Under 408b2, changes to investment related disclosures must be made at least annually. Does the participant fee disclosure prepared cover those disclosures? I got the impression that legally, it is the other way around - that is, the annual disclosure obligation was required to facilitate the plan sponsor fulfilling it's 404a5 requirements. But as a practical matter, does the covered-service-providers preparation of the 404a5 disclosure cover this?

Under EPCRS, plans may not use permissive disaggregation when correcting a failure to timely correct a failed ADP/ACP test utilizing either the QNEC method or the One-to-One correction method. However, it is not clear if this means the coverage testing for the plan must also be re-run without using permissive disaggregation, or if EPCRS is only focused on the determination of which NHCEs share in the QNEC or the one-to-one allocation.

In other words, if the coverage test was run using permissive disaggregation, is the correction sufficient even if you do not re-run coverage so long as the ADP/ACP test is re-run without using permissive disaggregation and the corrective contributions are made on that basis? Or must coverage also be run without permissive disaggregation?

Hello. I need some help here.

Employer A had a 401(k) Plan (Plan A). A control group existed between Employer A and Employer B. Employer B completes a participating employer agreement to parcipate in Employer A's plan.

Employer A ceases to exist and terminates the Employer A 401(k) plan as of 12/31/13. Plan A distributed the funds to all employees of both employers.

Employer B establishes a new plan (Plan B) as of 1/1/14. Does this constitute a successor plan?

Also, some of employees of Employer B have rolled their distributions from Plan A to Plan B. Is the rollover money considered a related rollover or not?

When adding Safe Harbor to a 401(k) Plan, the first plan year has to be 12 months long. Is there a similar rule when adding Coda to a Profit Sharing Plan? I do mean Coda with a Safe Harbor.

I break a plan into 2 and both satisfy min coverage.

Plan componant 1 to be cross tested, Plan componant 2 to be allocation based tested.

When testing Plan 1 do I include participants of Plan 2 as "zeros" in the cross testing?

Maybe only in the AB%T?

Thank you

We have a client that received a bill from the IRS for $18,000+ stating

"we made changes to your December 31, 2004 Form 5500. As a result, your amount due is $18,000. This wasn't an audit. Your return may be examined in the future. Please keep this notice and your other important documents in a secure place"

SInce when do 5500 changes generate a bill? What is this? Anyone seen this previously?

So it looks like we are NOT supposed to put the D's into the count for question 6.

Didn't we used to? Was it ambiguous?

The instructions say:

Do not include any participants on line 6a or 6b
who were previously reported on a Form
8955-SSA or a Schedule SSA (Form 5500).
Accordingly, only those participants who are listed with an
Entry Code A on page 2 should be included on line 6a or
6b.

Seem clear, right?

I hate Late Fridays. My mind goes to mush.

From the DOL's Schedule C Q&A Q25: If a service provider discloses a formula used to determine its indirect compensation, is the plan administrator required to calculate or estimate dollar amounts from the formula for purposes of Schedule C reporting (to the extent that compensation described by a formula is not eligible indirect compensation)?

No. Element (g) on Line 2 of Part I of Schedule C requires the plan administrator to enter the “total of all indirect compensation that is not eligible indirect compensation” and Element © on Line 3 of Part I of Schedule C states that the plan administrator should “Enter amount of indirect compensation.” Where a plan administrator receives a formula from a service provider for amounts reportable on Line 2, the plan administrator may enter “0” if that is the only indirect compensation reportable in element (g) on Line 2. The plan administrator must check “yes” in element (h) of Line 2, and attach a statement describing the formula(s) that is labeled “Schedule C, Line 2(h) formula description.” Where a plan administrator receives a formula from a service provider for amounts reportable on Line 3, the plan administrator may enter “0” if that is the only indirect compensation reportable in element © on Line 3. The plan administrator must include in element (e) on Line 3, a description of the formula(s).

My Question

With respect to the bolded paragraph, has anyone seen such an attachment? Great West is indicating that their comp is NOT eligible indirect on their schedule C report AND that they provided a formula. Has anyone included the attachment described above?

Also, why is GW saying that it is not eligible indirect? I had heard that the 408b2 should have made everything eligible indirect? Perhaps it is, and they just did not reprogram their systems?

Can someone provide an explanation as to what this is for? I believe it had to do wth a statute of limitations thing. Also, if there is no separate EIN for the trust, can we just use the employer's EIN?

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.