cpc0506

We have a plan where the profit sharing formula puts each employee in his our rate group. Due to the age of the owner, she is younger than her only other employee. trying to pass all testing required, a New Comparability allocation will be difficult. I have suggested to allocate using integration. Is this allowed? And if so, since integration is a safe harbor allocation method there is no additional testing required. Is that correct?

I have a service spanning rules question. Plan's eligibility requirement is 6 consecutive months of service, quarterly entry dates. Employee A is hired on 12/31/14, gets paid, and terminates the same day. The employee is then rehired on 7/6/15. I claim that we have to look at the service spanning rules and determine when the employee is eligible for the plan. Under the service spanning rules, since the time the passed from her termination date to her rehire date is less than 1 year, she is credited with the time while not employed and as such earns 7 plus months of service at her rehire. Does anyone agree? If the employee is eligible, I say her entry date is her rehire date. Do you agree?

Spouse of owner participants in Defined Contribution Plan A. Spouse dies. The owner rolls the funds from his wife's account to his account in Plan A. Do these funds constitute a related rollover or not for owner?

I don't agree. A safe harbor contribution is given to anyone who is eligible to defer. The deferral portion of the plan was not effective until October 1, 2015. The employees were already terminated at that point. They were not eligible to make deferrals, so not eligible for Safe Harbor. Is my reasoning wrong?

We have a new plan. Plan was effective 1/1/15 with deferral effective 10/1/15. Plan is a safe harbor with 3% non-elective contribution. Plan uses full year compensation. I have 2 employees who terminated prior to 10/1/15 but based on eligibility entered the plan on 1/1/15. Does client need to provide 3% non-elective to these terminated employees? My answer is no since they were not eligible for the deferral portion of the plan because they terminated before that feature began. If not eligible for deferral, then not eligible for 3% non-elective. Does anyone agree?

That is what I meant to say.

It looks as if our Basic Plan Document says the deemed cash out needs to be returned to the participant in the year of her rehire.

Employee A received a profit sharing contribution in 2012. In 2013 the employee terminated employment 0% vested. She only had 1 YOS. Plan forfeits her unvested balance as of 12/31/13. Employee A is rehired on July 15, 2015 and is still employed as of 12/31/15. Employee A is not entitled to a profit sharing contribution as she only worked 528 hours and plans requires 1000 hours for contribution. Should the unvested funds be restated as of 12/31/15? If so, how is that done. Just an FYI, the profit sharing funds are pooled (employer directed). If not, when must they be restated?

Can we retroactively merge the plans as of 12/31/14? And redo the 2014 Form 5500-SF for Plan 001 and show the assets going to zero at 12/31/14? Is that your recommendation? If we show all the assets on the 2014 Form 5500 for Plan 002 and leave the Form 5500-SF for Plan 001 as is, does that not overstate the assets?

The plans were merged as of 12/31/15. The issue is with the 12/31/14 Form 5500 filing. (And yes, the audit was not done in time for the filing due date.) The investment house is a familiar (to many TPAs) alliance.

Company sponsors 2 401(k) Plans. Prior TPA sent up 2 plans to keep the company from needing an audit. Plan 002 is now subject to audit due to an unfortunate amendment the client decided to make without concern of how it would affect their participant counts. Assets for both plans are held in the same trust. There is no division (such as Plan 001 participants and Plan 002 participants) split at the investment house. We, the TPA, had asked if the investment house could generate new reports if we provided division information after the fact. They said no, only prospectively. When we generated the draft Schedule A and Schedule C, we prorated the amounts based on the assets held by Plan 002 in relation to total assets. Plan 002 has been submitted to the auditors for the plan year. Auditors do not feel that they can certify the information UNLESS all the assets in the trust are reflected on the Form 5500. They have asked that we complete the Form 5500 with total assets for both Plan 001 and Plan 002 on the Plan 002 Form 5500. I have not encountered this before. Has anyone else ever encountered this situation? And what are your thoughts as to the auditor's request.

Does Notice 2016.16 imply that adding loan provision to a safe harbor plan mid year is an allowable mid year change, since it is NOT specifically listed as prohibited change?

Our TPA firm just took over a book of business from an advisor. He had life insurance in every defined contribution plan, even though it seems that only the owners have the policies. (Why that is so is still to be determined.) We only had a handful of plans with life insurance up to this point. Now we, as a TPA firm, are trying to set policy for how life insurance is handled in our clients' plans. In doing some research, I have read conflicting approaches on how the life insurance is to be reported OR NOT reported as assets on the financials and the Form 5500. We have always reported the cash surrender value in our assets and on the Form 5500. Interestingly we don't have any audited plans with insurance but in reviewing the lines of the Schedule H I was not able to see where you would include the CSV. I do have to say what research I did find was very limited. I would like to start a dialogue here to learn how other TPAs handle life insurance in the retirement plans that they administer. If you have recommendations for reading matters that would be appreciated as well. Besides the CSV issue, we would also like to know what actions you take regarding terminated participants who have life insurance polices as part of their investment lineup. Must something be done with the policy when a distributable event occurs such as termination or retirement? Thanks in advance for any guidance that comes this way.

