An individual just sold the assets of his corporation to an unrelated corporation on April 30th.

His five employees terminated employment with his corporation on April 30th and are now employed by the purchasing corporation.

The purchasing corporation has agreed to pay the individual's corporation consulting fees for continuing to provide services for the purchasing corporation.

The individual's corporation wants to establish a new defined benefit plan effective July 1.

Questions:

1. Will the new defined benefit plan pass 410(b) coverage testing for the plan year beginning July 1? In performing the 410(b) coverage test, will the 5 former employees need to be considered in any way for the plan year beginning July 1?

2. Will the 5 former employees have to be considered in any way for testing under 401(a)(4) for the plan year beginning July 1?

3. Will the timing of adoption of the defined benefit plan be considered discriminatory since it is adopted after the termination of the 5 employees?

Any insight or comments will be greatly appreciated!

Employer maintains an auto enrollment plan. Using a bundled platform and it was discovered the participants eligible to join the plan effective 1/1/2014 were not provided the auto enrollment information. Platform's position is this can be self-corrected by using the missed deferral opportunity, making the respective match and lost income.

Now for the tricky part, the participants in question all received the auto enrollment information as soon as the error was discovered and the majority of them opted out of the plan. The platform has asked the employer, since the employees have opted out, do they still want to make up the missed contributions for the period January 1 through the date the opt out was execute? Or will the participants who opt out be removed from the missed deferral calculations?

My gut feeling is the employer is on the hook for the missed deferrals even though the employees are now opting out. Since they never completed the form or online form stating they wanted to opt out, I do not see how the employer can take the position, "they more than likely would have opted out all along."

Change to deferrals/investments etc. are to rescind prior elections, my position would be that going forward the election is to not participate in the plan, however, the election can not be retroactive.

Thoughts????

Why would a non-profit have a 457(f) instead of just a regular old deferred comp plan? Because the (f) requires a substantial risk of forfeiture to avoid taxation, whereas the regular non-quals do not (at least not with respect to fed taxes--it would of course be subject to PR taxes), it seems to me that one should never use a 457f.

So then, I gather a non-profit is required to use a 457(f)? Is it because anything sponsored by a tax exempt entity that is not a 457(b) is by default a 457(f)? i.e., the plan sponsor has no say in the matter?

Anyone have any insight and/or speculation about when/how the IRS will adopt the new mortality table(s)?

(Yes, I'm familiar with the discussion at the 2014 EA meeting.)

Here is mine: the PPA mandate is to upate the tables "at least every 10 years". If the current table is extended one more year (thru 2016), and then a new basis is adopted for 2017, the IRS will get two benefits:

- they beat their mandate by one year, and

- they give the software vendors more time to update for 2D projedtions scales.

Also, there is no way the IRS will recognize (ie, in the approved tables) the measured differences in "collar".

Go.

Our company is looking to change HSA Vendors from JP Morgan Chase to either:

Connect Your Care

Health Equity

Optum Health

Wage Works

Curious to hear if anyone has experience with any of these companies from an administration standpoint and hear some thoughts on these vendors.

Can the Plan Sponsor name a position with the Employer as a Trustee, instead of specifically naming someone? For example: The Trustees shall be the President and CFO.

Secondly, does the Trustee have to agree, in writing, to be a Trustee?

I see a lot of plans where the husband owner is Trustee, and that his wife is also names as a Trustee. What if she doesn't even know that she is Trustee and something happens?

The Plan Sponsor has decided to terminate their Cash Balance Plan in 2014. 2013 was a great year for the Plan Sponsor and they want to make the largest contribution possible for 2013 prior to the termination in 2014.

Facts:

6 participant plan (all family members)

Maximum tax-deductible contribution for 2013 is $2,000,000.

Minimum required contribution is $250,000.

Plan is covered by the PBGC.

Total lump sum distributions at 8/31/2014 = $3,100,000

Sum of maximum 415 lump sum distributions is $4,200,000.

