We have a client whose plan allows for a discretionary pay period match; and an additional discretionary match at year-end for participants who are still employed at the time of allocation.

No formula mentioned in document, match can be uniform % of pay or a flat $ amount.

We just discovered that the employer decided on 12/24/14 to give a special match to 4 nonHCEs because he wanted to give them a "bonus". The plan document does not allow for a profit sharing contribution - only deferrals and match. Other employees got a match as well (as a uniform %), but these 4 individuals just got random dollar amounts deposited into their match accounts.

While this seems like it might not be permissible, I can't quite determine what rule has been violated? If we take the position that plan has allowed different rates of match, so it is subject to BRF testing, that is a nonissue because these 4 people are nonHCEs. And it helps the ACP test. So I can't see any testing problems with this.

Is this a plan document issue?

Thanks!

Client's 401(k) Plan limits the deferral limit of HCEs to the amount which equals current 402g deferral limit divided by current compensation limit. That number for 2014 would be 6.73% (17,500/260,000).

HCE contributes 10.6%. Plan does not fail the ADP Test but HCE exceeded the

plan imposed limit. What is the deadline for the return of excess? March 15th or April 15th?

The Plan was amended to the sponsor being a company owned (100%) by the eldest son of the owner of the previous sponsor. The previous owner is now an employee but not an owner..Previously his daughters who are also employees were included as Key Employees in the Top Heavy testing. Is Key status still attributed to the sisters for Top Heavy?

My HSA started in June. I am under 55 so the total I can contribute is 6550 for a calendar year for my family. We are likely going to change our insurance come April of this year so I'm just trying to figure out how much I can add to our HSA to max it out.

Since it is split between years does that I mean it's 3275 (6550/2) per 6 month period with the 2nd period being prorated? Or do I prorate the entire amount and since my period started mid-year I can add that total amount anytime across both years as long as I'm still in my plan cycle?

And where the hell can I read up on it to find out?

Thanks!

I have a document which specifically references the definition of compensation in the Definitions. Unfortunately, this definition of compensation excludes commission and bonuses. Two questions -- do I have to perform 414(s) testing and then use that (hopefully passing) compensation for my ACP test? and, do I have a document problem since the definition of compensation is so rigid?

Is a 401(k) plan permitted to only true-up employer matching contributions for plan participants who have hit the 402(g) limit for contributions ? Is there any statutory cite to support that this is possible?

According to the IRS website, it is my understanding that beginning with the 2014 Form 8955-SSA, the forms have to be filed electronically. It also says that you need to use software to create the proper format. In the past for the hard copy I submitted, the information was in the same format (page 2 and beyond) as appears in the 8955-SSA form on the IRS website. Do I still need to use the software?

I worked for Southern Railway system from june 1976 until April 1979 and paid union dues and contributed to the pension plan. I believe that I may have money owed to me but Southern Railway system no longer exists. How can I get information on this?

Company give a $250/month allowance to its employees. If employees benefit premiums come to $300 per month, there is a $50 deduction from their wages. If their benefits come out to $50 a month, they get $200 "bonused" to them as income.

1) I am pretty comfortable that the cash bonus is a taxable fringe benefit (although I know not everyone will agree, perhaps).

2) I am much less comfortable with the following question: If the employee spends the $250 per month, is the $250 considered wages for purposes of 415 comp OR is it employer paid medical benefits which would NOT be comp.?

Client had DOL audit and is filing a VFCP with the DOL. Do they also have to file SCP with IRS for the same issue (late remittances)?

We run all our DB valuations as of the beginning of the plan year. Asumming plan year is calendar, with 01/01 and 07/01 entries and 1,000 hrs required for accrual:

Q1 - should a mid-year entrant (07/01) with over 1,000 hours receive an accrual for the year?

Q2 - if not, should that mid-year entrant be included in the testing with 0% benefit?

Our company has done much better than expected in the first 6 months. As a result, we are able to and want to contribute the 4% profit sharing portion to all our employees.

Unfortunately we elected 1 YOS for profit sharing eligibility on our Safe Harbor 401k plan.

Any other options for us to be able to provide this contribution across the board to our employees?

I am processing a 401k hardship distribution for a participant who normally contributes the elective deferral max each year. There was a regulation that stated an employee's annual cap on elective deferrals for the year following a hardship distribution is reduced by the amount of elective deferral contributed in the year the employee received the hardship distribution. I do not see this requirement in the current regs. Was it repealed?

