We have a 401(a) money purchase pension plan that has a provision for which I'm trying to find the source. If a participant continues working after his/her required beginning date the employer would continue making plan contributions to the employee's account. But the plan has a provision that requires those post-required beginning date contributions to be distributed to the employee by December 31 of the first calendar year following the calendar year of the contribution. Is there an IRC or tax regs requirement for that provision? If so, please supply the cite. We are a governmental employer, if that makes a difference.

Thanks,

Ken Davis

Employer has a phantom stock program for employees subject to 409A. Payout is upon a 409A change in control. However, upon a separation from service prior to a change in control, employer has a 90-day option to repurchase the employee's vested phantom stock units at the then fair market value and pay the repurchase price to the former employee in cash immediately. If employer does not exercise this option, former employee holds his vested phantom stock units until there is a 409A change in control (if there ever is one). Doesn't the 90-day option to repurchase violate 409A, and doesn't it violate 409A even if never exercised?

Plan allows safe harbor hardships.

The participant has medical expenses from 2012 that are not covered by insurance.

When the hardship was submitted to the recordkeeper, they denied the hardshsip stating the IRS requires the invoices be within 3 months or less.

Is that true?? If so, is there a site I can refer to regarding this matter.

I am correcting a missed nonqualified deferred compensation distribution under the IRS correction procedure. Pursuant to the correction, I'm allowed to treat the distribution that should have been made in 2011 as if it had been made this year (it's below the 402(g) limit). We have also decided to reimburse the employee for the 20% penalty.

We are reporting the distribution for the former employee on a 2013 Form W-2. How do we report the amount we're giving to reimburse for the 20% penalty?

Because he is no longer an employee, I'd normally think we'd report on a 1099. But since we're already issuing a W-2, should the reimbursment also go on the same W-2? Should we withhold FICA/FUTA/SUTA?

Hello,

After much searching I need to ask for some help. An employee terminated 20+ years ago. He recently receives a letter from the SSA stating he may have a benefit due under the plan. There are no records dating back 20 year ago from the sponsor or the recordkeeper. The sponsor has no proof he was paid and cannot find any. The sponsor thinks this person was paid out but they just forgot to list him as a code D the following year.

Is there any IRS guidance that says who is responsible for proving the benefit still exists? The sponsor wants to take the stance that the "participant" should prove it. The "participant takes the stance that the employer should prove it.

Any thoughts or references (if there are any) would be appreciated.

Thank you.

There is some discussion and disagreement among some of us as we have seen different firms use different approaches - wondering if anyone can settle these 2 questions:

1. If you are preparing a 2012 Valuation and a participant has a loan payment receivable (due in 2012 but doesn't get deposited at Fund company until January 2013). Do you show the payment receivable in your 2012 Valuation as a receivable and reduce the loan balance by that payment? OR Do you report the loan balance as of 2012 without the receivable payment?

2. It is 2013, you are working on a 2012 Valuation. You notice there is a participant that has incurred a 5 year break in service (as of 12/31/12) who needs to have a portion of their account forfeited. Do you show the forfeiture on your 2012 Valuation, have the Fund Co. forfeit the person in 2013, and then make adjustments to the forfeiture account for the gain/loss in 2013 OR do you leave the person as is on the 2012 Valuation, have the fund company forfeit the unvested portion in 2013 and show that forfeiture on the 2013 Valuation?

TIA

Distributions are processed manually on balance forward plan.... Participant elects lump sum distribution to herself - It's $1200 - Inadvertently, a check is sent to the participant for the full $1200 with no withholding - therefore $240 in required FIT was not withheld - process the 1099-R in January '14 showing full amount taxable with no taxes withheld and move on or work with the participant to obtain the $240 and make the FIT as soon as practicable...

Is a terminated ESOP required to extend diversification rights to terminated employees? Terminated ESOP provided diversification through plan sponsor's 401(k) plan which is also terminated.

Client has a calendar year 401(k) plan. Owner writes a check for $3,500 on 12/31/12 representing his final salary deferral for 2012. This is the amount that will bring his total deferrals up to $22,500 for the year. Unfortunately, the check was intentionally held up and wasn't sent to the brokerage firm until 1/29/13.

Questions:

1. Do we agree that a PT has occurred?

2. Do we also agree that going back and changing his 2012 W-2 and his 2012 tax return would cause a

legal problem?

3. Would doing a DOL VFCP submission take care of "everything?"

4. Would an additional submission of some kind to the IRS be required?

Thanks for the help.

I have a large plan that is split into 5 divisions. My question is pretty basic...when I put employee numbers into Relius can I have employees under different divisions that have the same employee number? I was thinking that Relius is SSN driven for the participants so I should be ok.

There are a number of them though so before I did all the imports and data entry I wanted to check with others.

FYI - what usually happens to me - I answered my own question just after I posted:

I was entering a rehire & tried to put her employee number in. That number was already used by someone in another division & the system said "NO - eenumber already in use"

We have a SH plan that is top heavy. They have only put in the SH match since amending to add 401(k) provisions. This year the CPA wanted to put in a $7000 PS. This contribution amount is not sufficient to integrate. Can we reduce the PS for the owner and his spouse so that all of the non-keys get the TH minimum or can we allocate the $7000 on a pro rata basis and then increase the PS for those who didn't get the full 3% with the prorata allocation and SH Match. I have reviewed the plan document and it only addresses when there is more than necessary to integrate, not less.

