

Thank you

We are consulting on a 403(b) plan that has had an ADP test run (and refunds processed) for the past several years. Anyone have any thoughts about a correction method?

Thanks.

Suppose you have a plan where compensation is defined as W-2 - as many are.

Further suppose you have a taxable fringe benefit, such as life insurance over 50,000. (P.S. edit - the taxable amount of the life insurance is not considered part of the salary, but is in addition to it)

Using a simplified example, suppose the employee has a salary of $52,000, paid weekly. The taxable amount for the life insurance for the year is $1,000. This amount, while taxable, isn't "paid" in cash to the employee, but shows up on the final pay stub only - it isn't listed per payroll period during the year. And of course it shows up on the W-2.

If the employee has a 10% deferral election in place, do you find most payroll providers/employers:

A. Withhold 10% of $2,000, or a total of $200, or

B. Withhold 10% of the normal $1,000, or a total of $100, or

C. Something else.

Just curious.

Paychex is telling one of their clients they cannot modify a safe harbor plan to add auto enrollment until next year. Any truth to that?

Participant is age 50+

On 3/11/15, he's asked if there is any way to go back and do the catch-up elective for 2014 at this time

Since the calendar year is long ended, and he's already rec'd W-2 - could the employer withhold now and issue an updated W-2?

The participant is an employee at a C-Corp

My answer is no - just seeing if there is anything creative I could recommend outside of indicating the participant should just increase his elective contribution % for the 2015 year

I don't do many boy vals and generally do not advocate pfcb creation but here is my question:

Client has no minimum required contribution for 2014 but contributes 100k during 2014. During 2014 client loses 35% in asset value even with the 100k cont due to risky stock losses. no credit balance as of 1/1/14. I do the 1/1/15 val and req min now about 250k and AFTAP>60 but <80. If client elects to create pfcb by making an election before 9/15/15 to use the excess 14 conts, then should or must i redo the 1/1/15 val(maybe just reflect it when i do the '15 SB?) and must i redo the 2015 AFTAP or only if it moves out of the 60-80 range? Sorry if this is too basic for you boyers. plan has two participants, one hce and one nhce....

thanks for any responses...

Just wanted to make sure I'm not missing anything. Employer has SIMPLE-IRA - didn't make appropriate contributions for 2014 - didn't allow eligible participants to participate. This will be self-corrected via RP 2013-12, by an employer make-up contribution.

I don't believe this employer contribution is listed anywhere on the W-2. Only employee deferrals to the SIMPLE would be listed on the W-2.

Any disagreement?

In 2013 Dad owned 100% of companies 1, 2, 3 and 4. Company 1 sponsored a 401(k) plan adopted by all the other companies. During 2014, 51% of the ownership of company 1 is shifted to adult Son with Dad keeping 49%. Son also owns 100% of company 5 that is not a part of the plan.

Companies 2, 3 and 4 are clearly part of a controlled group. What about 1 and 5?

My recollection is that there is only attribution from Dad to Son if Dad owns more than 50% of the company. What about from Son to Dad? Or do I have that backwards?

And why is it always the client who gets you a census the second week of March who has these kinds of issues? (OK, I don't really need an answer to this last one.)

Client has a safe harbor KPlan…does not permit rollovers[i took over without a document restatement]. They are terminating their CB plan in a month or two and want to roll CB distributions to KPlan…100% of ees [a small number] want to do this.

The Safe Harbor notice of course doesn’t mention a Rollover Employee account.

Is a rollover a “Contribution” subject to the notice, in which case we cannot amend the KPlan to allow rollovers or is there wiggle room here…is there any way to classify the incoming $$ as a trustee to trustee transfer?

It seems reasonable that a Plan could add Rollovers. That is not an Employer Contribution.

Thanks in advance.

--

What is the reasoning behind the regs counting a Key employees balance going towards Top Heavy status even after the Key has been paid out? The Key is still employed but is no longer participating.

3% Maybe Safe Harbor Plan.

The employer wants to notify participants today that the plan will not be safe harbor for 2015.

Any issue with this notifciation at this time?

Since the decision was made not to be Safe Harbor, can the employer amend the plan mid year and change the default cash out provision.

Thanks

First 10 years plan covered owner and common law employees.

10 years ago all common law employees terminate employment and are paid out leaving only the owner with a balance.

Now preparing delinquent 5500s for last 10 years and question is has the plan become a "one-participant" non-ERISA plan eligible to file 5500EZ or does it remain an ERISA plan and need to (able to) file 5500SFs under DFVC?

Apparently each segment rate used in the calculation can be an average over certain lookback months immediately preceding the stability period ; and if the plan had been amended to adopt this new methodology , then for a year following the amendment lump sums are determined using pre-amendment methodology , if greater.

Could someone provide a cite(s) supporting this ?

Thanks , in advance to those who respond !!!