We have a plan that is considered a Davis Bacon plan. The company made QNECs as part of the prevailing wage arrangement some HCEs and NHCEs. I understand that up to 10% of compensation can be used for NHCEs in the ADP and ACP tests, however, do the QNECs for HCEs have to counted in either of those tests as well or can the HCE QNECs be ignored for testing purposes?

For plan purposes when does an owner (stockholder) actually "terminate"? The owner in question has not disposed of his shares, so still owns more than 5% of the company. He has, however, stopped taking salary and is not sharing in corporate gain/loss. I still need to confirm if he is actually performing any services, but for this scenario, let's say he is not. At what point is he "terminated"?

Thanks

I know I have seen this question before & probably even asked it myself!

Background: plain 401(k) profit sharing plan

the over age 50 owner made $22,669.18 in 401(k) contributions

the ADP test passes.

there is no match in the plan

computing the profit share contribution to maximize the owner using a cross tested formula.

The 2014 individual limit is $52,000. with $5,500 401(k) catch up, $57,500.

Since this owner only made $5,169.18 in catch up contributions is his total allocation amount limited to $57,169.18 or can he still get to $57,500?

I know it's not much in this instance but I want to do it right and get the client as much as possible.

thanks in advance!

I am sick of sponsors that insist on allocating matching contributions to participant's accounts over the course of the year AND insisting on having allocation conditions (last day, 1000 hours, or both)! I am looking for support for the propostion that allocating a match to participant's accounts before the allocation conditions have been met is a Code, Reg, or IRS or DOL Guidance violation.

Any thoughts?

Going to submit a VCP for 401(k) plan where the company owner, age 84, has never taken RMDs. Plan has 80 participants but just the one owner needing RMDs.

Any recent experiences calculating the correction with IRS? I did one of these a couple of years ago and IRS kept going back and forth on how to calculate the correction. I don't remember now what they finally accepted at that time, just hoping they have a more settled methodology today.

Seems to me we'd calculate the RMD for each year required, bring it forward with earnings to the present. In calculating the RMD for each subsequent year we'd back out the cumulative RMD payable from the account balance.

Thanks.

Safe Harbor 401k plan provides for the 3% nonelective contribution. Plan amended for 415 Final Regulations and thus includes adjustments for amounts paid post-severance for : 1) regular pay w/i 2 1/2 months or the end of the limitation year; 2) leave cashouts; and 3) deferred compensation (as described in the Reg.). Employment agreement provides for salary continuation to be paid to terminated employee over 36 month period. The salary continuation would not fall under the "regular pay" prong, nor the "leave cashout" prong. As for "deferred compensation" prong (as well as the "regular pay" prong), the amount would not have been paid if the participant had continued in employment. Thus, I do not see that the salary continuation is includible as compensation form purposes of computing the 3% non-elective safe harbor contribution. Any thoughts appreciated. Thanks.

I have seen some secondary / informal guidance and discussion suggesting that the prohibitions on reimbursing individual premium expenses under IRS Notice 2013-54 (and related DOL guidance, etc.) extend to prohibit tax-free reimbursement of premiums of COBRA coverage under the former employer's group health plan for a departing employee. That makes sense to me and I can see why requiring that these reimbursements be treated as taxable under 2013-54.

Given the guidance, it is unclear to me whether merely treating the reimbursements as taxable amounts is sufficient for compliance. It seems that the evolving interpretation of the guidance is that in order for payment of the premiums to be permitted the amounts must not only be taxable but not provided on a strict reimbursement basis or with restrictions on the use of the amounts. Again, while I can understand the rationale for that under the rules, the reimbursement of COBRA premiums under an employer's existing group health plan seems a bit distinguishable from reimbursement of individual coverage, etc. where the employer does not provide regular group coverage.

I was wondering if anybody had seen any formal or direct guidance from the regulators on this specific issue. My concern is that many many employment agreements are drafted to provide for actual reimbursement of COBRA premiums as part of a departing employee's severance package. Although having such reimbursements treated as taxable may not be inconsistent with existing employment agreements, having to pay the amounts out regardless of whether the departing employee elects COBRA is very different from how such provisions are typically interpreted / administered. Furthermore, providing for such amounts on a non-reimbursement basis would seem to destroy the potential 409A exemption for reimbursement of health coverage amounts for the COBRA period.

Would welcome any thoughts on this as I haven't found much discussion or guidance on this specific area. Thanks