Participant terminated more than 5 years ago, was 100% vested and was paid out.

Participant is rehired in 2012.

Does this person start over for eligibility and vesting purposes?

A participant took an inservice distribution from his employer's 401(k) plan, but the plan did not permit inservice distributions. Is this an "Overpayment" for purposes of EPCRS?

If it is an Overpayment, EPCRS says that to correct, the employer has to ask for the participant to pay it back, plus interest. It also says the employer must notify the participant that the distribution wasn't eligible for tax-free rollover. What form must this notification take? A letter? An amended 1099-R? If an amended 1099-R is required, and the participant pays the overpayment back, does that mean an amended 1099-R is no longer required?

What if the participant rolled the Overpayment to an IRA, and it is after the deadline under IRC 408(d)(4) to remove the excess contribution?

We have nothing to do with plan investments, but I thought someone might know the answer to this. I have little information to go on other than that a client wants to open up new plan investments and/or investment options. the client says that the investment house(s) or brokerages, whatever, are telling him that the plan fiduciaries must provide their personal social security numbers, due to Dodd-Frank. (Mind you, this is what the client is saying - usually inaccurate in ost information they provide!)

Doe you know if this is true, or partially true, etc? Thanks!

401(k) plan - 7/1/2011 to 6/30/2012 plan year. The plan defines the Limitation Year as 1/1 through 12/31.

Employer funds a profit sharing contribution for the 2011 plan year on 6/25/2012. How do you determine which limitation year this contribution should be included in? Does the employer choose whether it should be 1/1/2011 to 12/31/2011 or 1/1/2012 to 12/31/2012?

The 415 regs say that "an annual addition is credited to the account of a participant for a particular limitation year if it is allocated to the participant's account under the terms of the plan as of any date within that limitation year" - so from that perspective it's included in the 2012 LY test.

However, the regs also state that "employer contributions are not treated as credited to a participant's account for a particular limitation year unless the contributions are actually made to the plan no later than 30 days after the end of the period described in section 404(a)(6) applicable to the taxable year with or within which the particular limitation year ends." The 6/29/2012 contribution was credited prior to 30 days after the 404(a)(6) date - so from that perspective it can be included in the 2011 LY test I believe.

I believe the employer's preferance would be to include it in the 2011 LY test. There are some participants who terminated in December 2011 - and so they don't have any 2012 compensation. So if this contribution was deemed a 2012 annual addition, they would exceed the 415 limit.

Thoughts?

Does the Internal Revenue Code (or Treasury regulations) impose rules regarding inclusion of certain provisions in the ESOP plan and loan documents (e.g., a provision prescribing what happens if the plan defaults on loan repayments)?

Our firm has agreed to do administration for our first SARSEP (administration only for 2012). Upon review of the adoption agreement, we discovered the employer contribution has not been allocated according to the plan provision since inception (1994). The document states Pro-Rata, but the contribution has been allocated as Integrated.

In reviewing the latest EPCRS, I find a correction for this issue on a SARSEP to be a bit confusing. Since the plan has been operated using an Integrated formula since 1994, they are not interested in following the correction for an Excess Allocation, but would rather amend the plan retroactively and ask for the Service’s blessing.

According to 6.11 (1) Correction for SEPs generally is expected to be similar to the correction required for a Qualified Plan with similar failure.

According to 6.11(2) if 6.11(1) is not feasible for a SEP or determined by the Service…..Excess Amounts for cases in which there has been no violation of a statutory limitation with respect to a SEP, the Service may provide for different correction. Special fee my apply.

Can this failure be corrected by plan amendment under VCP? And if so, which Schedule; 1 or 3 or both?

Schedule 1 appears to allow for correction by plan amendment, but only if the corrective amendment was adopted before the expiration of the plan’s extended remedial amendment period for that amendment. Do SARSEP’s even have a RAP?

Schedule 3, specifically for SEPs provides for Excess Amounts Contributed & Retention of Excess Amounts, but does not appear to offer correction by plan amendment.

Also with regards to the filing fee. Fee for Qualified Plan is $750 (20 or fewer), and for a SARSEP it is $250. Would we send in the $250 and wait and see if the Service would impose the $750?

Any enlightenment is greatly appreciated. I’m out of my element here.

Thank you

Client has a short Plan year (6 months). The hour requirement for PS is 500 hours. Do they reduce that to 250 for the short Plan year or does the allocation requirement remain 500?

Participant in a plan terminated in July of '12 and rehired December of '12. He had a loan. He did not timely repay outstanding loan payments so he was defaulted and had a deemed distribution for 2012.

In 2013, is there any way for the participant to pay back this loan and 'reverse' the 1099 for '12 in '13. Final-Reg, Tax-Regs 1.72(p) - Loans treated as distributions indicates is repayment continue after deemed distribution, tax basis in the plan increases - how does that affect the 1099 that was issued?

Any suggestions would be helpful... Thanks

Can a DB plan be amended to not provide further benefit accruals to a participants upon attainment of NRA (which is 65 in this case)? Thanks.

