Coverage testing for a DB plan frozen to new entrants - the plan was frozen to new entrants several years ago. It is continuing accruals for those who were in the plan at the time. Two questions: first, can those who are not age 21 with 1 year of service be excluded (even though the plan was soft frozen several years ago)? If they cannot be excluded, can they be treated as "otherwise excludable" and tested separately? Second, the employer has many workers who work less than 1000 hours. Based on a positive answer to the first question, can they be excluded with less than 1000 hours in the current year? Two most recent years? How many years back would I have to go? Thanks.

We have a plan for 2 banks that are part of a controlled group with a lumber company. The banks want to make profit sharing contributions, but the lumber company does not. We proposed that they file as QSLOBs to facilitate this. After recommending that to the CFO of the lumber company, who discussed it with their TPA, we learned that there is a third bank that is part of the lumber company plan. Discussions are underway to move it to the bank plan, but the provider on the lumber company plan says it can't be done before March of next year. We're investigating that response.

Meanwhile, I'm being asked if we can proceed with the QSLOB election while the companies in the banking SLOB are participating in different plans. It seems logical that they could, but I have no experience with these things and don't really know where to direct them for advice. Any tips would be greatly appreciated.

Small employers (<250 W-2s) have been exempt through 2012, anybody know if they have to start reporting on 2013 W-2s?

Thanks

I have an 8/31 client with a simple 401(k) plan. Currently, the only contributions being made are employee salary deferrals and employer matches. They have decided to switch their Plan Year to calendar year. At this point, they would also like to consider adding a Safe Harbor match to the Plan in place of the current match for the Plan Year beginning January 1, 2014. I don't think that it is too late to prepare a S/H notice to be distributed to the employees informing them of this for 2014. Any problem with adding the S/H matching contribution?

Do employer have a right to object or challenge an individual's claims to a subsidy on the exchange?

As you know, individuals are eligible for a subsidy if, among other things, they weren't offer coverage by an employer or if the coverage that was offered didn't provide minimum essential coverage or wasn't affordable.

Is there guidance or has anyone addressed whether the employer can contest an individual's claims for coverage or what the process would look like?

This may belong in the istribution foru, but it's for a DB plan.....

We have plan that is terminating and a participant wants to take their LS, but needs the spouse waiver of the QJSA. The spouse is currently serving in Uganda for the next year and not reachable and the participant has a full power of attorney. I'm assuming that the participant can sign as the spouse and attach a copy of the power of attorney for the file......

Do you think this is enough?

An active, non-owner participant is age 71 and under normal circumstances could elect to defer his first RMD payment until after he retires. Due to an impending company merger this retirement plan was terminated with the goal being to have all accounts paid out before the end of the year. The participant wants to rollover his entire account balance to an IRA; however, must he first receive an RMD?

Alternatively, what if he elected to rollover his balance to the surviving plan of the merged companies?

An additional note, the plan allows for in-service distributions of all vested accounts at age 59 1/2; could this be considered an in-service distribution where it appears that the RMD would not be required since individual is still active (provided he doesn't retire before the end of the year)?

I know this topic has been discussed before.

Given:

AB = $10,000

415 comp Limit = $11,000

Age 62

Plan Actuarial Equivalent = 5% and 2013Table

AE APR = 156.04

5.5% 2013Table APR = 149.07

417(e) APR = 176.3

(1) 415 maximum LS = $11,000 x min(156.04, 149.07, 176.3) = $1,639,770

(2) $10,000 x 156.04 = $1,560,400

(3) $10,000 x 176.03 = $1,760,300

Final max LS = min( $1,639,770, max( $1,560,400, $1,760,300 ) = $1,639,770

Is the procedure correct? Thanks for all responses.

Suppose you have a 401(k) plan utilizing the "contingent" or "maybe" provision for the nonelective 3%.

When the employer decides, in October, to provide the supplemental notice and amend the plan to provide the 3% nonelective, can they, as part of that amendment, elect not to provide it to the HC? Or, since the current prototype document says, to paraphrase, that there are no exclusions from the definition of "eligible participant" for purposes of the ADP test safe harbor contribution, would the employer be precluded from making that change - in other words, the HC exclusion from a safe harbor contribution (if made) wouldn't be discretionary other than amending prospectively for the NEXT year?

I started out thinking the former, but I'm gravitating to the latter. Seems like an impermissible cutback if you take the first approach.

Thoughts?

I have a plan that was sponsored by Company A. Company B split off from Co. A and the plan was admended to make it a MEP so that Co. B could still be part of it (the 100% owner of Co. B is an still employee of Co. A and draws all her pay from there - she doesn't get paid by the company she owns! - so it's not a CG). The employees of Co. B also still work at Co. A, so they are still getting paid and deferring from both 'sides'.

I get that, because each company is tested separately, I'll have to manually break out the deferrals by company for testing (the platform they are on doesn't seem to do sub-accounting), but I'm not sure how to treat them for top heavy. Where do Co. B's employees' balances count for top heavy determination? Should the balance they've accrued up until the division stay in the Co. A testing, and then as part of my split going forward I'll have to track their balances as two sub-accounts for testing purposes?

