waid10

Hi. I need help understanding how the 415 limits work with multiple plans. We are a local governmental entity. We have a 457 plan and a 401a plan. We have a participant that defers the max allowed to his 457 plan account ($19,500) and catch-up ($6,500). I know that the catch-up is not taken into account with the 415 limit ($57,000). Does that mean that the $57,000 limit is imposed on the 457 deferrals and any contributions he receives under the 401a plan? In other words, he could receive up to $37,500 in employer contributions in the 401a plan, correct? Thanks.

I am making another plea if someone has thoughts on how to handle this situation. Thank you so much, in advance, for any insight.

Hi K2, My sense of the estimates I am seeing is that we are talking about a few thousand dollars in missed RMDs...so it is definitely on the smaller scale. So any thoughts are much appreciated.

We have one participant for which RMDs should have been taken for last ten years, and were not. Since it is only one participant, we think we can use SCP (even though it is several years) to correct. My question is the correction process and how to report it. We intend to calculate the missed RMD amounts, with earnings. When we distribute those amounts, do we just issue a 1099 for 2020 and the participant includes in income for 2020? Or does he have to amend each tax return and include the individual RMD amounts in the year each one should have been paid? For the Form 5329: do we file one form for all of the years? or do we file a 5329 for each year impacted? We plan to request a waiver of the excise tax. My understanding is that we fill out the form and request the waiver without actually paying the excise tax. The IRS will come back and either grant the waiver; or deny the waiver and then demand payment of the excise tax at that point. Is that correct? If the waiver is denied, how do we report payment of the excise tax?

Belgarath - I have the same question. Like you, we have 1 participant for which RMDs were not made for multiple years. I think SCP still makes sense, but my concern is the 50% excise tax. I am going through the same question regarding whether VCP is worth it for the formal waiver of the excise tax. If you go with SCP, are you having the employer file the 5329s? Also, I see your question about one 5329 or multiple (one for each year). I thought that the participant would have to file amended tax returns for each of the affected years and attach a 5329 with each amended return.

Hi. We have an employee that approached us with the following request and situation: she is the stepmother of a child. She and the father are no longer married. She has a court order awarding joint legal custody to the mother, father, and herself (stepmother). Primary physical custody has been awarded to her (stepmother). The employee (stepmother) wants to add the child as a dependent beneficiary to her employer-provided life insurance policy. Our policy language requires that the non-biological parent be a legal guardian or that the step-mother be married to the natural parent. The court order is a custody order and not an appointment of legal guardianship. Any thoughts?

Hi. We have a few participants that are receiving installment distributions (monthly) from their 457(b) accounts. Typically the monthly distribution occurs on the 15th of the month. Due to an administrative issue, the distribution still has not occurred for September. At what point is the distribution deemed late? And what type of correction is required? Thanks.

Luke - I’ll take a look at that Reg. The other thing I was thinking about is the fact that the 457(f) is all employer contributions and if this PTO contribution was permitted, isn’t it really an employee contribution?

Hi. We have a 457(f) plan. An executive with a lot of PTO banked has asked whether the unused PTO can be transferred into his 457(f) plan account. Is this permissible? Currently the plan is silent to this, but I imagine it could be amended (if it is legally permissible). Thanks for any guidance.

Hi. We have received a check for around $500 from an investment fund where we are unable to determine what participant it applies to. The check is made payable to the plan. Apparently the SEC ordered a settlement under an administrative proceeding. Certain investors received settlement proceeds if they were affected by market timing activity in 2001-2003. We have not been able to figure out what participant account to apply the check to. What should we do?

Hi. The employer is a school division. They have a retiree health plan. The employer subsidizes a very small portion of the premium. Most is the retired employee's share. The superintendent has recently retired. The school board would like to pay the employer and the retired employee's share of the premium until the retired superintendent reaches Medicare eligibility. Is this permissible? I thought that these types of arrangements (employer pays or reimburses an employee for premium cost) was banned by the ACA. Are there other ways to accomplish this? I know that the school board won't want to change the structure and raise the employer subsidy for all retirees. I also thought about the option of having the school division hire the former superintendent as some sort of consultant so that they could pay him a wage equal to his share of the premium cost (but I don't think the school board is interested in that). Other ideas? Am I missing a simple solution? Thanks.

It is unclear to me that the instructions require it (although it would seem that the PBGC would want to be notified of an additional participant like has happened here). The risk of not amending the filing is that the PBGC discovers the additional participant that was not included on the 501 and sanctions the plan sponsor for not disclosing the additional participant.

Hi jpod, Since the insurer is adding the participant to the annuity contract, would we need to amend the PBGC Form 501?

Now we are hearing that the insurer will add this participant to the contract. So I agree with Lou that the mechanics become important. Any recommendations on the best approach? Thanks and sorry for all of the questions.

Yes, we have reached out to the insurance company. Thus far, we are hearing that they cannot add this participant to the contract. Any ideas on other options? Thanks.

The trust has been terminated. There is nothing related to the plan left. The sum is greater than $5,000. The participant has been remarkably gracious as we try to determine options. She would prefer to have her balance rolled into an IRA.

Carol - how did you end up handling this? I have a situation that shares some similarities. We terminated our DB plan and trust (non-governmental) two years ago. Somehow we missed a participant's account. That participant shows up and wants (understandably) her money. The trust is closed. I am trying to figure out how to handle this.

We terminated our pension plan, and distributed all assets. Somehow we missed a plan participant. We aren't sure how. But we do know that this person is owed money. Does anyone know how to handle this? There are no plan assets remaining. But the balance is something we can cover from our corporate operating account. The real question is how to process this. Should we distribute into an IRA for the participant? Is there any guidance for something like this? I am guessing that we need to alert the PGGC. Thanks for any help.

Virginia

Hi. I work for a governmental entity (at the municipal level). My salary information is public information and subject to any citizen's Freedom of Information Act request). Are my contributions to retirement plans (403(b), 401(a), and/or 457(b)) included in that information that is FOIA-able? Thanks.

Hi. I work for a governmental entity and participant in a governmental 457(b) plan. I make elective deferrals into the 457(b) plan. How do those deferrals impact my future social security benefit? For example, if my salary is $100k, but I defer $15k into the 457(b), are my reportable earning to SS the $85k? I just want to make sure that I am not suppressing my future SS benefit by deferring into my 457(b) account. Thanks.

Employer has organized a weight loss challenge. Participants pay a $25 registration fee to participate. The winner takes the pot. No employer money is involved. Are the winnings taxable to the recipient? Thanks.

We are using the prior year testing method. We have an employee that was a NHCE in 2015. He became and owner in 2016, thus an HCE. For purposes of the ADP test, are his deferrals included in both groups? i.e. his 2015 deferrals as part of the NHCE group and his 2016 deferrals as part of the HCE group? Thanks.

We are self-funded. I think he wants a breakdown of any and all fees/costs that make up the premium amount. We have never provided that level of detail to a participant. But I want to make sure that there isn't some requirement to provide it.

Hi. What information must be disclosed to a COBRA participant regarding calculation of premium? We have a participant that wants detailed information about what makes up the premium. He is asking for information about what costs/fees/etc. go into the premium calculation. Typically we have explained that the COBRA premium is based off of the health plan premium for the coverage selected. It is 100% of that amount plus a 2% admin fee. He wants to know what goes into the health plan premium. My thought is that the insurer has set the premium amount; and he or any participant can elect to coverage and pay that amount, or decline coverage. But he wants very detailed information about what does into the premium amount. What are we (the employer) legally required to provide? Thanks.