Belgarath

Many documents have language that can help you out in such a situation. FIS, for example (my emphasis): "Regardless of the definition of Compensation selected in the Adoption Agreement, the Administrator may adopt a uniform policy for purposes of determining the amount of a Participant's Elective Deferrals of excluding "non-cash Compensation." For purposes of this Section, "non-cash Compensation" means tips, fringe benefits, and other items of Compensation not regularly paid in cash or cash equivalents, or for which the Employer does not or may not have the ability to withhold Elective Deferrals in cash for the purpose of transmitting the Elective Deferrals to the Plan pursuant to the Participant's Salary Deferral Agreement. Additionally, the Employer may, on a uniform and nondiscriminatory basis, permit different salary deferral elections for different items of Compensation (e.g., a separate salary deferral election for bonuses), and may exclude for purposes of calculating Elective Deferrals one or more items of irregular pay (e.g., car allowance)."

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Taking a poll here. Or maybe a survey. Do you prepare these for your retirement plan clients? If not, do you notify them that it is required when there's a change that would require it? In your opinion, is this (or should it be) the job of the TPA, or the CPA, etc.?

I dunno. Possibly system/programming/procedural changes that they don't want to deal with? Delaying getting people paid out and possibly off the books? Just guessing. I'd expect most clients would want the delay, since the largest RMD's are usually the >5%owners...

Thanks. I just wanted to make sure that nothing had changed. We told the client to contact their payroll company. Payroll company never did this before this year, so it appears just to be an error.

Document is a fairly standard document. It includes "Wages, tips, and other compensation on Form W-2." I

I want to make sure I'm not crazy. 409A DEFERRED income is not included in W-2 compensation for 401(k) plan purposes, right? We've got a payroll company including these deferred wages as eligible income. I could understand it if the employee was receiving taxable PAYMENTS of 409A amounts previously deferred, but this makes no sense at all for income currently being deferred. Agree/disagree? Thanks.

You can start here, but are you sure it was done under that name? Or perhaps some other name instead. A quick look through, I didn't see any starting with "Legg Mason..." https://www.irs.gov/retirement-plans/list-of-preapproved-plans

Agree. H. R. 1865—562 signatory operator or a related person to a signatory operator (as those terms are defined in section 9701(c) of the Internal Revenue Code of 1986).’’. SEC. 104. REDUCTION IN MINIMUM AGE FOR ALLOWABLE IN-SERVICE DISTRIBUTIONS. (a) IN GENERAL.—Section 401(a)(36) of the Internal Revenue Code of 1986 is amended by striking ‘‘age 62’’ and inserting ‘‘age 591⁄2’’. (b) APPLICATION TO GOVERNMENTAL SECTION 457(b) PLANS.— Clause (i) of section 457(d)(1)(A) of the Internal Revenue Code of 1986 is amended by inserting ‘‘(in the case of a plan maintained by an employer described in subsection (e)(1)(A), age 591⁄2)’’ before the comma at the end. (c) EFFECTIVE DATE.—The amendments made by this section shall apply to plan years beginning after December 31, 2019.

Say you have an employer with less than 50 employees - they have no intention of ever having 50 employees. Their cafeteria plan offers an opt-out benefit for those who don't elect the employer's group health coverage. As I understand it, there can be three types of opt-out arrangements, unconditional, conditional, or an "eligible opt-out arrangement" - which is a conditional arrangement that also meets specific additional criteria. If the employer is a non-ALE, what is the downside, if any, to having an "unconditional" opt-out arrangement, other than possibly affecting the affordability calculation for purposes of whether an individual is eligible for a subsidy for policies purchased on an exchange? Seems like a conditional opt-out arrangement, for a small employer, may unnecessarily restrict the employee from choosing to buy individual coverage? I'm sure I'm missing something here. Would appreciate any thoughts.

Well, maybe I was wrong in my initial thought. Looks like it could be ok depending upon facts and circumstances.

I'm thinking the answer is no. I don't think this would satisfy the requirement that loans be available on a "reasonably equivalent" basis. But I need to go back and re-look at 2550.408(b)(1)...

Congratulations! Best wishes for long and happy retirement. I'm green with envy...

Ok, thanks! Doesn't make a lot of sense to me, but I believe you!!

I'm looking at a situation where I THINK incorrect information was given, but I want to see if y'all agree. Situation is this - Employer A sponsors a Section 125 plan, that offers various options, including contributing to an HSA. Participant "X" does not participate in A's HDHP, but is covered under the HDHP plan of her spouse, at Employer B. "X" is eligible for all options offered under A's 125 plan. "X" is being told that she cannot contribute to an HSA under her employer's (A's) 125 plan, as IRS regulations prohibit this - because her HDHP coverage is under her spouse's (Employer B's) Plan. I don't think this is correct. Agree/disagree? Am I missing something?