We work on a plan that covers two 50% owners of a corporation, no other employees. One owner has not paid himself W-2 compensation in the last two years.

In calculating the 415 compensation limit, should he receive credit for these two years of service in which he was not paid. He worked, but chose not to take compensation.

In other words:

415 compensation limit = 10% x 3-year Average Comp x years of service

Should years of service include the two years in which he did not receive compensation?

Thanks!

disregard

Ok folks - looking for some brains on this one. Just came over to a company and I am trying to do some clean up. the 12/31/2010 PYE Filing had a zero balance and zero participant count EOY. Turns out the 2011 Form 5500 was filed as a zero beginning and zero ending count and a zero beginning and ending balance. 12/31/2012 would appear to be the same way.

As the 12/31/2011 was failed to be filed as a Final Return Report I was going to work with the client to get it amended reflecting a Final Return Report.

But now the client has awoke and is saying he may be having participants once again who will contribute during the current year.

My question is - can a Plan exist for that long with zero participants and zero assets? Trying to keep this client however it seems to long to exist this way.

Any help is much appreciated.

Ray

Participant is age 62. Plan does not allow for any in-service distributions other than hardships. Is the Safe Harbor Nonelective / Match money available?

Company A went into Chapter 7 bankruptcy in 2006. Company A sponsored several welfare plans and a 401(k) profit sharing plan. The 401(k) deferrals were and mostly still are invested on the American Funds recordkeeper direct daily platform. The profit sharing contributions were invested in a single common fund, invested largely in company stock. Shortly before the company failed, several key employees quit (fled?) and were paid their profit sharing distributions in non-company stock, leaving the plan with the soon to be worthless company stock. The bankruptcy trustee, in his role as plan trustee, filed a lawsuit to recover the distributions. Some of the money has been recovered, and a couple of actions are still pending.

The plan cannot be terminated until resolution of the legal actions. The plan is on a prototype document, and we were retained in March 2010 to complete the EGTRRA restatement. The document is currently in compliance. We were also asked to file the delinquent 5500s and to prepare the plan for termination as soon as the lawsuits are resolved. This is where the problems begin. The last 5500 was filed for the 2005 plan year. Thereafter, the TPA, unable to get any cooperation, resigned. Nothing has been done since. We have obtained many of the financial records, but no sponsor data, such as participant census data, etc. has been located. We have come to the conclusion that the material is probably lost, or at least unrecoverable at a reasonable cost. The plan is also in audit status. In brief, the cost of preparing the missing 5500s and paying for the DOL late filing penalties and the plan audits will likely exceed the probable plan assets.

Obviously, the abandoned plan rule would be a major benefit here. However, based on current regulations, since the bankruptcy trustee assumed the role of plan administrator, the plan is technically not abandoned. The DOL, in its December, 2012 proposed regulations, recognizes this fact and expands the Abandoned Plan Program to firms undergoing liquidation in Chapter 7.

Finally, I get to my questions:

1. Is it possible to apply the proposed abandoned plan regulations to this situation? If yes, does it make a difference that the sponsor was in bankruptcy prior to the proposed regulations?

1. If the answer to #1 is no and we have to do a standard plan termination, can we petition the DOL to waive the late filing penalties and audit fees. The problem, as noted above, is that the 5500s would most likely be incorrect and the audits would be qualified.

1. Can a QTA be appointed in this situation?

1. Should the plan trustee throw himself on the mercy of the DOL?

1. Should the plan trustee retain an ERISA attorney?

1. Any other ideas?

Thanks,

Thornton.

Plan has a two part allocation formula. For participants entering plan before 7/1/01, there is a uniform integrated allocation schedule and for participants entering plan on or after 7/1/01 there is a service based allocations schedule (that would satisfy the minimum allocation gateway). Can the two schedules be tested separtately, that is since the integrated formula is uniform, no x-testing necessary, so maybe only the serviced based schedule would be subject to x-testing?? Or am i just wrong and would the allocations need to be tested as a whole? Any guidance/suggestions would be appreciated. Thanks.

Company A is owned by Mr. X (40%), Mr. Y (40%) and Mr. Z (20%)

Company A owns 50% of several other companies. The other 50% ownership of these other companies are comprised of individuals or organizations not affiliated with Mr. X, Y or Z.

Given this, then there shoud not be any controlled groups between Co A, X,Y,or Z, and these other companies, correct?

Thanks very much.

We have encountered this problem a few times. ER in a one-person plan finally contacts us after a few years of not responding and we find that a 5500-EZ should have been filed for one or more past years (assets over $250,000). As an EZ filer, he is not eligible for DFVC.

Any suggestions on how to properly correct this without incurring horrendous late filing penalties? Although we could probably file a 5500-SF and use DFVC, this is probably not the right way to do it.

QDRO states that AP may commence her benefits on or after the participant's earliest retirement date but not later than the participant's normal retirement date. Participant is still active past NRD. We have prepared the benefit package for the alternate payee but she refused to return it. Plan document is silent regarding this issue. What are our options?

1. Start paying her on a life annuity basis (but she may refuse to cash the checks).

2. Wait until participant retires and start paying her with missing payments to participant's NRD (with interest or without interest?).

3. Wait until participant retires and start paying her actuarially increased benefits from participant's NRD to her commencement date.

4. Suggest to plan sponsor to contact participant and AP and request a new QDRO.

5. Other?