If an employee becomes disabled but has not separated from service, is this a distributable event?

In other words, does the "disabled" employee have to be terminated in order to receive a distribution from the plan?

Other info: The employee is an owner/partner and has not severed his partnership with the plan sponsor. The plan is a 401k plan. The participant is already 100% vested. The participant does not meet the plan's in-service age requirement and already has an outstanding loan. The plan does not allow hardship withdrawals.

Question:

Is it permissible to force a 415 failure to create a catch-up?

Scenario:

• Document calls for any employer allocation to be reduced so as not to cause "the annual additions to exceed the maximum permissible amount".
• Participant is catch-up eligible but has not created a catch-up event through Plan Limit, 402g or ADP/ACP failure.
• Participant is an HCE and is being "maxed out" with a cross tested group allocation profit sharing contribution.
• Compensatoin is greater than $255,000.
• $17,500 was contributed in deferal. $7650 was contributed as Safe Harbor NonElective.

With the 2013 415 limit being $51,000, when "maxing out" the HCE can I allocate $31,350.00 as a profit sharing (assuming it passing relevant testing) thereby "creating" a 415 failure in order to create a catch-up eligible event (415 refund) to give the HCE $56500 for they year (415 plus catch-up)?

it seems, given the document language, that "creating" a 415 is not allowable even if the 415 refund would be catch-up eligible and retainable in the plan.

I am working with a Corbel document and Relius software. The Relius Optimizer option automatically creates the 415 failure in the optimizaton process. The act of creating the failure to induce catch-up seems contradictory to the plan document.

If anyone has input or citings that can assist with a proper approach, I would be interested to hear from you.

Thank you.

Under the Internal Revenue Services procedures, a timing rule applies to an employer that adopts a modification from the pre-approved document that the employer otherwise relies on. Instead of applying for a determination promptly after the employer adopts the modification, one instead waits until the two-year window in which the employer adopts the NEXT pre-approved document. Rev. Proc. 2013-6 § 9.03; Rev. Proc. 2007-44 § 16.

If all goes as hoped, the IRSs approval of the modification gets reliance.

But what if the IRS disapproves the modification?

By the time the IRSs dislike of the provision becomes known, the employer might have made contributions, and the plans administrator might have allocated amounts, for several years.

Looking to the plans provision for a return of contributions upon the IRSs disqualification of the plans trust, may the employer get a return of contributions attributable to the modification?

Alternatively, may the employer end the provision promptly after receiving the IRSs communication that the IRS will not issue a favorable determination on a plan that includes the provision, while not undoing contributions and allocations that were made in good faith (before the employer knew the IRSs view)?

Participant rolled into his employer's plan several years ago. In 2013 he requested a distribution of his rollover, and it was paid out - he did not do a direct rollover.

Now that he's received the 1099-R with a taxable amount showing, he is telling us that the funds originally rolled into the plan were not from another plan, just his own personal funds that were already taxed, just because he wanted everything "in one place". He wants the 1099-R revised to reflect the same.

If he is correct - and that's not certain - then it should have never rolled into the plan in the first place. But how is my client the plan sponsor supposed to know this if was originally represented as such? And what sort of documentation should the sponsor require before considering amending the 1099-R - if he should even consider this at all? Any other correction the sponsor should consider? It is out of the plan now so if it was an invalid rollover at least it is now corrected.

Thanks.

I am working on one-man (doctor) plan. His normal retirement date is 1/1/2019, when he is 62. However, for some reason, the plan was set up as 10% of average comp per year of participation starting on 1/1/2006. Therefore, he will be fully accrued at 1/1/2016. His 415 lump sum limit is based upon his average comp, which is only about $140,000 (and it is very unlikely that he'll be able to establish a new high-3 average comp, as his recent comps have been low). He would like to terminate the plan 1/1/2015 or 1/1/2016 and be able at that point to take a distribution equal to his 415 lump sum limit. However, since he will only be 58 and 59 on those dates, his 417(e) lump sum will be considerably lower than his 415 limit, as it the 417(e) lump sum will be discounted from age 62. I don't think that it is reasonable to amend the normal retirement age to anything lower than 62. Does anyone have any idea how I can enable him to take a distribution equal to the 415 limit?

Any thoughts would be appreciated!

