Hi group,

I'm a TPA of a 403(b) plan with multiple vendors and many terminated participants with account balances. Some of the participants are in individual contracts and it is a challenge to work with the vendors to pay those terminated participants with balances under $5K. Sponsor is wondering if they offer some type of incentive to terminated participants who take a distribution ( $100 gift card or the like).

Wondering what your thoughts are??

Thank you for any help/guidance you can give...

An eligible employee is deferring into the plan. This participant then moves into an ineligible class (He became a non-resident alien).

The employer failed to stop deferrals into the plan for 2013 and part of 2014.

In accordance with the concept of EPCRS my proposed solution would be to treat this as a minor operational defect. To put the plan back to where it would be if the defect hadn't occurred I'd propose wire the deferrals back to the participant and forfeit the match.

A major vendor has proposed treating this as a mistake of fact, with a correction that would forfeit the match AND the deferral and correction via payroll.

I can't get my head around that. Am I missing something?

We are in the middle of restating our 401k plans for PPA and realized that it has been a while since we restated our cafeteria plans. We don't administer any of them however we have our own and were wondering if we are required to restate that any time soon. It looks like the last update was at the end of 2012. An amendment to change the Health limit to $2,500. We've recently updated our forms for the $2,550 Health limit for 2015. But that's about it.

We currently administer a cash balance defined benefit plan in combination with a 401(k) profit sharing plan for an employer.

There are 5 employees in the 401(k) plan, 3 are non-owners, the other two are owners. All meet the age/service reqts.

Under the 40% rule of 401(a)26, the non-owners have been excluded from the cash balance plan and are included in the 401(k) profit sharing plan.

401(a)(4) testing has been passed on a combined basis.

For 2014, there is 1 new employee who is eligible, so obviously we have to add non-owners to the plan.

Now there are 6 employees.

How is it determined which of the non-owners have to come into the plan, or do they all come in at once?

I have a small business combo plan..husband and wife and a few common law ees.

there are children on the payroll who are 18 but not 21. Can I have them be eligible

for the profit sharing plan and not the db plan?. ..i.e.,reduce the ps eligibility age to 18 but not the db). My goal would be to improve the rate group testing by having them eligible but not benefit ..but I do not want to boost the count for 401(a)(26) and have more db participants. I do not need to include them for 401(a)(26) even though they are in the 410(b)/401(a)(4) testing..correct?

Is there an issue with setting up a plan for director's fees (paid on a 1099) when the individual also has W-2 pay from the same company? I don't think it's a problem but I have a faint recollection of prior discussions about it. There are no control group issues.

Plan has gone to prior year testing for the plan year ending 9/30/14.

Plan provides a prevailing wage contribution.

Employee A was not HCE for the prior plan year, but is for this current plan year. Employee A received a PW contribution in the prior plan year as well as the current plan year.

We have used some of the total prevailing wage contributions from the prior plan year to boost the ADP rate for this year. Do I need to increase Employee A current deferral rate by the current year PW contribution to determine if he is due a refund? Or do I ignore the PW contribution?

Sal's book states: "in the rare event that all or part of the HCEs QNECs are included in the ADP Test, it is the current year ADP test for which they are eligible to be included because the prior year testing method applies only to the contributions made by the NHCs".(chapter 11.205) What is meant by this statement "in the rare event that all or part of the HCEs QNECs are included in the ADP Test?" When are they included? When wouldn't they be included?

Thanks.

So I have a client who is turning 70.5 in December. He was a 5% owner until he sold his stake on June 1st of this year. Does he have to take a RMD (or MRD, this acronym seems to change with each source I research) in 2015. He has not separated from service, nor does he plan on it in the foreseeable future.

The IRS' proposed regulations lists certain fields that will automatically be considered as service organizations, even if capital is a material income producing factor, one of which is "insurance." Is an organization that is a licensed insurance company that is in the business of issuing insurance included within the meaning of the "insurance" field on that list? I am asking because an insurance company is buying less than 80% of a service organization, so there is no 414(b) or © affiliation, and they will satisfy the other criteria for A Organization ASG status, but the point is moot unless the licensed incurance company is a "service organization."

I've got a question on the maximum percentage amount of the paycheck that can be allocated to contributing to a 401(k) plan.

I was told by my company's accountant that not more than 75% of my paycheck can be allocated to my 401(k) plan (managed by Fidelity Investments). My question is: is there a federal law on such a limitation -- or this is just a company-invented rule? If this is just a rule, have anybody heard of similar limitations in other companies? What could be a reason for such a restriction?

Thank you.

When calculating for owners the tax benefit of their plan, do we include 401(k) in that analysis? I've always said "no" because more likely than not there is some level of 401k that can be done with no employer contribution at all. But if the Plan is top-heavy, I suppose the 3% is the cost of doing the 401k quite literally.

But it also occurs to me that I'll bet someone has done quite a bit of research on this analysis. I wouldn't be surprised if one of the large accounting firms has written something about this. If not, they should, because I have this conversation with clients all the time.

Does anyone have any info they can share?

Husband/wife 2-person DC plan w/QJSA provisions being restated.

Wife has early alzheimers. They are in agreement they want to set up beneficiaries so that if husband predeceases wife, so that wife now has her account, and her husband's account as beneficiary in the plan, no future husband could ultimately end up with both wife and husband's accounts, rather than the children. How would this be approached?

