Suppose you have a non-governmental, tax-exempt 457(b) plan. No deferrals, just employer nonelective contributions only.

Now, suppose the employer's contract with the employee states that a specified amount (X) will be contributed each year for the employee. There is no language in the plan itself that states this. No Rabbi trust is in effect.

The employer never "funds" this - yes, I know, it is an "unfunded" plan anyway, and assets are general assets of the employer.

The point being that the employer is now in financial difficulty, although not yet, at least, in formal bankruptcy, and a terminated participant wants his money, and there is no money.

Am I correct in assuming that state law/employment/contract law would govern the remedies available to this participant? The plan provides, under claim procedures, that after jumping through the appropriate hoops, the participant may avail himself of the remedies under ERISA 502, but what does this really mean in practical terms?

Does this participant have rights that supercede those of other creditors, until such time as they are in bankruptcy, or is that again based on state law?

This is all a new one on me...

We took over the plans of a non-profit controlled group - three distinct entities, each with their own plan. Their approximate 2013 demographics are:

Corp - 519 NHCEs, 1 HCE, profit sharing only plan (they also have a non-ERISA 403(b) plan for this group)

CA - 20 NHCE, 0 HCE, 401(k) plan with match

HA - 50 NHCE, 0 HCE, 401(k) plan with match

The CA and HA plans are identical

I believe coverage is OK for 2013 as the only benefitting HCE is in the profit sharing, and that test is (1/1) / (519/589) > 70%.

However, one employee of CA had comp > $115K in 2013, so she will be an HCE for 2014. I think that will blow this arrangement up, as the deferral and match tests for 2014 will be (1/2) / (69/588) = 23.5%. Obviously, this would be Bad News. So...

1. Please tell me that my math and/or logic is completely off and everything works out fine.

2. Can I use a QSLOB election to group CA & HA and get around this?

3. If not, is there another way to pass coverage? I haven't looked at average benefits, but I suspect that having 500+ participants getting no benefit will sink that test, too.

4. I'm going to assume that the plan sponsor would like to avoid bringing in 206 - 69 = 137 employees of the Corp into one of the 401(k) plans and giving them QNEC/QMAC allocations to pass coverage. Is there another option?

Thanks.

Company recently terminated an employee for embezzlement who was 100% vested in his Account (all employer money) The plan document (a nonqualified deferred compensation plan) does not contain any forfeiture for cause provisions. ER does not want to pay. Are there any repurcussions for not paying - from a 409A perspective or otherwise? Any case law similar to this scenario? What do you see as a potential solution for this ER?

Looking for help in trying to understand how earnings are being calculated for my QDRO. The Plan Administrator is only reachable for inquiries via a letter or fax. So looking to try and understand asap so I can get some sleep tonight.

The QDRO stated the alternate payee (ex-wife) is entitled to $96,869.62 as of 05/09/2012, plus earnings, or minus losses. The amount that was transferred to the alternate payee was $134,090.40 as of 08/21/2014. My 401K account earned roughly 7% from 05/09/2012 - 08/21/2014. So trying to understand how the earning was calculated at $37,220.78.

401(k) plan was established in 2013. Plan sponsor wants to terminate the plan now. Two owners rolled money into the plan at inception. The only other money in the plan is 401(k) money of the participants; despite initial intentions no employer contributions have been made to the plan. No loans were ever taken on the rollover money (or any other money for that matter).

A couple of questions:

1. Would the IRS have a permanency issue with this plan terminating? Although I know it is subjective most opinions suggest two years for a DC plan with employer money. Not sure why it would be different if there is not employer money.

2. Assuming there is a pemanency issue what would be the cosnequences? Employee deferrals & trust earnings counted as income? Initial rollovers disallowed? Anything else

Thanks in advance for any guidance

Employer has employees spread out all over the country. Many of these employees are unionized and participate in various multiemployer welfare plans depending on their locations.

Employer is concerned about the Section 6056 reporting requirements for 2015 (i.e., providing information whether it offers its full-time employees with affordable, minimum value coverage). It does not have information about the employee contribution for coverage under the multiemployer arrangements (it generally only knows its contribution to the funds). Employer is particularly concerned that the funds may not be willing to share this information with the employer.

The final section 6056 regulations provide that multiemployer funds are "permitted" to submit 6056 forms with respect to the full-time employees that participate in the funds but also that the employer is ultimately responsible for the filing. The IRS declined to require multiemployer funds to submit the form or even to provide information to employers with respect to information that it has in its possession.

Do you see multiemployers funds being willing to cooperate with employers in providing information so that employers will be able to satisfy their section 6056 obligations? Do employers have any recourse to obtain this information?

Thanks for any help you can provide.

We're terminating our plan due to M&A. We stopped taking money 2 days before the last payroll, so contributions were withheld from paychecks and will need to be refunded during the next payroll runs. I'm not concerned about the weekly people, but for our semi-monthly and monthly payroll people, is there anything I should be concerned about as far as holding on to the contributions and accruing interest for half a month or a month? EE's will squawk, but I just want to confirm.

Plan has 1 asset with an asset that does not have a readily determinable market value so must file the 5500 form, not 5500-SF.

It also has a Variable Annuity investment with an insurance company called Allianz.

Does this investment mean a Schedule A must be filed? I wasnt sure since as a Variable Annuity, none of the investments are itself with the general assets of the insurance company. On the other hand, the Schedule A instructions seem to require a Schdule A if it is an "account, policy, or contract with an insurance company".

Thanks for any opinions.

A frozen defined benefit plan covers 8 participants, 4 of whom are partners in the ownership of the company. The partners would like to terminate the plan. Although it is underfunded, they would like to make a contribution to make the plan whole. For tax deduction purposes, how would the contribution be allocated? In partner situations, is the allocation of the deduction done pro-rata based upon the funding targets? PVABs? I have heard that it is possible to do it another way using theoretical reserves. Does anyone have more information about this method?

