DB - NOT covered by PBGC

Assume the following applies to both plans

- all participants covered by both plans

- covered payroll = $1,000,000

- MRC in DB = $250,000

- Max deductible in DB = $400,000

- 6% of pay in DC = $60,000

- 25% of covered payroll $250,000

Can sponsor make max deductible of $400,000 + $60,000 to DC plan and deduct them both?

or

Is sponsor limited to $250,000 MRC in DB + $60,000 to DC plan?

That is if the MRC in DB is 25% or more of covered pay is the sponsor limited to MRC in DB + 6% DC or can the sponsor always take max DB + 6% DC

I feel this should be straight forward but for some reason I'm brain cramping.

Converting 401k plan to QACA effective Jan 1, 2015. Must all current participants complete new election forms? All current participants have previously completed election forms, several have declined to participate - do they need to decline (again)?

In reviewing a Schedule SB for 2012 for a CY plan, I noticed that there was a typo on the Valuation Date. It indicated 12/31/2012 when it should have been 01/01/2012. The numbers are all correct, but, it is just that this date was put in incorrectly.

Question: Should I amend the 2012 filings and re-submit or just let it go and if the gov't calls me on it, explain that it was just a typo and that would be the end of it?

An advisor would like her client (a participant in a 401k plan) to take his 2014 RMD as an in-kind distribution of shares of a certain stock. Is this allowable? I know the RMD is a taxable event. Regardless of whether tax is withheld from the distribution or not the 1099-R will show the entire amount as taxable. But is it ok to transfer stocks in-kind from a 401k plan to another account (trust)?

When determining the non-statutory otherwise excludable employee group, can you use the elapsed time method for computing the 1 year of service requirement? For example, a 401k plan has a 6 month eligiblity period using elapsed time. It is difficult for the employer to track hours. When determining the non-statutory group, instead of using 1000 hours, can you use elapsed time and age 21?

Thanks!

An employer was paying for the first month of a former employee"s COBRA. The former employee sent his COBRA election letter to the former employer instead of the administrator. The employer paid the first month premium. The administrator cancelled the former employee"s COBRA because they did not receive the former employees election. Does the election notice by the former employee to the former employer count as notice of the election? The election notice was sent to the employer 8 days after receipt of the COBRA notice.

Any solutions anyone knows about?

Annual check to the state as an escheat process?

Failure to make the RMD is a problem for the plan as well as the Participant I believe.

Thanks

On page 4 of this article:

http://www.davis-harman.com/pub.aspx?ID=VFdwWmVnPT0=

is the statement that:

"If the 5-year rule applies, no amount is treated as an RMD that is ineligible for direct rollover for the first four years after the employee’s death, and no amount is eligible for rollover on or after January 1 of the fifth calendar year following the year of the employee’s death."

Do you know of any cite or reference that confirms that this is true? Thanks.

A participant in a 401(k) that has automatic enrollment was enrolled in the plan and subsequently opted out. The participant is now upset that the service provider has access to his personal info (address, SSN, etc). Opting out does not erase/delete the employee's personal information from the roll. Do you know where I can find information on this topic of protecting personally identifiable information? Is this a privacy issue? Has anyone had experience with this?

The service provider will need this info to process distributions, 1099's, 8955's, etc when a distributable event occurs. Do participants have any recourse with privacy issues?

Thanks

Multi-employer defined contribution plan.

I represent the Plan. I received a QDRO in June, 2014. I reviewed it and everything looked good. The QDRO assigned the AP a lump sum (let's just say $100,000 for sake of ease) as of November 1, 2010 (not the true date, but just for ease of use) plus interest/earnings accrued since November 1, 2010. I contacted the custodian and plan and told them to segregate the account per the QDRO terms, etc. Very easy and standard. The account was segregated and the AP withdrew the money. All proper.

Two months later, I get a note from the attorney for the AP that, in fact, the segregation should have been $100,000 as of February 1, 2014 plus interest/earnings accrued since February 1, 2014. Considering the amount of interest/earnings that accrued since November, 2010, the AP received an extra about $60,000 in her distribution.

The new QDRO that has the correct segregation date looks fine. My question is, what can the Plan do?

Can the AP just write a check for the excess amount back to the Plan?

Does the Plan have an issue because of a wrongful payment (even though it was following a Court Order)?

What do you recommend as the best practice to make this right?

To me, a problem is that the original QDRO assigned essentially $160,000 to the AP and now the new QDRO assigns approximately $110,000 to the AP. That's not an additional $110,000, but a "negative" $50,000. It's almost as if there's no use creating a new account since that would be pointless.

Instead, the AP should just pay back the excess amount and everything should be ok. But that seems way too easy and logical, and we all know that dealing with these things, easy and logical usually means wrong.

Your thoughts? Thanks.

A 401(k) plan had a participant with a participant loan. It turned out she made one extra payment on her loan and an additional $410.00 is in the plan. She was not making repayments through payroll deduction but by personal check.

This seems like it should be correctable through self-correction. If so, I would think the additional $410.00 plus earnings would be refundable to her. Does anyone disagree? Also I would think earnings should be based on actual plan earnings between the time of the additional payment and the refund. Anyone disagree?

