Tinman

Can a sponsor "convert" their SEP from Form 5305 to a prototype document governed SEP?

I have a city that is considered a second-class city in Nebraska (doesn’t have a population of more than 5k). They currently have a City Employee plan, Police Officers plan and a Firefighters plan. In Nebraska second-class Cities are not required to have separate plans for these different types of employees. That being the case, they would like to combined these three plans into one plan, having all current and future employees in the City employee plan. For the Fire plan, there’s no longer full-time firefighters, it’s a voluntary department now so no new contributions in that one - only balance is for one retired firefighter. There are police officers employed but they are getting the same contributions and vesting as the City employee plan. I am newer to govenmental plans - are there any issues with merging these three plans I should be aware of? A provisional comparison shows very few differences and they have already determined they would go with all the most lenient of the differing provisions. What other issues should I be aware of, if any? Thanks!

Thank you both for your response - I am aware general testing applies, I guess I was wondering what else might need to be looked at, if anything.

Below is the allocation formula for a profit sharing only plan provided to us by a plan sponsor. The tiers are based on job classification. The Tiers range from Tier 1 = trainees to Tier 9 = those who report directly to the board of directors. What testing is required here - general testing?

2007

Detail: Traditional 401(k) plan that's been in effect since 2006. For the first year, the plan was filed using the correct EIN. The following year (and each year since) the plan was filed using an incorrect EIN (off by one number). They even received a delinquent filing notice from the IRS back in 2007 due to the incorrect EIN situation. What would be the correction here? Would the plan need to: 1) Amend all 5500s back to 2007? If yes, how would the 2017 filing be handled? Would they need to indicate a "change" in Q. 4 on the Form 5500, indicating a change in the name and/or EIN of the plan sponsor? (4 If the name and/or EIN of the plan sponsor or the plan name has changed since the last return/report filed for this plan, enter the plan sponsor’s name, EIN, the plan name and the plan number from the last return/report:) 2) Just indicate the "change" in Q. 4 and move forward, not amending any past filings? 3) Any reason to use DFVCP in this situation? Any other thoughts/suggestions would be greatly appreciated!!

I'm having difficulty finding any guidance on this - we have a 401(k) plan with an automatic enrollment provision (ACA) and the client did not provide the required notice for the past two years. They have been operating according to the provisions in the plan document, they just neglected to provide their employees with the notice. Is there a "correction" for this? Maybe anyone that was auto enrolled would need to be given the option to remove their funds?

Agreed! Great information provided - and appreciated!!!

Thanks, all!

We currently use our normal DC document and it is silent as to the specific rules regarding a one-person 401(k) plan. We have just discovered the owner's daughter works at the business on a part time basis but has never met the 1 year of service eligibility requirement. Does this throw the plan out of "solo-k" status, causing a 5500 filing, testing, etc.? Or because she is part-time/seasonal and never works more than 1000 hours during the plan year, is that solo-k status retained? Thanks!

There is not a separate trust document in this case.

Here's what the BPD states: 8.1 AMENDMENT (a) General rule on Employer amendment. The Employer shall have the right at any time to amend this Plan subject to the limitations of this Section. However, any amendment that affects the rights, duties or responsibilities of the Trustee (or Insurer) or Administrator may only be made with the Trustee's (or Insurer's) or Administrator's written consent. Any such amendment shall become effective as provided therein upon its execution. The Trustee (or Insurer) shall not be required to execute any such amendment unless the amendment affects the duties of the Trustee (or Insurer) hereunder. That leads me to believe that ALL trustees would need to sign (if the amendment is something that affects their duties) - would you say I'm interpreting that correctly?

Trying to find some concrete specifications on this - if a plan has three trustees and only one has signed the PPA document by April 30, 2016, is the plan considered executed? Or do all three have to sign before the document is considered compliant?

