doombuggy

I don't think that is what they are looking to do anyway. Our concern is that this is technically not they forgot to START deferrals for a new participant, but that they just missed the deferrals for all 6 or 7 participants who defer each pay period. We are trying to find out if this type of error still qualifies for the "notice only" correction.

So I have a client that thru a clerical error, did not deduct 401k deferrals for the 11/29/19 paycheck. We discovered this yesterday. If they give notification letters out to the affected participants, do they still have to do a QNEC, since it has been such a short period of time and just one payroll? They apparently only do medical deductions 2x per month, but are paid bi weekly, and this was the 3rd pay check for November, so no medical deductions, but someone accidently cleared out the 401k deductions...

As an HOA board member, I thought I would chime in my opinion... is it possible that your participant has gotten to the point where the HOA has a lien on the home as that it might just be a step away from foreclosure? When I joined our board in 2016, I knew we had a unit (we are townhouses) that owed money but I didn't realize how much until that meeting (they hadn't paid in 8 years, so it was considerable). I think the home was about to be foreclosed upon and they probably had a notice of some type from the association's legal reps that stated that. The owners were begging the board not to take their home. So I would think it would be justified (the h/s request) if your participant's case is like that. The outcome - the board agreed to let them repay what they owed without interest. They did within a couple of years and still live there today (I am not sure if that is good though...)

I have a plan that was created in 2018 and is short, spanning only November and December 2018. While they do not have any ER money that is attached to a vesting schedule at this time, my question is this: Are hours that count towards a year of service also prorated for a short plan year?

Because of confusion with the generic beneficiary form this platform uses, the plan sponsor thought the 6 non-spouse benes could keep their shares of the dec'd persons assets in the plan. They all work there and each have an account in the plan already. The platform processed the pay out like this - all assets were w/d from the dec'd account, a "beneficiary" account was set up in the plan for each of the 6 (so in essence, each had 2 accounts at the platform) then the assets were moved out of the "beneficiary" and moved in to the rollover source of their regular account that they already had. My question is they will need 2019 RMDs and I need to know HOW to calculate those, as I am not familiar. Are they still based strictly on the dec'd's age or a combo of the dec'd and the child's age (like the chart we use in certain circumstances when the spouse is more than 10 Yrs younger). Edit to add that the 2018 RMD was distributed to each bene in that process somewhere. I realize I need to have those asset moved out to an inherited IRA, I am trying to figure out the RMD part at this time. Thanks.

Yes. They shouldn't have, they should have taken a Lump Sum or rolled the assets to an inherited IRA. We are looking to work with the platform to get this fixed, but will need to calculate the 2019 RMD before moving the money out. I am not sure how to calculate the RMD - using the participant's or the beneficiary life expectancy or a combination of both.

Company owner died on 1/1/18. His 6 children were the benes of his plan assets. They requested distributions from owner's account last year and each took their share of his 2018 RMD. They kept the assets in the plan, but the platform allowed them to move the assets to each of their accounts as a rollover. How do we calculate the RMDs each year? TIA

LLP with 3 PAs (1 for each dr, LLP covered shared staff) broke up in February 2018. One of the drs kept the LLP and his PA. Some of the staff left, as did the other 2 Drs. At this time we assume those two PAs are still in existence (they were on 12/31/18, PYE). All are still participating ERs of the plan. When would the plan be considered a multiple ER plan? For 2018, the year the partnership broke up? Or for 2019, the first full PY that they were not a controlled group of companies? If the other 2 PAs (drs) cease to be participating ERS, when would that "kick out" the multiple ER "designation" - in the year it happened (like 2019 for example, if the plan is amended) or the year after the amendment? See where I am going with these questions? TIA!

TAG seems to be giving us the same answer. We are making it clear that this company is part of the control group, but doesn't have a plan on its own and wants to adopt this one. There is no change to the safe harbor, just that it now appears that another part of the control group is going to get it. The safe harbor match is per pay period. Thanks for your help everyone!

I have an established 401k plan with a per payroll safe harbor match. The owner has a control group of 5 companies, of which the largest/main company is the adopting ER. The other 4 don't participate but we use their census for testing. The contact approached us yesterday to see if we can add one of the other companies as an adopting ER ASAP. Am I correct in assuming that because this is a safe harbor plan, they cannot do this for 2018 since it is already past October 1 (this is a 12/31 PYE)? Thanks for your thoughts!

