2 NHCEs met eligibility but entered the plan before the entry date. The total deferred was less than $300. I know in the past EPCRS stated you had to amend the plan, which seems ridiculous since amending the plan could potentially cause the plan to include other NHCE's to receive QNECS for missed deferral opportunities.

Am I mistaken that you can now refund the ineligible deferral and it becomes taxable to the participant in the plan year it was distributed?

if only the IRS would give large plan filers the same guidance they gave to small filers ( 7 days) life would be so much easier.

Client is putting together their Committee Procedures and wants to state that deferrals will be transmitted between the 3rd and 7th business day following the date the funds were withheld. The plan has over 100 participants.

I like the 3 days, but wondered if the IRS or DOL would take issue waiting 7 days.

Also if the actual transmittal date fluctuates some times 3 days, sometimes 7 days, if that would raise a concern from the DOL.

Thoughts

Thanks

We have a one participant 401(k) plan that files a Form 5500-EZ.

Does the DOL's 7 business day safe harbor rule for depositing 401(k) deferrals apply in this case?

What is the fix if they blow the deadline -- same as for other small plans?

Thank you!

Does anyone have any ideas as to what the proper correction would be under 4980D(f)(3) for credits made to a non-integrated HRA?

It is clear from the IRS, DOL, and HHS guidance that a non-integrated HRA will fail to comply with the annual dollar limit prohibition and preventive services requirements. If a plan sponsor (in the multiemployer plan context) makes credits to an HRA account and then later finds out the individual was not enrolled in a group health plan (rendering the HRA account "non-integrated"), what could be done to correct and avoid being slapped with the $100 per day/per individual excise tax penalty?

4980D(f)(3) states that:

(3) Correction

In 2013 Client had one participant who terminated in 2012 and should have been submitted on a 2013 Form 8955-SSA. TPA did not submit the Form 8955-SSA for 2013. Now we are working on the 2014 Form 8955-SSA. Can we include the missed person or should we provide a 2013 Form 8955-SSA and inform the client that a penalty may be assessed?

The IRS released the official 2014 version of the 8955-SSA on Thursday, Jan 29, 2015.

All the major Form 5500 series vendors (Datair, FTWilliam, Relius/Corbel ) are probably working to bring their electronic version to the market as fast as possible.

I am noticing that some are not ready to release their 2014 version yet.

Questions

1). What is the rest of the Benefits Community seeing?

One has to fight the urge to compare vendors, but it is a natural business question to wonder if one or more vendors are faster than others.

2). Any information on your preferred vendor?

Thanks

I have a new calendar year plan with an effective date of 02/01/2015. Corbel PPA Prototype. Eligibility Requirements are Age 18 and 6 Months of service, quarterly entry. All employees employed on the effective date were eligible as of 02/01/2015.

Question is we have a employee who was rehired after 02/01/2015 and had previously met the Age 18 and 6 month service requirement. When do they enter? On date of rehire, next quarterly entry date or do they have to meet the 6 month service requirement again.

Assume no rule of parity or no 1 year holdout apply.

Any input would be appreciated.

Thanks

SIMPLE IRA terminated effective 1/1/15. Sponsor starts a Safe Harbor 401(k) effective June 1, 2015, it would be considered "newly established" correct?

Have a client where plan defines compensation for plan purposes as W-2. A client is insisting that opposite sex health insurance premium, while taxable, shouldn't be considered as compensation for plan purposes, based upon their "research."

I can find no basis for this whatsoever, and I'd just like to see if anyone knows of something I'm missing? They could amend the plan to exclude such compensation for plan purposes, but that is a separate issue - plan does not currently contain such an exclusion...

Thanks.

Have a new client that owned 50% of an insurance agency (S Corporation), his brother the other 50%. He was paid as an independent contractor his commissions from insurance sales to a separate LLP (single member LLP tax as a sole proprietor).

The agency has a CEO and CFO separate from either brother.

Client has been max funding a SEP for as long as he can remember only on his independent contractor income - no other participants. The insurance agency has a separate retirement plan that she (Client) did not participate in.

Do not meet the controlled group rules as do not own more that 50%.

A-Org - 1st impression is FSO is the insurance agency, A-Org is my client. Since agency is a corporation appears that it would not be a FSO.

B-Org - appears likely

Having second thoughts on whether related - sure seems that it should.

Conversation greatly appreciated.

I have a small NQ plan (10 actives) that assumes 100% lump sums. The rate used for lump sums varies month-to-month. In prior years, the discount rate for fiscal year-end has been modeled using the assumed lump sum payouts. However, the plan has a new auditor this year and we are getting push-back on the development of our rate. Since the lump sum rates is not a constant, they believe the discount rate should be developed assuming annuity payments - this would be for the discount rate only. Plan liability would be valued using the assumed LS payments and this discount rate. The auditor made it seem as though this is the method that most pension actuaries use.

The number of plans that our office has exposure to that assume lump sums is pretty limited and the few plans we do have do not use the method suggested by this auditor. Has anyone developed the discount rate using this method and what was the reasoning behind it? I would be interested to hear some other opinions on this.

Thanks.

Does anyone have a good template or article on BR&F testing for a match formula based on YOS that has a 1,000 hour/last day rule?

Specifically, my question is, do I need to treat people who termed as not benefitting in the higher match rates solely because they terminated (with more than 500 hours).

