Flyboyjohn

6.06(4)(b) says get the overpayment back from the participant. If that doesn't work the employer makes the plan whole unless the erroneous distribution was due to "the absence of a distributable event (e.g. an impermissable in-service distribution)". I suspect we may disagree with the scope of the exception to the general rule that the employer must make the plan whole. I read "absence of a distributable event" narrowly to apply to situations where the distribution would have been "permissable by law" but was impermissable under the terms of the plan. Examples might be making a hardship distribution from a money-type not authorized by the plan document or for a reason not recognized by the plan's hardship policy. Under my narrow reading any overpayment "impermissable by law" would not qualify for the exception since a distribution was made that couldn't have been legal no matter what the plan document said. Examples would be in-service distributions from a money purchase plan, hardship distribution of earnings on elective deferrals or, as in your case, hardship distributions of employer money from a 403b custodial account. Certainly would be nice if the IRS would clarify just how expansively we can read the term "absence of a distributable event".

Messed up 2 dates in my original response: First paragraph should end "...and end your measurement period on June 30, 2015 as you might like." In second paragrpah should say "begins 8/1/2014" Lastly, you're correct that the 7/1/2014 measurement period start date only applies if you trying to use a less-than-12 month measurement period.

Based on nothing more than gut reaction I think you're correction is more than just a don't do it again notice. Had a somewhat analagous situation where MPP plan allowed in-service "hardship" withdrawals and IRS is requiring the plan sponsor to restore the $$ to the plan (since the employees have already spent it of course). Since you have a violation of what I'll call a qualification requirement I think the plan sponsor has to restore the accounts.

Happy to help. Start with renewal date (10/1/2015) and work backwards to determine if you're going to want/need an "administrative period" of up to 90 days. Since there are more than 90 days in the 3 calendar months of July-September 2015 you won't be able to end your measurement period on June 30, 2014 as you might like. So for "calendar month" simplicity let's say you decide to use a 2 calendar month administrative period of August and September, 2015. This now tells you your measurement period will need to end on July 31, 2015 and will have to be 12 months long (begins 8/1/2013) since the special 6 month short measurement period rule only applies if your initial measurement period starts by 7/1/2014. Bottom line: the "shorter than 12 month" special measurement period under the final regs doesn't do you any good for renewals dates after about August 1st or so (you'll be using regular 12 month measurement periods for those).

Sorry, I'm positing an assignment by the employer to the participant along these lines: "We as employer/plan sponsor don't think we have anything to do with this contract other than the fact that our government says we have to consider it as an asset of an employee benefit plan for reporting and disclosure purposes. Accordingly we are assigning any and all rights we may have over this contract to the insured individual and hereby disclaim any responsibility we may have had or been implied to have in the past. PS to policy vendor: please adjust your records to reflect this policy as having no further association with the XYZ 403(b) Plan. All future communications on this policy should be directed to the insured."

I think there's a way now to terminate am ERISA 403(b) plan invested in individual annuity contracts (something about assigning the contracts to the participants). Questions: 1. Does the vendor/insured have to "agree" with the assignment or can the employer make the assignment unilaterally (just send the vendor the assignment and file a final 5500 showing all assets distributed)? 2. Anybody had any experience they're willing to share on doing this with TIAA-CREF? Thanks

The sizeable CPA firm (top 40 in the country) I worked at for 27 years struggled mightily with this issue. For 10-15 years we would take both the TPA & IQPA engagements and felt we had a defensible position since on the TPA side we weren't doing "recordkeeping" (plans were always in an investment & recordkeeping platform) and we had a Chinese wall between the TPS folks and the auditors. We finally concluded that it was too risky (at the urging of Ian Dingwall, the Chief EBSA Accountant)so we stopped doing both about 10 years ago. But I can't point to anything that says flat out you can't do it and would defend to the death (for a substantial fee of course) a CPA firm who's independence was being challenged by Dingwall or AICPA. FWIW

This was a very common suggestion/strategy of TIAA-CREF. MPP absolutely no problem for a 403b eligible ER, just another 401a plan, Hopefully they've been filing 5500s for the MPP and are probably taking the position that the deferral only plan is Non-ERISA but likely issues as to whether or not it is.

My understanding of unoffical DOL policy: If no 5500s ever filed go back to LATER of 1999 (I think that was when 5500s switched from IRS to DOL)or date delinquncy began. But, in recognition of difficulty in constructing accurate returns for possibly 20+ years DOL will accept filings that are "perfect" for the latest 3 years and then "best efforts" for prior years. Janice Wegesin is the guru on these questions.

