Client made a Roth IRA contribution for 2011 in February 2012. Later determined that client's AGI was too high for a Roth contribution in 2011 and recommended the client do a recharacterization of the $6,000 contribution, which was completed prior to filing of the 2011 return. Client received a deduction for IRA contribution (no retirement plan in place).

When completing the 2012 return this tax season, received a 1099-R that shows the full balance in the Roth account (some $30,000) was moved to traditional IRA.

Is this allowed? If so, how to report on the 1040? If it is allowed, I assume the client has basis in the traditional IRA (less $6,000).

Does anyone have any idea the ways cutbacks can be made on employee Cafeteria Plan elections when the plan fails the 55% dependent care test--assuming there are pay periods left in the plan year?

A MEWA that is not an ERISA welfare benefit plan can file one Form 5500 on behalf of all employers who purchase benefits from the MEWA if the MEWA is a group insurance arrangement ("GIA"). A GIA is an arrangement that:

1. provides benefits to the employees of two or more unaffiliated employers;

2. fully insures one or more welfare plans of each participating employer;

3. uses a trust or other entity as the holder of the insurance contracts; and

4. uses a trust as the conduit for payment of premiums to the insurance company.

See DOL Reg. 2520.104-43 and 2520.104-21.

I'm trying to figure out what kind of trust must be used (numbered paragraph 4 above) in order for an arrangement to qualify as a GIA. Can the trust be a taxable trust, or must it be a tax-exempt trust? For what purpose must the trust be established? It is only for accounting purposes?

Any insight or thoughts are greatly appreciated!

The plan sponsor has two plans, a money purchase plan & a 401K plan. The employee is a participant in both plans. Each plan allows for loans and the limit of each plan is one loan at a time.

I understand that the $50,000 limit applies to both plans being treated as a single plan. Participant can only take a loan of $50,000 combined from both plans (not $50,000 from each of the two plans totaling $100,000).

Since each plan only allows for one loan at a time, would both plans be treated as a single plan limiting the number of loans to one total from both plans?

Plan sponsor considering terminating an underfunded DB Plan subject to PBGC. Owners are interested in waiving part of their benefits so they can file standard termination. The issue is that each of the 4 owners owns less than 50% even through attribution. What about providing an option to one of the owners. For example, say one 25% owner has the option to purchase an additional X shares where if purchased would give that owner an additional 30% share for a total of 55%. Is the "right" to buy the shares (without restriction) enough to deem majority ownership? Would that "majority" owner then be able to waive part of their benefit?

Thank you!!

I know a greater than 5% owner must take an RMD from a SEP IRA while still working and having reached age 70.5, but can they continue to make contributions?

Are non-electing church plans exempt from spousal consent required to designate a non-spouse beneficiary?

Hopefully this is a dumb question with an easy answer (regardless of whether it's the desired answer or not):

If a plan has filed their Form 5500 late but without going through the DFVCP program, can you still resubmit under DFVCP, pay the applicable penalty amount and get in under DFVCP if you file before the DOL notifies you in writing of a late filed return? In this case, the plan has just received a letter from the IRS but nothing from the DOL. The DFVCP guidance says you are eligible if you haven't received a notice from the DOL and doesn't appear to say anything about excluding those that have already filed their Form 5500 and want to file an amended return or otherwise try and put under DFVCP.

Thanks for any thoughts or suggestions.

The general rule is that the QJSA must be at least as valuable as any other optional form of payment. The only exception is when the 417(e) factors, standing alone, cause a lump-sum to be more valuable. We've come across a plan that grandfathers a lump-sum for all pre-89 service. It's more valuable than the QJSA for the same service, but not because of 417(e)--it's because the lump sum is calculated with an early-retirement reduction factor that is twice as favorable as the ERF for any annuity form. I guess whoever drafted it took the position that the most-valuable rule simply doesn't apply to pre-89 accruals.

It looks like the most valuable rule first appears expressly in the 1988 batch of regulations that added it to Q&A 16 of § 1.401(a)-20 and to the definition of "QJSA" in § 1.401(a)-11(b)(ii). Those regs were generally effective for plan years beginning on/after January 1, 1989. To my ear, the Preamble to those regs makes the most-valuable rule sound like a continuation of a previous IRS position, and of course the statutory definition hadn't changed after REA. Has anyone heard of an option to grandfather pre-89 benefits against application of the most-valuable rule?

Cheers,

Ü

I am contemplating retirement and the sale of my TPA practice.

How is this type of business valued? I realize there are many variable including transition issues, down payment, equipment included, etc. There are firms that value CPA firms which are similar, however different. Are there a firms that are more familiar with TPA firms?

Small 401(k) allows for Self Directed Brokerage Accounts

HCE 1 Owns Business that has 401(k) and also an LLC (That lends money for business start ups)

HCE 2 (over 5% owner of ER sponsoring the 401(k) (also a trustee of 401k plan wants to take part of his SD Account in invest in LLC owned by HCE 1, which is a loan that pays interest only and then principal after 5 years.

Broker does not think its a Prohibited Transaction as the loans are to other companies.

Prohibited Transaction????

Thanks

P

Participant A was 'a key employee' for 2011 and passed away during 2011.

