Employer X offers its employees a health plann with a menu of choices. One of the options available to employees is a high deductible health plan ("HDHP") in tandem with a health reimbursement arrangement ("HRA"). Normally, the HDHP would have declined claims for expenses and applied them to the deductible until it was reached. However, the employer would pay those amounts to the employee under the HRA.

It was recently uncovered that the insurer had been paying claims incurred from the beginning of the year under the HDHP in spite of the deductible (so the plan was working in direct opposition to the way it would currently work). The HRA is, of course, funded by employer money. Once this situation was uncovered, it was corrected prospectively. However, for those employees who were reimbursed under the HDHP, what options are available to effect correction? The only options occurring to me are: (1) treat the employees' reimbursement as if they had actually been made under the HRA rather than the HDHP but credit these amounts toward the deductible under the HDHP (this might require a wash transfer of monies from the employer to the insurer and vice-versa); or (2) require the employees to reimburse the insurer for the amounts incorrectly paid under the HDHP and the employer would cut a check for an equal amount under the HRA. If this option is chosen, does the employer have to tax-report those amounts paid to employees who fail to reimburse the plan?

I've had advisors end up having a really hard time figuring out where to "hold" the money ofr 457(f) plans, and in some cases 457b plans.

Anyone have any suggestions? These are usually 1 person plans for me, so the "platforms" are out. We're looking for brokerage accounts. Anyone have any ideas?

When opening just a regular brokerage account, are there any pitfalls/caveats? I'll take any advice.

http://www.irs.gov/publications/p957/ar02.html#en_US_2013_publink1000291661

I just wanted to share this with everyone in case they were not aware of its existence. It goes through all of the payroll reporting requirements for deferrals AND distributions.

Extremely helpful. One of those documents prepared by the IRS that is written in English. Perfect examples. Simple terminology, etc.

Well done!!

Our firm recently took over as actuary for two plans that were just merged into one. We are coming across a few questions that we are having difficulty finding guidance on.

Background

1. Plan A: Plan Year is 9/1 – 8/31. Last 5500 filing was for the 9/1/12 to 8/31/13 plan year

2. Plan B: Plan Year was 7/1 – 6/30. Plan had a short plan year from 7/1/13 to 8/31/13 and last 5500 filing was for that plan year. The box indicating “final return/report” was not checked.

3. Plan A and Plan B Merged effective 9/1/13. Assets and liabilities from Plan B were merged into Plan A

Questions

1. Going forward, should the new plan use the plan number held by Plan A since Plan B was merged into Plan A?

2. Should Plan B file an additional 5500 filing (9/1/13 – 8/31/14) that shows the participant count and assets going to 0 on 9/1/13 or can the last return suffice as the final filing?

3. Prior to the merger, both plans:

a. Smoothed assets;

b. Had credit balances; and

c. Had shortfall amortization charges

Does the newly merged plan only retain the asset gain/loss, credit balances, and shortfall amortization charges for Plan A effective 9/1/13, or are the asset gain/loss, credit balances, and shortfall amortization charges from Plan B merged in as well? If plan B items are merged in, is there specific guidance on how to merge those items?

Thanks for any assistance.

For 410(b) testing, terminated participants with less than 500 hours of service during the testing year may be excluded. Is there an option to include some of those terminated employees or is it a all or none situation? Thanks.

I'm old enough to not remember if I posted this before, but...has anyone successfully set up a withholding program for New Jersey state taxes? (Like EFTPS where we do it on behalf of the client.)

I actually had one client who figured things out and did it themselves. And I think I had someone from the state on the phone once who said "sure it's easy, you just need Form blah blah and Form yada yada and Form xyz and Form abc and Form pqr to cover all of them", or something like that.

American Funds used to say that they couldn't, but I think they (and others) can do it now.

I just sent a question through their "contact us" section of the website, but I shudder at the thought of what I might get back, if anything.

Anyway, you get the idea - is there an equivalent to EFTPS for NJ?

(For the uninitiated, NJ says that plans must withhold state taxes if requested. We've made it very difficult to request on our forms but recently had a couple of people who outsmarted us and wrote a separate note.)

I can never remember this one for refund purposes. Is the first business day after the 3/15 deadline sufficient?

Thanks

I have a plan that is going to fail the ADP Test this year. The plan will also fail coverage on the deferrals because they are controlled group and the other company didn't adopt the plan (this other co., "B", is larger than the original company, "A", so we have a lot of people who weren't given the opportunity to defer).

Which order do I have to correct things? Can I run the ADP Test just on A and process the refunds and then deal with the coverage failure separately? Or do I have to figure out how to fix coverage and then include those new "participants" in the test (which will make the ADP Test results far worse, of course)?

Thanks.

Plan only allows for one outstanding participant loan at a time. It does allow for loans to be refinanced / renegotiated.

One of the drawbacks of not allowing concurrent loans is that any participant who refinances can have a shorter repayment period than 5 years. For example, if a participant has been paying 2 years on an existing loan. The new refinanced loan would then be restricted to a 3 year repayment period.

