TPA Bob

Thanks Kevin. We are in the process of determining how far back this goes.

Thanks to both. I had found the reference that Kevin alluded. Still trying to determine if we should do a filing under VCP. Again thanks very much.

We have a Plan that allows for in-service distributions once a participant has achieved 10 years of service, at any age. Plan contribution sources are 401(k), Employer non safe harbor contributions, and Participant Rollovers. A participant who was under the age of 59-1/2 has received all of his employer and rollover monies and also some 401(k) monies which are restricted. Under EPCRS the correction is to take reasonable steps to secure repayment of the excess amount. We are assuming the participant does not have the capacity to return the funds. In that case, as the over payment to the participant was a premature distribution the employer is not required to make up the difference. It appears upon our initial review that a VCP filing will be necessary (and self correction not available). I would be very much in appreciation if anyone has any comments or thoughts.

Thanks for the thoughts. Meetings this weekend to discuss.

As part of a plan merger we are looking at one of the plans subject to the merger. Organization has four owners who each have established their own LLC and elected to be tax as an S Corp. Each LLC owns 25% of the organization and is receiving guaranteed payments from the Organization. Each S Corp is then paying W-2 compensation to the owner from proceeds received as guaranteed payments. Current arrangement allows each S Corp to have its own retirement plan and be tested separate from the Organizations plan. The TPA firm says based on ownership and related that they should not be considered related organizations for retirement plan purposes. The Organization is in a service business. I am trying to explain the technical reason they should be considered one plan for testing purposes. Any thoughts?

Have two unrelated entities that are merging into a new entity (a type A or C reorg, accountants working out details). They wish to also merge their respective retirement plans. Both calendar year plans. Plan A is a safe harbor 3% QNEC, Plan B is not safe harbor and has a matching contribution. They wish to merge the Plans asap (during the year) with the new merge entity accepting sponsorship of the merged plans. And want the merge plan to be safe harbor 3%. I am trying to find guidance on how to handle - can we treat the merged plan as new and adopt SH provisions, do we have to wait until 2019, etc. Any thoughts would be greatly appreciated. Thanks.

Thanks for replies. I am not aware of an age 55 rule (once HCE after 55 always HCE). Is there a cite?

We have a law firm with 9 current shareholders with ownership greater than 5%. There is one former shareholder who is receiving compensation based on revenue of his clients when he sold out (paid as W-2 compensation) - he does not actually work. And there is another shareholder who has sold a portion of his stock, is now below 5%, who is "on call" for questions about his clients and is paid a monthly amount (about $200 a month) but otherwise not active. The problem is these individuals are eligible for top heavy and are now considered NHCEs for discrimination testing. I am considering amending the Plan to have these individuals excluded from the Plan by definition (retiring shareholders as an example). The Plan would easily pass coverage excluding them. Any thoughts greatly appreciated.

Mike Passing using the 70% threshold. And yes to otherwise excludable although is only two out of about 40 eligible nhces in A - passes 70% either way.

Have a Plan that uses Grouping method with two classes A and B. Each class passes coverage individually. The allocation method in each class is based on compensation (pro-rata). Plan is not top heavy. They are wanting to do a 5% allocation to Group B but not do any allocation to Group A. As each passes coverage individually and a safe harbor base allocation (pro-rata) is used for Group B I do not see any problem - anyone have different thoughts? Appreciate in advance.

Thanks for this input. I agree with the analysis that Plan A will be continuing as Plan B and Plan C is spinning out. As a conclusion, the national provider has now agreed that this in not a distributable event and that employees who went from Company A to either Company B or C will not have the option regarding their funds. Thanks again to Mojo and Bird.

To clarify Plan A is going away. The new entities (B and C) will be establishing their own retirement plans

We have a physician group "A" that split into two groups B and C effective January 1, 2017. They continued to maintain the existing 401(k) plan for 2017 to date. They will each adopt their own plan effective January 1, 2018. In my mind this will be handled as a spin off from Plan A with the assets transferred to B and C. The participants would not have incurred a severance of employment. The national retirement plan Company who currently has the A plan is holding firm that the participants will have to elect distribution. Their basis I think is that Plan A is terminating. Seems simple enough to me that Plans B and C represent successor employers and the retirement plans are replacement plans and would not allow for distributions. Any thoughts would be appreciated.

