austin3515

Plan currently has a dollar for dollar match on first 10%. I think I can have a dollar for dollar match on the first 4% as safe harbor, and then dollar for dollar on the next 6% as a discretionary match. I would still get to keep my ADP Safe Harbor, but obviously no ACP Safe Harbor. My understanding is that this does not create any problems at all, right? i just have to run my ACP Test.

Sounds like it is probably an Affilliated Service Group. The significance of this is that all "one-participant plans" of a controlled/affilliated service group are considerd in the aggregate to determine if the $250,000 threshhold is exceeded. From the 5500-EZ instructions (2019) "You do not have to file Form 5500-EZ for the 2019 plan year for a one-participant plan if the total of the plan's assets and the assets of all other one-participant plans maintained by the employer at the end of the 2019 plan year does not exceed $250,000, unless 2019 is the final plan year of the plan. For more information on final plan years, see Final Return, later." So interestingly, if the parent's plan is not a one-participant plan because of the kids, then the elder daughters plan does not have to be aggregated with it for purposes of determining the $250,000 threshhold. Although shockingly the above quote from the 5500-EZ instructions does not indicate that the term "employer" includes all employers in the controlled group/affilliated service group (nor anywhere else in the instructions) , it should be read that way in my humble opinion. As Bill said, if non-owner kids are participating in the parents 401k plan, then it is not a one-participant plan. If the elder daughter owns her own S-Corp and has her own plan, then that plan would be a one-participant plan. similarly if she is not considered to be a common law employee of the parent's S-Corp she would not prevent her parents plan from being a one-participant plan. But because the elder daughter has younger siblings who presumably are common law employees of the parents, they would prevent the plan from being one-participant.

yup, thats it!

I was trying to find something in EPCRS that says that in certain situations if impractical you can use the DOL Lost Interest Calculator to adjust a corrective allocation for gains). I routinely see attorney drafted VCP apps take this approach and have never seen it questioned. Can anyone shed some light on this for me? IF we're depositing a $100 into someone's account, we don't want to charge the client $250 in fees.

Interesting. When is the trust terminated? Do they set these things up to run for 5 years or something, and then close them out? And then if none of the employers go bankrupt, essentially everyone in the pool gets their money back plus interest on the investments, less administrative expenses. Is that about right? To your last point I could see where it would be limited to publicly traded companies. I'm sure they set the premiums based on the audited statements.

I definitely understand the Roth conversions, if someone is 35 and converts some 401k, it's still 401k and has to be tracked as such. But let's say the are 62, what then? Can I just call it Roth rollover? Or do I still have to call it Roth 401k conversion? That's really my question.

For an in plan Roth rollover, the money can only be converted to Roth if the participant is otherwise eligible for an in-service distribution by law (I realize the events don;t have to be consistent for regular distributions versus in-plan roth rollovers). Therefore, post conversion, are the amounts pure rollover, and therefore subject to rollover distribution rules? What about top-heavy treatment? Is the conversion added back for 5 years as an in-service withdrawal? Trying to figure out if upon a inp-plan Roth Rollover, I need a "Roth Rollover-Profit Sharing" the way I know for sure I do upon a Roth conversion. Any good articles on this?

Ahh so the participant owns the policy and they buy it on their own? That's how they keep it out of the bankruptcy... And perhaps the corporation pays them a taxable fringe benefit to cover the cost... Pretty interesting. Still something that I could mention in my annual letters or plan design phase. I think its an important disclosure because God forbid this ever happens I could see people saying "I could have bought insurance and you didn't tell me?? I would have "obviously" bought the insurance!" Notwithstanding the fact that they never would have paid for the insurance on their own.

http://stockshield.com/ this company apparently insures against the risk of bankruptcy of the plan sponsor. Sounds too good to be true. Why wouldn't the bankruptcy trustee get the insurance proceeds? Wouldn;t the proceeds inevitably be an asset of the business? Curious if anyone has seen this before or has any thoughts. If it works, heck I'll mention to all of my clients, let them decide if the premiums are worth it. You would think this company would have done their due diligence before they came out with a whole product line...

