Company A, owned by 3 people, 33% each.

Company B owned 100% by Company A

I'm thinking Company A and Company B are a controlled group. I have someone telling me it is not a controlled group. Am I totally wrong?

A pension plan pays the benefit due each month on the last day of the month. When a retiree dies, his last check is issued instead to his beneficiary. Plan benefits include after-tax contributions.

Is the retiree or the beneficiary taxed? How should the plan handle 1099-R reporting and withholding?

Thank you.

The American Taxpayer Relief Act of 2012 restored parity between the monthly limit for mass transit and qualified parking, retroactive to 2012. How can an individual retroactively take advantage of this change in filing his/her 2012 federal income tax return? Is it based on the actual amount paid for transit up to the limit and can the individual claim a tax credit for the difference. Assume an employee participated in his/her employer's qualified transportation fringe benefit program during 2012, electing a mass transit pre-tax amount of $125 and that his/her mass transit fare exceeds even the $240 adjusted limit. If the monthly fare were equal to $250 and the individual elected $125 in pre-tax amounts and $125 in after-tax payroll deductions, could the individual claim a tax credit equal to the FICA and federal income tax withheld on the additional monthly $115 s/he is now able to claim retroactively?

This is probably going to sound like a crazy question. If a 403(b) plan sponsor adopted a written plan document in 1999, but hasn't adopted any amendments since the plan was adopted in 1999, can they submit under the new EPCRS for failing "to adopt a 403(b) Plan in accordance with the final regulations", or is the availability of that correction procedure limited to those who NEVER adopted a written 403(b) plan document until after 12/31/2009? See, told you it was crazy.

Here's the situation:

Defined Benefit plan, was always an IDP, received prior determination letter in 2009. This is a Cycle B filer as an IDP, so would be required to refile under Cycle B by January 31, 2013.

However, the employer recently adopted a pre-approved Volume Submitter document,and made minor changes to the language that will require filing on a 5307. There really are a couple of questions:

If submitted for a d-letter by January 31, will the IRS accept it, or will they return it as an "off-cycle" request?

If they can't submit now, what is the applicable filing deadline?

And of course, the IRS could reject the 5307 filing and say it must be submitted as an IDP on a 5300. So it seems like the safest thing is to submit prior to January 31, 2013. If the IRS kicks it back saying a 5300 is needed, at least it was a "good faith" effort at timely filing? If they kick it back saying it is off cycle, and later determine it needed to be on a 5300, seems like same argument. But the changes really are minor, IMHO,so I'd think this is most unlikely.

The procedures on this are so convoluted that they are frazzling my normally sunny disposition!

I’m the sole employee of a company (S corporation) that just established & adopted a 401(k) plan in December 2012. My 2012 annual compensation from the company was $96,000 ($8,000 was paid on the first of each month). The company who help me establish the 401(k) & whose prototype plan was adopted told me that it was Ok for my company to write a check for 25% of my compensation ($24,000) & deposit it to the plan, which my company did.

Since the plan also provides for employee deferral Roth contributions as well, they told me that even though the plan was adopted in December with an effective date of 12/19/12 that it was Ok for me to contribute $17,000 to the plan as an elective deferral Roth contribution for 2012. They said that since all my compensation was paid to me already for 2012 that I should just write a $17,000 check from my personal checking account & deposit it to the plan, which I did.

I’m now wondering if I did something wrong by writing a personal check to the plan instead of having it come from my company. Also, if the plan effective date is 12/19/12, how can the company pay elective deferrals to the plan for compensation paid before the plan was adopted? The plan document doesn’t contain any language making it retroactive to the beginning of 2012. Am I Ok with how I did things, or should I be concerned? If this is a problem, how do I fix it? Thanks.

With the new legislation regarding the availability of an In-Plan Roth Rollover without the requirement of a "distributable event", would the participant be able to have Federal Withholding distributed from the account also?

Hi All,

I am the owner and single employee of my LLC, taxed as an s-corp.

This year I set up a defined benefit plan for myself, paid from the LLC.

I *think* this DB is a qualified plan. Vesting is either immediate, or after a year (I'll have to check my plan.)

While I am clear that neither FICA or income taxes are paid on the contributions the year they are deposited, while distributions in retirement are treated as income and subject to income taxes, I remain confused whether the contribution amounts are subject to FICA taxes in the future.

Non-qualified defined benefit plans ARE subject to eventual FICA taxation. How about this plan ?

Thanks much!

Eric

I'm a bit of a novice trying to figure out how contribution limits apply to 401(k) or other DC plans. My main interest is in percentage limits rather than the dollar limits.

I see that under section 415, total DC contributions are limited to 100% of compensation. At least, loosely speaking. The questions I have are:

1.) What language specifies whether the 401(k) contributions themselves are included in compensation? Obviously, if 401(k) contributions were included in comp, then it isn't a limit on 401(k) contribs.

