A small plan improperly excluded an eligible employee who was an NHCE. He was the only NHCE; all other employees and participants are HCEs.

When calculating the missed deferral oppertunity under EPCRS, Appendix A, .05(2)(b) indicates that the missed deferral opportunity is determined by multiplying the ADP for the year of exclusion for the employee's group in the plan by the employee's compensation for the year of exclusion.

But in this case there isn't anyone else in the employee's group because he is the only NHCE, so how do you determine what the ADP for his group would have been? Do you assume 3%, since that seems to be a favorite assumption for other portions of Appendix A? It surely cannot be zero....

Can a 401(k) plan sponsor (a brokerage firm) act as the broker for its own 401(k) plan that allows a brokerage window without violating fiduciary/prohibited transaction rules?

Employer sponsors a SARSEP.

Terminates Plan 12/20/2013 (essentially via a board resolution terminating it).

Employer Sponsors Profit Sharing Plan

Terminates 12/31/2013.

Balances will not be paid out until June 2014.

Calendar Year Plan

Sponsor Starts a 401(k) Plan effective 2/1/2014 with a Plan Year 2/1/2014 – 01/31/2015.

Plans with different Plan Years still have to be aggregated for Top Heavy purposes.

To determine the top heavy status for Plan year beginning 2/1/2014 you must aggregate the plans and the determination dates that all fall within the same Plan Year.

Therefore to determine the top heavy status for the new 401(k) Plan we must include all Top Heavy tests within the 2014 plan year.

1. Am I interpreting the regs correctly?

2. Is it correct to say that to determine the 401(k) Top heavy status I will only need to include the profit sharing Plan balances?

Is a Form 5500 that was completed on time, then subsequently amended because of an error after the due date, subject to the same penalties that an "original" late 5500 is? It would seem like a deterrent to amend.....thanks for any help.

We were contacted by someone with a very old plan who wants to terminate and rollover all his money to an IRA. The ONLY participants in the plan have been the owner and his wife (always a 5500-EZ), and unfortunately, he has only the original plan documents. They have never been amended or restated (about 20 years old).

1) What would IRS's position likely be concerning a one person (h/w) plan that terminates under these conditions?

2) What would be the best way to bring this plan into compliance?

I'm consulting with sponsor of a 403b plan that's never had a plan document.

Any EPCRS gurus out there know whether they can sign a good faith 403b document now (retro to 2009) and get the current $375 fee discount for late amender?

I have a client that has many internationals participating in their 401k plan. We run into a problem when getting an SSN assigned to them is delayed. They often miss the auto-enrollment deadline and have to be enrolled once we have their SSN and then QNECs made for the missed contributions/earnings. We attempted dummy SSNs so they could at least get auto-enrolled in a timely manner but that didn't work very well with their recordkeeper's system. Any ideas on how to best handle this? Consistent QNECs just doesn't seem practical.

One of the advantages of a safe harbor 401(k) plan is the exemption from top-heavy contribution requirements. Does a rollover contribution to a safe harbor plan blow the top-heavy exemption?

Section 416(g)(4)(H) says that the term "top-heavy plan" does not include a plan that consists solely of elective deferrals and safe harbor contributions. Certainly Section 416(g)(4)(H) could not be read so literally as to mean that a rollover to a safe harbor plan would blow the exemption from top-heavy requirements. Or could it?

I have talked with a few TPAs about this question. All have said that they see rollovers to safe harbor plans all the time and do not believe receipt of a rollover blows the top-heavy exemption. Comments were also made to the effect that the reference to "solely" in the statute is understood to be referring to "employer contributions consisting solely of elective deferrals and safe harbor contributions" - and not to rollovers.

I realize that some might think this a moot point inasmuch as the safe harbor contributions can be applied against any top-heavy contribution requirement, but there are some situations where it is an important issue.

I would be interested in any thoughts on this topic.

I don't handle health and welfare plans, but a client is asking if a 5500-SF is required for his self-funded medical insurance plan. He has received conflicting advice. One person advising yes, and he needs to go through DFVC for past years and another advising that health welfare plans under 100 participants never have to file a 5500.

I've read and re-read the instructions, and it seems that only unfunded, fully insured or combination unfunded/insured welfare plans with fewer than 100 participants at the beginning of the plan year are exempt from 5500 filing. So I agree with first person's recommendation.

Thanks in advance!

A non-owner participant age 72 working on a full-time basis died in November 2013 before his required beginning date. The only designated beneficiary is the participant's spouse. The spouse wants to directly rollover the entire accunt balance in 2013. The plan allows the beneficiary to elect either the 5-year rule or life expectancy rule. If the beneficicary elects the life expectant rule, the beneficairy's RMDs would begin in 2014.

Is a 2013 RMD due?

Had the participant lived and retired in July , and requested a direct rollover in 2013, the RMD would have to be paid before the rollover could occur even though he could have deferred his first payment until his required beginning date (i.e., 4/1/2014). An arguement could be made that to the extent the participant died before he retired and before his required beginning date, there is no participant RMD due for 2013. The spouse may directly rollover the entire account without taking a 2013 RMD.

