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Found 23 results

  1. I have a small Profit Sharing Plan that wants to terminate ASAP. I wanted to confirm we could accomplish this with a 15 day notice to participants so I checked the IRS website and found the below information under "Plan Terminations - Required Notices". Did we loose the 15-day notice and/or 30-day notice of Termination for small plans? Retirement Topics - Notices | Internal Revenue Service (irs.gov)
  2. Both 403(b) plans are subject to ERISA. The 2 401(k) Plans will be merged. The 401(k) Plans are Safe Harbor plans. It is my understanding that the 403(b) Plans could be terminated and the employees would have a distributable event and that the distributions must be made within 12 months and they could rollover the assets to the 401(k) plan but are not required to do so. Is there anything that would prevent the plan termination of the 403(b) Plans on 6/30/2022 with the covered employees becoming immediately eligible for the existing 401(k) plan on 7/1/2022? I know if this were 401(k) Plans, the only option would be to merge the plans but because this is a 403(b) Plan, it cannot be merged into the 401(k). Thanks!
  3. In filling out the 5500 where one company has moved all of the plan assets to another company with that same Multiemployer plan, do you mark that the plan has terminated as the ending assets for company A are at zero and then fill out the information for the termination and say that it is a final 5500 and indicate the name of company B as the recipient of those funds?
  4. Group: I have a potential client who owns a company that has sponsored an ESOP some years ago. This has become costly to the client and too many regulatory hurdles in their opinion. They'd like to terminate at end of this year (12/31/18). The client is under a TEGE audit. Can the client terminate the plan while under audit? The audit years in question do not relate to 2018. Thoughts and comments appreciated.
  5. I have a situation where Company A started 401(k), contributed, took loans, and then Company A went bankrupt. Although the business is closed the 401(k) maintained active status to avoid loan default and classification as taxable income. 6 months later the same owner started another business, of the same industry type, and 3 of the same employees. A new 401(k) was opened and the owner requested to transfer the loans into the new 401(k). Because this is a same owner with a request to transfer assets, is this a successor plan or new plan with rollover? Thank you for any input.
  6. 403b is terminating Sept. 2018 and starting 401k same year 2018. Plan wants move away from universal eligibility for ED on 403b and add age 21 and 6 mth service. - 403b is 001 so use 002 for 401k? - use original effective date as 1/1/2018? - rollover of loans allowed? Does it need to be stated in AA or no? - does excluding vesting prior to effective date of the plan need to be addressed? - any employee can in 403b plan rollover balance to 401k even if they would not be eligible to enter under 401k plan under new eligiblity rules? - employees years of service and vesting still can continue If all the participants chose to rollover to 401k plan? - any other considerations on plan document creation or processing/logistics? I appreciate your help!!!
  7. Company B is purchasing 100% of the assets of Company A. All employees of Company A will terminate effective July 15. Company A's 401(k) Plan is terminating. Owners of Company A would like to make a discretionary profit sharing contribution to Company A 401(k) Plan for this final plan year. Even though the asset sale will occur on 7/15 and all employees/owners will terminate employment effective 7/15, can Company A elect to wait until 12/31 to formally adopt a resolution to terminate the plan, thus avoiding a reduction in the compensation limit, 415 limit, 1,000hrs allocation service requirement for PS, etc...? As an added benefit, the employer would not have to provide top heavy minimum contributions since the limitation year would be extended to 12/31. While I cannot find anything suggesting the plan is deemed terminated or must terminate as of the transaction date, it doesn't seem right that an employer could manipulate the staff funding requirements by postponing a formal plan termination.
  8. When a single employer plan transfers to a Multiple Employer plan, is this considered a termination of the single employer plan? or simply a merger under the Multiple Employer plan? If this should be a termination of the single employer 401(k) plan, would the plan be subject to the 12 month restriction to start a new 401(k) - Participants were NOT eligible to request distributions. Thank you in advance for sharing your thoughts!
  9. Potential client started up a typical 401(k) plan with safe-harbor match and profit sharing as of 1/1/2012. Plan number: 001. In 2015 they moved their money to John Hancock and got a new document with an effective date of 1/1/15 and when 5500-SF forms were done for 2015 there was a final one for 2015 under 001 showing assets transferred to a new plan (002) and a first one for 002. Plan 001 listed an asset transfer and not payouts and question 13a on whether there was a resolution to terminate the plan was answered 'no'. Questions: 1) Is this proper? 2) Would there be an issue with the mandatory waiting period after terminating a 401(k) plan? 3) How would you proceed? Amend 2015 filing for 001 and continue filing under 001 or go ahead with 2016 filing under 002?
