chc93

Shouldn't the plan document tell you which employee contributions are matched? Or are you designing a new plan now.

... and also provide a good cushion for the future. With only 2 owners excluded, count is 99. Maybe not inconceivable to hire 2 new employees in the near future... then over 100 again.

Apparently a DOL proposal for Form 5500 changes... which apparently has been halted (ASPPA article)... *** Work on the Labor Department’s effort to expand, streamline and modernize the Form 5500 Series has been halted until a new head of the DOL’s Employee Benefits Security Administration (EBSA) is in place, according to ERISA attorney S. Derrin Watson. *** https://www.asppa.org/News/Article/ArticleID/9203 But the good news (from the article)... ***** Watson noted a significant improvement in the way small DC plans are distinguished from large ones: Under the proposal, the definition would be based on the number of active participants with account balances. ***** There seemed to be a few other articles on this back in 2016-2017.

I agree. TH rules are based on participant account balances, not plan assets. One example is that "former key employees" are not in the TH test at all, even if they still have "plan assets".

Continuing this thought... the divisor goes to zero in the following year (my idea that the divisor cannot be negative). Then, the account balance, whatever it is, is divided by zero, and since the full account balance gotta be less than infinity, the full account balance is the RMD and the account is closed.

Said another way, the $100,000 is divided by 0.4, and the RMD is $250,000. But the account only has $105,000, so the RMD is $105,000 and the account is closed. Similar to a vested account balance. If the vested account balance is less than the RMD, only the vested account balance is distributed.

If the plan document specifies percentage or dollar amount, I think the financial advisor is running the risk of not following the terms of the plan. What if a participant knows that he can elect a percentage (I would think the SPD says that too). If the financial advisor says "NO" to percentage, to me that is a problem. If all responsible parties agree, the plan document should be amended.

Couple of thoughts I had... We heard of a situation where they actually drove up to the participant's home and got the distribution done. They knew the address since all mailings were not returned as undeliverable. But this may come with "risks"... Exit interviews are nice, but we had a couple of clients tell us that the employee just doesn't show up to work one day, and never contacts them after that, and essentially "disappears". Sometimes, co-workers can help, but not always.

Thanks... I don't know much of anything on 401(b) plans...

Sorry, can someone tell me what "personal 415 limit" is in this case...

Also note that with the 2017 Form 5500, Line 4 was changed to include any change in plan name. *************(from 2017 Form 5500-SF instructions) Line 4. If the plan sponsor’s name and/or EIN have changed or the plan name has changed since the last return/report was filed for this plan, enter the plan sponsor’s name, EIN, the plan name, and the plan number as it appeared on the last return/report filed. The failure to indicate on line 4 that a plan sponsor was previously identified by a different name or a different employer identification number (EIN) or that the plan name has been changed could result in correspondence from the DOL and/or the IRS. *************

Another comment... when we file extensions, we file for both the 5500 and 8955-SSA even if we are not sure at the time that an 8955-SSA will even be required. As ESOP Guy says, "we are not going to get caught without an extension".

I think it has been discussed here and other places that filing for an extension timely, but then filing the form(s) prior to the filing due date so an extension was not needed, is not a problem. In fact, I've heard of folks filing extensions for all plans, whether needed or not... for example, extensions for all calendar year plans were filed in February (extreme, I think). But don't recall any concerns for compliance or audit checks.

He can terminate his employment and *really* go play somewhere else with his money and all.

And I think the responsibility for getting an ineligible IRA contribution out of the IRA falls to the participant and the IRA custodian... not the plan. The plan only needs to notify the participant and IRA custodian of the ineligible IRA contribution amount.

I think only the SAR needs to be posted. After all, the SAR does state that the participant can get a copy of the full annual report or any part thereof on request. The "full annual report", I think, is the full Form 5500 itself.

What about this... first, "process" the distribution out of the participant's account. Second, take distribution fee from distribution amount. Finally, since distribution amount doesn't cover the fee, then nothing to send to participant. But distribution was "processed" (out of the participant's account) and thus the fee.

I'm assuming the safe harbor is the 3% to all. What about changing to safe harbor match... if these "retirees" don't defer, no safe harbor match. Then new comp for PS contribution, and zero PS to them (assume passing the test). But safe harbor match will mean that ALL participants who do not defer will "lose" the 3% safe harbor, if that's an issue.

Back in the day when most plans were pooled trusts, I recall some plan administrators having a policy of a set threshold of something like 20% of the assets for distributions where a special valuation would be done... gain OR loss.

Yes... since Transamerica is not doing your company's payroll, they do not see if your loan payments are being deducted... only that no loan payments have been made to Transamerica. Sorry, but you (and you rcoworkers) have a major problem. Were you able to find out if there is a TPA (third party administrator). As posted above, Transamerica should know if there is one or not.

We actually have plan documents for plans in our office with that provision and an IRS DL. My initial comment on "forfeiting back to the company" was really was along these lines of forfeiting in the plan, and have the plan pay fees from forfeitures. Thanks...

I agree... but... how do you have a DB plan for 3 years without an actuary...

Well... the 5500 instructions for code 2T is "Total or partial participant-directed account plan – plan uses default investment account for participants who fail to direct assets in their account." Instructions seem to say DIA, and not QDIA. So any DIA provision would use 2T, qualified or not.

Similar question that may or may not help. What about a plan that has a discretionary match provision, but a discretionary match has never been made (no participant has a match). Would you use code 2K or not... I generally would use 2K even if no participant has a match since it is a plan characteristic (provision). So if no participant has a QDIA, but it is a plan characteristic, I would probably use code 2T.

Another thought. Can those $361 account balances be forfeited in the plan and pay for administrative fees... again, with knowledge that if the participant comes forward, the company is obligated to pay the forfeited balance.