I will preface this post with stating I know very little about church plans and how they operate - however, I've received a question and hope someone out there can help. One of our advisors is trying to set up a church plan and was asked - if the pastors are receiving contributions in this plan, does it cause any issue with the "tax-free" status of their housing allowance? Thanks, in advance, for any guidance!

Thanks!

The new EPCRS procedure release in Rev. Proc. 2015-28 specifies the following: (b) notice of the failure that satisfies specified requirements in new section .05(9)© of Appendix A of Rev. Proc. 2013–12 is given to the affected eligible employee not later than 45 days after the date on which correct deferrals begin; Anyone know of a sample notice floating around out there?

A client currently has a 412(e) plan in place - can they also sponsor a 401(k) plan? Are there any restrictions/limitations they should be aware of?

First - a disclosure - I don't know nuthin 'bout 403(b) plans. Our firm provides custodial and record keeping services for a 403(b) plan. This plan is leaving us to go to a new vendor. There are 4 individuals in the plan who have separated service and the TPA is stating the new vendor will not accept the funds for these individuals as they won't have "applications" for them. It is my understanding that a 403(b) cannot do a force out (as in 401(k)-land) - and keeping the funds of these four individuals here would keep the contract we have with the plan sponsor in force - and that's not what they want. I see nothing in our contract that allows us to force the sponsor to take all the accounts to a new vendor. Suggestions please - what can be done with the account balances of these 4 terminated participants?

Thanks for the reply. You are correct, not the enrolled actuary for the plan - actually work for the insurance company holding these assets which have been with us since the early '90s. These assets came to us for purchase of annuities upon termination of the plan. Trying to determine if they are still considered plan assets subject to ERISA or if the purchase of these annuities constituted distribution from the plan, allowing the plan to terminate. And I think from what you said above, the answer to that question would be the latter - distribution/termination of plan - am I interpreting that correctly?

DB illiterate here - so be kind! If a fully-funded DB plan is terminating and uses a group annuity contract as a terminal funding vehicle, does the distribution of those assets into said vehicle then allow for plan termination? In other words, do those assets being held in the GA still constitute plan assets, thus a continuation of the plan? Who would be responsible for instigating payouts as participants separate from service - the (former) plan administrator? The GA vendor? The participant? Any cites you may have on this would be appreciated!

New to the governmental side of the business, so I apologize for the basic question..... Are there any limits to the pre-tax contributions made in a 414(h) plan? Subject to 402(g)? 415 Limit?

Thanks for the response, Hojo! Our main business is 401(k) plans, individual accounts, daily valued, so not subject to PBGC. And I would say about 1/3 of the auditors for our large filers have requested this. Some have been content with the answer that this is a group annuity contract with assets in a separate account, but others are pressing harder......

We are a bundled provider with plan assets invested in a daily valued group annuity contract. Within the contract is not only a guaranteed account, but also a separate account that houses underlying investments (one separate account in which the plan may have 20 funds in which they have invested). Do the disclosure regulations require a fair value report on the underlying investement within the separate account? Our actuaries are telling us they do not have to provide that information, however we have had multiple auditors for our large filers that are insisting we do have to provide it. Any help would be appreciated!

The match is calculated based on hours worked weekly - so we were looking at each employee, each week in order to perform the BRF testing.

Plan has discretionary match. Formula being used is dollar-for-dollar up to a max $40/week, based on hours worked but capped for deferrals made. Examples: Joe works 36 hours and contributes $50 in deferrals. He receives a match of $36. Bob works 15 hours and contributes $10 in deferrals. He received a match of $10. Don works 45 hours and contributes $100 in deferrals. He received a match of $40. Performing a BRF test on this match on a weekly basis - some weeks pass, some weeks do not. Document is silent as to how to correct this - would it be as simple as providing additional match to those who did not receive as much as the HCE in the same group? Or could we look at this differently and do it on an average basis instead of looking at each week individually? (HCE A averages 32 hours/week for the year - they compare that to the weekly average for the NHCEs) Opinions, please!