Projected assets as of 8/31/2014 is $2,700,000.

They will need to deposit $400,000 to fully fund distributions as required by the PBGC.

Can anyone think of a reason they cannot deposit $1,300,000 for 2013????

The assets will increase to $4,000,000, creating assets in excess of the benefit liabilities. The excess assets will be allocated to each individual according to that individual's liability and the ratio to the total liability. No one will receive a distribution in excess of the IRC 415 maximum lump sum.

Thanks for your opinion.

Is there any exclusion to the late deferral deposit rule for Plans that convert to another product - and the new Recordkeeper will not accept contributions until the assets have transferred.

I have found nothing to indicate that the Employer is not subjected to the Prohibited Transaction rule - but the Recordkeeper feels otherwise.

I have a hypothetical question, but based upon a potential real-life situation where client currently has C-corp with a 401(k) plan, and is now suddenly interested in converting to an S-corp with an ESOP, for reasons unknown. I'm just trying to consider some background. Numbers are hypothetical and rounded for simplicity. For purposes of the example, assume 1,000 total shares, all to be owned by the ESOP, with no synthetic equity and no family members.

So, in first year, since there is no prior valuation to use to calculate "deemed owned" shares, you must use a "reasonable
" method." I'd assume that the actual first year allocation/share release would typically be a "reasonable" method? So, let's say 140 shares allocated/released, and of those, 60 are allocated to Mr. Big. This represents 43% of the total share release for 2014. So for his deemed ownership, you start with the 60 shares, then you take 43% of the remaining 840 shares, or 360 shares, for a total of 420 shares - app. 42% of the total.

First, have I got that right? If so, that's pushing the 50% in the first year. So, say you then amend the plan to exclude Mr. Big from receiving further allocations. You still aren't necessarily off the hook, because an "impermissible accrual" includes ACCUMLATED allocations from prior years (although I can't offhand see how he'd reach 50% if he is ineligible to ever receive an allocation, barring some new family issue or synthetic equity situation?) I'd think perhaps the client's legal/tax counsel would perhaps advise Mr. Big against participating even in year one?

I've seen very few ESOP's, and the ones I've seen are mostly small S-corps where the Head Honchos are excluded from day one cause they can't pass 409(p).

Appreciate any thoughts.

New to the governmental side of the business, so I apologize for the basic question.....

Are there any limits to the pre-tax contributions made in a 414(h) plan? Subject to 402(g)? 415 Limit?

note, this also includes form 8955-ssa

http://us.practicallaw.com/0-567-8745

Notice 2014-35

ERISA and the IRC provide penalties for the late filing of a Form 5500 series return and other information. The DOL's Delinquent Filer Voluntary Compliance (DFVC) Program allows plans that fail to timely file their annual reports to admit to noncompliance in exchange for reduced penalties (see Legal Update, DOL Notice Updates Delinquent Filer Voluntary Compliance (DFVC) Program). Benefit plans participate in the program by filing an application and submitting the late annual reports. Under Notice 2014-35, the IRS will not impose penalties under IRC Sections 6652(d), 6652(e) and 6692 for a plan's late filing of a Form 5500 series return (including Forms 5500, 5500-SF or 8955-SSA) or an IRC Section 6059 actuarial report, for a year for which one of these forms must be filed, if the person.....


last paragraph of article
By linking the IRS' penalty relief procedures to the DOL's DFVC Program, Notice 2014-35 gives late filers of Form 5500 Series returns an incentive to participate in the relief programs of both agencies. However, plan administrators and sponsors participating in both programs should be sure to submit Form 8955-SSA on paper with the IRS for the year at issue, even though the DFVC program requires Form 5500 series returns to be filed electronically using the EFAST2 system.

