gregburst

I'm looking at a potential 401k takeover, but I'm not sure I want it. The employees are all invested in a group annuity contract with insurance company X. But the owner uses a brokerage account to access more investment choices for himself. I know in general the employees must have the same investment choices as the owner. And I know the brokerage company can have a minimum threshhold to be able to use their product. But this owner has put forth a higher threshhold to keep the employees from using this option. I'm pretty sure that's not allowed. Can someone point me to the right code section to research these rules? Or which chapter in the ERISA Outline Book? Thanks.

Joe is a 10% owner of a partnership. He gets paid $300,000 per year from the partnership (on a K-1). The partnership has non-highly-compensated employees. Joe wants to establish a pension plan for just himself. My initial response is NO. Joe asks if it makes a difference if his $300,000 is paid to an LLC that he'll set up rather than to him directly. His hope is that this other entity, that has no employees, can establish a plan for just him. My response is still NO. Joe asks, "What if I get paid $0 on my K-1 as a passive partner, and then the partnership pays me $300,000 on a 1099 for the actual work I do; can I set up a plan for just me with this 1099 income as an independent contractor?" "Or what if I get paid $0 on my K-1 as a passive partner, and then the partnership pays $300,000 to my newly established LLC for the actual work I do; can the LLC then establish a plan for just me?" None of these pass the smell test to me, but after a while my head starts spinning. Is there some way to set this up so that Joe's plan doesn't have coverage issues?

I met with a charter school that has had a 403b plan for about 10 years. They've always made matching contributions; and they've always considered themselves to be an ERISA plan. Their document is completed as such, and they've always filed 5500s as such. But as a public school, I believe they should be Non-ERISA. They stated that they recently reached this same conclusion themselves, and they mentioned it to their current provider. The provider told them that since they had filed as an ERISA plan for more than five years, they cannot reverse course now and be a Non-ERISA plan. I can't find any rule about five years. Are they stuck as an ERISA plan? Or is there some action they need to take to become a Non-ERISA plan?

So if a 403b is set up as a profit sharing plan and it provides that a participant's nonforfeitable accrued benefit is payable to the spouse, then no J&S requirement? No QPSA notice? The adoption agreement can limit distributions to lump sum only? I was confused by your last line above: "unless the participant elects a life annuity." Can a participant do this if the document calls for lump sum only?

Must all ERISA 403b plans allow for J&S? Or only if invested in annuities?

Assume a safe harbor 401k plan is cross tested and each person is in a separate class for allocating profit sharing. The plan is then amended to allow prevailing wage contributions for certain employees who work government contracts. According to the plan document, these Davis Bacon contributions are considered QNECs. As such, may they be used in the 401a4 general test? Does this answer change if a defined benefit plan is added to the mix (even though most of the prevailing wage workers won't qualify for it)?

Is an insurance agency considered a Professional Service Employer for PBGC purposes? I have a 401k client with 20 employees that is considering adding a DB plan. It's an insurance agency. Would PBGC coverage be required?

Self-directed 401k is currently invested in a GAC with a popular insurance co. For asset-protection purposes, owner/trustee would like to rollover assets from his IRA into the plan, which the document allows. HOWEVER, what he wants to rollover into the 401k is non-publicly traded stock, in kind. And we can amend the plan to allow in-kind rollovers, available to all participants. But since all employees must have the same investment opportunities, what must be offered in addition to the GAC? Just this stock, which is no longer for sale? Any stock? Self-directed brokerage accounts? Of course we'd like to offer as little as possible, but we also want to keep the plan in compliance. Thank you for any guidance.

I have a couple of 403b plans that I TPA that are looking to switch vendors. Any recommendations? There seem to be a lot of good options for 401k plans; not so much for 403b.

I have a couple of 403b plans looking to switch providers. Any recommendations?

