OMG. You've got to read this. I'm not even a plan sponsor and I'm offended by this!

http://opssupport.tiaa-cref.org/EC/GetFile.aspx?&ECID=RJc3IF5nf

I know that when we first started with EFAST, the IRS would not accept an electronic filing authorization (so that we as TPA could sign for them) for multiple years - we had to prepare a separate authorization for each year.

Does anyone know if that has changed?

RMD was paid for 2013 (due date 12/31/2013) and calculated based upon the Account Balance of 08/31/2012. Subsequently, the Plan Year changed to a Calendar Year, with a short Plan Year from 09/01/2012 to 12/31/2012.

Assuming the account balance had investment gains during the short Plan Year, should the 2013 RMD be recalculated, with an additional amount to be paid by 12/31/2013?

Have ESOP with non-registration-type securites that owns 30% of the Company. Company wants to convert to S-corp, but first needs to change from 2 classes of stock to 1 class of stock. Is pass-through voting required for the change in classes of stock (is this considered a recapitalization or reclassification requiring pass-through voting)?

If the other owner of the Company (an indiviudal) owns the remaining 70% (and thus has a controlling interest), and he votes in favor of the change in the classes of stock, even if pass-through voting is typically required for this change, is it still necessary when the other owner has a controlling interest and will alone be able to dictate the outcome?

Any responses would be appreciated.

A partnership sponsors a 401(k) plan. Partnership operations effectively ended 3/31/13, which was the last day of employment for all W2 employees. All contributions due them have been made. The issue now is determining the partners net earnings from self employment (NESE). The partners will have positive earnings through 6/30. However, in August a large final malpractice insurance premium along with some other items will result in negative earnings for the second half of the year. For the entire year, NESE will be minimal to negative.

Accountant wants to know if a plan term date of 6/30 is established, can the partners use NESE through 6/30 to base their contributions on? Obviously using 6/30 will result in the 415 limits being cut in half, but that is not a concern. I have been unable to find anything definitive. The best argument I have against this idea is the fact that partners will get K1's for the year that will not support the contributions made using earnings as of 6/30. W2 employees will get W2's that do support their contributions. They are obviously trying to game the system, but I would like a better argument than the previous one, if possible. Should partnership plans only terminate at year end because of this issue?

Another thought is for them to terminate the partnership and become a corporation as of 7/1. If they take no compensation for the last 6 months, then that combined with their NESE for the first 6 months will get them where they want to be. There are probably dozens of non-retirement plan reasons why that won't work, but that is the accountant's problem.

Any thoughts are appreciated.

Hi,

Husband / wife have existing solo 401K for S-Corp at major brokerage. However, they would like to convert to a self-directed solo 401K is to increase the available investment options, such as investing in alternate investments.

Currently, the brokerage firms provides all the solo 401K plan documents / adoption agreements / annual reporting and recording keeping. And brokerage also provides updates to plan documents free of charge to keep in compliance with new rules and regulations.

However, if they were to move to a self-directed solo 401K model, the brokerage would no longer provide those services.

1) What is the process to convert a existing Solo 401K at a retail brokerage into a self-directed Solo 401K?

2) What are the annual recordkeeping / maintenance operations / filing requirements to maintain a self-directed solo 401K, compared to a solo 401K at a major brokerage?

I recall at a session last year that even non-credentialed 5500 preparers are somehow accountable to the IRS for their errors, even though they have no 'initials' to lose. Does anyone recall hearing this and what the penalty would be?

Another question - there is a small business owner in my city who verbally calls himself an actuary, and lists himself as an 'Actuarial Consultant'. Is this legal? He doesn't have a single credential to his name. My concern is a lot of bad advice he has been giving in the guise of being 'actuarial'.

Hi,

What is the best way to set up a self-directed solo 401K plan for a small business? My understanding is that self directed solo 401K can be setup as follows:

1) create EIN from IRS website as a tax-exempt Employer plan (401K)

2) adopt a set of IRS approved solo 401K plan documents

3) create and fund bank account under the name of the 401k trust

Am I missing any steps?

Who are the reputable providers to set this up?

Where can I get up-to-date IRS approved solo 401K plan documents?

Do we have a problem or am I just over thinking this? We are aggregating a PS and an offset DB for testing purposes under 401(a)(4). The PS normal retirement age defined in the document is 55 and the DB normal retirement age is 65. The plan covers the same participants.

1. For testing purposes I am assuming this is one plan with a non-uniform normal retirement age. As such, under 1.401(a)(4)-12 I am assuming that I must use a Testing Age of 65. Is this correct? What worries me is that I have the same participants with multiple retirement ages and that doesn’t seem to be specifically addressed.

1. Assuming (1) above is correct and I must test at 65. Are there any special adjustments that I am supposed to make to the PS contributions to test at 65? I would assume that it is simply the EBAR calculation at 65 using interest to 65 and an age 65 APR.

Note that I have seen prior threads but all seem to deal with a DB NRA less then the DC NRA which would create different normalizing issues.

Any input is appreciated.

Plan provided for suspension but did not give out suspension notices to persons who worked past NRA. Plan provides that at late retirement, retiree receives benefit accrued through late retirement date. Because the plan assumed suspension notices would be given (and so there would be no actuarial increase), document does not provide that retiree gets the greater of (i) accrued to late retirement or (ii) actuarial increase.