So in my case, the match increases after 5 YOS from 50% of 6% to 100% of 6%. If someone with 7 years terminates, do I need to treat them as not benefitting in the higher rate of match?

Since it's coverage testing, I presume the answer is yes.

New client has been excluding pre-1/1/09 contracts for participant counts, but NOT the assets. This is a plan where the pre 1/1/09 contracts will push them over the audit requirement.

Is amending the 5500's for the past 5 years the only option available? And presumably if we amend the past 5 years of 5500's to remove 40% of the plans assets that might be a red flag...

Good afternoon,

As a former Trustee and Participant in a governmental DB plan in Michigan, I ran into a question regarding how the plan administrator determines Final Average Compensation.

The applicable Collective Bargaining Agreements indicate FAC "shall be calculated by multiplying the FAC (the employee's highest consecutive 5 year income average) by the number of eligible years of service by the pension multiplier (2.8%)."

However, in the case I am concerned about, the Plan Administrator went back 5 years and 10 months and determined an average monthly income for year #1. Following is the manner in which he calculated this FAC:

Year #1 - Determined an average monthly income and multiplied that by 1.4 months.

Year #2 - used actual income.

Year #3 - used actual income.

Year #4 - used actual income.

Year #5 - Although the retiree severed employment in good standing on October 31, he was credited as if he received 10.6 months of compensation (prorated based on the number of pay periods in that year. The remaining 1.4 months was credited to year #1).

The net effect of using this methodology was to reduce the retiree's pension payment by $100 per month.

According to my research, consecutive five year income is usually limited to actual income over a 60 month period. In fact, the Plan Administrator used that precise method in the past FAC calculations. I might add, the Plan Administrator is also the Plan Sponsors Chief Financial Officer.

Any thoughts on this?

Can someone point me to the reg that was added to the final 401k regulations that essentially said "hey, no funny stuff--even if a literal interpretation of the regs says its ok, you can't monkey with stuff in such a way that it impacts the testing."

I know in practice it can essentially be ignored, but I'm running an ADP test on net op and we have someone clocking in at 1,000 percent (they're deferring 90%, so 90/10 = 900% (she has 125 pre-tax premiums to boot pushing her over 1,000%). I'm just concerned this might be a situation where the IRS might employ this vague rule.

I believe it was the IRS response to the bottom up QNEC, which smells like what I have here.

I have a case where a 100% owner of a corporation is a director of a 501(a) nonprofit he founded in an unrelated field. There are 2 other directors of the nonprofit. Let's say he controls the other directors, so he has at least 80% control over the nonprofit (including the appointment/removal of directors).

Is this a controlled group, or does the corporation (as an entity) need to be directly controlling the nonprofit (e.g. the owner's personal decisions over the nonprofits would have to be in his capacity as a representative of corporation - not as a separate individual)? I.e., the "parent-subsidiary" rules apply, not the "brother-sister" rules.

From Reg section 1.414 ( c )-5:

"For this purpose, common control exists between an exempt organization and another organization if at least 80% of the directors or trustees of one organization are either representatives of, or directly or indirectly controlled by, the other organization [does "organization" include the individuals with a controlling interest in that organization, e.g. a 100% owner?]. A trustee or director is treated as a representative of another exempt organization if he or she is also a trustee, director, agent, or employee of the other exempt organization."

Thanks.

After Anthem's security breach, they've become fodder for phishing attacks ("Members who may have been impacted by the cyber attack against us should be aware of scam email campaigns targeting current and former members. These scams, designed to capture personal information (known as “phishing”) are designed to appear as if they are from a health plan and the emails include a “click here” link for credit monitoring. These emails are NOT from us.").

My day isn't looking to be turning out so bad, in comparison

Have a plan, each employee in their own group ... NHCE employees receiving from 3% of comp to 15% of comp (only one employee receiving 15%)

There are 5 HCES and only two are receiving contributions ... one at 3% and one at 15%.

Can I bypass the gateway test by testing the average of the contribution percentages? Do I have to use broadly available allocation rates? If using broadly, can I count the HCEs that are getting nothing? For example, if I average the HCE group (including HCEs) getting nothing, it is a 3.60% average. If I average the NHCE group (and also include those getting nothing because they were not employed on the last day of the plan year), the average is 3.92%.

From what I read about broadly available allocation rates you count only those getting a contribution, my HCE group would be 50% (only 1 of the 2 who are getting a contribution is getting 15%), but for my NHCE group is 1 out of 22 getting the 15% for 4.55%. My NHCE concentration percentage is 84.85% and the midpoint is 27%; I believe this would definitely fail the broadly available allocation rate.

They would pass cross testing; but fail the gateway because of the group of employees getting only 3%. I need to tell them either to lower the one HCE to 9% or to raise the 3% contributions to 5%. Or let them know it can pass testing another way. Any help greatly appreciated and I hope I have adequately explained everything.

We have a DC plan that allowed terminated participants to take partial withdrawals (separate from installments). They may want to eliminate that, allowing for only installments and lump sums (and the QJSA already there).

Can they? I thought you could eliminate all other forms of distribution if a lump sum was available.

Quick question regarding RMDs. I have a person that just turned 70.5 and needs a RMD in 2015, she has both pre-tax and roth. I look at the 12/31/2014 balance, and I come up with the RMD amount. Question is, do I have to take a certain portion from Roth, or can I take it all from pre-tax, or is it up to the participant.

I appreciate all your help. Apologies for the likely elementary question.