Cafeteria plan is on a calendar year basis. The client's insurance policies are on a fiscal year basis (5/1-4/30). I know how to file Form 5500 with these policies. A question has come up regarding the "lock in" period. The employees should be able to enroll and make changes for 5/1 open enrollment. The cafeteria plan has a January to December term on their forms and would normally be "locked in" for this period unless they had a Change in Status. What are your thoughts on this, considering the two different periods? I suggested changing the cafeteria plan year to match the insurance policy years to make it less confusing.

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A potential cash balance plan client made the 2017 contribution in 2017. It has now been determined that this contribution is over the maximum allowed. We think the excess can be transferred to the client's profit sharing plan but can't find clear guidance on this.

Do controlled group rules affect successor plan rules? I have a person who owned two businesses, only one with employees. This Company with employees has been sold and all employees hired by the new company. The business owner/salesperson is going to be a 1099 consultant to the business. Can they establish a 401k plan under the other business they owned (or a new one they create)? Or should they just establish a SEP which I know is not a successor plan?

Normally, a plan that wants to have a requirement of 1 year of service and age 21 would be written as: "You will be eligible to participate for purposes of salary deferrals when you have completed one Year of Service and have attained age 21." But for some reason the document was written as: "You will be eligible to participate for purposes of salary deferrals when you have completed 1,000 Hours of Service within your first 12 month(s) of employment and have attained age 21." The client is saying he thought the eligibility requirement was 6 months, based on the foregoing language. I see his point... one could interpret it as, "once I work 1,000 hours (which would take about 6 months for a full-time employee), I become eligible." Has anyone else seen a plan that has an eligibility requirement like this one?

Fund-holder notified client he over-shot his $18 due to the fact the payroll company did not cut off his payments at $18 for the year. They refuse to do the excess earnings calculations. Is it out of the realm of possibility to use the VFCP Calculator for this purpose?

Small (less than 100) 401(k) plan does not presently allow for loans but would like to add them, subject to the hardship rules. The employer would like to restrict salary deferrals during the time that a loan is being repaid, meaning the participant could not make deferrals until the loan is repaid in full. The thinking is that if the participant has extra cash available to make deferrals, then they should be applying that extra cash towards payment on the loan. Is this a BRF issue? If loans are available only for hardship purposes, probably NHCEs will be the primary users, so the deferral restriction would primarily affect NHCEs. (HCEs that take a loan would likely have more means to repay them quicker.) Should this provision be allowed?

A small DB plan covers husband and wife. They also have 3 longtime employees who are covered under a profit sharing plan. They pass 401(a)(4) because they always make a 12% profit sharing contribution and because there is adequate age difference. The DB plan now has assets of about $100k over the section 415 maximums. The document is a volume submitter and uses one of the actuarial equivalent selections as 417(e) assumptions. It's been operated under more conservative assumptions. If the actuarial equivalent is amended to the 417(e) assumptions and then terminated and distributed next year, it's likely they would not have excess assets, especially if they take an in-service distribution of the bulk of the assets now, but this would seem to be discriminatory. And yet they are willing to make a 25% profit sharing contribution to employees this year. If the 401(a)(4) test were then run on an accrued-to-date method, they would easily pass. In running the test, we would convert the monthly benefits to the actuarial equivalent based on prior assumptions. What do you think about this approach?

A plan excludes unions and has a last day of the plan year allocation requirement for profit sharing contributions. An employee enters the plan, but later during the year changes job to a union position. Can the plan require a participant to be an eligible employee on the last day of the year to be eligible for an allocation, or is that limited to employment on last day of the year?

Client had decided to terminate its Multiple Employer Plan which has been undergoing a DOL Audit for 2 years. Reason for terminating is unrelated to the audit. Is it advisable to proceed with termination during an open audit? Any potential ugliness if proceeding before the audit is closed?

A plan has been filing 5500-EZs for years. We want to change to filing the one-person version (the 5500-SF) for better tracking. Should be check the "first return/report" box on Line B because this is the first filing with EFAST as opposed to filing with the IRS all the previous years?

Can a participant rollover their entire balance to an IRA and then take their RMD from the IRA? I told the participant he must withdraw the RMD from the plan and then roll over the rest, but he's is adamant that he does not want a cash distribution from the retirement plan. He says he called the IRS and was told he didn't need to take the RMD from the plan first. Maybe I've been wrong for all these years?

The plan language states that one must be employed on the last day of the plan year in order to be eligible for a share of the year's employer contribution. This seems to be to be capable of two different interpretations: [1] You must be employed as of the END of the last day. or [2] you must be employed during any part of the last day. If someone was terminated on 12/31/2017, do they receive a contribution? The software we use would not allocate a contribution to a participant terminated on 12/31. However, I have seen some responses on the forum that state that the participant would be entitled to the contribution. Is there any additional guidance on this from the IRS?

I have a deceased participant in a qualified retirement plan, no designated beneficiaries, and no spouse/child/parent. We have been making RMD payments to the participant's estate for several years. The participant's brother is the executor (and plan trustee), so he gets the RMD checks and deposits them into an estate account. The plan is now terminating, so the financial advisor is looking to help him roll over the full balance, but the advisor is having trouble determining what type of rollover account is acceptable. Most literature indicates that non-spousal beneficiaries may roll over only into an "inherited" IRA. How does one establish an inherited IRA when no beneficiaries were ever designated?

Any problem making a hardship distribution for cosmetic, elective surgery? After hearing the facts, we think the participant's need really is more preventive than elective. The participant has submitted the surgeon's estimate of the cost, as proof of the amount needed. Thoughts?

A Cash Balance DC plan passes coverage using the ratio percentage test. For my 401(a)(4) testing, some rate groups are less than 70%, so for rate group testing I need the average benefits test to pass. Can the average benefits test pass on an equivalent contributions basis, while the (a)(4) rate group testing is being done on a benefits basis?

A new client of mine worked many years for the FAA and was covered by FERS. Under a marital property settlement, the ex-spouse receives 1/3 of the monthly benefit under the pension program and 1/2 of the account in the Thrift Savings Plan. Are two COAPs required (a "court order acceptable for processing," which basically is like a QDRO), or can both benefits be included in one COAP?

I know that one cannot amend a qualified plan's allocation methodology once someone has satisfied the accrual requirements for a particular year. In this case, there is a 1,000 hour requirement for accrual of the nonelective contribution. But wasn't there some IRS guidance six or eight years ago that said such an amendment could be done by May 15 for a calendar year plan, even though a participant already had worked more than 1,000 hours?

Owner-Participant of 401(k) Profit-Sharing plan has to take an RMD. He has 100k in the pooled profit-sharing account and 50k in FBO 401k account. Isn't this ONE retirement plan and RMD can come from either/both accounts?

A plan is considering implementing a QACA safe harbor match on 1/1/2019, but wants to make additional matching contributions. Specifically, the plan wants to match 50% of contributions on deferrals between 7 and 10% -- auto escalating up to 10% using the QACA AE provision. They want to try and get total employee contributions over 15%, and encourage it with the discretionary match over the QACA formula. Is the discretionary match subject only to ACP? Any other considerations?