Situation where census provided by client showed incorrect DOB for an individual, from inception, and it was never caught by the client. Employee terminated, left funds in plan. Now turns out that former employee is in fact several years older than 70-1/2, so multiple years missed RMD's. So, you self-correct, but under SCP you can't get a waiver of the excise tax, so you file the 5329 with the "reasonable cause" statement. Any thoughts as to the relative merits (or risks) of submitting under VCP solely to try to get a formal waiver of the excise tax? The total tax involved would likely be "only" a couple of thousand dollars more than the VCP fees. I know the IRS has historically been pretty reasonable about waiving excise tax in missed RMD situations, but not sure about a multiple-year situation where VCP is otherwise available. Also, would you file multiple 5329's - one for each year RMD was missed, or just one 5329 using the total of missed RMD's plus interest as the RMD for, say, 2019? I'd say the latter, but others may disagree.

P.S. - I assume the responsibility for terminating the A portion plan is part of the sale and purchase negotiation between Winnie and Tigger?

Hmmm - I think your first question is unanswerable without knowledge of the specific state laws. Section 4.03 of Revenue Procedure 92-64 has the same language you reference in the model Rabbi trust: 03. "The trustee of the trust must be an independent third party that may be granted corporate trustee powers under state law, such as a bank trust department or other similar party." I'm dubious that this would permit an individual to have such powers, unless that individual is operating as a corporation? As to your second question, I'm inclined to disagree. Assuming for the moment that an individual can, under the relevant state law, operate as a Trustee, then it would seem to me that they wear two different "hats" and this would not be considered constructive receipt. But I think this may be moot, depending upon the answer to the above. Hopefully someone here will have actual experience with such a situation - I've never had to deal with this.

Yes. See 1.401(k)-3(d)(3)(ii).

Thanks!

Let's look forward to 2020. Suppose corporation X and Corporation Y are a controlled group, each owned 100% by Winnie the Pooh. Corporation A is the Plan sponsor, and Corporation B is signed on as a Participating Employer. Winnie decides to sell Corporation A to Tigger on 6/30/2020. Tigger has no interest in maintaining a plan, because he's bouncy and fun, and 401(k)'s are not. So Corporation A's plan will be terminated effective 6/30/2020. Winnie, however, wants to maintain the Corporation B plan (it invests primarily in honey pots, which Winnie deems Socially Responsible Investing), so will spinoff the Corporation B portion of the Plan. Because this is a 401(b)(6)(C) transaction, the Corporation A Plan should qualify as a Safe Harbor Plan through 6/30/2020, the termination date. Corporation B adopts a new plan document with identical provisions for the initial short Plan Year of 7/1/2020 to 12/31/2020, and the Spinoff assets are transferred to the new Plan - for the Corporation B employees, this is not a distributable event, and 100% vesting is not required. This Plan should also qualify as a Safe Harbor for the 2020 short Plan Year. Am I missing anything here? Whenever something seems relatively straightforward in these situations, it makes me nervous. Hope you all have a great Thanksgiving holiday - drive carefully, and hopefully the weather won't interfere with your travel plans!! P.S. - just for the heck of it, suppose this transaction takes place on, say, 11/30/2020 - can corporation B still have a Safe Harbor plan for the 1-month plan year? I'd argue that they can, since the spinoff plan, although a "new" plan document, is considered to be a continuation of the prior plan. Since the provisions will be identical, seems reasonable. But on this subject, what about the 5500 forms - do you show it as a "new" plan 001? I lean toward that, as otherwise, seems like it will confuse the DOL system if you don't show it as a new plan. Also, would you set up your new document as a "new" plan, or an amendment/restatement of the existing plan? I lean toward amendment/restatement, even though for 5500 forms, I lean toward "new" plan.

I checked the option in the checklist, and got nada. Either it doesn't really work, or it has to be "turned on" or something.

I don't know if there is a special service or module that you could pay extra for - as far as I know, in the basic format, you can get a notice in Spanish to go with the SPD that refers them to the Plan Administrator, who would then presumably give them a Spanish SPD? Now you've got me curious - I'm going to go into a checklist, check that option, and see what comes up.

Thanks - I will pass all of these comments along to the folks involved. This whole discussion has been very interesting, and I thank you all for your opinions.