Just be aware that in Congress' infinite wisdom, they did not extend this courtesy to the earnings on 403b elective deferrals....

When we are doing restatements, that is a one by one process anyway, so we can just check the boxes per the default rule we set up. So no, it will not map over, but since a person has to touch everyone, and because we always have a set of "rules" for that person to follow, one of the steps would be to check the boxes in accordance with that default. So yeah, I was concerned about that too, but that's how we got around it.

That;s exactly what I told this person to do! And then wait and see if anything comes out, even if they say nothing is coming... They have to address it. They;ve spoiled us over the years so they know we're looking for it.

Well I get sticking it to for profit business, but some of these non-profits, especially the ones too small to hire big law firms, are out doing God's work as they say, so it seems like they really ought not stick it these organizations. Youre not punishing the "bad owner" you're punishing the people who rely on the org for services. So anyway, I am optimistic the IRS will see it that way. No guarantees of course, but I'm still waiting with hope!

Has anyone heard if the IRS is going to come out with any non-amender program as a means of allowing these non-profits to correct the fact that they did not restate by 6/30th? Already have someone in that situation (not a client I should point out!). It occurred to me that they did away with all the $325 VCP options so I do wonder if there will be anything...

Another question: how do people feel about including "formulas" in the Summary of Material Modifications? So for example, I can write my SMM to include a similar formula to the one I have included above. It will be worded more plain-English, but is that permitted? I assume there is no prohibition on SMM's. I'm willing to stipulate that it of course would be "better" to customize each one, but that is an enormous additional cost in terms of manpower.

This fits better with the overall structure of the amendment. Expansion of sources available for a hardship distribution. Pursuant to Amendment Section 3.2, are QNECs and QMACs available for hardship distributions? a. [ ] YES. QNECs and QMACs are available for hardship distributions. b. [ ] NO. QNECs and QMACs are not available for hardship distributions. c. [X] Pursuant to Adoption Agreement. QNECs and QMACs will only be available for hardship distributions if in the Adoption Agreement the Employer has elected that such distributions are permitted from all Accounts (other than those restricted by law).

We use FIS and this is what I came up with for the "will QNECs and QMACs be available?" question. It really blows my mind that this was not the approach since as far as I can tell it comes up with the correct outcome 100% of the time. Expansion of sources available for a hardship distribution. Pursuant to Amendment Section 3.2, QNECs and QMACs will only be available for hardship distributions if in the Adoption Agreement the Employer has elected that such distributions are permitted from all Accounts (other than those restricted by law). I appreciate any feedback, ESPECIALLY if I screwed something up!

Wow, that's a pretty darn good auditor! Most auditors don't know that much about correction principles.

I think you misunderstood. John Doe makes $135,000 in 2019, so he is an HCE for 2020. In 2020 he makes $110,000 so he is NOT an HCE in 2021. In order to avoid John Doe flipping back from one plan to another every year, we want him to stay in the 403b plan "permanently" regardless of his HCE/NHCE status.

Well the consensus seems to be that exercising discretion causes ERISA coverage, but it happens every day to not much consequence. Rest assured if anyone seeks my counsel they'll get the by-the-book answer!

Interesting!

I was talking to one of the vendors in this space and when I asked them about it, they were like "it happens all the time? I've been here 13 years and no one has ever asked me that before?" Carol I certainly would not question the accuracy of your guidance! And to clarify I am referring to non-governmental non-ERISA plans.

Seems to me that many non-ERISA plans require employer sign-offs for things like distributions and loans. I read some articles that seem to suggest that the only way to have a non-ERISA plan is for an independent party to sign off on everything. Is that how it works in the real world (I only work with ERISA plans so forgive my ingorance on this aspect).

Ha, I've taken both positions! Also Derrin Watson recommended just writing "This SMM is intended to provide updates to the Safe Harbor Notice" or something to that affect to make it clear that it was fulfilling both requirements.

The plan is a creditor of the business. Tell them to get on a payment plan... Even if it takes years to repay it, you need to do something. Especially if someone is the Trustee or a fiduciary as they need to try and collect what is due to the plan. Does the owner have $64K in their account? Take a loan for $32K and avoid this horrible headache.