I have to believe that a similar question has come up before, but if it has, I sure can't find it.

For 2011, the plan sponsor had a safe harbor nonelective contribution due. The sponsor also "declared" a profit sharing contribution. The 2011 and subsequent valuation reports were prepared on this basis.

Neither the safe harbor contribution nor the profit sharing contribution was ever made, although both were apparently deducted.

Since the safe harbor contribution was required, my understanding is that it must be accumulated with interest and deposited, using an EPCRS correction method. However, since the profit sharing contribution was NOT required, it seems to me that there is no making it up at this point, and that the correct action is to revise prior valuations to reflect that it was not made. Or, is the correct action to just make the contribution now and revise the tax return (which should be done anyway)?

Any thoughts? There are many positions I could talk myself into.

Thanks to anyone who replies!

Dog

Does anyone know if you can have a Wrap Section 125 Plan that also covers after tax benefits?

Are you "required" to use Code 2E (Profit Sharing) if the only contributions that have ever been made are 401k and Safe Harbor? Or is it necessary to clarify that at its core it is a profit sharing plan. I always used 2E for 401k plans but I'm reviewing a 5500 for the prior provider and they are not using it. Should I tell them they are flat out wrong or let it be?

I'm thinking that it's probably ok to exclude it (they did indicate 2J and 2K).

The plan document requires payment to the estate when no beneficiary is named. Would that mean that the benefits are paid to the estate's EIN, taxed to the estate, and then distributed to the estate's beneficiaries? In that case, the beneficiary would not be able to rollover the benefits, correct? And, the beneficiary will be able to itemize deductions for any estate tax paid? If you have any Code citations or formal IRS guidance on this, please provide. Thanks!

I'm preparing for a small group seminar on 410(b).

I know there are some homemade stand-alone spreadsheets available tfor ratio percentage test of 410(b) but does anyone know of any stand-alone spreadsheet for the average benefits test?

It's been several years and the creator has since passed.

Presumably the drop-dead date for opting out of HAFTA for 2013 for a calendar year plan is 9/15/2014 for 430 and 9/30/2014 for 436.

9/15/2014 is the last date a contribution for 2013 could be counted on the 2013 SB. 9/30/2014 is the AFTAP drop-dead date whereby presumptions apply.

I made all of this up so please feel free to disagree!

What are the parameters for merging a SH Plan into a non-SH Plan?

I can't find anything, even in the Outline Book... Can I continue the SH portion of the plan for just those participants merged in from the SH Plan? IT is a separate legal entity that was recently acquired.

Also, does the merger itself "blow" the 410b6c grace period which just opens up a whole other can of worms?

Or are my choices a) wait until the first day of a plan year, or b) discontinue the SH mid-year and therefore run ADP testing, etc.

I've never dealt with deemed IRAs inside a plan. If the plan allows for deemed Roth IRAs, is it possible to roll a Roth IRA into the deemed Roth IRA within the plan? I know that you can't roll a Roth IRA into a 401k plan, so if the participant wants to consolidate assets. Would allowing the plan to set up a deemed Roth IRA allow him to roll his money into the investment platform if the platform can recordkeep the Roth IRA separately?

I left ATT in 2008 and my ex wife put a QDRO hold on both the ATT and USWest (now Centurylink) she pursued and got a portion of my ATT cash buyout. Now I'm eligible to begin withdrawing my centurylink annuity of $354 a month. 8 years later the hold is still in effect. It is managed through Towers Watson QDRO Service Center in Los Angeles. I feel 8 years is long enough and my ex does not want to sign a waiver. I worked for USWest from 9/1977-1/1998. We married in 1991 divorced in 1996 but we separated in 4/1995. She will not get very much in any settlement which is why she took the ATT buyout. I need to begin drawing this money due to financial hardships incurred during this economic downturn. I did see in another post that there is no statute regarding any limit. At ATT if no action is taken after 18 months the hold is dropped. Any input would be greatly appreciated.

Hello all!

We have a client that would like to self-correct their untimely participant contribution and loan repayment remittances in lieu of filing under VFCP. The client is well aware of the potential liability they may face in the event of a plan audit should they choose to forego the opportunity of receiving a "No Action" letter from the DOL via acceptance of a VFCP.

As I read in EPCRS, you can use an actual earnings method, or the highest performing fund method to determine the lost earnings on the late remittances. I am probably over analyzing the situation, but would we use the actual performance rates for funds i (i.e. returns published in Morningstar) to determine the highest performing fund, or somehow determine the fund performance within the plan? Depending on fees, withdrawals, contributions, etc., the "Plan" fund returns may be greatly skewed in comparison to actual mutual fund performance for the fund as reported online on Morningstar, Yahoo! Finance, etc.

Additionally, can you pro-rate the highest performing fund percentage? For instance, if the start date of the untimely remittances was 1/21/2013, but I get the highest performing fund for 1/1/2013 - 12/31/2013, can I assume that the contributions were invested for the year from 1/21/2013 - 12/31/2013 at a pro-rated share of the highest performing fund (i.e. contribution was invested at rate compounded over 1/21/2013 - 12/31/2013)?

Any help is greatly appreciated. I am tired of debating with myself on this issue

Thanks!

Wickedp1

401k plan is subject to QJSA. A former employee wants to take a distribution. His account balance is $4,000, but he has an outstanding loan balance of $3,000. Since the amount of cash he will get is under $5,000, do I need to get spousal consent? Do I include the amount of the outstanding loan balance in determining whether his balance is over $5,000?