Participant was a greater than 5% owner. Participant did not turn 70 ½ until December 30, 2012 at which time he was no longer an owner. He resigned as an owner on December 26, 2012. i believe he would still have to take the RMD for 2012 because he was a 5% owner during the year. anyone agree or disagree?

Hi folks, it took me a while to notice (almost 10 years to be exact), but I have noticed a huge mistake made by my IRA custodian for one of my IRA funds. The IRA was made in 2003 for the 2002 tax year, and I contributed the maximum allowed, $3,000. It was supposed to be established as a Roth IRA, but all this time it has been structured as a Traditional IRA. I have proof that it is their mistake because I have a copy of the contribution form marking it as a Roth, and when I called up the custodian, they acknowledged it was their mistake.

I first spoke with the custodian February 1st, and haven't heard back from them since. I have called a few times, and they say they will contact me when they find a solution. Understandably, this appears to be a very difficult issue for them, but I'm a little concerned that I'm being ignored, as I only have about $5,000 in the fund. All my IRAs are Roths, spread out among several funds, and I very much prefer Roths so that I can withdraw the earnings tax free at retirement, or possibly withdraw from the principal without consequence if necessary, both of which I cannot do with the Traditional IRA. True, I could just leave it as is as a Traditional IRA, but I never took the necessary deduction in my 2003 tax return. Without the benefit of a deduction, I have no incentive to leave it as is as a traditional IRA!

Has anyone run into a similar situation? I feel foolish that I had not caught this mistake sooner, as it was basically staring me in the face on the fund's website all this time, but I need to correct this soon.

I am unemployed with no income at the moment, and imagine I will be for the near future, so the possibility of taking the missing tax deduction this year or next is not feasible. Is there any possibility I could file an amended 2002 tax year return to retroactively claim the missing deduction? And this is assuming the IRA stays traditional. If they were to correct this issue by converting it to a Roth, I would then be stuck paying taxes on the contribution amount, even though it was supposed to be setup as a Roth in the first place with my after tax dollars!?!?!?!? Since it's the administrator's mistake, shouldn't they eat the loss and reimburse me if I have pay the taxes to the IRS to convert to a Roth, or if nothing can be done, they could reimburse me the opportunity costs of not taking the deduction in my 2002 tax return.

Anyways, this is a rather complex situation that I hope to resolve in a timely manner, and I look forward to your expert analysis!

owner wants to borrow Roth money with high rate of interest. thoughts on max rate that could be charged?

Can it still be done? I know prior to electronic filing it was permissible. The plan sponsor is having difficulty getting distribution paperwork from TIAA-CREF

I'm seeking support for IRS relaxation of the 90 day limit on the administrative period to allow 3 calendar months (allowing an October 1 to December 31 administrative period for example)

Commenting is quick & easy, go to regulations.gov and search for 4980H, takes less than 5 minutes

Thanks

I have taken over the administration of a leveraged ESOP for a S-Corp. The ESOP was set up to pay out a partner with a 5-year loan which ended in 2012. The problem is that the loan payments from the very first year were more than the deductibility limit. The previous administrator 'solved' this problem by allocating released shares up to the deductibility limit and then allocating the remainder of the shares as dividends. The number of shares used as dividends were greater in most plan years than the number of shares allocated. I've done research, but cannot figure out if this is an allowable solution. Any ideas?

I found out, a couple days ago, that an employee received a hardship withdrawal last year and the HR department failed to suspend the deferrals. The plan administrator inisists that I refund the ineligible prior year deferrals. I asked the plan administrator to refund the employee directly and issue him a 1099R. The administrator said that for this type error, where the deferrals were ineligible, the employer should process the refund. Should I just process the refund, which would mean issuing the employee a corrected W2(I haven't file them with the SSA), filing Form 941X, filing an amended Form 940, or continue to insist the plan administrator process the refund and 1099R?

New company formed and first payroll period commenced 7/1/2012.

Company adopted 401k PS plan effective 7/1/2012.

Are these correct:

415 limit not-prorated (still $50,000 + catch up)?

401(a)(17) comp limit is prorated ($125,000)?

Thanks

Has anyone ever seen a multiple employer plan change into (convert - however one describes it) a multiemployer plan (with all the accompanying requirements - joint board, etc.)? Is this even possible?

I understand that regulatories have denied that a multiemployer plan who is down to one employer can convert itself into a single-employer plan. Reasoning being (I understand) - you are what you are. (Help, right?!)

Anyhow, I'd appreciate hearing about whether the change from a multiple to a multi is possible, and if so, whether anything special is needed to effectuate such a change.