Is a non-safe harbor 401k plan that is found to be top-heavy at 12/31/13 required to make a top-heavy contribution to a HCE (by income) who is a non-key employee?

I believe the answer is yes - that the requirement to pay non-key employees doesn't differentiate between HCE's and NHCE's - but I'm getting old

Thanks.

I was released from a large company on 8/31/13 and offered COBRA coverage accordingly. None of the notifications or the plan summary description make mention of a need for my 67 year old husband to become entitled to (sign up for) Medicare part B to receive identical coverage. In our coverage the day before I was released, he did not have Medicare B.

At the end of December we learned my husband would need surgery. The first week of January, I called the provider to verify our coverage & maximum out of pocket for him. The reply I received that day was in line with what I understood our existing coverage to be. I called again a few weeks later to see why claims weren't being paid as usual. I disclosed that we were COBRA and that he had Medicare part A, but not part B. I was told that they would resubmit for payment, it would take 30 days. I called several times to monitor status on this. Until 3/11, the answers were that it was in process, it would be 30 days. After 30 days was up, the answer was that review was complete and that it would take an additional 30 days for full correction.

Last Tuesday, on 3/11/14, I was informed that because he is "eligible" for Medicare, they will only be paying 20% rather than filling the gap for part B. He is indeed eligible for part B, but he is not entitled to part B. Since he was under my insurance plan 2 years ago when he became eligible, he declined, so is not entitled. Nevertheless, his coverage has changed from the day before I was terminated to a 20% limit. There is no indication of this possibility in any of the COBRA documentation or summery plan description.

I have been searching for information on COBRA & Medicare. My understanding of the law is that it pertains to entitlement, not eligibility. If he had signed up for Part B, he would be entitled. Since he didn't, he is only eligible. I've talked with both the company (self insured) and the carrier about this. They are both sticking to the "eligibility" status as reason for declining coverage now although there has been a variety of answers to this from both of them.

The first surgery was double hernia on 1/10/14 after my initial call to the carrier. During pre-op workup, we discovered he had a large dissected aneurysm and leaking valve. He had open heart surgery on 2/10/14. We are now being informed we are responsible for a gap mounting into tens of thousands of dollars.

I think they are confused about entitlement vs eligibility. The last company rep I talked to said there have been other cases like this.

My questions are:

Is there a COBRA exclusion that allows them to require Medicare B entitlement or a change in coverage like this? If not, what recourse do I have?

If there is a COBRA exclusion that makes this legal, do I have recourse with the carrier who gave me incorrect information for 2 months while we incurred extensive medical bills?

Thank you,

Sue B

Is it a prohibitive transaction for a Grandfather to lend money from his Profit Sharing plan to a company that is owned 25% by his Grandson?

Hello,

I've been trying to find a particular case.... and for some reason all my resources are coming up dry.

Can anyone help me find information on the following case:

Lee, et al v. Builder's Supply Co, et al

Assigned to: Senior Judge Thomas M. Shanahan

U.S. District Court

District of Nebraska (8 Omaha)

CIVIL DOCKET FOR CASE #: 8:93−cv−00267−TMS

Thank you,

Lisa

Pardon this senior moment, but

I'm setting up a SHNE 401(k), usually this would be done for a January 1st ed and the SH Notices would go out by December 1st of the previous year.

Prospective client wishes to go ahead with a safe harbor 401(k) 30 days after he supplies the employees with a SHNE Notice, which he wants to give out this week, which would mean that contributions would start May 1st.

Plan year = calendar year = limitation year, so what is the plan effective date? May 1 and a short plan year 5/1/14-12/31/14; or January 1 with comp measured on participation?

Sorry for the brain fart.

We administer a DB that we set up in the 1980s with a valid 242(b) election.

The sole participant is now 78 and wants to terminate the plan.

Clearly she has to take an RMD prior to rolling over to an IRA.

Can we use the account balance method and then rollover? (I doubt it.)

How is the "make-up" distribution calculated?

I would assume by calculating each distribution, then accumulating that distribution at the plan's interest rate from the date it would have been taken through the current valuation year; adding all these up and subtracting from the current value of all the plan investments.

