CuseFan

Thanks. Unfortunately, this is a fairly complex DBP that covers two different unions plus non-union (merged along the way).

What you can't do is allow a form that is not permitted by the plan. In this case, if you allow the A/P to select any joint and survivor option, you are now paying a total benefit from the plan that is based on three life expectancies rather than two - the participant, the A/P and the A/P's contingent annuitant. I have not seen any plan permit this. All DB QDROs I have seen prohibit the A/P from any J&S option. On another front, you seem to be confusing the plan document provisions - the subject of the favorable DL - with the QDRO's provisions, which is a separate document for the specific purpose of dividing marital pension benefits and is mutually exclusive from the DL. I don't think the QDRO must provide for all the plan's options (other than J&S) but I'm not sure. I have not seen a plan with language that prohibits certain payment forms related to QDROs, usually the reference is to timing.

We have taken over a plan under which some, but not all participants are covered by collective bargaining agreements. Some, but not all, of the bargained benefit changes have been incorporated into the document, either by amendment or as part of a restatement. For example, a benefit increase for one union and a benefit freeze for another union are nowhere to be found in any version of the document or amendment. We have also scoured the document and nowhere does it incorporate by reference any of the CBAs. We think this is a problem while an in-house attorney for the former actuary/document provider says it's not a big deal because the CBAs "trump the plan document". We think the IRS would disagree with that assertion. I found an article that referenced inconsistencies between document and CBA being a compliance failure, at least in the multiemployer plan context, but I don't see a difference (our plan is not multiemployer). http://www.unitedactuarial.com/research/pdf/2009_36.pdf We have advised the client that we think a VCP submission is in order for this (in addition to other administrative/operational failures). Does anyone have direct experience with IRS looking at a plan where the document and CBA do not jibe? Any other thoughts?

i don't think so - the corrective distribution would be taxable in year received, so 2017, and going back to adjust 2016 payroll does not accommodate that. However, doing reverse payroll entries for any 2017 errors, if any, I think would be reasonable and permissible.

Agree with E and I think the wording, albeit a little vague/confusing, was saying that only for hardship were gains excluded, at least that's how I interpreted.

No issue, and that is most efficient manner to handle. There is no need to switch to a different plan and no sense in having a second plan unless of course you have significantly more income now and adding a defined benefit plan to increase deductions makes sense.

Assuming 50% or more owner of business he sold, he has an annual aggregated 415 limit with any other "business" he owns 50% or more - including self employment income - so without a doubt he absolutely cannot do SEP in same year on that income.

True, but those limits are the lesser of $54,000 or 100% of pay, so an employer contribution of 35% or 40% of pay would not be out of the question. HOWEVER, tax exempt entities must also pay reasonable (total) compensation and report their officers' total pay on their 990s, so a sizable employer contribution on top of significant pay for a NFP executive might draw attention for excessive compensation.

Transition rules allow coverage to be determined separately as long as the plans don't amend eligibility or benefits, so yes, 7/1/2017. Participation agreement for B should have been adopted by 7/1/2017 for 7/1/2017 effective date if B wanted its employees to be able to defer as of that date, otherwise they can't defer until it's signed as B still has no plan until then. PS for B should not be effective until 7/1/17-6/30/18 PY, the retro entry doesn't apply for the 4/2016-4/2017 YOS and a 7/1/2016 entry as B's employees were not eligible then. Remember, these are two different situations here: (1) B's required inclusion for control group coverage and nondiscrimination, and (2) B's adoption of A's plan as a participating employer.

Yes, that is exactly my point.

Are you really changing/transferring plans? Or are you really just looking to change funding vehicles/recordkeeper/vendor? When a 401(k) plan moves from Fidelity to Vanguard you don't (or shouldn't) create a new plan and do a plan to plan transfer, what makes this situation any different?

How many active HCEs are left in the DBP? It may make more sense to amend DB do that HCEs are no longer eligible and, depending on the situation, try to make them whole via enhanced profit sharing or NQDC or a combination thereof.

Agree with those opining that remaining payments go to beneficiary's estate. Note that a contingent/secondary beneficiary designation by the participant would provide for a beneficiary to the remaining payments in the the event the primary beneficiary predeceased the participant, not to be a next in line - i.e., pay P, dies, pay B1, dies, then pay B2.

I can't answer your question, but if the person was a partner then he is considered self-employed and his profit sharing contribution essentially comes out of his earned income. Unless all the receivables, buy-outs, etc. have been reconciled, couldn't the final profit sharing be accommodated with other final accounting issues? it doesn't cost the firm because it's really self-funded, and allowing could head off a legal action (whether founded or not).

No, and probably because it's difficult to win a lawsuit against poor decision-making. If there wasn't an IPS and the fiduciary(ies) lacked a process which led to the poor decision, then maybe there is more standing to sue. Or to put it bluntly - it's easier to sue (and win, or at least settle) against the unethical (conflict of interest) than the stupid. Also, since the unethical situations usually involve significantly more dollars, they draw the plaintiff attorneys and the real reason for these lawsuits - attorney fees. However, that said, these high profile lawsuits have brought attention to abuses and contributed to lower fees in the industry which means more money for people's retirement, and likely much more collectively than what the classes reap from their lawsuits.

I don't see any reason you cannot use that income for determining this person's 415 100% of comp limit, in addition to his pay from the company.

Now if you can train oompa loompas to do ADP testing...that would make everyone's life easier.

dude, you crack me up - that's priceless!

Why does the match have to be determined so late? Timing of determination (calculation?) vs. timing of deposit (and deduction) are two different things. Auditors are correct in wanting to book as an accrual on 2016 F/S because it's based on 2016 deferral activity. If the plan sponsor is not determining - i.e., deciding on if and how much the match for 2016 will be until November 2017, then I think there is an issue with it being a 2016 contribution (based on 2016 deferrals) at all. I think the discretionary match must at least be declared well before then.

If the spouse is the designated beneficiary they have until the participant would have attained age 70 1/2, so the 5-year rule doesn't apply unless the plan simply had that requirement without the spousal exception. Regardless, as stated above, this unresponsive person cannot hold the plan termination hostage.

Happy Birthday! They say 59 1/2 is the new 39 1/2!

Congrats MP, always glean something useful from your posts.

Correct - plan's get DQ'd not employers or control groups.

You can, as part of an employment agreement which defines the total compensation package, provide that a person's base pay is permanently reduced by X amount which will be contributed as an employer contribution on the employee's behalf. Like plans that require employees to contribute as a condition of employment - the amounts do not count as deferrals. However, providing annual discretion - which if you do with matching contributions that indirectly provides discretion - then I think you have a CODA instead. Unless with a match the maximum is assumed and "charged" whether he gets it or not. Much easier to defend at the start of employment (or plan) - the total compensation package is X and it is comprised of base pay A, retirement plan contributions B and H&W benefits C plus whatever incentive pay is earned. If there's a waiting period then define up front these components before and after, because doing it only when the person becomes eligible looks more CODA again. Of course, if someone takes a lower comp because of these "employer provided" contributions that are subject to a vesting schedule - that's another complication. In summary: defining the total compensation package by component in employment agreement at employment commencement - good - reducing a participant's pay arbitrarily to pay for his matching contributions - bad.

Hopefully he had no employees. I guess if he files bankruptcy the plan assets go to zero - and I would terminate and file a final return.