Plan is switching new recordkeepers. Plan has existing loans. The new service provider is telling plan sponsor that they can reamortize the loans unilaterally rather than just continuing existing loans as is. I've never seen this before and can't find a basis for it. The new recordkeeper can't really provide me a basis for that conclusion except that it can be done. Can anyone provide me a basis for allowing a reamortization?

Part III of Schedule H requires attachment of the auditor's "opinion"

The opinion is just the signed first page of the auditor's "report" which goes on to include the statement of net assets, statement of changes, footnotes, etc.

I've seen instances where the 5500 preparer/filer only attached the opinion and not the entire report.

Is this legal/permissable?

Thanks

A participant age 63 wants to get an in-service distribution and roll it over to an IRA in 2013.

The plan document allows for in-service distribution after age 62.

Question:

Can the participant take the entire "Lump-Sum" value of the vested accrued benefit?

Or is the in-service distribution restricted to the amount of the (annual) vested accrued benefit?

Single employer plan; affiliated employer transfers into plan 01/01/2012... then decides early 2013 to disassociate from the plan.

Affiliate came into plan with 6 yr graded vesting, changed those coming into plan 1-1-12 to 3 year cliff.... Then the disassociation of this affiliate employer is not a partial plan termination Would the forfeitures from the terminated affiliated employer employees stay in the plan trust or move out with the affiliated employer?

Plan does not allow for loans anymore (it used to). Can the plan allow for refinancings of existing loans?

I received a question from one of my clients and was wondering if someone could assist me in providing a response back to the client. The heart of the question is, can the client continue to make the profit sharing contribution for 2012 earnings and the 2012 plan year and still deduct the contribution from their 2013 tax return instead of 2012?

Below is additional information that the client forwarded to me.

As a follow up to our phone call, we wanted to pass along some information regarding the potential deferment of the 2012 accrued profit sharing deduction to 2013. In order to defer the payment of the 2012 accrued balance at 12/31/2012 to a 2013 deduction, the company should designate in writing to the plan trustee that the contribution is on account of the 2013 taxable year of the employer. Doing this, would push the deduction from 2012 to 2013. This would mean that on the 2013 return, there will be the 12/31/2012 accrued balance deducted in 2013 and the accrued balance at 12/31/2013 paid in 2014 will be deducted on the 2013 tax return.

There is a limitation out there for 2013, that being the 2013 “double deduction” (the 2012 non-deducted portion and 2013 accrued deduction). The total of these cannot exceed 25% of W-2 compensation of the participants for 2013. I am assuming this will not be an issue for the company, but wanted to inform you of this limitation.

Is it permitted for a full time life insurance agent who is classified as a statutory employee of the life insurance company that employs him & receives a W2 as a statutory employee consider this as earned income for a SEP plan he wants to establish as a sole-proprietor? My initial response is yes because of the exception for life insurance agents that treats their income as self-employment income. Normally, W2 income is not considered earned income for self-employment.

A small C-corp bank maintains an ESOP. They have been considering changing to a S-Corp and are interested in knowing what affect this could have on their plan. Outside greater scrutiny by the IRS and/or DOL due to pass through issues, what other pitfalls could they face? Would the benefits of changing to an S outweigh their current structure as far as their plan is concerned?

When the DOL turned open MEPs into separate plans for 5500 and audit purposes last May they didn't say "when" their position became effective (retroactive, starting with 2011 or 2012 or other?)

Does anybody know what any of the big open MEPs are doing?

Thanks

I have a 401(k) profit sharing plan that uses an age weighted formula. Plan has deferrals and Profit Sharing.

If I understand it correctly, I do not have to pass the gateway test because of the age-based allocation rates.

The profit sharing requires 1,000 and LDR, I am passing coverage at 103%, so is it correct that I do not need to do the average benefits test?

Under 401a4, the plan is passing under rate group testing.

Is the plan passing non-discrimination testing as long as it passes the rate group testing under 401a4?

When I run the average benefit test in Relius it is failing becasue of including the deferrals.

Just would like confirmation that I am thinking correctly, or totally missing the boat!

Thank you

We are tpa for Co. A 401(k) plan.

A health insurance company incorrectly told Co. A's employees that the insurance co. that they could reduce 2013 deductibles by medical expenses paid in 2012. In an attempt to make things right the health insurance company is going to pay the employees the amount of their unused deductible in 2012. They cannot pay the employees directly. Thye pay the employer who in turns pays the employees. The employer has determined that this will be run through payroll (similar to a bonus) and included on the W-2. (That doesn't seem correct to me, but it is not really somehting that we can advise them about.)

Given that the employer is treating this as W-2 wages should the employees be allowed to defer to the 401(k) plan? Just given the way the employer has decided to treat this it seems to me like this will be treated the same a s a bonus payroll.

Thanks in advance for any guidance.