Three IRS phone forums scheduled for February 2013

http://www.irs.gov/Retirement-Plans/Phone-Forums-Retirement-Plans

Ethical Standards for and Accountability of Practitioners Offering Tax Advice Relating to Employee Benefit Plans - February 13, 2013

Employee Plans Compliance Resolution System Changes - February 21, 2013 - Session #1 - (Morning)

Employee Plans Compliance Resolution System Changes - February 21, 2013 - Session #2 (Afternoon)

Overview of the 2012 Cumulative List of Plan Qualification Changes - February 28, 2013

A plan has 10 HCEs. Total refund needs to be $5000.00. Our software (DATAIR) suggests $500 to each HCE (all maxed out). Are we allowed to refund the entire $5,000 to a signle HCE if that's what the company & individual wants? (There is an owner & wife who both maxed out - Wife is willing to take the full $5,000 refund).

Has anyone ever heard of a one-time election to change the form of distribution in a DB plan after payments have already commenced (i.e., changing from a J&SA to a single life annuity)? The plan provision allowing for this requires spousal consent and proof of good health of the participant (among other requirements). Is this type of provision allowed under the Code? I cannot find anything stating that it is not allowed, but the actuary and I have never seen anything like this before. Any comments or help in locating guidance one way or the other is greatly appreciated.

I know the automatic cash out and rollover rules get confusing, and to make matters worse, I just studied for and passed ERPA-SEE Part II, so now I have just enough knowledge.

Anyway, we have 401(k) with auto rollover limit at $5,000 and a LOT of terminated participants they have not been able to contact. I know participants with over $5,000 must be left in the plan. But my ERPA studies said that the automatic rollover can only be done before the later of age 62 or NRA (NRA per plan is 65). We have a couple participants who are already age 65.

But then the Adoption Agreement says something about involuntary cash-out above $5,000 is deferred until required beginning date.

I would appreciate any enlightenment that can be provided on the topic. Thanks.

This plan's eligiblity is 1000 hours, age 21, 1 YOS. The Eligibility Computation Period uses the Hours of Service Method, a 12 consecutive month period beginning with an Employee's Employment Commencement Date and each anniversary thereof. It does not switch to the plan year as do all of my other plans. An employee is hired 6/1/2005, terminates 6/1/2007. He never works 1000 hours and does not enter the plan. He rehires on 4/8/2011. What do I use for his anniversary date to determine if he has met the 1000 hour requirement? His original hire date of 6/1 or the most recent hire date of 4/8?

Assume neither buyer nor any member of buyer's controlled group sponsors group health coverage. Buyer enters into a transaction with seller such that, under the COBRA rules, buyer is responsible to offer COBRA to M&A qualifying beneficiaries. Is buyer required to purchase group health coverage in order to offer COBRA to M&A qualifying beneficiaries?

Thanks, in advance, for any help.

Is a DB plan "required" to offer "non-spouse" beneficiary distribution option (e.g. 50% J&S) or is it discretionary?

Thanks.

403 has immediate eligibility for deferral purposes, but a 2 year waiting period for match. Let's say 125 are eligibile to defer but only 100 are eligible to receive a match at plan year end. Would an audit be required? My thinking is if the plan only had employee deferrals it would not be subject to ERISA, therefore no audit requirements. Thanks.

A terminated participant in one of the Plans I manage, recently received a 'Notice of Levy' from the State of Massachusetts. I didn't think States could levy Qualified Retirement Plans. Anyone have any experience with this? If this is allowed, are there any exceptions?

If there is a parent company A that owns 100% of the stock of B and where B then owns 100% of the stock of C, it is clear that A,B and C are all members of the same control group as a chain of parent-subsidiaries. If there is a reorganization where the stock of C is distributed out to the 40 shareholders of A (I think this is referred to as a split-off?), at the end of the transaction you will have A still owned by the same 40 shareholders and C will be owned individually by the same 40 shareholders. I believe that this would be considered a mere change in form with no withdrawal liability trigger. Am I correct in my belief that A and C will not be members of the same control group after the reorganization since they are no longer parent-subsidiaries and are not a brother-sister group since (assuming this is correct) 5 of the 40 shareholders (even assuming the application of the attribution rules) do not own at least 80% of A or C? Thus, after the reorganization C will not be potentially liable for A's future withdrawal liability? I understand that a pension fund may argue that the transaction has a principal purpose to evade or avoid liability. Does the exclusion of certain interests in determining brother-sister groups apply under Regulation 1.414©-3© so that if any of the 40 shareholders of A and C are employees of either A or C and their stock is subject to restriction on the employee's right to dispose of the stock which run in favor of A or C (assuming that the same 5 or fewer shareholders own at least 50% of A and C)? If one of the shareholders of A and C is not a person (for example, is a corporation) is that interest likewise excluded in making the brother-sister determination. Thanks for your help, it has been a while since a had to dive so deeply into the control group rules.