  10. Hello! I've read through a lot of old content on this board and just want to say thank you. It has been a huge help. Lord knows this industry in a minefield of misinformation and salesmen. I am the new administrator of a 20 year old group deferred annuity plan with MetLife for a mid-sized non profit. We are looking to terminate this plan and start a new 401k (or 403b) with much lower fees. We have calculated that each participant is paying an average of 2% in AUM fees annually (1.25% annuity fee + .75% ave fund fees). This plan also comes with a 7% surrender fee that decreases by 1% each year. We have been advised by a TPA to leave the plan open and start a new 403b with a different provider. However the provider that I'd like to work with (Guideline Technologies) does not yet offer a 403b. This would also drag out the closure of the MetLife account. Unless people are really pushed out of the plan, I imagine a lot of people will drag their feet. I'd like to avoid having to manage 2 separate providers for any longer than necessary. So I'm thinking it would be better to immediately terminate the 403b and incur all surrender fees (which I've calculated to come out to around 65k). I've run a cost analysis (attached) that shows that if we move to a low cost provider such as Guideline which has only .15% AUM fees, then our participants would be better off moving their assets immediately and incurring all surrender fees rather than wait a few years for the surrender fees to subside. So my question is... do you see any downside to this plan? Since the surrender fees would be paid by the individuals, could the organization be held liable for any damages? Or do you have a better solution for us? Thanks so much in advance. I'd be happy to answer any questions for clarification as well. Asset Loss v Surrender Fee Cost Analysis.xlsx
  11. For persons retired and receiving benefits who are over age 70-1/2 at the time benefits are distributed and who elect to rollover the non-employee contribution of their lump sum, is the terminating plan sponsor required to calculate an RMD that cannot be rolled over? If so, do monthly benefit payments made in the year count toward the RMD? If so, would that include both the employer and employee portion? If there are employee contributions being paid in cash that cannot be rolled over, do they count against the RMD?
  12. I'm really trying to see if this should throw a "Red" flag. The parties enter into a settlement wherein the alternate payee is paid 50% of the payee's Defined Benefit Plan. This is a small business. After the Consent is signed but before the QDRO is entered the Plan is scheduled for termination by the Plan administrator. The "Plan administrator" happens to also be the Participant. Could this affect the alternate payee's 50%? Something just doesn't feel right. I'm afraid someone is trying to pull a fast one. The participant has not retired at this point. They are asking that the QDRO, after initial review include termination language.
  13. I've inherited a 403(b) plan that was intended to terminate in 2012. For reasons that are unclear, the annuity contracts in the plan were never distributed to participants in accordance with Rev. Rul. 2011-7. Instead, participants were contacted and asked to elect to withdraw their balances. Unsurprisingly, not all of the participants did so in a timely fashion. The plan was effectively forgotten until this summer, when 5500s were filed for 2013 and 2014 because the plan retained assets during those years. After this TIAA-CREF was finally contacted and a termination/distributions of the annuities was requested. TIAA-CREF went forward with the termination and distributed the annuities, but backdated the termination to the date of the original resolutions in 2012. So now the question is how and for what year do we file a final 5500 if TIAA-CREF is treating 2012 as the year of termination and a full 5500 has already been filed for 2012, 2013, and 2014? Obviously this also raises questions of whether or not the assets were distributed as soon as administratively practicable. Will the termination be deemed invalid, and, if so, what then? My understanding is that some of the assets were withdrawn by participants back in 2012. Thanks for your help.
  14. Successor Plan Question Related question http://benefitslink.com/boards/index.php/topic/56926-401k-plan-termination-and-startup/?hl=successor#entry249499 First Question: 401(k) with Safe harbor: Plan terminated end of 2014, no distributions have been made while awaiting final deposits / admin/ testing for 2014. Less than a dozen participants. Employer has decided they want to keep having a plan. Don't care if it is a new plan or the old plan reopened. Since no distributions have been made, I don't see doing either 1. establishing a new plan, or 2. reopening the old, would violate the distirbution rules. Am I missing something in that regard? Second Question: Is there a cut-back issue for the right to distirbution for the participants? They would have an expectation/right to a distribution due to the plan termination. The fact that none have been taken seems immaterial. Under either option, I don't see how it can preserve that distribution right for the deferral/safe harbor money sources, given the standard - not before age 59.5 rule. Any ideas?
