We are in the process of splitting a plan into two plans so there is no longer a required n audit. The intent is that the effective date of the new plan and the amendment to the old plan (removing some employees) is 1/1/19. We know that audits are determined based on the number of eligible employees in the plan at the beginning of the plan year. So if the participant count shown on 2018 Form 5500 at end of year is 130 and on 1/1/19, 60 of these participants are now participants of plan 002 and no longer participants of plan 001. Am I correct that as of 1/1/19 the counts in both plans are now less than 100 and no audit is required?

DB plan is amended; final pay formula was changed as of 12/31/2012 to provide a new/better final pay formula effective 2013. The accrued benefit as of 2012 was frozen -- benefit service and final average earnings -- so total accrued benefit is A plus B. However, the plan also limits benefit service to 25 years but does not specify how that limit applies with respect to the pre-2013 and post-2012 benefit formulas. The prior actuary (it's always a takeover case!) applied the limit on the latest service. Extreme theoretical example -- a person hired in the 1980s could hit the service cap under the old formula, work another 25 years (so 50 in total) and not accrue another cent, while a new hire in 2013 could work 25 years (all under the new formula) and have a substantially higher benefit than the 50-year employee. Putting the fairness argument aside, are there any statutory issues here? If so, would it matter if the pre-2013 FAE was not frozen so that the service-limited person's benefit could increase for salary increases?

Asset sale occurred 11/2/18, plan termination effective date is 11/3/18, seller (sponsor of plan being terminated) says employees were terminated on 11/1/18. This is a tested plan but only owners are HCEs. No employer contributions. Could non-owner employees be paid out on 11/30/18 before any year-end work was done technically on the basis of being terminated employees vs. for the reason of the plan termination?

I have a client with a 401(k) plan which will be merged into the 401(k) plan of their parent company on April 1, 2019. The parent company has asked the client to freeze contributions (but not loan payments) effective January 1, 2019. Is the client required to provide the plan participants with any advance notice of this freeze?

On the annual information questionnaire we send to clients, we ask if their company shares the services of any employee with any other business entity. Their bookkeeper has responded that he works for three other companies -- two that pay him as a W-2 employee, and one as an independent contractor. The owners of the company don't have any ownership in the other businesses in which this employee works. My question is -- should I care? Would I have an issue only if any of these companies had common ownership? Is there anything else that I should be asking?

403(b) plan sponsor wants to adopt an amendment on 12/31/18 to change vesting of employer matching contributions from immediate vesting to 3 year cliff (100% vested after 3 years), effective 7/1/18, for all employees hired on or after 7/1/18. Is this a violation of the anti-cutback rules?

403(b) plan sponsor identified errors in adoption agreement dating back to 2014 resulting in differences between the operation of the plan and the document. We plan to submit a VCP proposing a retroactive amendment to the plan. Should the plan sponsor adopt an amendment NOW (by 12/31) to make these changes for the 2018 plan year and file the VCP for 2014-2017, or wait and include 2018 in the proposed amendment submitted in the VCP?

An employee has submitted paperwork to show his divorce as a Qualifying Event. But he didn't submit a divorce decree. It's a "Partial Mediated Settlement Agreement." Is that sufficient? Even if it is, can I require a divorce decree instead?

Medical practice sponsors 401(k) plan. A nurse practitioner terminated employment in early December, and has not worked for the plan sponsor since termination. However, the NP will receive commissions on collections through the end of December. What is the impact on the retirement plan if the NP receives a paycheck (with employment taxes withheld) as of 12/31 even though the last day worked was several weeks prior to that?

We have a plan that was terminated 12/31/2017. IRS considers a plan terminated if all assets are distributed within 12 months of the termination date. There are two participants who could not be located and the client directed 100% of each participant account payable to an eligible rollover institution that accepts and establishes IRA rollovers for missing participants. The checks were prepared last week and mailed to client, payable to the financial institution. If the checks are mailed ASAP to the rollover institution, is the plan closed since the money came out of the plan; or is the plan considered closed only when the rollover institution establishes the IRA accounts?

We filed an 8955-SSA for 2010 reporting one participant who was paid out (Code D). We've just been notified by the participant that he was informed by SSA that he has a benefit that's due to him. We're debating whether we should send a letter to SSA with a copy of the return previously filed, or add said participant to the next SSA. Your thoughts?

Per the ESOP plan at my former employer, I'm to receive 3 annual payments of what's listed on the stock certificate. The first payment was almost 4 months late and several hundred to an attorney to get him moving. The second payment will be past due as of January 2. Do I need to get the attorney again, or can I rattle his cage some other way?

I didn't contribute more than is allowed to my solo 401K for 2017, but I (somewhat accidentally) contributed way more than necessary and took our AGI too low. Can I correct that?