I have more medical expenses than my budget can handle and I'm considering taking a hardship withdrawal from my 401k. For tax purposes, would it be possible to deposit the money directly into my HSA? I haven't found anything online that says yes or no either way.

BofA took out a $50 fee from the funds in my Roth IRA when I had it transferred to a Vanguard Roth IRA. I called BofA as they did not tell me beforehand they would be doing that (in 3 phone calls to them to go over the procedure beforehand, I had asked them if there were any fees, to which they said no.) BofA is refunding the whole amount into my checking account as my Roth with them is already closed.

My question is this, does the IRS look at that $50 as a dispersment of funds? Does BofA report it to them? Do I have to deposit the $50 from my checking into the Vanguard Roth IRA or can I just let it be?

Thank you.

The proposed regulations on the employer shared responsibility clarify that employers must cover the dependents (i.e., children to age 26 but not spouses) of FT employees. But the penalties under both 4980H(a) and (b) only apply to the extent that the employer receives a Section 1411 Certification that a FT employee obtains a subsidy/credit for obtaining coverage on the Exchange.

Despite the coverage mandate, it is still not clear to me that there is any penalty if an employer provides affordable coverage to all its FT employees but not to their dependents because no FT is eligible for coverage on the Exchange.

What am I missing?

Are the following correct:

Employers have to count union employees when determining their responsibilities/penalties under Obamacare?

The union H&W plan has to provide minimum health benfits, have 60% minimum actuarial value and be affordable to enable the employer to avoid penalties?

Thanks

Plan has 3 NHCE's:

1 Is Otherwise excludable and gets only Safe Harbor 3%

1 is a terminated non-highly getting only the gwm

1 is a full-time active NHCE getting enough PS to pass testing.

How do I apply the limitaiton on the number of allocation groups? If 3 NHCE's the limit is 2; if 2 NHCE's, the limit is 1 rate. But should providing the GWM be counted as an allocation rate? Should the Otherwise Excludable participant (whom my document permits disaggregating for testing) be considered an allocation rate?

Good Afternoon,

Our plan has a historical frozen 401(k) that allows for loans and a currently active 403(b). We became a non-profit some years back.

My questions is this - If a person takes a $50,000 loan on the 403(b), should they then be able to take an additional $50,000 loan on the frozen 401(k)?

It seems our recordkeeper's system allows for this, and my understanding is $50,000 was the maximum loan between all employer's plans, and not by themselves. Please correct me if I'm wrong.

.

I have a participant who wants to start taking a monthly distribution from his 401k to cover his RMD for 2013. The participant is not 70.5 until July. Is their any issue with starting the RMD earlier than 70.5 or no because he will be 70.5 during the plan year?

Is some of the interest on deemed loan taxable when account is all paid out? I think interest is still accumulated on the loan after it is deemed. Am I right on this?

If a loan plus interest was $20,000 when deemed, then Taxes were paid on $20,000. If the loan "grows" to $25,000 by the time the Participant retires and the account is paid out, will taxes have to be paid on the other $5,000?

I have a client who owns an insurance policy for an employee and wants the 401(k) plan to take possesion of the policy. Is this allowable (assuming the plan allows for insurance)?

What would need to be done if this is even allowable? What steps must be taken to insure compliance?

Does anyone know if a Model Annual Funding Notice that considers additional disclosures for MAP-21 is forthcoming??

Also, it looks like one of the additional disclosures is the minimum required contribution under MAP-21 and pre-MAP-21 provisions. For plans on MAP-21 does that mean that a pre-MAP-21 faux psuedo funding standard account will need to be kept from year to year for AFN purposes??

Thanks.