What is the risk/exposure for unfunded/fully insured welfare benefit plans that do not file 5500's, or that file with incorrect information such as participant counts?

A participant in a money purchase plan attained age 70 1/2 in September 2012. He is not an owner but is the Executive Director. He retired 1/31/2013. Before a total distribution of his account can be processed shouldn't he receive an RMD? Thanks.

If i turn age 55 in 2013, quit my job, take a distribution in 2013, I do not pay the penalty. If I turn age 55 this year and terminate next year, receive a distribution in 2014, I do not pay the penalty. This is how I am interpreting the exception. If I turned 57 or 58, I would still be subject to the penalty, yes?

Why age 55?

Thanks

Is anyone able to get their participants to connect their website UserID to download into thier mint.com account? If so, what was required to set this up? I have been told by Relius Support that this is now possible, but have not been able to get it set up and was wondering if anyone has actually gotten this set up.

If a TPA's distribution fees exceed a participant's account balance, is there any justification for simply eliminating the account upon termination of employment? For example, assume a participant's account is valued at $55 and the distribution fee is $65. Can you apply the distribution fee against the account and zero out the account?

The TPA is suggesting that this is permissible. How can you apply a distirbution fee to an account if the distribution is never made?

I have a client whose CFO embezzled $1.5 million from him. He has a $200,000 balance in the company's 401(k) plan. Does anyone out in BenefitsLink land have any suggestions on how to "encourage" the felon to take a distribution and pay it over in partial satisfaction of the restitution order?

Thanks.

Employer A is a Dentist’s Office which acquired another dental practice, Employer B in 2011. They are being operated as two separate businesses. It is now 2013 and Employer A has learned that he needs to either cover Employer B or run the risk of failing coverage.

Now Employer A would like to add a safe harbor plan ASAP. Employer A currently has a calendar year 401k plan.

Are there any options to get a safe harbor plan sooner than 2014?

From my research, in the 2012 EOB, page 11.557 states that an employer might consider changing its plan year for the plan and start using safe harbor for the first 12-month plan year that starts after the amendment. Has anyone done this? What are the consequences/pitfalls of doing this?

Found a couple of these in our pooled funds this year (and noticed one that has been around for a while but didn't realize the values given weren't really "values"). I'm talking about the David Lerner Apple partnerships, non-traded "business development companies" (a type of closed-end mutual fund) and the like. And I'm talking about relatively small plans, all DC but it would be relevant for DBs as well.

They generally give a year-end "statement" that has the last public offering price or cost basis or something similarly irrelevant, but which gives the appearance of a current value.

Just wondering what other folks are doing as far as determining a value. In most cases, I will make it clear that we can't just take the number of off the statement, and will more-or-less get the trustee to give us a value (probably the number on the statement, but at least we've turned it around so the trustee is giving it to us and we are not just reading it off a statement). Then we'll use a 5500 instead of 5500-SF because we don't have a fair market value.

Any thoughts?

If a participating employer that leaves a controlled group in the middle of a plan year, is it necessary to file Form 5500 as a multiple employer plan for the year of the change? It clearly must in succeeding years, but what is the relevant date for determining whether a plan's status for purposes of 5500 reporting?

Thinking for in the future: Company A has a 401K psp. Eventually Co A will dissolve, but a different Company B (doing completely different kind of business) will be formed with 2 of the 5 shareholders from Co A.

Only 1 shareholder from Co A has ever had a W2/401k account and likely the same employee/owner will be the only 401k account holder in Co B.

What is the best or easiest way to keep the original 401K psp for Co B? Or is this not even possible? Can Co A's 401K psp also be sponsored by Co B at the same time. Then when

Co A decides to dissolve, just transfer the 1 employee's 401K accounts to Co B's 401k plan?

Hope this isn't confusing, but I know what I'm talking about

Hi folks, I had recently done some digging into my Roth IRA portfolio just to monitor fund performance and sector allocation, something I regretfully have ignored for the past 14 years I have been invested in a Roth. My portfolio is all mutual funds, mostly active large cap stock funds from a few different providers.

I had noticed that I accidentally double contributed for the tax year 2004. I contributed $3,000 (the max allowed for that year) in April 2004 for the 2004 tax year to one fund, but I had also contributed $3,000 the following year in another fund, also for the 2004 tax year.

I understand this could be considered an excess contribution, and I will be socked with a 6% penalty for each year the excess is left in the funds. Is there any way I could ask the fund custodian for one of the funds to change the tax year to say, 2003? I noticed that I had contributed to a Roth every year EXCEPT 2003, so it looks like that is the reason for my error.

Or, could I instead just ignore my mistake and pretend nothing happened? How would the IRS know about this, would they even pick up on the duplicate 2004 contributions when I take distributions when I finally retire?

I'm ok with paying the penalty, but I am hoping that I could just simply explain my error to the fund custodian, have them make a change to the tax year and be done with it.