WCC

yes, if done correctly. Here is a recent discussion similar to this question:

thank you all for the responses.

Short plan year. I edited my OP to make that clear, thanks for the clarification. It was adopted early December and it took them a pay period to get the deferral elections processed. 5500 instructions say the following. All pension benefit plans covered by ERISA must file an annual return/report except as provided in this section. The return/ report must be filed whether or not the plan is “tax-qualified,” benefits no longer accrue, contributions were not made this plan year, or contributions are no longer made.

I have been in a debate with a TPA firm over whether or not a Form 5500 should be filed in the following scenario. They are telling me a filing is not required. I asked them to show me documentation as to why not and their answer is that it is "industry standard" not to file. I would like to ask the Benefitslink experts if this really is "industry standard". Their argument is no assets therefore no filing since they choose to file on a cash basis. The EOB has an example almost identical to this which says to file. I called the Office of Chief Accountant they say file and they referenced page 2 of the 5500 instructions. Situation: Traditional 401k plan was effective December 1, 2016. Plan year ending December 31, 2016. Document was signed and the first payroll withholding happened on December 31, 2016. Deposit of the funds was made first week in January 2017. File Form 5500 for 2016? Yes or No? If you respond with "no" will you please share documentation as to why? Is it industry standard not to file with $0 assets when you have participants and withholding? We are not changing the effective date of the plan to 2017, deferrals were clearly withheld in 2016 and there were participants on December 1, 2016. Thank you

So the stock sale of a once unrelated group triggers a related group and therefore RMD's forever?

Company A is owned 100% by one individual. Company A is purchased in a stock sale by Company B. Owner of Company A will never be an owner of Company B but will be an employee. Purchase was effective April 1, 2017. Owner of company A turns 70.5 in 2017. Company A terminated their plan prior to the sale. Owner of Company A will take a RMD from Company A's plan for 2017. However, what about going forward regarding assets accrued under Company B's plan? The EOB states (I added the red lettering): under the key employee definition, an individual is a 5% owner if he/she owns more than 5% of the company (or a related group member - see 1.d.3) below) at any time during the relevant plan year. Will Company A be considered a related group under the control group rules? Therefore requiring RMD's for the remainder of this individuals employment?

We have moved a couple plans away from TIAA over the years. There are usually a few issues to watch out for: 1. Money invested in TIAA Traditional generally has a 10 year payout. You may already be aware of that. 2. I have not seen any surrender charges in the share classes you reference - but that may just depend on the contract. 3. Are the assets in individual contracts? Very likely they are if the plan has been with TIAA for a while. If so, each individual will be required to sign a transfer form. Be careful on the transfer forms because they have a bar code unique to each individual (i.e. you can't just copy one form and give it to all the participants to complete). There are ways around the bar code issue.

Yes, you can if the plan document allows for it. Note, if the intern/seasonal/temp employees meet 1 year and 1000 hours, they must enter.

I have not found any free ASPPA CE. However, the Western Pension and Benefits Council hosts webinars which are relatively low cost compared to other webinars I have seen. $50 for non members $35 for members. http://westernpension.org

correction to my last post. Limitation year is defined as: Limitation Year means the Employee’s taxable year. However, if the Employee is in control of an employer (within the meaning of section 1.415(f)-1(f)(2)(ii) of the regulations), that Employee’s Limitation Year is the limitation year of that employer. Looks like the TPA is correct. Penalizes terminated employees in this case.

I checked the limitation year and it is the same as the plan year. I have asked why they are doing this and am waiting to hear back. Thank you all!

Plan year runs from July 1, 2015 - June 30, 2016. Plan has a profit sharing allocation of 5% to all participants, no allocation conditions. Participant earns $30,000 from July 1, 2015 - December 31, 2015. Participant earns $1,000 from January 1, 2016 - June 30, 2016. Participant terminated employment January 30, 2016. Profit sharing allocation is $1,550 (5% of 31,000). Participant makes no deferrals. The profit sharing allocation is deposited in September 2016. How does the 415 limit work in fiscal plan years? TPA is processing a 415 failure of $550 and I am trying to understand how this works in conjunction with a pro-rata profit sharing formula. Thank you

missed deferral is funded as a QNEC. match is funded as a match. See IRS notice 2015-28.

Plan uses a discretionary match formula based on the plan year. Plan fails ADP test and refunds have been processed. TPA calculated the match excluding the ADP refund amounts, therefore reducing the HCE's rate of match on their entire deferral. This seems odd to me so I questioned the TPA as to why the match is being calculated after reducing the total deferral by the refunded amount. They told me the match can be calculate either way (before refunds or after refunds). Is that accurate? The plan document does not specify before or after. Thanks

Participant dies with no beneficiary form on file. The document establishes payment of benefit to: 1. Spouse (no spouse in this case) 2. per stirpes (4 children) 3. surviving parents 4. estate An attorney for the estate is trying to tell the plan sponsor they must distribute benefits directly to the estate due to the estate documents. My response is "no" we must follow the plan document. Is there an instance where the attorney could do something to override the form of payment in the plan document? One thought is all four children and parents disclaim their benefits under IRC 2518. The funds then are paid to the estate. Thank you