We are taking over a client from {redacted}. Their plan document indicated that for purposes of elective deferrals, compensation shall not include bonuses. When we asked the client for bonus data for 2017, they responded that they have never excluded bonus from comp. I do not see a 414s test in what little we got from {redacted}. I don't know the details of who got bonuses, and the plan has 1 HCE (one of the owners, the other two owners don't "work" there/receive no comp). How would the plan sponsor go back and correct prior years thru the self correction process?

OK, it looks like I have a plan sponsor that thought their document didn't allow deferrals off a bonus, when the plan document (both the current PPA, prior EGTRA by us and the EGTRRA from Ascensus, their prior tpa/RK) says that there is no special election on the deferrals off bonus. The current PPA allows for a separate election if the participant chooses. I don't know how far back this misunderstanding of the document goes. How do you correct this kind of operational failure? I don't know the specifics of bonus, as the client doesn't report that separately to us. The HCEs at least for last year was the owner and his 2 children. None of them made more than $265k. The owner has the highest comp and it was below $150k. Thoughts?

Large plan has ACA and excludes Part time and temp employees from plan (if they work the 1000 hours, that changes them, but that is not the case here for this question). Six P/T ees were allowed in the plan in 2015 in error, but were stopped. Seven people were allowed in the plan in 2016 but were stopped. What is the correction? Some of these people are terminated from this employer and dollar amount range from about $4 to about $100.

Happy birthday, BenefitsLink!

Would you consider commissions to be classified as irregular pay? If so, why? We use Relius documents and bonus is listed as irregular pay. Client I have has a plan doc that states deferrals come out of irregular pay unless the participant elects otherwise. This plan also has commissions. Plan sponsor did not withhold deferrals from either bonus or commissions. I realize that this is part of the administrative procedures, but we want to make some things clear to the client so they know how to handle this properly going forward. Thanks!

Yes, the former owner, "AW" sold his shares in July 2014. We had him as Key in 2014 (since he was a more than 5% owner in 2014). In 2015 he is listed as former key. I wasn't sure how long this was going to hang on and my cheat sheet is from before 2002. So in essence, AW will remain a "former key" and only the owner and his son are keys at this point. Since the son has never deferred, if he does consider to start making deferrals, the plan might become top heavy again (it is not for 2016, at just over 57%). Thanks for the discussion!

I have a client who has dropped down to 57 1/2% on the top heavy test and is so happy he doesn't have to do the top heavy minimum for the 2016 plan year. He is now the sole owner, and his son also works there, but doesn't defer into the plan. The former co-owner sold his shares to the current sole owner in July 2014. Is he still counted as key for 5 years (2014 thru 2018) for determining Top Heavy? My client is trying to do some planning to see if his son can defer, and someone I talked to thought this had changed...the number of years a non-key is counted in the test. Note the former co-owner still works there and still has assets in the plan.

Participant requested a hardship earlier this month. Today he contacted out distribution administrator to tell her that the sale might not go through as the current owner found out the property had a lien on it (from a prior owner I guess) and current owner doesn't want to pay/might not show up to the closing today. Do, if participant doesn't close on this house, what should he do with his h/s distribution? Taxes have been paid on the disbursement and MassMutual sent the money to his bank account. If the closing doesn't go through today, the participant will continue to look to purchase another primary residence. Thoughts?

We have gotten some updates on this problem since I initially posted it last month. The participant was still employed at the time of her death. She had been hospitalized and the employer was told she died in the hospital. They do not have a death certificate. This answers my vesting question. Our distribution processor has access to a search program. The participant doesn't come up listed as dec'd in the search for other relatives and we thought that was strange since she died in 2014 - or at least that is what the employer was told. I have indicated in my initial post (#3) what the document states is the beneficiary order if no beneficiary was named. Our people search does come up with a female (and a male) relative that could correspond to children/issue. Should we try to correspond with these two individuals to indicate that we are looking for this participant and if she is actually dec'd (employer has no death certificate) we are looking for her beneficiary? Would the employer be able to obtain confirmation from the state or the hospital she was in that this participant actually is dead?