If I am a retired railroad employee who has a minor child, will I be able to draw benefits for my minor child if my former spouse still works for the Railroad

Back in benefits after an 8 year hiatus. My organization currently has no budget for communicating benefits to employees. We mail various notices to employees as required by law, and (still) send out paper open enrollment packets to all employees which are printed in-house as needed, and the cost just absorbed in administrative overhead. I have no way to track what has been sent or spent over the past 5 years. I'd like to change this.

As a general rule of thumb, what do you expect to spend on a per employee, per year basis to communicate benefits to your employees? No staff costs, just the hard costs of printing and mailing (including the cost of any professional services used for design, production, etc.), and electronic communication costs if you track it separately. If possible to split out cost between paper and electronic media, that would be great. But even a composite figure would be most helpful. I'm just trying to get an idea of what a basic, professional communication plan should cost so I can start moving my organization in that direction. Currently we do all of our own printing on big printers, no color, stapled in the corner, and have no professionally produced materials of any kind. Unfortunately, I think this low budget low tech approach sets the tone for the value that employees perceive from our benefit program. I think we can do better.

Thanks in advance for your insights.

1. Guy, age 55, makes a lot of money.
2. Guy has no employees.
3. Guy has a DB & DC Plans. Funding for max benefit so 2014 DB contribution is more than 25% of pay.
4. In DC Plan, guy makes full 2014 401k of $23,000.
5. In DC Plan, guy makes full 6% 2014 company contribution of $15,600 based upon W-2 of $260,000 or more.
6. Total DC Account Addition is $38,600.
7. 415 Limit is $57,500 so he is $18,900 short of the maximum Account Addition.

Question:

Can the guy make a $18,900 “After-Tax Employee Voluntary Contribution” since ACP test is n/a? Is this contribution type part of the 402g limit? I think "no."

Idea is that he could immediately in-plan convert 100% of that money type to a Roth Account.

How do you make After-Tax Employee Voluntary Contribution? Do you just write a personal check to the plan? Is there a deadline (do you have to do by Dec 31/plan year end)?

Thanks

Can an employer restrict the availability of a payroll deduction IRA to a select group of employees? For example, office employees vs. manufacturing employees?

My concern is that they will blow their ERISA exemption through use of discretion regarding eligibility.

Happy pi day.

Is anyone advising plan sponsors of this IRS form to report change in plan sponsor, address, EIN, such as when a plan merges? I have plans that merged in 2012 and 2013 and I assume to be safe the sponsor should file this form? Form 5500 has the information but the DOL gets this, not IRS.

Any comments would be appreciated!

8822b.pdf

A charitable organization's executive director has a written employment agreement. It provides a salary of $120,000 a year, payable as $10,000 a month. The agreement has no specified work hours. The agreement obligates the executive director to devote reasonable efforts to the employer's interests, subject to an obligation to work no more than 1,248 hours a year or 24 hours a week.

For the purposes of not attracting the Affordable Care Act's play-or-pay excise tax, is it proper to classify this employee as part-time?

Hi,.

We have a plan that has 6-year graded vesting on employer contributions/deferrals to the 47(b) NP plan.

Participants also make deferrals from pay.

It is our understanding (PLEASE correct me if I am wrong) that only the current year VESTED employer contribution (plus vesting increase from prior years' ER contributions) count towards the annual ceiling.

So, someone who receives a 17,500 ER contributiion but is ZERO percent vested could contribute 17,500 deferrals from 2013 pay.

We understand that due to the complexity of the annual ceiling calculation, some TPAS might be considering the entire contribution VESTED and apply it all towards the ceiling in the current year only.

So, tracking of the annual ceiling is simplified.

Any thoughts are appreciated.

GG

Suppose a new individually drafted defined benefit plan was established mid-2013 with a January 1, 2013 plan effective date. Suppose the plan was signed and executed and the plan document was submitted to the IRS with Form 5300 last summer. No contributions made yet, but liabilities for 2013 have accrued.

Now suppose the client calls today and says business has turned so bad that they aren't sure they will even be in business a few months from now and they don't see any possibility for making any plan contributions.

Also suppose the DB document says something like "...if, pursuant to an application for qualification, the IRS should determine that the Plan does not initially qualify as a tax-exempt plan under Code Sections 401..., then if the Plan is a new plan, it shall be void from its inception..."

Since the IRS is still in the review process for this plan's determination letter application, would the IRS accept and even consider a request to them asking that they issue an unfavorable letter on this supposed plan? Has anyone done this? What do you recommend?