We have a participant in a premium only plan who is asking to drop his dependent group coverage due to qualifying for cheaper individual coverage through the State of Oklahoma (Sooner Care). I have looked at our language (Sungard / Corbel/ FIS) post-Affordable Care Act and it appears this is not a change of status and would not be allowed. Any thoughts?

5 individual real estate brokers have left an existing business A and are going to work with new Company B (a national firm with offices in 35+ other cities). Each of the 5 are establishing their own LLC and will receive a 1099 from Company B for commissions. Each is responsible for their own expenses. The 5 will not own any of Company B. Company B (a national firm) will have an office and staff with 3 administrative type employees. These employees will be eligible for Company B's retirement plan. One of the LLC members wants to establish a plan for her and not include any of the other LLCs or the 3 employees of Company B. It is common in the real estate business for the brokers to be independent. After a review of the management service group rules I do not see a problem. Any thoughts would be appreciated.

Thanks Kevin. But we could as of January 1, 2018?

We have an existing 401(k) safe harbor plan with one year of service, age 21, quarterly entry dates. Plan Sponsor now wants to exclude certain employees from the Plan (a division of the Plan Sponsor) that would make current participants ineligible for the Plan. The Plan will easily pass coverage. I am sure that this can be done but have a colleague that says these employees will continue to be eligible even if now in an excluded class. Any thoughts greatly appreciated.

Am reviewing Form 5500-SF for American Funds Recordkeeper Direct Platform. On their trust report the only fees that are broken out are the distribution fees we charge as TPA to participants. Instructions for Line 8f of Form 5500 SF would imply we need to report administration fees paid to American Funds and investment fees paid to advisers (brokerage services). This information is not readily available. Wondering what anyone else may be doing other that reporting what is on the Trust Report. Thanks.

My understanding was that once contributed in 2016 and deducted in 2015 that established the year credited (2015). If as easy as amending the Plan Sponsor's tax return would gladly do that. Are you saying as long as contributions are made after the tax and limitation year you would never have a 415 issue? Would you amend and reduce employer contribution by 8,500?

As Paul Harvey would say, now the rest of the story. In addition to the above 415 issue they exceeded their 404 deduction limit by 6,719.95. I believe these are two separate issues (404 and 415) and still advise the 8,500 be distributed. The amount of contribution in excess of the tax deduction amount will be suspended and used towards the 2016 contribution. Advised the Company amend its 2015 tax return and file an excise tax return for the excess contribution. I do not see a way out of distributing the 8,500 or suspending the 6,719.95. Anyone have any thoughts of how to possibly net the two?

we are going to self correct

in 2015 employee (and owner) defers 18,000 and the company matches 6,000. In March of 2016 CPA calculates, has the Company contribute, and deducts on the 2015 return 37,500. The total allocated to employee is 61,500. 415 limit is 53,000 (under age 50). i am treating the full 37,500 contributed in 2016 but allocated and tax deducted in 2015 as a 2015 annual addition. Plan uses Oppenheimer document, which says if there is an excess allocation must correct using EPCRS. EPCRS provides if excess allocations are attributable to elective deferrals must be distributed. Client and broker want to take the position that the excess allocation was only due to the 2016 contribution allocated to 2015 (employer monies) and that no deferrals should be distributed. My remembrance from technical readings is timing of the contribution does not matter, but only if a contribution was credited to a limitation year. Any thoughts would be appreciated.

We have reviewed the document and cannot find any reference to the time period for which the match is calculated. Will put into our document (Sungard) and will specify there. My reference to payroll v payroll is the way the plan sponsor has determined match in operation.

Plan has a discretionary matching contribution. The Plan Sponsor is wanting to eliminate the matching contribution for the rest of year. Notification required to participants should include (not limited to just these) Date the matching contribution will cease How to change future deferral elections with form Explanation of how match through March 15th will be determined (payroll v payroll) Question - the Plan Sponsor is under the impression that they are required to provided a 30 day notice. While I believe may be in their best interest I do not believe a 30 day notice is required. Any thoughts would be greatly appreciated.

Thanks very much MoJo.