Thanks for your help.

This pooled profit sharing plan received an executed and proper QDRO from the court for participant TW to assign $X to an account for AP (well, the estate of the AP, as AP died in September 2013). TW happens to be an owner and Trustee. I called TW to discuss timing and a possible interim valuation, and he said that he talked to the attorney for the estate, and they agreed that he can pay the $X from his personal assets and not touch his plan balance, so that's what he wants to do.

Leaving aside the fact that this QDRO has been two years in the making and this probably should have been thought of before this point, does the plan have an obligation to make this distribution because a valid QDRO was received? Is there some way to modify or cancel it or otherwise 'take it back' so that it's no longer an plan issue?

Thanks.

I know this is a 401k forum but could not find an appropriate folder. Does anyone have experience with setting up a 401a plan just for making a one time contribution of unused sick and vacation leave? I see the IRS in 2005 put out internal guidelines stating this could only be done if the plan otherwise has recurring contributions, or via a 403b plan 5 year post termination contribution. But a large provider named Bencor has many school systems using their document for these special pay plans. I am not sure how they can still do this?

Any thoughts?

Employer maintains large 401(k) plan, not a safe harbor plan.

Eligibility is age 21 and 3 months (“1/4 year”) of service.

Hours of service are determined on elapsed time method for all purposes.

Entry date is next paydate after meeting eligibility requirements.

Company uses a staffing firm to provide potential employees on a temporary basis before the Company offers them a full time position. The decision to hire is usually made within the first 90 days of temporary service. Very few employees are hired direct; most come through the staffing agency.

The adoption agreement has an option (not previously selected) to exclude Temporary Employees. The Company wahts to use this option to exclude time worked by employees (and associated compensation) while they are temporary workers. Once an employee is hired as a non-temporary employee, his or her retirement plan eligibility and benefits would be counted from that date; the employee would receive no credit for time worked while a temporary employee and no contribution based on wages earned while a temporary employee.

Question:

If the Company uses that option to exclude time worked while an employee is considered a temporary worker, (1) will the coverage test be satisfied and (2) will excluding vesting credit be a disqualifying issue?

Thanks!

I have a participant who has an outstanding loan and they just switch from full-time to per diem. Since they will not be able to make the scheduled loan payments according to the amortization schedule, just wondering how other people handle this. Any advice?

I have a 78 year old participant who just terminated employment in October and for whom we prepared distribution forms. I know that if she selects a rollover, we will have to first process an MRD for 2013.

1) In that case, would the MRD be based upon the 12 months of 2013 or only based upon the months of November and December?

2) A related question (probably the answer to question 1 will answer question 2) - If she selects an annuity, will the two annuity payments for November and December satisfy the MRD?

Any help would be appreciated!

Hi everyone!

I have recently decided to leave a company with which I have a 401K worth approximately $16,500. I will be in between jobs for a while, not having the option of investing in a new employer's plan. I am considering rolling this 401k over to a traditional IRA, however, I already have a Roth Ira, which I have had for several years. I have the Roth invested in a Target Retirement fund, which I am happy with. Does anyone know of any disadvantages to having both types of IRA's at the same time? Assuming I were to do this, is it best to start splitting my yearly contribution between the two IRA's or to just continue to max out my Roth which I have always done and leave the new traditional IRA alone. Any feedback would be greatly appreciated. Thanks, Gracey

Bill, the 50% owner of the corporation, buys the other 50% from his sister Mary in mid-2009. He does not have enough cash to do this, so his sister holds a promissory note (more on this later). The company has a calendar year 401(k) plan. Mary is an employee and is still an HCE in 2010 due to her prior ownership.

Mary did not retain any repurchase rights, but she held liens/collateral interest in her company shares, the building, some land, etc. as security for the promissory note from her brother since he did not have the cash to pay for her shares outright.

Mary's wages have always been only about $50,000 per year so she is not an HCE due to wages.

Is Mary an HCE in 2011?

Is Mary an HCE in 2012?

Just met with a client who has a 401k plan. One of the owners should have started taking RMDs in 2010 or 2011, but did not. I am helping them correct this. I know, under Self Correction, they can correct this. However, if I am reading correctly, we will need to go through VCP for a waiver of the 50% excise tax. Is that correct?

Should they go ahead and process all prior RMDs before the end of the year or wait until the VCP submission to do the prior year distributions and just do the current year distribution in 2013?

Thanks so much for your thoughts.

Anyone know of any good resources for learning Crystal Reports for Relius Admin? Other than flying to Jacksonville for a few days?

Calendar Year Plan's service requirement for entry is 1 year of service. Entry date is defined as 1st day of month coincident or next following completion of eligibility requirement. Full time employee is hired on 1/2/13. Would the entry date be 1/1/14 or 2/1/14? Thanks.