  15. A DC plan terminates and pays out all benefits. AFTER all benefits have been paid out, the custodian (thank you very much) credits revenue sharing to us (we are both fiduciary advisor and recordkeeper). The amount of the revenue sharing received does not cover the cost to distribute it - not that this matters philosophiclaly, but practically, it carries weight. Of course, nobody wants to deal with this, not us, not the plan sponsor - we, however have to. Eagerly await your enlightened comments and opinions.
  16. I have a Cash Balance plan (not covered by PBGC) that is terminated an currently underfunded. 1. There is an emeployee that used to be an HCE, but is no longer an HCE - can we reduce this employee's benefit (pro rata) based on account balance? 2. Do we need to have the owners sign waivers to reduce their benefit? 3. Are we allowed to just reduce all participants benefits pro-rata?
  17. We are in the midst of a standard termination. We want to offer a lump sum window to terminated vested participants. Can we offer this same lump sum window to active participants? Is that legally permissible? The more people that take lump sums, the more accurate our annuity pricing will be. Thus, we wanted to see about offering the lump sum window to actives. Thanks for any thoughts.
  18. We are terminating a defined benefit plan which has been submitted to the PBGC and the the 60 day period has expired. We are not submitting plan to IRS. Client has determined that cost of providing annuities is too expensive and now wants to amend the plan to allow lump sums elections. Pursuant to PBGC instructions, as long as we are not taking anything away, a post termination amendment is ok. However, my understanding is that the IRS has taken the position that once the termination date is past, the plan cannot be amended other than to implement required interim amendments. Can anyone comment on whether or not this is the case and possibly provide a citation?
  19. I have client that is planning on terminating their cash balance plan. If participants in a cash balance plan accrue the benefit after 1000 hours, and the plan terminates 9 months into the year, are they only entited to 9/12 of a benefit? If so, we will wait until Decemebr 31 to terminate, if not we will start the process now. I know for profit sharing plans, if the plan terminates 9 months into the year, the max profit sharing of $52,000 is reduced to 9/12 or $39,000. Thanks
  20. Hi, All - My plan was terminated by the PBGC in 2013, and all assets were transferred back to the PBGC at the time of termination. I have categorized the assets as a transfer from the plan, but I get an error message when trying to file the Schedule H with the transfer of assets since I do not have a plan EIN for a transferee plan. I have spoken with the IRS, who tells me to check with the PBGC (for a 5500 instruction??). The PBGC basically laughed at me, as expected, since this pertains to the 5500. No answer from either of them. Has anyone had to file a 5500 Schedule H for a plan terminated by the PBGC? If so, how did you categorize the transfer of assets to the PBGC? Thanks!
  21. Last year, my company burned through their 100+ employee grace period with the SIMPLE IRA. This year, around January 10th, (5 days before our first paycheck of the year), we were informed that the company could no longer offer the SIMPLE program. This sounds a lot like the employer is breaking several rules. 1. Operating a SIMPLE IRA with over 100+ employees (as of January 9th, of this year, employees knew nothing of the situation) 2. Terminating the SIMPLE plan without giving employees 60 days notice 3. Terminating the SIMPLE plan mid year My employer claims to be searching for a 401k program, and hopes to have one available within the next few months. Several employees are considering leaving this employer and would like to know if anyone has thoughts / ideas as to what may be done to handle this situation from the employee's perspective.
  22. Here is the scenario: A client has a one participant overfunded DB plan, no 2013 contributions needed or made. He wants to terminate effective in 2013 and transfer excess assets to a DC plan escrow account, but the actual transfer won't happen until 2014. The question is, can he release from escrow for 2013 (up to his DC annual addition)? My presumption is yes, since aside from the lack of a deducation, it is little different from an accrued contribution. I would think that the termination resolution should specify the intent to accrue the transfer for 2013
  23. we have a regular 401(k) plan that terminated as of 11/15/2013. passed out notices, stopped deferrals, signed the amendment, etc. Most participants have already returned their distribution forms. We anticipated distributions to start shortly, with assets out by 12/31/2013 and 2013 being the final year. The plan sponsor now has changed their mind about terminating the plan. Other than the participants being 100% vested,I don't see an issue. I think the plan sponsor would need to get new deferral elections because the notice given indicated that all salary deferrals were going to cease as of 11/15/2013. What I don't know is about distributions. We are after 11/15/2013 and participants have accrued a distributable event. The fact that no one has actually been paid out doesn't change the fact that participants have a right to take a distribution, and undoing the termination would presumably take away that right. I seem to think there were several threads on this topic already, but I can't seem to find them. What if they terminate the plan and then start another? I would think the successor plan rules would dictate that the participants didn't really have a distributable event, yes? or would the new plan just be disqualified? If anyone can point me in the right direction I would appreciate it.
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