Thanks.

Based on the regulations that came out this morning, it looks like a fixed interest crediting rate of 6% is allowed under the regulations for a hybrid plan.

What I would like to know is when this is effective. The regulations are generally effective January 1, 2016, but it also states

"The rules in these final regulations that merely clarify provisions that were included in the 2010 final regulations apply to plan years that begin on or after January 1, 2011, in accordance with the general effective/applicability date of the 2010 final regulations). In addition, these regulations amend §1.411(b)(5)-1 to provide that §1.411(b)(5)-1(d)(1)(iii), (d)(1)(vi) and (d)(6)(i) (which provide that the regulations set forth the list of interest crediting rates and combinations of interest crediting rates that satisfy the market rate of return requirement under section 411(b)(5)) apply to plan years that begin on or after January 1, 2016. footnote 9"

footnote 9 says:

"The 2010 final regulations provide that these particular provisions apply to plan years that begin on or after January 1, 2012. The intention to delay the effective/applicability date of these provisions was announced in Notice 2011-85 and Notice 2012-61. Notice 2012-61 announced that these provisions would not be effective for plan years beginning before January 1, 2014.

So, can the use of a 6% fixed rate be relied upon in 2014 or 2015?

Client has a safe harbor 3% plan- Company A. They have a second company ( not a controlled group) that has a 401(k) Plan - not safe harbor.- Company B

Recently they started to have employees transfer between companies. They want to give employees in Company B who transfer to Company A service credit for purposes of eligibility.

Since this would take an amendment, are they prohibited from adopting a mid year amendment for this change effective in 2014?

They are expanding coverage to allow additional employees to participate in the plan. Would the IRS take issue with this mid year amendment?

Thanks

The Aug rate was released yesterday

so we have 238.250 for July

237.852 for Aug

awaiting Sept

unless it dramatically, and that would be a super dramatic drop to go under 233.000

then the limits next year will be

6000 catch up

18,000 deferral

265,000 comp

53,000 415 limit

120,000 HCE limit

or I guess our wonderful govt could hop in and say Sorry, no more increases.

I have a plan that is facing a major coverage problem unless it merges all of the plans in its controlled group by the end of this year. They are skeptical, and want to see a "for instance" on how much it would cost them in the event that they had to go to a closing agreement.

My question is, is there a way to access the IRS decisions on closing agreements reached with plans? I know I've seen a couple of very large ones reported somewhere, but I can't recall where. Is there a way to access these decisions on a website?

Client has an Employer Sponsored Individual Retirement Account plan - adopted in 1978. The employer withholds the participants' IRA contributions (all are after tax) and the participant's match is also taxed, and makes the deposit to an omnibus IRA trust. Now it's up to each participant to claim the deduction (annually) to convert this contribution to a pretax benefit.

What happens, however, when a participant doesn't claim the deduction? Maybe due to the fact that the participant couldn't take the IRA deduction for that year and/or subsequent years?

The plan now terminates and the trust holds after-tax IRA money? Where can it be rolled? Is it treated like a ROTH? The Plan doesn't allow ROTH.

Any ideas?

This comes up all the time. We get a court signed document saying to move money from the Participant to the AP and they come back and say "we won't comply with the order without getting the paperwork back from the participant."

To which I say "are you crazy??" We learned the hard way with a large QDRO where we waited until the participant returned paperwork (per the general procedures of the recordkeeper), which of course she never did. Imagine the hot water we were in when we told her account was down 17%... (this was back in 2007 or 2008).

Am I the only who constantly bickering with recordkeepers to get them to move the money to a new account ASAP.

Our local monolithic BCBS bureaucracy offers participants in its clients' self-insured health plans the ability to receive rewards for participating in certain participatory "wellness" activities in the form of cash reimbursements. For instance, if a participant joins a gym and documents that it completed X number of workouts, BCBS will reimburse a portion of the gym membership fee.

This reimbursement is a taxable fringe benefit under the Code. As such, each employee must include it in gross income and the employer must properly withhold the amounts and report the amount on the employee's Form W-2

BCBS appears to be, thus far, unwilling and/or unable to provide its clients with information about these reimbursements to permit the clients to comply with its reporting obligation.

There does not seem to be a legal obligation on BCBS to provide the information.

I understand the risk of liability is relatively low here but has anyone come across this situation and, if so, how did you address it?

Thanks!

Per HATFA guidance, section IV.A. an employer may reverse an election to reduce funding balance for the 2013 plan year under 1.430(f)-1(e) if the election was made by 9/30/14. It seems that 1(e) refers only to waiver of funding balances and not election to apply funding balances towards meeting the 2013 minimum funding requirement.

At least one summary published has indicated that this reversal would be available for elections to apply funding balances toward the funding requirement as well as waivers despite how the guidance reads.

Has anyone come across this issue yet? And if so, what was your interpretation and result? Thanks.

A plan has annual automatic enrollment set up that applies to all employees except 2 groups, which are named in an amendment. Does the ACA notice need to them as well, and state that it doesn't apply to these groups, or can it just be distributed to the employee groups that it's applicable to?