Please let me know what your thoughts are. Thanks.

Still working through some questions and issues on a plan I took over several months ago. Finding some design issues that are unfamiliar to me and which make me nervous regarding our legal compliance. But just because I haven't seen them before (10+ yrs of plan admin experience) doesn't mean they're a problem. But they might be ... which is where I hope to draw on your collective experience for some insight. Your thoughts and comments on the following situation would be greatly appreciated!

Health plan provides employee-only coverage for part-time workers who average more than 25 hours per week over the previous 12 months, following 3150 hours of continuous service. Eligibility is determined in June and December each year looking back at the previous 12 months, with coverage effective in January and July. Plan covers approximately 160 of 350 total PT workers, with approximately 20-30 rolling onto or off of coverage at every review. PTs losing coverage are offered COBRA. PTs becoming eligible are offered employee only coverage (ee pays 20% of premium cost, pre-tax) or are allowed to waive coverage. No response by employee defaults to enrollment in the plan. At each review, waiver employees who have continuing eligibility are also offered the opportunity to enroll. Waivers who do not respond are continued in waiver status. At other times during the year, standard Qualifying Event rules are observed to permit eligible PT employees to drop their coverage or enroll from waiver status. Plan year starts July 1. This plan is different from, and more limited in scope and provider selection than the plans offered to regular full-time employees. Due to the ACA, this plan requires some design changes (eliminate service requirement, add availability for minor dependent coverage) this coming July 1.

The issue at concern is offering a 2nd plan enrollment opportunity and pre-tax salary reduction election to employees with continuing eligibility who have previously waived coverage. This only applies to the January enrollment window as it does not coincide with the start of the plan year. I suppose we could look at this as a "special enrollment" opportunity, but it's really just a normal part of the plan design. Does anybody have a concern regarding the mid-year pre-tax election changes, either for continuing waivers who now want coverage, or for continuing enrolled ee's who want to drop mid-year?

Thanks in advance!

For purposes of accident and health plans under Code Section 105, is there a definition of personal injuries or sickness? Any IRS authority or guidance relating to the definition of personal injuries or sickness?

Consider a MEWA plan (not a bona-fide group or association), not subject to ERISA, where no M-1 is required to be filed. MEWA / plan sponsor offers only fully-insured group life, on a voluntary basis to eligible business owners. The policy is issued by a national carrier licensed to operate in all 50 states. The plan is not administered by a trust.

For those states outside the policy situs-state, where covered business owners reside, does the MEWA need to register? It seems that most states registration and model law requirements are concerned about Medical insurance benefits and/or self-insured MEWAs.

Any direction about how to assess NAIC model laws and state regs for fully-insured, non-medical benefits offered through MEWAs would be much appreciated!

Hi, I'm still new to managing a retirement plan and I have a question about the deposit of deferrals.

A client's last payroll date is December 26, 2013. The deferrals might not get deposited until after the end of the calendar plan year. Are those deferrals from that payroll date included in 2013 or 2014 testing?

I think that since the employees deferrals are based on pay earned in 2013 instead of 2014, those deferrals deposited in the trust in the beginning of 2014 are included in 2013's testing.

Thanks

Are alternate payees (under QDRO) required to be reported on Form 8955-SSA? Account balance is still in the plan. Thanks.

Quick little background. I have a Dr. client who wants to have a seperate plan for HCE's and NHCE's. The reason behind this is he wants to offer an investment to the HCE's that is not avaliable to NHCE's. Is this possible? If so, could someone point me in the right directions regarding rules and regulations and how to set it up.

Corp. owned 49% by Father and 51% by his Daughter.

Daughter and 3 other unrelated non-union employees participate in a 401(k) plan sponsored by the Corp.

401(k) excludes union members.

Father has modest W-2 ($12,000) from Corp. and is paid a large 1099R ($200,000) from Corp. for Management Services that goes on his Schedule C.

Assuming Father is a union member, can this be considered a Controlled Group or Affiliated Service Group to allow the Father entry into the plan based on his Schedule C income?

This was posed by an advisor to me:

Participant has been out for about four months after having had open heart surgery. He will probably not return to work until March of next year. He has medical bills and tuition for his daughter that he is behind on payment. Does he still have to request a loan from his 401K even though he may not return to work for some time. Will he accrue interest on his loan until he returns to work? In this instance can he opt for a hardship withdrawal instead?

My answer is that he is not eligible for either a loan nor a hardship b/c both are "in-service" requests and he is currently not being paid by the company.

We have a 401k plan participant that only has a life insurance policy as his plan asset and he is a 75 year old terminated employee. Is there an RMD requirement for this participant, and if so, how is it calculated, “distributed,” and taxed? Thank you in advance for any advice.

Scenario:

Participant does $15,000 401k in calendar year 2013.

Participant is over age 50.

Participant receives PS of $41,500.

In the ADP test, I will use $9,500 for the elective for this participant since total annual additions will be $56,500 for him / her meaning $5,500 of the $15k elective has to be catch-up.

Agreement? Any thoughts?