I ran into a non-profit that has been contributing 5% each year to a SEP plan and they also have a Non-ERISA Plan where the employees are also contributing.

My understanding with non-profits where the employer is making a contribution, there required to have a ERISA Plan doc.

I can't find anywhere that says what there doing is not allowed. Can they have both or are they in violation of ERISA?

Need help in code, if available, to direct this client.

Thanks

SEFinnegan

We recently merged a few Multiple Employer Plans into a new Multiple Employer Plan effective 6/1/2014.

As part of the merger, there were forfeitures associated with the old Multiple Employer Plans that were transferred into the new Multiple Employer Plan.

Can we use the forfeiture money in the new Multiple Employer Plan to pay plan expenses (final 5500 fees) for the old Multiple Employer Plans that were merged into the New Multiple Employer Plan?

Any help is greatly appreciated.. ALEX

Working with a client who makes frequent acquisitions - I'm looking to provide a listing or checklist of items that are relevant to consider during the acquisition process - instead of creating something from scratch, I'm looking to see if anyone has or can direct me toward such a checklist - not something that's full of legal verbiage - something simple that can get topics like the following considered:

Identifying the type of plan if any in existance

Ability for participants to take distributions

Identifying loan issues - in particular abilty to rollover or continue making payments on loans

Vesting - need / option for giving vesting based on service with the acquired entity

Plan eligibility - need / option for recognizing service with the acquired entity for plan entry based on the transaction date

Termination of plan pre-transaction vs. post transactoin merger

Identifying directed investment and SDB arrangements and what having either means to participants - i.e. consider that plan with SDB going to plan without those participants may have to give up their SDB.

The more basic the better.... Thanks in advance...

I’m trying to get a better understanding of controlled groups. This should be a straightforward situation that I think I’ve made too complicated and confused myself. I’m trying to determine if a controlled group exists in the following situation:

Company A Company B

Owner 1 50% 33.33%

Owner 2 50% 33.33%

Owner 3 0% 33.33%

-Owner 1 spouse is an employee of Company A

-Owner 2 spouse is an employee of Company A

-Not a community property state

Based on the amounts above, the common control in Company B is less than 80% (66.66%) so no controlled group. But I’m getting confused on the attribution (if any) to the spouses. I know the spousal non-involvement exception does not apply since they are employees so would the calculation look like this?

Company A Company B

Owner 1 50% 33.33%

Owner 2 50% 33.33%

Owner 3 0% 33.33%

Owner 1 Spouse 50% 33.33%

Owner 2 Spouse 50% 33.33%

If so, would common control in A now be 200% and 133.33% in B resulting in a controlled group?

I have a plan that normally passes ADP easily and fails ACP (after-tax, no match) by a small margin. We use borrowing or shifting to pass the ACP test. We are considering changing the plan in a way that we think will encourage more after tax contributions by HCE's. If the passing margin of the ADP test is not sufficient in the future to cover the ACP test through borrowing or shifting alone, can we recharacterize pre-tax contributions as catch-up contributions to pass both tests, even though the ADP test passes without it?

If I want to write the plan document so that it gives the Owner's the maximum lump sum under 415, do I need to include how that is calculated.

Basically, we want the owner's to get the max each year without having to amend each year.

Is there a better way to write it so they owner's get the maximum allocation?

Thanks for your input.

a small C-corp has appx 4mil in assets in its non-leveraged esop. It's a plain vanilla esop. Strictly employer stock, no employee funds. The plan sponsor is considering shutting it down. Of course the main question is has the plan served it's purpose. The company is eyeballing a 401(k).

It is my understanding that the plan does not need to be frozen and that a resolution signed by the board can effectively start the termination process and cease future funding and an optional letter of determination on termination can be pursued.

The company is in good shape financially, is not being sold or going public and the plan has been in existence for several decades.

One question, do terminated participants with account balances as of the last valuation date (12/31/13) and who have not been paid out as of resolution to terminate become fully vested?

They are not considering employer stock as an option in any successor plan at this time.

My client's traditional defined benefit plan is doing a lump sum window and hopes to open it up to alternate payees. The recordkeeper has suggested an approach that would simplify the eligibility of potential alternate payees to elect a lump sum. If there is a divorce decree and the decree mentions division of the pension, then further documentation is requested from the participant and/or his/her soon-to-be former spouse. If no division is mentioned in the decree, then no further documentation is mentioned and the only change that will occur is a change in marital status for the participant from married to single. Does anyone have any reason to object to the taking of this type of approach?

Much has been written about a requirement that a non-insured group health plan obtain a health plan identifier [HPID].

But if the only thing the plan does is pay or deny a claim submitted by a participant, when (if ever) does such a plan use this new identifier?

I have a profit sharing plan that has old MP money that still follows a vesting schedule.

When reallocating forfeitures of the MP money, must that money stay in that source?

