One of my clients is looking to split their annual recordkeeping fees, which their participants pay, by active and terminated employees. The question the client has is can those fees be different meaning $40 for actives and $50 for terminated participants? Would that be discriminatory in nature?

I can find references that show US Qualified plans of US Corporations can accrue benefits based on foreign income (for US persons) even if paid in the local currency.

What I have not located are any code sections or regulations addressing this issue. I have spent over two hours on BNA trying to use the search function to find this. Of course, I have trouble with ALL search engines - even GOOGLE!

Does anyone have a clue as to what code section(s) might cover this?

Thanks all.

Owner of S-Corporation that is only two years old wants to set up a SEP IRA and make contributions for himself, but not his employees. The owner argues that this is possible because the employees have not yet been employed for 3 of the last 5 years. Then, after the owner makes these contributions to the SEP IRA only for himself for as many years as he can, he wants to transition the SEP IRA to a Simple IRA and continue to make contributions for only himself. Is this permissible? Is there any IRS guidance on this?

It is my understanding that a ITG is not eligible to participate in a 457(b) plan. Therefore, as they are covered under 414(d) and can have a Governmental Plan, could they have a 414(h) pick-up feature in their 401(a) plan.

Participant has an account balance of $70.00 and TPA charges $75.00 for a distribution fee. TPA wants to wipe out account and have the remaining balance sent to them as a fee for distribution. Is their really a distribution fee to be charged? I have found no IRS guidance on this nor a De minimus amount .The distribution was not initiated, no notices to the participant and not disclosed as such in the Fee Disclosure Statement. Under audit would the IRS ask for the money to be put back with earnings? What would be the correction? Or is this the norm and it's ok to process the transaction?

So the plan contact had an outstanding loan that he received a 1099R for in January from American Funds, as he was not making loan repayments. Apparently (he says) when the plan moved over to my new employer and to a new carrier (AF), "somehow the loan repayments for me stopped" and for another person he mentioned. He wants to know if he can start repaying the loan. My answer would be no, since he received the 1099 already and the info was submitted to the gov't back in February; I don't think there is a way to "undo" the default...or is there?

Plan is a defined benefit plan. Participant had 16 years of service with the Plan, so he is vested. He and his wife were divorced in July, 1987. A DRO was filed with the Domestic Relations Court (state = Ohio) at that time giving Alternate Payee $85.00/month beginning July 1, 2003. That was when Participant would be 55 and eligible to retire under the Plan.

As far as we can tell, that DRO was never sent to the Plan Administrator to judge whether it was a QDRO or not. At least, it wasn't provided to the Administrator until last week. The Participant left the Plan in 1990 when he took other employment. He is going to be 65 this July and is looking to begin his benefit with the Plan.

So, my questions to my fellow board members are as follows:

1) Has anyone ever experienced anything like this? If so, what did you do?

2) Is there any time limit on turning DROs over to a Plan Administrator? I don't believe there is, but who knows if there's some goofy ruling out there saying there is.

3) Assume that the terms in the DRO are acceptable, thereby making it a QDRO. Is the Plan required to make a lump sum payment for all the payments it "missed" since 2003 even though the Plan didn't even know it was responsible for those payments until 2013? My inclination is that, if the DRO is a QDRO, then the Alt. Payee is entitled to all those benefits, not just from this point forward.

Thoughts? Thanks.

Hello,

A sponsor has two plans covering different companies. Plan A has been in existence for 3 years, and Plan B is new in 2012.

For the 2012 Plan Year testing, both Plans have to be permissively aggregated for coverage, and non discrimination testing.

Both Plans use prior year testing method. Since the Plan A has been around for a few years, the prior year testing percentage is known, but I am not sure what percentage to use for the Plan B to come up with the Weighted Average for the combined plan.

Plan B's document says the Plan uses 3% rule for the first year.

I appreciate your time and response.

Thank you.

ML

The employer has 5 locations (retail). Each is filed as a separate Schedule C for income tax purposes. What is it that determines which entities need to actually become participating employers by separately adopting the 401k plan? Is it because each has filed a separate Schedule C as opposed to combining the entities as one?

Does anyone know if there are any provisions stopping a participant from taking out a 401k loan to purchase a property abroad if they provide a purchase contract? I have a participant wanting to purchase a property in Poland. Thanks for the help!

Document/Adoption Agreement was drafted by prior TPA. It was on a non-standarized 401(k) prototype.

I have two questions:

1. Client comes to us, the new TPA, to administer the plan. I would suggest the plan be restated onto our prototype document. Client wants to wait until the new restatement that will be required in 2014. What does this do to their document? I believe it is now an Individually Designed Plan. Does that mean they need to apply for a determination letter?

2. Adoption Agreement lists the client as an Corporation. Client tells us that their business entity is an PLLC. Should the AA be corrected?