It is an operational failure. Based on an employee's employment contract he signed, he were not eligible for any employer offered benefits. But 401k plan did not exclude such an employee and the plan had immediate entry. Client now wants to add an excluded class of employees - those whose employment contract excludes them. Employee was hired in 2014 and as TPA we were not told of the employee until we started doing the 2014 valuation work. And no, it would not change the pre-approved language.

I am working with a client who has requested that a retroactive amendment be made to their current AA. The plan is on a pre-approved prototype defined contribution document. They know that the amendment must go through the VCP program. Number 7b on the Form 8950 asked if I have concurrently submitted a Form 5300 series? I have answered the question 'no' as I was under the impression that the service is no longer accepting Determination Letter request for pre-approved plans. Am I correct in my assumption? By answering 'no', the form instructs me to provide an attachment explaining why we did not file. What should the attachment say? Thanks for your help with this matter.

They want to allow them to make deferral contributions but NOT received a QACA match, so a separate plan will need to be established.

Client has opted NOT to make VCP filing under EPCRS.

So the client will have 2 plans. Is it correction that the plans will have to pass coverage separately since I cannot permissively aggregate two unlike plans?

Client decides to terminate their plan. Client owed top heavy contributions to the plan for 3 prior plan years. We instruct client to deposit the funds before anyone can be paid out. Client deposits the money. 5 employees who had no account balance at the Alliance were entitled to part of the overdue funds. Alliance informs client that the social security numbers provided for these 5 employees did not belong to them, so Alliance will not distribute the funds in the name of the participant and returns the company to the client. How the Alliance knew the numbers were fake, I do not know. But fake SSNs are not the only problem the client now has. What, if anything can the client do with the funds? If the funds are not paid to the participants, then I think you have to answer questions on the Form 5500 that assets reverted to the company. But this generates an excise tax.

Client has come to us and would like to start a new plan for their employees covered under the Service Contract Act. Currently the client sponsors a QACA match plan, no other employer contributions. There were 65 eligible employees in 2014. Client wants to start a new plan effective 1/1/2016 for the 8-10 employees covered under the Service Contract Act, but do not want to provide the QACA match to these employees. Can a company sponsor a safe harbor plan for one portion of its employees and a non-safe harbor plan for another portion of its employees? If it is permitted, what would be the pros/cons to doing this?

But is the triple stack match totally discretionary from one year to the next without having to amend the plan?

After the plan year has ended we, the TPA, begin compliance work and learn that Employee A was not given the opportunity to defer. Under EPCRS, we have calculated the missed deferral opportunity and missed matching for the employee. Client will be making a QNEC contribution to the plan in the amount of the missed deferral. Client will be making a matching contribution to the plan. Plan uses prior year testing. My question is: do I run the ADP Test with the QNEC included to determine the level of deferrals allowed for the HCEs for the next plan year? Or is the employee in the test with a 0% deferral or not in the test at all?

We have a client that would like to add a triple stack match for 2016. We are having difficulty with filling out the AA so that it generates language for the SPD which provides flexibility in the way the triple stack match is calculated. We are using a Relius prototype. Does anyone have any suggestions? The language generated in the SPD makes the ACP safe harbor match look as if is a fixed amount. It is our understanding that the triple stack match is fully discretionary within the confines of the compensation limits set for each piece of the match. If you include the ACP safe harbor provisions in the AA, can you chose to make the triple stack match one year and not the next without having to amend the plan?

Company A sponsors a 401k plan. Company Be sponsors a 401k plan. It is learned that Company A is a control group with Company B. There is a common employee X between Company A and Company B and he is one of the owners (who because of an ownership percentage change caused the two companies to become a controlled group.). The ownership change occurred in 2012 which means that for the 2014 plan year, the coverage test has to include all the employees and we now need to determine if each plan passes coverage on its own. My question is: when I run the coverage test, how do I treat employee X? He is benefitting under Plan A (as an employee of Company A ) and not benefitting under Plan A (as an employee of Company B). Do I count owner twice?

I can tell you that the EGTRRA AA was on the Datair prototype. Can anyone out there using Datair tell me if the Datair document allowed for the notice to be the amendment to the plan?