R. Butler

I'm just taking a stab in the dark in hopes I am missing something. Plan is a safe harbor 401(k) utilizing the match to meet safe harbor. Plan is top-heavy, but has been getting the pass because the only contributions have been deferrals and safe harbor match. All the key employees defer up to the 402(g) limits plus catch-up if applicable. Plan sponsor wants to make a 1% profit sharing contribution for each employee, but it is not interested in bumping contributions up to 3% for those that require a top heavy minimum. I don't see that they have that flexibility. If plan sponsor makes any profit sharing contribution they lose the pass. We are aware that matching contributions can count towards top heavy & mitigate some of the minimum contributions, but that won't solve the entire issue. Am I missing anything here? I don't think so, but I am hoping. Plan sponsor wants to mke a contribution, but wants a level profit sharing contribution for all employees and isn't willing to pony up additional funds to get employees to 3%. Thanks in advance

I echo the comments by 2 cents. The DOL is targeting correspodnece to plan sponsors who usetilize auditors who perform less than 100 employee benefit plan audits per year. They really want to crack on auditors, particularly those with small practices. They issued a report in 2014 entitled Assessing the Quality of Employee Benefit Plan Audits. (You can google it and find it easily.) The first 5-6 pages contain a nice summary of the DOLs conclusions and recommendations. Some of it is a little unsettling because they are specifically targeting auditors with smaller practices. That is what they are going to do to tpa firms when the preparer information is required on the 5500's. A little surprising I haven't heard more concern about that.

Does constructing a new home constitute "acquring a dwelling unit" for purposes of exrenidng a loan term beyond five years? It is not entirely clear to me that it does. Thank you in advance for any guidance.

Plan Sponsor wants to tier their match whereby the match rate increases as deferrals increase. We have recommended against that, but they are still considering. I know that the issue is whether the match is effectively available at all rates of deferral. I know that it is a facts & circumstances test and there is not a safe harbor percentage whereby plan sponsor can be assured that the effective availablity is met. Having said that is there a percentage of the NCHE's (less than a 100% of course) whereby the plan sponsor can at least feel a little comfortable that the they have met effecitve availabity? Thanks for any guidance.

That is a good thought; I should have thought of that. There very likely were residual dividends paid in a later month. I will check with the client about that. Thank you.

Calendar year plan terrminates in December 2014, but assets remained at 12/31/14. Plan had individual brokeage accounts. The last assets were rolled out of the plan in February. We just found that out. It is my understanding that the final 5500-SF was due by 09/30. I am hoping to avoid the $60 DFVCP penalty (we will get it filed tomorrow). We filed for an extension on the 12/31/14 filing. Any argument that that extension woud extend the 2015 short year return also? I don't really believe that it does, but I'm hoping that I am wrong. Thanks in advance for any guidance.

A client attended a seminar where at least the client was given the impression that it is beneficial to wrap H&W benefits with the 401(k) plan into one document. 2 questions: 1. Are there document providers that provide a wrap document whereby the 401(k) provisions & the H&W provisions are incorparated into one document? 2. Even assuming that the answer to Question 1 is yes, what would be the benefit of wrapping a 401(k) plan wiht H&W plans? I understand why a plan sponsor might want to wrap all H&W benefits into a single plan, but I don't see why a plan sponsor would want to wrap a retirement plan with welfare plan. Thank you for any guidance.

Co. A is acquired by Co. B in a stock transaction on 11/01/14. Co. A's 401(k) plan was merged into Co. B's plan A prior 5% owner of Co. A (Person Z) turned 70.5 on 12/01/14. It is my understanding that since perspn was a 5% owner at some point during 2014 that he should have received a required minimum distribution by 04/01/15, but thta further minimum distributions would not be required as long as he remians employed. Am I correct on that? Thanks in advance for any guidance.

Is it effective? They didn't notify the plan administrator. You are no longer their service provider; you aren't really under any obligation to notify the plan adminstrator of the missed filing. In this case it may work out for the plan sponsor, but if you chose not to notify the plan adminstrator it could be months longer before they learned of the missed filing.

We received a failure to file notice on a 2013 form 5500-SF from the IRS. We had had an incorrect EIN that raised the question. A couple of things with this thread though: 1. Unless I am missing somehting in the facts I don't see that the plan adminstrator has been notified. Supposedly the DOL e-mailed an authorized alternate e-signer. That is quite different from notifiying the plan administrator. 2. Something still seems strange though. Why would the DOL contact a prior year's authorized alternate e-signer about a filing not made?

Okay I see under §1.402(g)-1(e)(6) how this works. A slight twist. In addiiton the excess contributions due to the failed ADP test there were deferrals refunded due to exess annual addiitons. The adjusted dollar limit was only about $12,000. It is my understanding that the excess annual addiiton is disregarded for 402(g) purposes and Jim would be allowed to contribute that portion to the new employer's plan also. Am I understanding correctly? Thanks for any guidance.

Thank you for your response. I agree with your answer. The problem isn't really the refund; that has been made. The problem is that Jim is hoping that by receiving the refund of 2015 401(k) contributions during 2015 that the refunded amount would not be treated as 401(k) for purposes of the 402(g) limit. I don't see that we can give Jim the answer he wants, but I was hoping that maybe I was missing something.

