We had a transaction occur and as part of the transaction, our employees with Options and RSUs were required to be paid out. However, as part of the transaction, we had to put money in an escrow account for a year to cover if we violated any representations. So, instead of receiving the full $100/share the employees were entitled to under their Options and RSUs, they only received $80, and the additional $20 was put in the escrow account. It's been a year, and we didn't violate any representations, so we are now releasing the additional $20, and we're wondering whether it should be included for 401(k) purposes? Our Plan's definition of compensation specifically excludes payments from Options and RSUs, but we're wondering if this compensation should be treated as something different because it was held in an escrow account -- does that change the nature of the compensation somehow?

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Companies B and C are domestic subsidiaries of foreign parent A and in a controlled group. B is not profitable and sponsors an underfunded frozen defined benefit plan for its employees. Can sponsorship of this plan be transferred from B to profitable company C such that C can make tax deductible contributions toward funding benefits for B's employees? If they were unrelated, I think clearly the answer is no (exclusive benefit rule), but OK for a controlled group. First thought is, why would C be allowed to make contributions for another company's benefit? But because it's part of the controlled group and hence C is on the hook with PBGC for underfunding if B goes under, C would seem to be allowed to fund. If B did fail, or was sold (asset sale) with plan staying behind, C could pick up sponsorship, so why not now? And should B continue to sponsor the plan as an participating employer, because it still exists and its employees are the participants? I would think so. I also think language should be clear that all contributions from affiliated employers are available to fund benefits for participants employed by any and all participating affiliated employers.

Non-profit ERISA 403(b) plan. The business decided to install a 457 plan so they could contribute for the lone HC executive. Fine. Due to a new and inexperienced Human Resources person, they not only didn't timely adopt the 457 plan, but the employer contributions were just sent to and deposited into the 403(b) plan! This happened for several months until it was finally noticed. Now, I know about PLR 9144041, etc., and although this situation doesn't clearly fall under the stated "mathematical errors", etc., it seems there should be some latitude to consider a contribution to the wrong plan (even though other plan not yet established) as a mistake of fact. For example, if a client has a DB plan and a DC plan, and the DB contribution were sent to the DC plan, I'd feel comfortable having that refunded under a mistake of fact. Thoughts on this situation? I know this interpretation may be pushing the envelope, but it doesn't seem that far-fetched to me.

A doctor (of course) signed documents to set up a new 401(k) plan in December of 2018 that was effective 01/01/2018. It was to cover only her, at least to begin, because she had no employees. She signed everything, we did the document, she paid the bill, and it died right there. No investment accounts were ever opened; no deposits were ever made. All requests for information have been completely ignored. Does this plan really exist? There is nothing to file because there would only be an EZ if she had over $250,000 in the plan. It makes me nervous, though. I can't quite wrap my head around a client for whom there is nothing to do, if she really is a client at all. Have any of you had this happen? If she ever answers us and says she changed her mind and doesn't want the plan after all, do we need to terminate it as we normally would (resolution, amendment) and file the first, final, and only EZ for it? Can an employer sign all the papers and pay for a plan and then just walk away from it without further ado?

I'm filling out a 5500. One company has moved all of the plan assets to another company that's participating in the same multiemployer plan. Do I mark that the plan has terminated and that its ending assets for company A are at zero, and then fill out the information for the termination and say that it's a final 5500 (indicating company B as the recipient of those funds)?

I have a question regarding 401K and deferring its audit. From 2016-2017 we had three 401K plans with common ownership. Starting September 2018 we merged the assets from those 3 plans into a new plan with a new plan number. For the three prior plans the group has always filed a 5500SF. Now that we have merged those assets into an entirely new plan with a new plan number as of September 2018, our eligibility has climbed we think to more than 100 eligible. Because the plan is a new plan starting on September 1, 2018 (with a short plan year ending on December 31, 2018), can we defer the audit until next year? Some CPAs tell me that it isn't a new plan because it's an offspring of the 3 prior plans, and hence that it wouldn't qualify to defer the audit the following year. But some say otherwise.

Solo 401k plan had loans taken from the plan without promissory notes, pledges of account balances, etc. The loans at one time (several years ago) exceeded $50,000. Repayments have not been made. The sole participant now wants to withdraw what benefits there are and close the plan. It's been a couple of years since I prepared any corrections under EPCRS, much less a failure like this. Can you get me started off in the right direction?

When calculating an RIA's fees, can/should the value of accrued interest on bonds be included in the portfolio value? Is there guidance written anywhere on how to value an account for charging fees?

Last week I became a 2% owner of an S Corp of which I am an employee. I'm participating in Dependent Day Care and FSA to the maximum allowed amounts. I also participate in an AFLAC type policy. I understand there will be tax implications and I'm trying to figure out what exactly they are. Do all of these pre-tax items get treated the same way for this tax year?