Plan year is 01/01. Employee acquired 6.2% ownership at the end of the business day on 12/31/2011. I know the employee would be HCE for 2012 but what about 2011. I know the ownership definition states:

The employee owns more than 5% of the employer at any time during the current plan year or during the 12 months preceding the plan year.

But since this employee acquired the ownership at the end of the business day on 12/31/2011, did he really have any ownership in current plan year (2011)?

Any thoughts?

Roughly 65% of employees are in the self insured plan

and 35% are in the insured plan. It looks like the plan fail

the first two discrimination tests and the employer has no

real worker classification to fall back on for test 3.

For the past ten years, the employer has been paying much less of many of the non highly compensated employees health premiums

in the insured plan relative to highly compensate employees in the self insured plan.

Any problems for the employer?

Thanks,

Ty

Can someone clarify on the timing of deposots for self employed individuals to their SIMPLES.?

I am self employed and usually extend my tax return. I never know what amount I will contribute until I do my return in the summer.

Therefore I do not make any contributions usually until the summer ( "deferrals and match " ( however for self employed the funds all are the same really ))

THanks for the input.

King Ozymandias of Assyria was running low on cash after years of war with the Hittites. His last great possession was the Star of the Euphrates, the most valuable diamond in the ancient world. Desperate, he went to Croesus, the pawnbroker, to ask for a loan.

Croesus said, "I'll give you 100,000 dinars for it."

"But I paid a million dinars for it," the King protested. "Don't you know who I am? I am the King!"

Croesus replied, "When you wish to pawn a Star, makes no difference who you are."

Who knows how many years from today we'll be using pre-approved plans, but at least it now exists...

http://www.irs.gov/pub/irs-drop/rp-13-22.pdf

Provided below is an abbreviated breakdown on how to calculate the "tesing comp" for a particpant in a partnership. I have included numbers for example purposes.…

Step 1 - Take K1 Wage (disregard partner portion of the nhce ps...assume that is zero) - $183,137.21

Step 2 - Back out URBE - $6,590 ($176,547.21 net)

Step 3 - Calculate ½ SE Tax on net amount in Step 2 - $9,190.30 ($167,356.91 net)

Step 4 - Back out personal PS - $7,969.38 ($159,387.53 net). Partner received a 5% profit sharing contribution.

Step 5 - Equals “testing comp” - $159,387.53

A portion of the $183k included non-taxable life insurance proceeds of $11,099.35. My question is how does the $11k impact the calculation?

A) Do I simply reduce the $183,137.21 by the $11,099.35 in Step 1 and then continue with Steps 2-5?

B) Would I only back out the non taxable portion for purposes of the ½ SE Tax calculation and then add the $11k back for the plan comp?

C) Include the $11k in the $183k since the $11k is only not subject to Federal Tax and is subject to Social Security and Medicare Tax.

I am trying to help a friend use some of his and his wife's IRA money to buy land. There would be no debt and I can help him avoid the pitfalls - UBTI, UBDFI, PT.. What I don't know any longer is a good IRA custodian to advise him to use. I looked on YELP and didn't see good things about Pensco.

Does anyone know a "good" IRA that would hold the real estate? "Good" here means, would meet whatever the legal requirements are but be a good value - not too expensive. The couple has been out of work and needs to limit their expenses.

Thanks -

Craig Schiller, CPC

Does anyone know whether the exemption under the 1933 Act covers former employees who are still participants (because they still have an account balance)? The plan (which does not offer employer stock) accepts such contributions by these participants, but I am unsure whether the securities exemption also applies to former employee.

Any thoughts would be very much appreciated.

Client has a SERP plan where executives are deferring compensation on a voluntary basis. The Plan's definition of compensation was amended to include these deferrals in the plan's definition of comp because otherwise, they would miss out on the regular match applicable to their 401k contributions.

When I run a 414(s) test, the additional comp for the HCE's is clearly de miminis (100.5 vs 100). But...

From the 414(s)-1 regs:

(d) Alternative definitions of compensation that satisfy section 414(s) —(1) General rule. In addition to the definitions provided in paragraph © of this section, any definition of compensation satisfies section 414(s) with respect to employees (other than self-employed individuals treated as employees under section 401©(1)) if the definition of compensation does not by design favor highly compensated employees, is reasonable within the meaning of paragraph (d)(2) of this section, and satisfies the nondiscrimination requirement in paragraph (d)(3) of this section.

In my case, the SERP is available exclusively to HCE's (not by definition, but of course it would be very rare for one of the executives to not be considered an HCE). So I think that under no circumstanc can I call this a 414s definition of comp. Does everyone agree? It's not a problem, because obviously I will pass the general test on the profit sharing (everyone gets the same %age, and the HCE's on average get only a tiny bump), and I have plenty of room on the ADP/ACP test. I just want to know which tests to run and which definition of comp to use.