Long background story: I am 56 and had $84K of self-employment (sole proprietorship) income in 2017 and established a solo 401K for myself ONLY on 12/28/17. My husband has an S Corp and I seldom know where his numbers will come in. In 2016 we paid a lot of tax because his income was surprisingly (to me) high in 2016. Thinking it would be the same in 2017, I contributed $3,300 to my HSA, $13,000 total into IRAs for both of us, $24,000 EE to my new solo 401K and $15,500 ER to the solo 401K. At the 11th hour of completing our 2017 taxes in September 2018, it became apparent that our AGI was going to be below zero (!) after a big, unexpected (to me) loss came through from his business to our personal return. For [ACA] /Advanced Premium Tax Credits reasons we REALLY needed our AGI to be at least $13K higher than it was about to come out. I had already wired the 2 separate (EE/ER) amounts to my large brokerage plan provider, but I reduced line 28 on our tax return from $39,500 to $26,500. The brokerage's retirement accounts department had told me I could just send them a correction memo (which I did) and designate $13,000 of what I had sent in to be for 2018 rather than 2017. Now that I read a lot of the great information on here, though, I can see that they shouldn't have told me this. I have evidence of the memo I sent them and when, but when I sign in to my account, they still have only the entries for $24,000 EE and $15,500 ER (i.e., they ignored the memo they breezily told me to send them). What recourse do I have? Our accountant just retired and the lovely person who has taken his place is hard for me to communicate with (couldn't reach him that last week due to holidays). Is there any way to legitimately recategorize/recharacterize/reclassify (not sure which is the right term) $13,000 of my solo 401K contributions from 2017? If not, how about those darned IRA contributions I made? I thank you in advance for any feedback or insight as I hang my head in embarrassment. I realize my spouse and I need to improve our communication and that I am a poster child for the pitfalls of DIY solo 401K plans, big breezy brokerage house plans, etc.

I've recently become aware of the limitations on maintenance of a 5305-SEP while also having a Solo 401(k). I have a small side business that is all but inactive at this point. I used to use a SEP-IRA for retirement savings related to this endeavor, but moved things to a Solo 401(k) in 2010. The SEP did, however, remain open (albeit empty) at that point. I made one additional contribution to the 401(k) after setting it up in 2010 but it's otherwise been essentially idle (just sitting there holding the existing funds). In the intervening years, not having been aware of the restriction related to 5305 SEP-IRAs while maintaining a qualified plan, I made a handful of small-ish employer contributions to the SEP on my behalf. Don't ask why I did it this way, convenience or naivite, I guess ... Regardless, this was done during a time when there was no actual activity with the 401(k); again, I just made that one contribution after setting it up in 2010 and then left it alone. So... Here we are. I have no concerns about over-contributions or anything like that. The SEP contributions were safely below any relevant limits, and I never even contributed to both in the same year. Nonetheless, I have just discovered that these SEP contributions may not have been technically allowable, and am trying to figure out what (if anything) to do.

To complicate matters a bit further, I have since converted those (formerly deductible) SEP contributions to my Roth IRA. Thus, I actually wound up paying taxes on them, but the money is no longer in the SEP to "undo" if I wanted to somehow pursue that course of action.

One option would be to just do nothing and let this mistake fade into ancient history. This would have been the default course of action if I hadn't stumbled across the info alerting me to the potential problem. In this case, I probably would've gone through life none the wiser. Barring an audit in the near future (knock on wood) this issue would probably have been lost in the sands of time.

The other option would be to (somehow) fix it. The problem is, I'm really not sure how to undo this, or if it's even worth pursuing.

What is the actual deadline for funding their deferrals for 2018? Is it 12/31 or the due date of the tax return? They've funded their deferrals only partially during the year.

A question about participant fee disclosures and corporate fund actions (i.e., actions taken by the fund issuer to rename, merge, or otherwise change one or more of their funds) -- Historically, when the action affects the investment information provided in the notice, we have produced an updated fee disclosure and sent it to the plan sponsor with instructions to distribute to participants. Corporate actions happen almost weekly, and some of our clients have complained about having to distribute updated fee disclosures multiple times throughout the year. Some advisors/service providers say it's "not technically required" to provide an updated fee disclosure or other notification of a corporate fund action, but I can't see any supporting guidance that excuses a plan sponsor from having to notify participants when the investment information in the disclosure changes due to a corporate action. Do you? Would you describe the approach you take to assist plan sponsors with notifying participants of a corporate fund action that affects their plan?

A non-profit has an ERISA 403(b) plan. They came to us a couple of years ago -- plan was a mess -- document out of compliance, no 5500 forms EVER filed, ACP testing was never done, etc. -- So a huge clean-up VCP project, and 5500 forms (audited) filed under DFVCP, etc. -- They just got notified that the plan will be audited by the DOL. Is the selection of plans for DOL audit a purely random process? Did the DFVCP filing trigger this audit?

A governmental non-ERISA 403(b) plan, with discretionary matching and nonelective contributions, wishes to make the following changes:

Compensation is now defined a W-2 Wages with no exclusions. Plan sponsor now wishes to exclude following from definition of compensation applicable to all contribution types: [1] All amounts deferred or excluded from taxable compensation under Code Section 125, 132(f)(4), 402(g)(3), 402(h)(1)(B), 403(b), or 457(b); [2] Deemed Section 125 compensation; [3] Bonuses; [4] Overtime; [5] Commissions; [6] Differential Pay; [7] Safe Harbor Fringe Benefits; and [8] All Post-Severance Compensation.

Plan currently allows participants to take distributions in the form of lump-sum, partial lump-sum, and installment payments. Plan sponsor now wants to eliminate partial lump-sum and installment forms of distribution.

Plan has a 6-year graded vesting schedule and provides 100% vesting if participant severs employment on account of disability. Plan sponsor now wants to eliminate 100% vesting upon disability.

I am concerned that these changes would result in a cutback of benefits under 411(d)(6). What do you think?