I recently took over a terminating plan from another administrator. The plan terminated in 2010 and has been trying to pay out the participants over the past few years. There are currently 7 participants with a remaining balance. I noticed in the file that the prior administrator requested census info last year, and listed 77 participants with 7 having balances. If it's a terminated plan, wouldn't the plan only have 7 participants, (the ones with the remaining balances)?

If there are no HCEs in the plan, and each participant is in their own group.

Can some of the NHCEs receive an allocation, and others do not?

There are no key employees in the plan.

I have a client who wants to design the plan the following way: SHMAC 100% up to 4% and an additional match with a formula of 0% of the first 4% and 100% of the next 2%. I believe that due to the increasing match formula on the additional match, the plan would be subject to ACP testing. My colleague beleives that because the entire match is effectively 100% of the first 6%, then no ACP testing is requried.

There are effectively no caps on the elective deferral precentages.

Opinions would be greatly appreciated.

Is it possible to elect the "2 year eligibility" provision but waive eligibility for active employees as of the effective date? I assume no, but please confirm.

Has anyone had a client receive one of these rejection letters, specifically citing the reason as the IQPA failing to perform a sufficient audit? I'm wondering if there is some sort of audit initiative, if this is random or if something on the 5500/audit package triggered the inquiry. Thoughts/Comments?

We have a plan that is hovering around audit size. At 12/31/12 the plan had 115 participants, so it fell just under the first year audit size for 2013. On 1/1/13 the participant count grew to 160, but the question is, how do we base our count?

The plan has no hours or service requirement and entry is on the date of hire. Since this is a health care placement group, we have many employees who work as fill-ins and are hired for a week or so, here and there, during the year. The problem is that if an employee became a participant and terminated during 2011, didn't work at all in 2012, then was hired to fill in for a week in November-2013, the program is counting that participant as a body on 1/1/13.

I haven't been able to find any document that discusses how to handle rehires in this situation. Should the beginning of the year participant count be inflated for these "participants," even though they didn't physically get rehired until later in the year?

Hello. I am looking for some guidance here. We have been hired by a small dentist office that established a 401(k) plan as of 1/1/2003. Prior to that time, the client sponsored a simple IRA.

During the set up of the plan on your systems, we attempt to reconcile the assets at the investment house (in this case, strategic alliance) to the Form 5500 for the beginning of the plan year for which we have been hired. For this client there was a signifciant difference (besides the usual year end adjustments, eg receivable, etc.) When I approached the prior TPA, they informed me that from 1/1/2003 until 12/31/2006, the cleint was depositing the 401(k) and employer contirbutions into the Simple IRA investment accounts and that they did not establish a dedicated 401(k) account with the strategic alliance until 1/1/2007. When I asked the prior TPA about this, they indicated that they knew that the deposits should NOT have been made into the Simple IRA accounts but never tried to fix it.

Here is it now 13 years since that first incorrect transaction. How can this be fixed? On the face of it, when looking at SIMPLE investment statements it looks at if the SIMPLE plan continued to be funded between 2003 and 2006. And there is no record that a 401(k) account received monies during this same time period.

Has anyone ever encountered this before? What recommendation would you make to the client other than to hire an ERISA attorney?

I have client that is planning on terminating their cash balance plan.

If participants in a cash balance plan accrue the benefit after 1000 hours, and the plan terminates 9 months into the year, are they only entited to 9/12 of a benefit? If so, we will wait until Decemebr 31 to terminate, if not we will start the process now.

I know for profit sharing plans, if the plan terminates 9 months into the year, the max profit sharing of $52,000 is reduced to 9/12 or $39,000.

Thanks

First time poster, so please bear with me.......

This is a calendar year plan. The plan is a hard coded safe harbor.

I have a participant that was termed in 2012 and recieved pay 90 days after termination which went into 2013. What confuses me is the employer also withheld 401(k) from this excess monies.

My question is: Is she entitled to Safe harbor for 2013? And or included in testing. Can i disregard her all together?

Please advise.

Facts are as follows--

• Person A owns 100% of Management Co.
• Managment Co. derives 45% of gross receipts from Co. Z. Co. Z is owned 40% by Person A, 30% by A's brother (Person B) & 30% by somone unrelated.
• Person A & Person B also own 5 other businesses 50/50.
• Managament Co. derives about 20% of its revenue from the 5 businesses ownerd 50/50 by the brothers.

The goal is for Management Co. to adopt a plan without having to include any of the other business. My concern is whether Co. Z needs to be aggregated with the other 5 businesses when determining from where Management Co. derives its revenue. It is my understanding that under 267 the brothers are related persons. I'm unclear though about whether there needs to be a certain degree of common ownership between between Co. Z and the other 5 before all businesses are considered related. Under 1563, Co. Z wouldn't be part of a controlled group with the other 5 because there isn't 80% common ownership. Does that same 80% threshold apply when using 267©? Am I analyzing everything else correctly?

Thanks in advance for any guidance

Suppose an employer cannot fund the 2013 safe harbor match by September 15, 2014?

What happens?

I would think they would need to run the ADP and ACP tests and provide a top heavy minimum since the plan is top heavy. Any other horrible consequences?

A client is worried about the economy and would like to put a few hundred thousand dollars of his Profit sharing into precious metals? Can anyone tell me if this can be done legally? and who does it well?