Two things in life are ubiquitous. First, yellow taxis in Manhattan. Second, the use of the time rule formula for allocating an ERISA qualified defined benefit plan for an employee who is still working, using a "shared" formula, a/k/a "Bangs/Pleasant" formula in Maryland, a/k/a "Brown Formula" in California, a/k/a pro-rata formula re: FERS and CSRS - 5 CFR � 838.621. Thus, your standard shared interest allocation for a defined benefit plan: "The Alternate Payee is hereby awarded 50% of the "marital share" of the Participant's retirement annuity benefit if, as and when paid to the Participant. The "marital share" is determined by a fraction, the numerator of which is the number of months during the marriage that the Participant accrued creditable service in the plan, and the denominator is the number of months that the Participant accrued creditable service in the plan at the time of his commencement of benefits." Now we have Fidelity on it's website, setting forth 10 Northrop Grumman defined benefit plans with respect to which they offer only two allocation options: See page 40, line 3 of the attached. " ______% (insert percentage) of each of the Participant's monthly benefit payments from the Plan. $_____ (insert dollar amount) of each of the Participant's monthly benefit payments from the Plan." Note the absence of a time rule option for defining the amount to be paid to the Alternate Payee. I now have another attorney telling me that I cannot change the model QDRO to insert a time rule option AND must wait until the Participant actually retires to prepare and submit the QDRO - likely about 20 years in the future. Say what? 26 IRC Section 414(p)(2) sets forth everything needed for a valid DRO: "(2)Order must clearly specify certain facts: A domestic relations order meets the requirements of this paragraph only if such order clearly specifies-- "(A) the name and the last known mailing address (if any) of the participant and the name and mailing address of each alternate payee covered by the order, "(B) the amount or percentage of the participant's benefits to be paid by the plan to each such alternate payee, or the manner in which such amount or percentage is to be determined, (Emphasis provided.) "(C) the number of payments or period to which such order applies, and "(D) each plan to which such order applies." BUT, hold on, if the Participant remarries and then retires, his new wife becomes irrevocably vested in the survivor annuity and the intended Alternate Payee can never get it....PERIOD. See the 1997 decision of the US Court of Appeals, 4th Circuit, in Hopkins v. AT&T Global Information Solutions athttp://scholar.google.com/scholar_case?case=9954117838131396049&q=hopkins+at%26T+global&hl=en&as_sdt=2,9 followed by the 5th Circuit in 1999 Rivers v. Central and South West Corporation at http://scholar.google.com/scholar_case?case=2296953953561556363&q=rivers+central+and+south+west&hl=en&as_sdt=2,9: "This Circuit agrees with the Fourth Circuit's decision in Hopkins and adopts its rationale. Rivers failed to protect her rights in Franklin's pension plan by neglecting to obtain a QDRO prior to Franklin's retirement date. Consequently, Franklin's pension benefits irrevocably vested in Mrs. Franklin on the date of his retirement and Rivers is forever barred from acquiring an interest in Franklin's pension plan." To the same effect see Dahl v. Aerospace Employees' Retirement Plan, a 2015 case from the U.S. District Court for the Eastern District of Virginia (and cases cited therein) -https://scholar.google.com/scholar_case?case=3487596170773082469&q=dahl+v.+aerospace&hl=en&lr=lang_en&as_sdt=20000003&as_vis=1 Other cases following Hopkins are collected at:https://scholar.google.com/scholar?start=0&q="Hopkins+v.+AT%26T"&hl=en&as_sdt=20000006 I have changed Fidelity forms like this many times and inserted a time rule formula and it was accepted by the Plan. Can anybody cite an IRC/ERISA code provision, or a case decision, or any treatise, that would be contrary to my universal experience that time-rule formulas are acceptable as a method if defining the amount of the Alternate Payee's defined benefit annuity, and that a Plan Administrator/TPA cannot limit the options available? Thanks for your insight. David N-G Shared QDRO Package 42 pages 2019.pdf

As usual, just want to make sure I'm not missing something. I've just seen a couple of plans that did perform the Key employee concentration test and the DCAP testing. However, they did none of the eligibility or benefits testing. It so happens that even on a cursory glance, they obviously pass eligibility testing, so maybe they just looked at it informally and, reasonably enough, said "it passes." Ditto for the "Availability Standard" test. However, for the Utilization Standard test, the HCP ratio is app. 10%,and the non-HCP ratio is about 5%. And it looks like this has been going on for about a million years, give or take a year or three... So, - am I missing something with regards to the Utilization test? Is there some special way around this that I don't know about? And for the past failures, I'm not aware of any "correction" procedure - if audited, they are screwed, right? All they can do is correct this going forward? Any thoughts appreciated!