I recently heard that a 501©(3) org can sponsor both an ERISA 403(b) and a 401(a) plan and get a double 415 limit ($52,000 ER contribution to each plan for a single employee), sounds too good to be true? I know if the plans allow elective deferrals there's a single 402(g) limit but can I also have a 457(b) for another $17,500 on top of the $104,000 to the 403(b) and 401(a) plans? Thanks

Cafeteria plan should work fine and tying eligiblity to group medical shouldn't matter. In fact, you want to do everything possible to establish that this is an EMPLOYER group dental plan and not an "employee-pay-all" payroll accomodation which of course would not be eligible for pre-tax treatment.

Slight twist on original fact pattern: in-service distributions were made from a money purchase pension plan, error caught on IRS audit, auditor is requiring repayment by the employer. Am I correct that this repayment goes into an unallocated account and does not get credited to the accounts of the participants who received the "premature" distributions? And these repayments are deductible and allocated as current year contributions? Thanks

I recommend you start by finding out what type of income tax form the doctors themselves recieve. If it's a 1099 (and we assume that 1099 reporting is proper) then each doctor is a proprietor and having their "own" SEP would be fine. If it's a K-1 from the "partnership" then having their separate "own" SEPs is really bad (especially if they're varying their rates of contribution) since the SEP should have been adopted at the partnership (employer) level. If you find this to be the case get them to the proverbial "good ERISA attorney" ASAP because the issue of treatment of staff becomes minor in comparison.

The .9% Medicare surtax applies only to the employee's side so it doesn't enter into the SE calc

I don't see why an individual who had business earned income couldn't sponsor a qualified DB plan, happens all the time. That being said it sounds like some $$ was put into an investment account that was "supposed" to be owned by a qualified trust but which turned out to be nothing more than an investment account for the "individual". So I would pick up the investment activity on the individuals 1040 even though the 1099s issued by the investment place had some other taxpayer name and EIN attached.

If a purported entity was "nullified" by the IRS I have to assume that somebody else was required to pick up the business income & deductions and pay the resulting tax. Can't that "somebody else" take over sponsorship of the DB plan nunc pro tunc? Or if you have what you thought was a tax exempt DB trust that wasn't ever qualified you need to file trust income tax returns (1041s) and let the income tax chips fall as they may.

Can't use DFVC for a "one-participant" (non-ERISA) plan even if filing 5500SF. Only option is the old "ignorance is not supposed to be but usually works" approach.

Remember that Form 5305-SIMPLE (the employer "adoption agreement") and Form 5305-S (the employee investment account document) are IRS generic forms that almost no investment institution that's going to handle the accounts will use, they'll have their own gussied up slick versions, usually in a "kit" with other promotional info. So you need to go to the "new" place and ask them to send you their set-up forms. You'll also need to contact the "old" place to get their distribution/rollover/transfer forms for all the participants to sign. Unlikley they'll accept whatever you try to put together. The IRS forms are updated from time to time and the financial institution will generally take responsibility for keeping your client's forms updated. Form 5305-S was last revised March 2002 and Form 5305-SIMPLE was last revised March 2012. I haven't encountered any employers who are willing to pay for professional help in keeping them legal and out of trouble, they think the financial adviser is doing it for free.

Yep, easy enough. Have employer fill out a new IRS Form 5305-SIMPLE (essentially an amendment and restatement of the "plan") unless the new investment platform requires use of their functional equivalent (very likely) Have employees fill out new 5305-S forms to establish new investment accounts (or new investment place equivalent) Send rollover/transfer forms to "old" place to move to "new"

In order to offer a compliant health FSA in 2014 is it enough that the FSA participants be offered ACA compliant group coverage or do they have to actually be enrolled in the group coverage?

I thought all "skinny plans" had to be self-insured, do you have the name and contact info for one that is traditional indemnity and approved by the state insurance regulators? Thanks

SIMPLE IRA investment accounts can certainly be moved with the consent/directions from the participant even if the SIMPLE is with a DFI. If the transfer is being made before the account is 24 months old OR the new account is going to accept future SIMPLE contributions then you need to move to a new SIMPLE IRA (use IRS Form 5305-S or functional equivalent). If the partiicpant just wants to move the current balance AND the accunt is at least 24 months old they can rollover to a traditional IRA.

How about CT gateway?

Think I'm right that if a class of employees is excluded from a plan (assume no 401b problem) they don't get top-heavy minimums or 3% non-elective safe harbor. But what if an employee make an old fashioned irrevocable waiver of participation, same result? Thanks

Simple solution- guidance allows you to check the box on a cash basis (check the box based on the year the contribution is actually deposited rather than the year it's "for")