Plan fails ADP testing for 2016 plan year. Company distributes HCEs' excess contributions in February 2017. Excess contributions are subject to tax in year of distribution (2017). Company provides a make-whole payment to HCEs to account for the tax owed on the distributed excess contribution. (Idea being that if the plan had passed ADP testing, the excess contributions would have stayed in the plan and would not have been subject to tax.) Payment to the HCEs is made outside of the plan -- structured as a bonus essentially. Anyone see a problem with this?

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The plan offers two vesting elections that comply with the 409A fixed payment and timing requirement. So there is not a 409A compliance problem. But the company sometimes makes the election on a participant's behalf. Rather than giving two options, the company just goes with one. Is this allowed or must it be corrected? Should there be a retroactive amendment?

Have a plan that uses the Grouping method, with two classes A and B. Each class passes coverage individually. The allocation method in each class is based on compensation (pro-rata). Plan is not top heavy. They are wanting to do a 5% allocation to Group B but not do any allocation to Group A. As each passes coverage individually and a safe harbor base allocation (pro-rata) is used for Group B, I don't see a problem. Agree?

Company has gone bankrupt. They sponsor a fully insured Wrap Plan. Fees for most recent Form 5500 will not be paid. Is there any reason to file future 5500's, and who assumes responsibility?

Two calendar year plans with unrelated employers, Company A and Company B with corresponding 401(k) plans, Plan A and Plan B. Plan A will be top-heavy for 2018. Plan B will not be top-heavy in 2018. Assume Company A sells its stock to Company B on January 1, 2018. All participants in Plan A are merged into Plan B on January 1, 2018. Thus, Plan A no longer exists after January 1, 2018. Will Plan B need to re-determine its top-heavy status for 2018 by including the 12/31/2017 data from Plan A? Do the Plan A participants get any top-heavy minimums for 2018? Or how is this handled?

I've been talking to an individual whose ex-spouse "forgot" to mention one or more retirement plans as assets in a divorce settlement. The ex is a physician who is the plan sponsor. She's talked with ERISA attorneys. Apparently there was a money purchase plan that terminated in 2010 and its assets were merged into a profit sharing plan that was in existence (we think) at the time of the divorce. ERISA attorneys suggest that she involve the IRS or DOL. I'm aware of EBSA's call centers that assist plan participants, though I don't know of anything similar on the IRS side. I'm at a loss to understand what either agency can do about the fact that the assets of the plan were not disclosed in a divorce settlement.

Client is a private high school with religious affiliation. They want to include the Rabbi/Head of School's parsonage allowance in the determination of the company contribution (5% of pay). For common law employee that's not taxable income, so I see no authority to include this in wages. Agree?