What's happening is that participants are receiving small amount of forfeitures in that source, and then they terminate before becoming 100% vested and then they have a small amount of forfeitures to reallocate and so on. I only have 319 in forfeitures to allocate among $5,000,000 in comp. Someone earning $45,000 is getting less than $3.00.

I'd like to allocate all the forfeitures under the profit sharing source if that's allowed.

any other suggestions on how to handle these forfeitures?

For an owner-only 401(k) plan, how should fractions of cents be allocated when allocating investment earnings to the various subaccounts (pre-tax, after-tax, Roth subaccount etc.)? How often should earnigns be allocated and rounded to cents (if at all)? Should the subaccount balances be carried forward rounded, or if not, with how many decimal digits, after each accounting period (plan year or contribution/distribution events from/to subaccounts)?

A participant mistakenly made 1 additional loan repayment on her participant loan to her directed account.

We will have the plan distribute the extra payment to her along with applicable account earnings for the period the additional payment remained in her account.

Does anyone see a problem with this?

Thanks

Has anyone had this happen:

Form 5500 EZ efile confirmation says:

Date Type of Activity

10/15/14 Transmitted to FD (I have a submission number)

10/16/14 Accepted by FD on 10/16/14

If so, was the filing consdered late?

(Calendar year plan on extension.)

Thank you.

So I know that a surviving spouse of a qualified plan can rollover an eligible rollover distribution to the spouse's IRA, and the account will be subject to the surviving spouse's RMD rules. However, doesn't this mean that if the spouse is older than the decedent, the rollover will cause RMDs to occur earlier than they need to (that is, at the spouse's, and not the decedent's RBD)?

Is there any way for the surviving spouse's IRA to be treated as an inherited IRA and remain subject to the decedent's RBD? Thanks...

the employer maintains a 401(k) with a permitted disparity profit sharing allocation. For the 2013 Plan Year a Profit Sharing Contribution was made, however, the recordkeeper used the wrong compensation. This resulted in some participants receiving to much of an allocation, while others did not receive enough.

The platform has recommended pulling the excess dollar amount from each participant and allocating it to the participants who received the incorrect amount. Then using the DOL calculator, calculate the "lost" income to make the participant whole.

Does this correction process seem ok. To me, the entire transaction should be reversed and the shares purchased for the incorrect deposit pulled from EVERYONE's account. If the cashed raised due to the sale of the shares is less than the actual contribution, then the employer would need to contribute the difference. Then the correct amount is allocated to all participants. If the sale of the shares was greater than the contribution amount, the excess is allocated pro rata to all participants.

Then the employer would use the DOL calculator to determine the lost income from the date the deposit was originally made to the date the correction was made.

Thoughts

This is probably a silly question, but please indulge me.

How is a termination of employment distinguished from a retirement (or an early retirement)? Is it purely a matter of when the termination occurs ... i.e., if the termination occurs before both the Normal Retirement Date and the Early Termination Date, it is a termination of employment, if it occurs on or after the Early Retirement Date, but before the Normal Retirement Date, it's an early retirement, and if it occurs on or after the Normal Retirement Date, it's a normal retirement? Surely the distinction is not made based on whether the participant intends to stop working (and move to Florida), right?

Now, a second question: Assuming that Early Retirement under the plan is age 55, if a participant terminates employment at age 50, will his termination ripen into an early retirement in 5 years, once he attains age 55 (assuming that he hadn't received a distribution of his vested benefit), or ripen into a normal retirement in 15 years once he hits his Normal Retirement Date?

Thanks in advance for your help and input.

Publicly traded employer sells a subsidiary to a non public entity. Public company owns 60% of the non-public entity (the buyer), so the empoyees of the subsidary do not have a "separation from service" from the seller under Section 409A. When they separate from serivce from the buyer, they will also be considered to be separating from service from the public company as well. Six month delay for specified employees? Or because they NOW work for a non public entity, no six-month delay requires? [This falls in the "grey area" where they don't have a separation from service from the original employer (under the 50% controlled group test applicable to separation from service), but also are no longer "employed" by the original employer either (under the 80% test of who is the service recipient).]

Ain't 409A just a hoot?

I keep hearing various practitioners taking the position that you can't accelerate the payment of a short term deferral because it raises 409A issues. I know that it seems extraordinarily logical that if it is a short-term deferral, 409A does not apply, so there is no prohibition on accelerating payment. But this keeps coming up -- can anybody tell me what part of the regulations would lead you to think this is a problem?

Here are the facts:

1. Plan Year: 7/1/2013-6/30/2014

2. Participant is still actively employed and turned age 70 1/2 in March of 2014

3. Participant was a greater than 5% owner until June of 2013 and is no longer an owner

Question: Is the participant still considered a 5% owner for RMD purposes and must receive a 2014 RMD?

Thanks!

Is there anything that prohibits (or allows) different levels of match %s for different classifications of employees?

Our plan document doesn't seem to allow this, but I'm not sure if it's because it's not allowed, or because our doc just doesn't permit it.

Thank you!