A terminated participant is on disability and TnCare, neither of which she can afford to lose. She wants to know if the Pension Plan allows for the money to be rolled into a Trust (her son who is over 21 would be the Trustee.) If so, is there a tax liability at the end of the year or is there no tax as long as the money stays in the Trust. Of course, in the future when/if money is taken out she knows there would be tax.

My thoughts are the funds could be put into the trust, yet they would be taxable in doing so? Would this be the best option for her? I'm thinking she should just leave the money in the plan or roll it over.

due to the issues last year whereby the 5558 was filed in July and then the 5500 form in early August:

Some Sponsors received letters that the 5500 was late because of the timing of the IRS providing the 5558 information to the EBSA.

what are others doing this year? Are you holding off on the 5500 filing and if so, until when?

I know the issue is easily addressed with the proof of the 5558 filing date, but trying to avoid having the issue to begin with.

any thoughts appreciated.

Employer sponsored voluntary executive access to Institutionally-priced Life Insurance (ILI, COLI, SALI) serving as a 409A complement or supplemental Roth is gaining in popularity. Access is typically restricted to same "select group" as nonqualified deferred comp / 409A plans, or more restricted.

Most institutional COLI issuers now allow their policies sold in this manner, a multi-life after-tax employee funded alternative to pre-tax nonqualified deferred comp funding, but don't provide employer overviews of how to do this on an ERISA compliant manner like they do when buying COLI to informally fund 409A plan.

I'm looking for a reference piece on how discriminatory an employer can be sponsoring a voluntary life insurance benefit and the required documentation.

Also ... some have expressed ERISA concerns since these plans / policies are designed for (1) retirement cash / fund management with (2) supplemental protection as opposed to traditional retail / group voluntary life insurance plans designed for (1) protection with (2) supplemental cash accumulation opportunities.

Would appreciate any opinions on employer regulatory / ERISA exposures sponsoring a voluntary life insurance plan to fund retirement.

Should car allowances be included in the definition of compensation?

The doc only says that a bonus and items included in Treasury reg. 1.414(s) 1©(3) should be excluded.

I could not really find a car allowance definition.

Would it be based on whether or not the car allowances is included in W-2 income?

Thanks!

Participant deferrals were withheld from a participant's paychecks (7/15/13 and 7/31/13) before the plan adoption date (8/15/13). The deferrals were never deposited into the plan, and (but) were not included in taxable wages on 2013 Form W-2. How to correct this? Possible options:

1) Correct the 2013 payroll information (W-2, quarterly, etc.) and reissue check. Of course, this would also involve the participant amending their 2013 Form 1040.

2) Deposit the two July 2013 deferrals into the plan, then distribute out of the plan with a Form 1099R. (If this is done, does the plan sponsor pay excise taxes on the late deferals?).

3) ????? (Never had this happen before, so I'm completely uncertain.)

Dave participates in a 401(k) Plan and is unmarried at all relevant times. He dies on 8/1/2014 with an account balance of $X and without designating a beneficiary. Under the Plan terms in effect when he died, his account balance is paid to his estate. Under the relevant state law, his account balance became a probate estate asset on his date of death. He has no will. Under the relevant state intestate succession rules, Gloria stands to get his entire account balance. If the Plan is amended now to change the default beneficiary from "his estate" to someone else so that Gloria does not get any of it, does Gloria have any legitimate cause of action against the Plan? Also, is such a post-death amendment likely to be challenged by the executor of Dave's estate since it would change a probate estate asset to a non-probate estate asset after Dave's death. Very confusing--please help. Thanks!

Code Section 409(e)(5) provides that the pass-through voting on the specified matters in Code Section 409(e)(3) for non-registration type securities will be met if the plan permits each participant one vote with regard to such issue. I am concentration on the language "will be met." Is "one-person, one- vote" an absolute requirement, or can the plan permit voting based on total shares held by each participant? Is there any authority for an alternative method of voting?

Relevant Background Information:

401(k); Safe Harbor Non-Elective; additional non-SH match.

Age 21 & 1 year of service with dual entry on 1/1 & 7/1.

Adoption agreement specifies that participants must complete 1 year of service to receive the match.

Further, it defines 1 year of service as 1,000 hours.

Match formula = 50% on the first 3% of comp deferred (max 1.5%)

Questions:

2-part question whether ACP testing is required on non-SH match or not...

IRC 401(m)(11) indicates no testing IF...

- the additional match is not based on deferral exceeding 6% of comp (okay);

- Ma formula cannot escalate (okay);

- % cannot be greater to HCEs than NHCEs (checkmark);

- Ma cannot exceed 4% (okay); and

- the additional match cannot impose an hour and/or last day requirement to

receive.

That last point regarding hours is where we need clarification.

Adoption agreement specifies that participants must complete 1 year of

service to receive the match. Does not specifiy hours in that section.

But, the agreement defines 1 year of service as 1,000 hours elsewhere. I

could see the last point causing a need to ACP test. Here are my questions...

(1) Would we need to ACP test?

It just so happens that all participants who deferred worked

more than 1,000 hrs anyway. Anyone with less than 1,000 hours didn't defer

to receive a match. Therefore, no one was excluded from receiving match

due to hours.

(2) If question 1 is yes, then due to additional facts and

circumstances would that be enough to avoid ACP testing for the plan year?