Participant B (also a key employee) is the beneficiary for Participant A. They are husband and wife.

Both participants were participants in the same plan.

Partcipant B rolls the distribution in 2011 from Participant A's account to his account in the current plan. Is this distriubiton considered a 'related rollover' or unrelated rollover? I am raising this question as how the rolloer will influence on top heavy testing.

Thanks.

I the past we have always file a 5500-EZ, regardless of the amount of plan assets.

Last year one of the clients forgot to send his in. No harm under 250,000.

We are rethinking whether or not we should file this client this year 2012 or just not file at all until the final return.

Also looking at the few other ones under the 250,000 asset value to determine if we should file this year or just stop filing.

What are the rest of you doing?

Thanks

Pat

We have a prospective client.

The client is a Controlled Group consisting of Company A and Company B.

Company A has over 80 employees. Company B has 20 employees. Client would like to offer a 401k plan to company A and company B but wants to provide a safe harbor match to Company A only.

The plan will pass coverage on the match with the employee count that currently exists.

Is this ok? In other words can a safe harbor plan exclude employees, other than statutory excludables?

Thanks

The questions that came up are with regard to a small, frozen, DB plan. There are terminated former employees who have elected not to receive their benefits yet. How often is the plan required to provide benefit statements, both automatically and on request?

It appears that under ERISA 105(a)(1), the automatic "every three year" EBS is required only for EMPLOYEES who are participants. It also appears that this requirement may be satisfied by proper notification, at least once per year, of the AVAILABILITY of an EBS.

But specifically with regard to a terminated participant, although it appears they must receive an annual funding notice, it does not appear that they must automatically receive an EBS. However, under ERISA 105,it appears that a participant or beneficiary may request, in writing, an EBS, and that they are entitled to only ONE per year under ERISA 105(b). Furthermore, under proposed regulation 2520.105-2©(2), it appears that IF the benefit information has not changed since the last statement furnished upon termination or break in service, no additional statement is required to be provided.

Agree/disagree?

Assuming you agree with the above, what is the required content, and IF a Plan Administrator agrees to provide a benefit calculation more than once per year, may the participant be charged for the extra calculation?

With regards to the charge, although 2520.104b-30 prohibits charges for disclosures REQUIRED under 105(a), since only one statement on request is REQUIRED, then I would conclude that charging the participant for any extra calculations would be permissible. Thoughts?

As to the content - I'm not sure on this. For example, if the plan permits lump sum, life annuity (normal form of benefit), Jt. & 100, 75, and 50%, must the mandatory annual statement furnished upon request provide payments under all these options? Under ERISA 105, it must provide "total benefits accrued." Under proposed regulation 2520.105-2(d)(5), it does not appear that the statement must provide the benefit amounts for alternative forms, but must contain a statement referencing this and referring them to the SPD. And must any extra statements provide them as well? As a practical matter, if you are going to charge the participant for the extra statement(s)m there shouldn't be a problem with providing the additional option payment amounts, but I don't know that it is required.

However, if a participant is actually electing to take a distribution, then clearly the distribution amounts under the various options must be provided.

I'd appreciate any thoughts or comments. Thanks!

P.S. - one final question: Suppose a participant comes in and says, "I want to take a distribution." So the Plan provides, at no charge, the various payments under the options available. Once having received this, the participant says, "I've changed my mind." How could this be handled? Could the Plan Administrator say, when the initial request is made, "There is no charge for you to receive quotes on the payment option for your distribution, but if you then decide not to take your distribution, we will bill you $250.00?" Alternative solutions?

Company wants to establish a 401(k) as they feel it would be cheaper and offer better investments. If the plan relinquishes control over existing annuity contracts, are the account balances of the contracts as of that date, perhaps the date of resolution to terminate, used for distribution reporting on the 5500? This is a small plan where all the contracts are easily identifiable.

Does the ACA require ANNUAL notification or just the first time a participant enrolls? The IRS brochure mentions that an EACA is similar to the ACA plan but has specific notice requirements. It does not specifically say that the ACA requires annual notification. Any confirmation is greatly appreciated!

I own and am the only employee (W2 pay) of a C Corp which administers a solo 401k of which I particape and which allows in-service withdrawals.

I will be turning 59 1/2 soon and would like to know my options and the forms I will need to file particular to the option(s) I act on.

I'm thinking of continuing to work for my company, but possible take a distribution from the 401k.

Can I move part of my 401k to my Traditional IRA while still working for the company? If so, what forms would I need to file and what would go on the W2 and where?

A plan requires that your deferral rate be at least 3%. (So, you can't defer 1or 2%) Is this ok or would it need testing? If testing is needed, I am assuming BRF, but how would that be run?

I have a client insisting he should be able to do a Roth Safe Harbor and make Safe Harbor POST-TAX contributions. I have explained that his plan is set up as a Roth 401(k) Plan and it has a Safe Harbor feature. He is taking advantage of the Roth Deferrals. I have explained that the government does not allow the employer to do Post Tax contributions. He now wants to see something in writing stating that employers cannot do post tax contributions. Any assistance or direction to the verbiage is greatly appreciated.

Thanks