I also posted this in the 125 topic but have not gotten a response.

Hoping to get some guidance. I see in the 125 regulations that deferred compensation under a 401k plan can be a qualified benefit in a cafeteria plan. I think the issue is if the cafeterial plan has flex employer dollars available, and the employee has an election to receive the cash as taxable income or defer it under the 401k plan, how do we do this? Is it a matter of providing this benefit in the 125 plan document and then giving the employee a 125 deferral election form and a 401k election form?

What is the Gateway Minimum for the NHCEs in the following scenario?

HCE is receiving the Safe Harbor Match (capped at 4%) and a 10% Profit Sharing Allocation.

Assume NHCEs did not receive any SHM because did not defer any 401k. Also assume 401(a)(4) testing is passed with as little as a 3% PS allocation to the NHCEs.

Is the Gateway Minimum additional allocation requirement 0.34% (3%PS + 0.34%GW = 3.34% * 3 = 10% PS allocation to HCE)?

OR

Is the Gateway Minimum additional allocation requirement 1.67% (3%PS + 1.67% GW = 4.67% * 3 = 14% total SHM+PS allocation to HCE)?

Hoping to get some guidance. I see in the 125 regulations that deferred compensation under a 401k plan can be a qualified benefit in a cafeteria plan. I think the issue is if the cafeterial plan has flex employer dollars available, and the employee has an election to receive the cash as taxable income or defer it under the 401k plan, how do we do this? Is it a matter of providing this benefit in the 125 plan document and then giving the employee a 125 deferral election form and a 401k election form?

thanks!

So this may be a silly question but if a plan sponsor is looking to establish a Cash Balance plan with the goal of sheltering a large chunk of money from taxes but is concerned that the variability in funding requirement that may occur due to fluctuations in the market may cause higher required contributions than he wants, could he simply set the interest crediting rate to ZERO (0%) and set his pay credit at $100k for himself and 5% for NHCEs and then invest in some ultra conservative money market account paying basically nothing?

Here's the example:

Sponsor is 10 years out from retirement. His income is 345k. He sponsors a cross-tested profit sharing plan where he maxes out each year. Those assets are invested appropriately to take advantage of market growth. In addition, he wants to accumulate another 1 million dollars and he wants to do it by taking $100,000 each year, sheltering it from taxes, and squirreling it away. He doesn't really need this 100k to earn much, getting the tax break (which brings his income from 345k down to 245k) each year is enough reason to do this. What he DOESN'T want is to have 2008 happen again and, not only see his balance reduced by half (which he'll see in his DC plan anyway) but he especially doesn’t then want to be on the hook for making a large contribution to his staff to make up for market losses. So that's the question. Would it be possible for a sponsor to choose a pay credit of $100k for himself, 5% for staff, and a ZERO percent interest rate and an investment vehicle yielding almost zero and just kick back and enjoy the tax deferral-- Thanks!

Have a plan with 3 partners. The 3 partners don't want to be responsible for the investment decisions of the other two. What's more, they don't want the other partner listed as the "account owner" (these are brokerage accounts) on what is for each of them a very substantial balance. So we have each partner listed as trustee of their own personal accounts, and just one of the partners serves as Trustee for the other employees.

It just so happens that one of the other employees who is semi-retired is the founder of the partnership, and he also wanted the same set up (i.e., trustee of his own account). This person obviously has a lot of clout and the 3 partners for political reasons do not want to say no.

There are no rules regarding who can serve as Trustee - any one have a problem with this?

We know from recent guidance that this is a HIPAA violation to make such an offer to just the sick employees but what if you do it for everybody?

Employers like to say "If you have coverage elsewhere we'll pay you more than if you take our coverage".

Thoughts?

I've been anticipating some employer wanting to do this and it's finally happened.

Each employee will be required to pay 9.5% of their Box 1 wages as their share of the premium for the lowest cost minimum value coverage and the employer will pay the difference.

I can't find a problem with this approach (other than the administrative challenges) and I suspect it won't violate the yet-to-be-released non-discrimination regs since it favors the lower paid employees.

Anybody disagree?

tripped across the following in the 1099R instructions

I've seen this topic discussed before, but never the comment about putting something in the margin of the 1096. (Never had this situation before, not quite sure how you would do this if you file electronically)

If you make a total distribution in 2014 and file a Form
1099-R with the IRS and then discover in 2015 that the
plan failed either the section 401(k)(3) actual deferral
percentage (ADP) test for 2014 and you compute excess
contributions or the section 401(m)(2) actual contribution
percentage (ACP) test and you compute excess
aggregate contributions, you must recharacterize part of
the total distribution as excess contributions or excess
aggregate contributions. First, file a CORRECTED Form
1099-R for 2014 for the correct amount of the total
distribution (not including the amount recharacterized as
excess contributions or excess aggregate contributions).
Second, file a new Form 1099-R for 2014 for the excess
contributions or excess aggregate contributions and
allocable earnings.
To avoid a late filing penalty if the new Form 1099-R is
filed after the due date, enter in the bottom margin of Form
1096, Annual Summary and Transmittal of U.S.
Information Returns, the words “Filed To Correct Excess
Contributions.”
You must also issue copies of the Forms 1099-R to the
plan participant with an explanation of why these new
forms are being issued.