2.) I read somewhere that the comp figure is based on the previous rather than the current year. Where would that be specified?

3.) What are the consequences of over-contributing? I mean, if a correction is not attempted.

Also,

4.) Do I gather correctly that the 25% limit under 404 is based on a company's total workforce, so a particular employee could receive well over that amount?

Thanks!

We have client with funds in John Hancock. Owner was instructed to take RMD of $3,893 BEFORE 12/31/12. We provided him with JH form, which we just got back from him in the mail YESTERDAY asking if it was completed properly.

Does anyone see any way we can have this treated as a 2012 RMD as it was intended in order to avoid the penalty?

This seems to be a stupid question, but I need a quick answer and cannopt find it.

A husband and wife own an S Corp. They employ a housekeeper, but not as an "employee". If they put in a plan, do they need to cover her?

Quick thoughts are QSLOB and non-related service to the company.

I can find no guidance or disussion on changing the plan year of an ERISA 403(b) arrangement. Can someone please point me in the right direction? Thanks.

The TPA is advising me that a 2013 RMD is based on the owners 12/31/12 account balance for his profit sharing plan.

THis sounds correct.

But they are also saying that this calculation will be impacted if the client decides to make a 2012 profit sharing contribution ( in 2013 ) and he gets an allocation.

Is this correct ?

THank you.

I have client that does 8% of pay every year. They only need to give 5% to the staff to max out the owners at the full $50,000.

We're failing the ADP test, and a 3% QNEC allocated pro rata substantially reduces the refunds to the owners. Add in a couple of the lowest paid people with a bottom up QNEC and, hey we're passing.

Any issues with using both allocation methods in one year? We use the Corbel Prototype 401k.

The TPA is advising me that a 2013 RMD is based on the owners 12/31/12 account balance for his profit sharing plan.

THis sounds correct.

But they are also saying that this calculation will be impacted if the client decides to make a 2012 profit sharing contribution ( in 2013 ) and he gets an allocation.

Is this correct ?

THank you.

Husband owned company which sponsored a profit-sharing plan and money purchase pension plan.

The only 2 participants in the plans are husband and wife.

Company went out of business and company was administratively dissolved due to not making annual filings with Secretary of State.

Husband has now died.

There is no plan document for either plan.

These are orphan plans and I am familiar with EPCRS and DOL guidance on how to handle.

My question is, is there another way to go about terminating an orphan plan? For instance, could wife create a new entity to "adopt" the plans, sign new plan documents and then terminate the plans?

I have a client who wants an update on the status of this. Has the IRS said when this will be available?

Treasury Regulation Section 1.401(a)(4)-5(b) limits the annual amount of pension payments made to one of the plan sponsor's 25 most highly compensated current or former employees ("restricted employees") in any plan year to the amount that would have been paid to the restricted employee in that year if he or she had received a straight life annuity. This restriction ensures that a pension plan will not discriminate in favor of highly compensated employees by paying out their full benefits, while leaving insufficient plan assets to pay out the benefits of lower-paid employees. The restriction does not apply if (i) the value of the distribution is less than 1% of the value of the plan's current liablilities before distribuion is made, (ii) after the distribution the plan assets will equal or exceed 110% of the plan's current liabilities, or (iii) the plan terminates with sufficient assets to pay out benefits to all participants.

Treas Reg. Section 1.401(a)(4)(b)(3)(v) states "any reasonable and consistent method may be used for determining the value of current liabilities and the fhe value of plan assets" for purposes of the high-25 restriction. Guidance issued to date under MAP-21 describes specific cases where MAP-21 rates apply and specific cases where they do not apply. However the guidance does not address whether the modified segment rates under MAP-21 may be used to determine a plan's "current liabilities" for purposes of applying the restriction on lump sum payments to the top 25 most highly compensated employees.

Is it reasonable for a plan to use the modified segment rates under MAP-21 for this purposes? Summaries prapred by actuaries and consulting firms list this as an open issue. I heard that either Mike Spaid or Tony Montanaro stated it was reasonable in the course of Qs and As following an IRS phone forum, but can't verify this.

Put your thinking caps on - Multiple Employer Plan, and of course a Key Employer draws pay from both employers.

Payroll records shows he deferred and received a match from only one employer.

The question is, do we use his balance in the Top Heavy test for only the employer from which he recevied the match (and made his deferral), or do we include his balance in both tests?

Or maybe we prorate his balance based on his (average) pay from each employer?

Thanks all for your ideas (and cites if there are any).

in nj if ex has entitlement for life insurance policy to be held as long as there is an alimony obligation does that have to be included in qdro for it to be valid and one of the policies was a non contributory through this pension and now will have to be converted at 545.00? public pension