What if the participant's first loan was for a home which the document indicates can have a 20 year repayment period? Suppose that even though he could have had a 20 year repayment period, he only chose 10 years. Now if he refinances, what is the new loan repayment period restriction? Or is there a restriction?

Thanks

a former employee's beneficiary?

Has anyone seen this in practice?

While we always wish to accommodate legitimate client wishes, this proposed amendment request borders, if not leaps over, into "non reliance" territory!?

All of a sudden, we could be (?) accepting de-facto "participants" by virtue that their inward rollover money could be (?) in the plan, regardless if they never worked for the Plan Sponsor.

Thank you for your thoughts and comments!

a former employee's beneficiary?

Has anyone seen this in practice?

While we always wish to accommodate legitimate client wishes, this amendment request borders, if not leaps over, into non-reliance territory!?

All of a sudden we could be (?) accepting de-facto "participants" by virtue that their inward rollover money could be (?) in the plan, regardless if they never worked for the Plan sponsor.

Thank you for your thoughts and comments!

Taxpayer has two separate lines of business, filing a Schedule C and a Schedule F.

The Schedule F has a SIMPLE IRA. That business incurred a loss in 2014.

The Schedule C reported income in 2014 that is greater than the Schedule F loss.

Question: Can the taxpayer make a deductible SIMPLE IRA contribution to the Schedule F business, even though it has a loss, because the taxpayer has positive net SE income?

I have a client that needs to have their SARSEP document restated for PPA 2006. They are currently on an individually designed plan because they are ineligible to use model Form 5305A due to sponsoring another retirement plan. Also, Vanguard (the IRA custodian) doesn't have a pre-approved prototype document. If I restate the plan as an individually designed plan, can it be (or necessary) to submit to the IRS for a determination letter? I noticed on Form 5300 that SARSEP is not listed as a plan type.

A client's prior TPA amended out profit sharing provisions from a safe harbor matching 401(k) plan, as she thought allowing for profit sharing would create a top heavy minimum requirement (even if there were no allocations of profit sharing or forfeitures). The plan doesn't allow for any additional matching contributions.

The client had deposited $30K throughout 2014 toward profit sharing (in addition to the SH match).

The plan document provides that contributions may be returned to the employer within 1 year due to "mistake of fact," but some of the deposits are now over one year ago.

Does anyone have any suggestions for a reasonable way of dealing with this? What about the following?

• Place the contributions into a suspense account and take a 2014 corporate deduction, then amend the plan for 2015 to allow (understanding the potential issue with mid-year amendments for safe harbor plans) and allocate them in 2015 (including them in 2015 415 limits)
• Return contributions made in the last year as a "mistake of fact," an return the prior ones as prohibited transactions (paying excise tax)?

Thanks.

Calendar year 401k plan with basic safe harbor match - 4 participants - 2 out of the 4 are owners

Client was using a payroll provider but due to financial issues took the payroll in house in September 2014. The client stopped making the 401k contributions and safe harbor match in September.

I prepared the ADP/ACP test for 2014 and both tests fail. Refunds are needed to for both owners. Also prepared the top heavy test with a determination date of 12/31/13 and the plan is top heavy for 2014

Client doesn't have the money to fund the top heavy minimum and wants to termiante the 401k plan. What are the ramifications for the client refusal in making the top heavy mimimum?

Question about my test. New owners in 2014

2013 owners did not have comp in excess of the HCE level (prior year comp)

My thinking is that just my 2 new owners are in my HCE group?

One trustee of a ps plan died. The spouse, who is the other trustee, wishes to move the plan assets to another investment group. Brokerage (the back office) says they have to segregate the deceased's assets into a new account. We say it is none of their business, if trustee wants to move the whole trust, he/she has the right. There are other participants in this pooled, balance forward plan.

Plan allows one trustee to act for both (not that there is a "both" anymore)

Ever heard of this? see any reason/grounds they would have for forcing this instead of moving the assets as directed?

I have a Cash Balance Plan year of 1/1 - 12/31. Am I able to amend the plan this month adjusting the crediting rate to the market rate of return prospectively (for March thru Dec.)?

I am reviewing a DRO and the plan name is slightly incorrect.

The name of the plan is ABC, Inc. 401(k) Profit Sharing Plan

It is listed in the order as ABC, Inc. Profit Sharing Plan

The plan was once known as PSP, but we added a 401(k) feature for 2013 and changed the name.

This doesn't seem material, as it is quite obvious to which plan the order refers--the participant has no other retirement plans.

The EOB says that when a name or address is misstated, the plan administrator should "supplement the order rather than reject it..."

How do you supplement an order? Does it go back tot he judge? Just noted in the file? Do I write something to everyone such as: the name of the plan in the order should be xxxxxx.

Your thought are appreciated.

Is the 401k plan name the same as the trust name? If different, why? Would they need different EINs?