I've heard that if a new plan grandfathers all employees hired as of the effective date, then the normal coverage testing - that sometimes causes problems when grandfathering is used - is not required. In other words, a plan can grandfather everyone employed on the effective date without worrying about coverage. Can anyone confirm this (or shoot it down)?

Am I correct that a plan that covers only the owner and spouse plus their child cannot file a 5500-EZ (due to the child being in the plan)?

Assume Chris owns 100% of company A, a C-corp which has 50 employees. Several people/resources have told me that if Chris sets up company B, a C-Corp "marketing" company with Chris as the only employee, then B can sponsor a qualified plan without having to cover any of the employees of A. This goes against everything I've ever learned or been taught, but I'm willing to be corrected. Is such a set up really allowed by IRS? If so, can you please provide a cite? Thanks,

In 2010, a plan sponsor missed a regular deposit of $1,700. This oversight was discovered nine months later (before end of plan year). At that point, it was immediately deposited; and lost earnings of $50 were calculated and deposited. Sponsor recently received a letter from EBSA stating that the situation needs to be corrected. VFCP was recommended. Is VFCP required in this case?

I think a corporation can have a Sep 15 deadline for filing its tax return (showing a deduction for profit sharing), yet the profit sharing contribution may be deposited as late as Oct 15 without jeopardizing the deduction. Can anyone verify this?

401k prospect wants no financial adviser involved with the plan "to save money." We could establish a brokerage account for each participant. Any other ideas or investment companies that might be a good fit?

Interesting. So Chris will be NHCE for A and HCE for B? Contributions will be charged separately, as will forfeitures. So it won't be a MEP. Is it then considered a single employer?

Company A is owned 100% by Pat. Chris is a long-time employee and participant in Company A's plan. Chris is not related to Pat, and Chris is NHCE right now. Pat and Chris will soon form Company B, owned 49% by Pat and 51% by Chris. Before the end of the year, Company B will become a co-adopter of the Company A plan. Since there is no ASG (they are manufacturers) and no controlled group, the current plan will thus become a MEP. As such, Companies A and B will have to satisfy separate discrimination tests for 2012. It seems that Chris will be NHCE w/r/t A's testing, but HCE w/r/t B's testing. Can that be right? I've never heard of it, so I'm guessing Christ must be treated as HCE for the full year for all parts of the plan. Agree?

I have a client with a few "Davis Bacon" employees (most of their employees are not). Generally, the plan has a one-year eligibility wait. However, Davis Bacon contributions start from day one. All plan assets are self-directed. However, the client wants the Davis Bacon money to default into a QDIA. The affected employees could switch their money into different funds of their choosing the next day if desired. The client does not want this QDIA route for any other money types in the plan. The document is a Datair Volume Submitter; and I don't see any option under self-direction to cover this treatment for just one money type. The client could implement it as policy, but it doesn't sit right with me. Any suggestions?

For 401k plans that use a platform such as John Hancock, I'm curious whether most TPAs are preparing the annual notice - due by Aug 30 - for their clients to distribute? Or will you rely totally on the investment company to provide it? Or are you letting the plan sponsor deal with it based on communications from the investment company? Just curious.

My hard copy does not have those mistakes.

So apparently it doesn't matter that he never works for a consecutive 12-month period.

Plan's eligibility requirement is 1 Year of Service. Entry dates are 1/1 and 7/1. Plan year is calendar year. A person is hired from 4/1 thru 10/31 for three consecutive years, working 1000+ hours each time. He's terminated and rehired each time. Does this person ever meet eligibility and enter the plan? I realize the document is the controlling force; it's a Datair VS document. But reading it through, I don't see the definitive answer to my question.

I know several that have done it without a state license, but it might depend on the requirements of your state. E&O is not a requirement; you'll have to decide whether it makes sense for you.

If a 401k plan without automatic enrollment chooses a QDIA just in case someone doesn't complete an enrollment form, does that plan sponsor need to provide a QDIA notice each year, even if every participant has completed an enrollment form and chosen investments?