See point #6 from IRS publication 560. Our document allows to write in an increase beyond year 5. Qualified automatic contribution arrangement. A qualified automatic contribution arrangement (QACA) is a type of safe harbor plan. It contains an automatic enrollment feature, and mandatory employer contributions are required. If your plan includes a QACA, it won't be subject to the ADP test (discussed later) nor the top-heavy requirements (discussed earlier). Additionally, your plan won't be subject to the actual contribution percentage test if certain additional requirements are met. Under a QACA, each employee who is eligible to participate in the plan will be treated as having elected to make elective deferral contributions equal to a certain default percentage of compensation. In order to not have default elective deferrals made, an employee must make an affirmative election specifying a deferral percentage (including zero, if desired). If an employee doesn't make an affirmative election, the default deferral percentage must meet the following conditions. It must be applied uniformly. It must not exceed 10%. It must be at least 3% in the first plan year it applies to an employee and through the end of the following year. It must increase to at least 4% in the following plan year. It must increase to at least 5% in the following plan year. It must increase to at least 6% in subsequent plan years. We see this often with the record keepers we use. One of the pricing variables is cash flow. Higher the cash flow the better some vendors price (i.e. lower asset charge). The down side to pricing is the number of small balances auto enrollment creates. Some vendors weigh average account balance more than cash flow when they look at pricing.

From the EOB: All service with the employer must be credited, even service before the plan is established, unless disregarded under the break in service rules See IRC §410(a)(5)(A) service for eligibility purposes cannot be excluded unless under the above referenced break in service rules

No, unless one of the exceptions listed below applies. Notice 2016-16 states this in section II B (copied below). Section 1.401(k)-3(e)(1) provides that a plan will fail to satisfy the requirements of §§ 401(k)(12) and 401(k)(13) and § 1.401(k)-3 unless plan provisions that satisfy the safe harbor plan rules of § 1.401(k)-3 are adopted before the first day of the plan year and remain in effect for an entire 12-month plan year. It also provides that a safe harbor plan that includes provisions that satisfy the safe harbor plan rules of § 1.401(k)-3 will not satisfy the nondiscrimination requirements for § 401(k) plans for a plan year if the safe harbor plan is amended to change those provisions during the plan year. Section 1.401(m)-3(f) includes similar provisions for matching safe harbor plans. The safe harbor plan regulations set out several exceptions to the requirement that plan provisions satisfying the rules of §§ 1.401(k)-3 and 1.401(m)-3 be adopted before the first day of the plan year and continue for an entire 12-month plan year. These include exceptions for (i) a short first plan year, (ii) a change in the plan year, (iii) a short final plan year, (iv) a delayed adoption of safe harbor plan nonelective contributions (if notice of this possibility is provided before the beginning of the plan year), and (v) a mid-year reduction or suspension of safe harbor contributions (which results in loss of safe harbor plan status). See §§ 1.401(k)-3(e), (f), and (g) and 1.401(m)-3(f), (g), and (h).1 In addition, exceptions to the prohibition against mid-year amendments may be provided in guidance of general applicability published in the Internal Revenue Bulletin. See §§ 1.401(k)-3(e) and 1.401(m)-3(f).

Participant provides a valid and timely deferral change form to HR. Deferral form says "I want to defer 100% of eligible income on the December 31, 2016 payroll" HR does not process the request. Participant is upset and plan sponsor wants to fix the problem. We can follow Rev Proc 2015-28, but are there any other possibilities? The payroll funds are sitting in the employee's checking account. What would happen from a compliance point of view if the plan sponsor retrieves the funds and corrects the December 31, 2016 payroll and withholds 100%? Thank you

Below is a quote from an IRS phone forum from September 7, 2012. My thought is you now have to follow Rev Proc 2015-28 to correct a failure to implement a deferral election. Note: A Plan Sponsor cannot avoid liability to make corrective contributions for the missed deferral opportunity by making its employees responsible for checking pay records to ensure deferral election has been implemented.

I have read all the threads on this board that I can find regarding change in vesting as well as the EOB, 411(a)(10). My confusion is regarding comments that state future accurals are subject to the prior vesting schedule. Plan sponsor decides to be generous and make everyone 100% immediately vested in a discretionary match. This has been the case for a few years. New CEO questions why this was done and wants to change vesting to a 4 year graded schedule. Can the plan sponsor amend the vesting schedule to keep all current match 100% vested and have future discretionary match accruals subject to a 4 year graded schedule? (regardless of the record keeping struggles). Thank you

I am preparing for a conversation with a DOL investigator and am looking for thoughts. Plan receives the DOL late deposit letter discussed in a thread a few weeks ago. The letter states we noticed you have late deposits..... you can file via VFCP..... go this class in your area..... The contributions in question were all deposited within 7 business days. The company who prepared the 5500 shows them as late. The plan is a small plan filer with a beginning participant count of 115. Here is the question. Federal Register Vol. 75, published January 14, 2010 says the 7 day rule can only be used for plans with less than 100 participants. I could not find any reference to the 80/120 rule in that register. The EOB also says the rule can only be used for plans with less than 100 participants. I assume the 80/120 rule cannot be used or the F.R. would have said so. I always thought of this as a small plan rule, but I think I am wrong?? Thoughts? Thank you

Yes, they were similar to what you described. Relatively small dollars compared to annual contributions.

I have received 3 within the last month. I work in the western part of the country within the San Francisco DOL region. We have responded each time that we self corrected and provided them with dates. Each time the DOL has sent a response saying the "case has now been closed".

Their accountant told them this plan design was perfectly fine. Not sure on the K-1's, but I will find out. I appreciate the comments.