K2retire

Thanks, that's exactly what I thought. But using Andy's examples both of these large record keepers are telling clients that the result would be that all of those years must be filed as a large plan if they had initially waited until exceeding 120 participants to begin filing as a large plan.

I've now been told what I believe to be wrong information by 2 record keepers, causing me to question myself. If a plan has used the 80/120 rule to delay audit requirements at some point in the past, must they continue to be audited until they fall below 80 participants or is it just below 100?

Someone is using inaccurate terminology. Generally a stock split is when my 100 shares of ABC Company are turned into 200 shares of ABC Company -- nothing related to a separate company. As for the TPA's concern, it is likely due to the successor plan rules indicating that the participants did not have a distributable event that would allow them to be paid out of the terminated plan. Whether or not that is correct would depend on the nature of the transaction between the two companies and timing of the plan termination relative to that transaction date. It sounds like the attorneys structuring this deal may have dropped the ball. I'd let them figure out how to fix it.

It's only neat if the tax rate stays the same or goes down. If it happens to be a year when it goes up, you'll have a pretty unhappy HCE.

I read it to mean they would only withhold from the end of the month payroll.

QDROphile, I was under the impress that pretty much all plans were subject to ERISA, but I have a potential new client who is trying desperately not to be, since they've never filed a 5500. They have never had a plan document, making it hard to tell what the provisions are. The only employer involvement appears to have been sending in contributions. The insurance company says they are a non-ERISA plan and refuses to disclose any information to the employer without participant consent. Any tips for traps that I should be looking for that would make them subject to ERISA?

The deferral limit as a percentage of the compensation limit has been in the range of around 6% for years and that is not likely to change. A 133% match up to 6% would get your HCEs to an 8% employer contribution.

I believe that discounted fee is available only until December 31, 2013.

You could have separate plans, but that would not solve your problem as they would have to be tested together.

With my larger amount, the concern is that the money will remain unclaimed because the likely heirs are unaware of it. So, 5 or 10 years from now, what is the plan sponsor supposed to do with the account?

I doubt that the mother has been told. We also don't really know if there is a father still living. The employer wants the money to go to the fiance, and will probably not be willing to contact the parent(s). Thanks for the tip about the small estate affidavit.

I have a similar situation, only the balance is about $6,000. Young participant, no beneficiary designation, no spouse or children and the next default is the estate. She was estranged from her mother, living with a fiance (who is not likely to get anything no matter how you slice it). I spoke to a friend who is a probate judge in another jurisdiction, who recommended having whoever paid for the funeral open an estate to file a claim. The plan sponsor says there was no funeral. How long must the plan hold this balance waiting for an estate to be opened? Can the balance be forfeited eventually?

Often the people answering the phones for the record keeper do not understand the difference between a plan entry date and a deferral change date. I wouldn't worry too much about getting a wrong answer there. As BG said, they just take the money, and I haven't heard of any of them turning it away for this reason. The TPA is of more concern. Does your adoption agreement specify when deferral changes can be made, or is it a separate administrative procedure? Does the TPA have a copy of whichever document spells it out?

It depends on what it says in the QDRO.

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.

Keep in mind that various service providers have deadlines as well.

Mass Mutual debited the employer's bank account for the earnings. The distribution was initially rolled to an IRA. A 2012 1099-R was issued showing the rollover. We don't know yet what the IRA will report for 2013. We were eventually able to persuade them to accept direction from the plan fiduciaries and restore the dollars to the account rather than reversing the original transaction to make it appear that it had never happened.

Perhaps the prospect of the late filing penalties accruing to the company will motivate the son to sign it.

It's not an either or proposition. They need to do both.

Because of the recapture rules, will you need separate sources for each year's conversion amount?

But usually it is the employers who are giving bonuses primarily to NHCEs who want to use this plan design!

I haven't heard anything from the plan sponsor, so apparently the bill they prepared and mailed to me is the only one that has gone out so far. The invoice says "Your account will be debited." But I can't tell whose account -- it almost looks like they're trying to deduct it from the revenue sharing they pay us.

Mass has already credited the full amount to the participant's account and is billing the employer for ~$1,700 to make up the difference. The service agreement is a good idea. I'll see if the client can locate it.

Mass Mutual's compliance department is now saying that since this was an "impermissible distribution" and the quoted section above refers to "overpayments" it does not apply -- despite the clear reference in the highlighted sentence. Aside from the fact that I believe they are wrong, they are not supposed to be the fiduciary on the plan. Has anyone had any luck persuading them or other record keepers to follow direction from the plan's named fiduciaries when the record keeper's position is wrong?

Why would you want to have some sources tested differently -- especially if different means you are more likely to fail the test?