We are now trying to correct the failure. Because the plan does not provide for the "greater of" at late reitrement, do we need to give both the accrued to late benefit and the actuarial increase?

Hi,

Many large brokers, such as Schwab, Fidelity, don't allow customers to trade with margin privileges in a solo 401K account.

However, there are several companies / services that will create Self-Directed Solo 401K plans that will allow margin privileges in a trading account. (just search for "solo 401K")

I thought margin trading in a 401K could cause issue related to prohibited transactions / self dealing? Don't margin agreements require that the retirement assets be pledged for collateral or require a personal guarantee by the account holder? Isn't that a prohibited transaction?

So is margin trading in a self-directed 401K allowed?

I'm working on a calendar year plan (2012). The employer made contributions and already filed their tax return but they didn't meet minimum funding requirements.

They have already made contributions in 2013 (to deduct for the 2013 plan year). Can I use these new contributions to satisfy the minimum funding requirement for 2012? And if so, how does that affect my maximum deductible for the 2013 plan year? OR do they need to amend their 2012 tax return?

I'm working to determine whether a company that reimburses its employees up to $5,000 each for the cost of their acquiring health insurance can keep this plan in 2014. Some suggested that this type of arrangement would violate the rules on annual limits (particularly in light of FAQ 11). However, I'm becoming convinced that this type of plan will remain permissible in 2014, given that it is only reimbursing premiums - which do not constitute an essential health benefit. This is based on 29 C.F.R. 2590.715-2711(b)(1), which states:

"The rules of this section do not prevent a group health plan, or a health insurance issuer offering group health insurance coverage, from placing annual or lifetime dollar limits with respect to any individual on specific covered benefits that are not essential health benefits to the extent that such limits are otherwise permitted under applicable Federal or State law."

I would be interested in getting thoughts from other practitioners. For anyone interested, I noticed this debate was also happening in the comments section of the below article.

http://healthaffairs.org/blog/2013/01/25/implementing-health-reform-health-reimbursement-arrangements-and-more/

a participant in a 403(b) recently passed away. The Designation of Beneficiary form on file from 1997 states the deceased participants niece will be his beneficiary. Last year the participant married. He never filled out a new DOB form. However, the death benefit will go to his new spouse, correct?

The plan document states that "if a married participant dies prior to his annuity starting date, the administrator will direct the vendor to distribute a portion of the participants vested account balance to the surviving spouse in the form of a Qualified preretirement survivor annuity (QPSA), unless the participant has a valid waiver election in effect OR unless the participant and his spouse were not married throughout the one year period ending on the date of the participants death" So if they were not married for one year, would the niece be the beneficiary?

The plan sponsor has confirmed the participant was NOT married for one year at the time of his death

a participant in a 403(b) recently passed away. The Designation of Beneficiary form on file from 1997 states the deceased participants niece will be his beneficiary. Last year the participant married. He never filled out a new DOB form. However, the death benefit will go to his new spouse, correct?

When a profit sharing only plan amends mid-year to add a deferral provision (traditional and Roth), what compensation would be used for testing purposes - full year or only from the effective date of the amendment adding the deferral provision? Is there anything else to watch out for?

Thanks!

A couple of questions

1. If an individual is receiving regular distributions but is not cashing the checks, is it okay to stop sending them? I know uncashed checks are a nightmare and there isn't much guidance, but I'm curious as to what others do in these situations.

2. If you send out the RMD for a person who has not made an election using the default assumptions and the individual later comes back with new information (for example, you thought they were married but it turns out they are single so a 50% QJSA was incorrect) can you retroactively change the old distributions? Can you change the distributions going forward once you've started if it's an annuity?

Thanks in advance for any help.

Plan allows for changes anytime. They have bonuses every year. Some participants may receive multiple bonuses in a given plan year. The company is setting up a new payroll system and had a question regarding the bonus election.

We know that the participant can elect to have a different amount withheld from the bonsus compared to normal pay. For those situations we have the participant complete a bonsus election form. Those that do not complete this form have the same % withheld from bonus as normal. No issue there.

Does the participant need to complete a bonus election for each bonus?

Can the participant complete a bonus election form, say 1/1/13, which would cover any bonus received for the entire 2013 plan year? The form we have does lists the plan year, so could assume it is for the entire plan year?

Could they complete a bonus election form that would cover all bonuses in the future (multiple plan years)? Would it be as simple as adding simple wording that this is for all bonuses received after this date will have "x" percent or zero, etc.?

I have two employees with identical names. The accounting firm or company (not sure who was at fault as far as the bad information) deducted from the wrong one for 3 months.

How do I take care of the deferrals and match deducted for the employee who had opted out. Do I process redemptions and have the employer

return the deferral dollars minus taxes and used the match dollars as a credit?

How do I make the employee who requested that deferrals begin 3 months ago whole? Must the entire amount (deferrals and match) be paid

in for the employee who became eligible and opted to participate?

We are a financial advising and 401k recordkeeping firm and have been holding on to and filing away the piles of custodian statements we receive each month from our 401k plan custodians. We never use the paper statements because they are available for download online at any time and it is much easier to go online to get them then dig through files.

Is there any law that states we must keep paper copies of statements if they are made available online?

Thanks