Little history: My husband and I hired a lawyer(s) to have his ex-wife of 16 years be removed as the beneficiary of survivor benefits. We were definitely blessed because the judge granted DRO and after 2-3 submissions to the company (was told they never received it until third time) and hiring another lawyer to formulate the Amended QDRO ( It was deemed qualifed 3/2014 and active 6/2014) I know usually not ever heard of.. being able to win a case like this after 16 years. Here is the problem: From 2006-2014 his ex-wife would have been the surviving spouse if he had died. I would not have received a dime. NOW the company is making it retroactive to 2006 (early retirement) for his current wife (me) being the survivor and informing us we have to pay 1400 dollars even though if he would have died during the time frame, his ex-wife would have been the surviving spouse. Does anyone have any idea how we can get this fixed? Such as survivor benefit starting in 2014. The company is one of the big 3 American Auto industry. I do not know if I can be more specific of the company.

If you want more history, I wrote about it before and it would be in the forum under QDRO with my user name.

What do you think about Senator Rubio's idea of allowing non-governmental employees to contribute to (and invest under) the Federal Thrift Savings Plan?

If you would be comfortable sending me a PM and letting me know what you all are thinking about charging for these PPA restatements, I would be more than happy to reciprocate with the same for you. We're just trying to get a sense for what others are doing in this regard.

Plan Sponsor of a calendar year 401k plan deposits employee deferrals from the Dec. 2012 payroll once in Dec. 2012 and then again in Jan. 2013. In March 2013, he fails to deposit the employee deferrals which still haven't been paid. When determining the lost earnings, can I calculate it on the net amount due after subtracting the duplicate Dec. 2012 deposit from the missing March 2013 deposit? Would it be preferable to calculate the lost earnings on the entire amount that should have been deposited in March 2013?

Can an existing plan of the Plan Sponsor be a qualified replacement plan?

Small DB plan with some excess assets above 415 limit, can they transfer it to an existing profit sharing or 401(k) that already covers all of the DB participants and allocate the excess or do they need to actually establish a new PS plan to accomplish this?

Excess assets can easily be allocated in 1 year.

i was reading a note in cch pertaining to counting back in-service distributions made over a 5-year period. the note stated that in-service distributions to a key employee that are rolled over to an IRA are counted back. what if the key employee took an in-service in cash and didn't roll it over?

as explained in the IRS notes

http://www.irs.gov/pub/irs-tege/epn_2014_7.pdf

A one-person defined benefit plan was started effective 1/1/2012. On the 2012 SB, the funding target and assets were both $0. In 2013, prior to 9/15/2013, $75,000 was contributed, which satisfied the 2012 minimum required contribution and created a small prefunding balance. On line 16 of the 2013 SB, would it be correct to put 80% to show that the prefunding balance is available to apply towards the 2013 minimum?

Thanks!

I am seeking any and all thoughts on the following. There is an existing cash balance plan where one begins to participate in the plan at the beginning of the month following date of hire. Accruals (pay credits and interest credits) begin after participatiion begins. A contemplated design change to be made prospectively for new hires would implement a one-year wait for eligibility to participate but such persons would accrue a benefit from the first of the month after hire. I assume hours of service prior to participation would count for vesting purposes.

This concept of accruing a benefit prior to meeting eligibility for participation is alien to me. Thoughts on where one might find guidance that would allow or preclude such a design would be appreciated.

Would such folks (in their eligibility period but with a benefit accrual) be counted as participants for PBGC per-participant PBGC premium purposes. The language in the 2014 instructions indicates" For premium purposes, “participant” means an individual (whether active, inactive, retired, or deceased) with respect to whom the plan has Benefit Liabilities as of the Participant Count Date." Until such individuals become participants in the Plan under the contemplated design, if the individual has not yet the eligibility period as of the Participant Count Date, there is no actual benefit liabilities and thus seemingly the answer is "no" based on the PBGC instructions. Again, thoughts?

Is this design something being pushed by the consulting firms....?

My sense is this contemplated design won't be considered by the plan sponsor...but would like to know whether such is or isn't allowed by law/regulation.

Thanks.