I know the answer, but I am hoping I'm missing something. Jim contribuites $24,000 in January to ABC, Inc. 401(k) plan. In March, XYZ, Inc. purchases ABC, Inc. in an asset acquisiiton. ABC, Inc. plan termninated immediately prior to the acquisition. Jim gets a $12,000 refund for the 2015 short plan year. Jim wants to contibute to the XYZ, Inc. plan. I don't see that he can for 2015. Even though he received a refund from the ABC, Inc. plan for 2015, he still hit the 402(g) limit. I don't see that the refund changes that. Am I missing anything? Thanks in advance for any guidance.

Ownership of Co. A is X 42.5% Y 42.5% Others 15% At 01/01/13 Co. B was owned X 35% Y 35% Z 10% W 20% Mid year 2013 W's shares are purchased by Co. B and are no longer outstanding. Once Co. B purchased those shares form W, Co. A & Co. B becmae a controlled group. We just found this out. Any argument that the 410(b)(6) transition rules can be used? I don't see that it is really an acquisition, but I'm hoping. Thanks for any guidance.

Employer maintains an FSA plan. Employer makes some changes to their health plans and beginning 04/01 will have an HSA plan also. Can employees stop the FSA deduction so thta thye can participate in the HSA? I think the amnswer is no, but I do not do much with health plans so I am not positive. Thanks in advance for any guidance.

Thanks for the responses. Not sure that the same goal can be accomplished with a one year service requirement because if I read the H-2B rules correctly, hypothetically they could work for up to 3 years. The plan already exlcudes seasonal employees, but does apply fail safe language if any such employees works over 1000 hours. The plan sponsor would like to exlcude the H-2B employees permanently. It is a tough issue because there is a valid business reason. It just so happens that the the government defined these workers as temporary, not the plan sponsor.

If plan sponsor excludes employees H-2B workers is that exclusion going to be considered to be based on length of service? We wnat them to be permanently exlcuded. Although such workers are temporary deifinition thye aren't being exlcuded because of that. Thanks in advance for any guidance.

I understand what you are saying. I guess I am trying to determine if there will be a successor plan issue assuming the following: After the asset purchase employees were paid by Co. A. (Actually still trying to determine that; Bird brought up a valid point that employees may have still been paid through Co. B) Contributions were withheld from employee paychecks and put into Co. B's plan after the asset purchase. Co. B terminates the plan & distributes asssets Co. A allows participants in Co. B's plan to immediately come into Co. A's plan. My inclination, given the above assumptions, is that since Co. A let the employees participate, after the acquisition, Co. A has to adopt that plan. How else can you rectify that? If Co. A has to adopt Co. B's plan, the plan can't then be terminated and ahave assets distributed and then immediately allow the same participants to participate in Co. A's plan. Am I missing something in the analysis? Thnaks for any guidance.

The employees were being paid by Co. A immediately after the purchase. Co. A's intent is to merge the plans at 01/01415. They adopted the resolution stating that intent was adopted about 30 days after the purchase.

Co. A purchases Co. B. in asset purchase. Both Co. A and Co. B have retirement plans. The intent was to merge the plans, but Co. A didn't formally adopt the plan at the purchase date. Co. A did prepare a resolution to merge the plan about 30 days after the pruchase. Co. B continued to accept contributions beyond the asset purchase date. Co. B's advisors are telling them that since the plan wasn't adopted simultneous with the buy/sell transaction that the plan terminated & can't be merged. Although ideally the plan should have been adopted at the transaction date my concern is that since contributions were accepted after the transaction date if Co. B's plan is allowed to terminate and distributions are made. we have successor plan issue if Co. B's former employee's are allowed to particiapte in Co. A's plan.

Co. A purchases Co. B mid-year. Both Co. A & Co. B have retirement plans. Co. B's plan is being merged into Co. A's plan at 01/01/15. Just found out that Co. B has life insurance in the plan. Co. A doesn't offer life insurance and really doesn't want to fool with the policies. Can the Co. B participants who have policies be forced to surrender the policies into the plan?

Church sponsoring a 403(b) plan. Thye want to exlcude part-time employees expecting to work less than 30 hours per week form safe harbor contributions. Can that be done in a non-ERISA plan? I know that the universal availability requirement prevents thta for deferrals, but I'm not sure about safe harbor match. Thanks in advance for any guidance.

Thank you for your response. A follow up question. Under §54.4974 the excise tax was due in the year that the rmds should have occurred. If that excise tax wasn't paid it seems that the 2012 and 2013 returns need to be amended and that the estate would be reposonsible for the excise tax. Am I understanding that correctly?

IRA account holder dies in 2014. Should have taken rmds beginning in 2012, but failed to do so. His child is the beneficiary. To add a twist the deceased had a will to which he leaves everything to a charity. The chariy is asserting that the rmds for 2012 - 2014 should be payable to the estate and thus go to the charity. I dont see that that is the case, but it would help if I could point to a cite. Is there a cite that is on point? Thanks in advance for any guidance.

I am preparing a VFCP filing and this particular employer has a check date that is seven days after the payroll end date. For purposes of the both the 7 day safe harbor and lost earnings calculations should we use the check date as the starting point or the payroll end date? I'm pretty sure it is the check date based on §2510.3-102(a)(2) -- "...or the 7th business day following the day on which such amount would otherwise have been payable to the participant in cash." I've filed several VFCP's apps before and always used check date. I have never been questioned on it, but as far as I can recall the check date has alwasy been within a day or two of the payroll end date. It has been awhile since I've seen this much time lag between payroll end and check date. Thanks in advance for any guidance.