Client notified us that a participant who term'd in early 2014 has since died. I don't know how the client found this out (this plan is currently in transition to me from a co-worker). Debra, dec'd ee, did not designate a beneficiary. Plan sponsor heard thru the rumor mill that she had an estranged daughter. The plan sponsor is located in FL, the participant in Nevada. She was 60% vested at the time of her termination from the company. Her current account balance, vested or not, is still under $5,000, the force out amount. 1) Can the plan sponsor roll her assets into an IRA payable to the Estate of, a possible assumption on their part? 2) Can the assets we escheated to the state of Nevada? I don't know if they pay state taxes there (we do not here in FL) and I also didn't think you could do this anymore... 3) the plan doc indicates that the order if there is no bene on file is spouse, issue, parents, estate. Is the plan sponsor required to try to find out if there really is a daughter out there? How would they do that? 4) Would her vesting change? The plan does vest 100% due to death, but she was already terminated when she died, so I am not sure if that applies. On the fence about that one. Thanks for your thoughts!

They go by a calendar year, correct? My renewal is next year and I have enough credits for my 3 year cycle, but if the new cycle technically starts on 1/1/16, then I will sign up for the APC that SunGard is going to have here in Orlando in February. I last renewed in 2013 and am drawing a blank on this....

This was a great list! I think I am a little younger than the rest of you, being a '60s child, but I remember plenty from your list, Andy: using the manual lawnmower we had to mow the lawn we had in Philly that was the size of a postage stamp. party line - my grandparents shared one with my great-grandparents up the street until they sold their house in 1983. Great-grama died in 1992, so I guess that ended that. They lived in rural NE PA - farm country. My grandparents had a wringer washer (can't remember it ever being used, as Grama had a regular washer when I was little) in the basement (with a pencil sharpener attached to the staircase!), a clothesline outback and yes, they had milk delivered by the Dallas Dairy (I assume that is where the milk from our cows went) Grama also had one of those old singer sewing machines that you pumped with your foot. I can't tell you what my dad did to it one night after I was out with some of his old high school buddies.... I spent most of my pre-collage school years in Catholic schools, so I remember when nuns actually wore habits. Some still do, it depends on the order. My aunt was in a cloister for a couple of years and they wore the full blown habit. I have to say I was working at the store one day and one of the nuns from my high school came in and I didn't recognize her out of her habit! penmanship - it is so wrong that they have stopped teaching this is some places. My godson started collage this year and his handwriting is really bad. I still have my 8-tracks (although nothing to play them on anymore) and LPs in various speeds: 33 1/3, 45 & 78 I had a pogo stick back in the '70s, had a zim-zam too - plenty of cement when I lived in the city, but not a lot of grass for the zim-zam (tall stick with a tennis ball on a rope that you and another player would hit back and forth) We had Woolworth's 5 & dime in Philly, but my parents grew up in Wilkes-Barre area and they had a Kresges. I didn't go to the drive in much, but I do remember the last time we went was in 1984 Talk about coal bins - my aunt and uncle bought a home in the poconos that they converted from a summer vacation home to a year round home. The house was built around 1914 and it did have coal heat, evidenced by all the stuff in the basement (where the servants quarters were) and the big coal bin. It was years before they converted over to electric I think. The house had 4 fireplaces and they did get a huge keroscene heater too. They bought that house in 1978. I will admit that I had a 13" B&W tv that my mom bought me around 1979. That no-name brand tv was great! My mom accidently poured a drink in it one night but it kept working! I finally got rid of it when I moved in 2004.

We had this problem a couple of years ago when Disney installed new card swipers (I am drawing a blank on the actual name for this thing). When you swipe the card, the strip should be facing the register. Nowadays, I let the person try to figure it out, then tell them to "turn it around" if they swipe it wrong. I don't think these readers can handle the new chips, but they can read the magic bands real good!

I know that a more than 5% owner and any terminated participants are required to take a distribution once they turn 70.5. We were discussing the options open to those who are 70.5 and still employed (non-owners). I say the option is open to those people to take it if they want to - assuming that the plan allows for in-service withdrawals of course. My coworker disagreed. What are your thoughts?

I have a fiscal plan that I just took over at my new employer. I discovered that a participant who terminated in the 2012 PY was rehired late in the 2013 PY. This rehire was not reported on the 2013 PY census, and she was subsequently reported on the 2013 8955-SSA because she still had a balance. So now she is an active participant, how do I report her on the 2014 SSA? She was never paid out while terminated. The instructions for this form indicate that she should NOT be reported under Code D merely because she return to the service of the plan sponsor. So do we just leave it go or report her each year as a "b" with updated data? The summary report I ran out of Relius indicates that she should be a "D," but that is contrary to the instructions....