Is a distribution of post-tax funds from a section 401(a) DB government plan eligible for rollover treatment to a Roth IRA?

May a non-electing church plan eliminate early retirement?

we are the investment advisor and TPA and we change Broker Dealers. this in effect increases our share of the subsidies and 12b1s which are used to offset the clients overall fees. is this a change that must be disclosed within 60 days or is it an investment related change that can be disclosed annually.

I’ve asked this question generically before, but was hoping I could lay out an example and get confirmation that this is correct:

Plan has:

Eligible HCEs: 10

Eligible NHCEs: 94

All 10 HCE’s are receiving a PS contribution

Only 46 of the 94 are receiving a PS contribution (approx 49%).

Plan fails the Ratio % Test for Coverage.

That said, when I 410(b) test, ABT is 81%; and all rate groups under 401(a)(4) are above midpoint of 23.5. Plan now passes coverage testing. Is this correct?

Client is looking to add loans to its plan. The loan fees will be paid by the participants, i.e., set up and annual loan maintenance. Investment House is telling us that the loans cannot be made available until a new 404a5 notice is provided and this notice must be given 30 days before the change.

Is this correct? Any thoughts?

I feel certain I saw a news blurb or clip somewhere recently (last 3 weeks maybe?) indicating that the IRS intended to stop sending out Form 5500 Delinquency Notices but I cannot seem to locate the article or any information along those lines. Indeed, it looks like the IRS recently revised and updated the delinquency notice provisions on their website so seems strange they would do that if they were going to stop sending these out. Maybe I imagined seeing the headline or just misread it. Has anybody else seen or heard anything about the IRS stopping such notices.

Also, a somewhat related question: we have a client that recently received a DOL letter notifying the plan of the DOL's intent to assess a civil penalty for failure to file a 2011 Form 5500. According to the client, this is the first notice they received with respect to the 2011 Plan Year--never received anything from the IRS re 2011--so no real chance to go through DFVC first. (They apparently filed 2010 late as well and did receive an IRS notice for that and filed that under DFVC so maybe that explains the 2011 notice directly from the DOL.) Anybody have similar experience?

An S-Corporation pays medical insurance premiums for the 100% shareholder. These premiums are included in the amount reported on his W-2 box 1 income. The Shareholder then deducts these premiums on his 1040.

The plan document defines Plan Compensation as W-2 wages, including deferrals and does not exclude any type of compensation.

Should these premium amounts be included in Plan Compensation used to determine allocations, testing and 415 limits?

Employer wants to use "forfeiture account" to pay adminiistrative expenses.

Plan document allows such transaction.

Question: What is the tax implication of the of the distribution? Taxable distribution?

Thanks.

I recently received a letter from the actuaries for my DBP not to make a contribution for 2012 since the plan is overfunded. I am wondering if I should ignore their advice and still make a 2012 contribution since I know in the coming years my income will be falling? The actuaries gave a 2012 contribution range of 0 - $343,250 which is a big range, but said it is best not to contribute anything.

I have a DBP which is a qualified plan, that I started at age 40 with a RA of 55. I am presently 48 years old and every year since I started the DBP my compensation has been over $500K allowing me to make the maximum contribution to the DBP . The plan assumes a rate of return for both pre & post retirement at 5%

Current trust assets as of 12/31/2012 were $1,040,000 and exceed the maximum distributable amount as of 12/31/2013 which is $1,025,000. So that means the trust is presently and will be at the end of this year 12/31/2013 overfunded providing the assets don't decrease in value due to market fluctuation. So my question is what is the most I can contribute for 2012 and a strategy to work out the overfunding issue?

My business is setup as a sole proprietor (entire business is just me - no employees) I believe with DBP the overfunding tax penalties is something like 93% (50% Excise Tax, 39.6% Income Tax, 0.9% ObamaCare surtax, and say 3% SE Tax). I don't understand when or how these penalties kick in. When a DBP is overfunded one has several years to allow the trust assets to return to the maximum distributable amount by typically not making a contribution for a year like the actuaries are recommending.

Since 2013 brings many higher federal taxes (35 > 39.6%) plus the new Medicare taxes (0.9% for income above $200K & 3.8% on unearned income) I had accelerated income from my business in 2012. Not making a contribution to my DBP for year 2012 results in me having a much much higher income tax bill for 2012. My business does not have a great deal of expenses since I am in the wholesale business where I just buy and sell and work on the margin. My biggest expense on my Schedule C is the DBP and Solo 401K contribution.

What needs to be factored in for future contributions to my DBP is the direction of my business which is going downhill. My business has done well over the years but I the business slowing down dramatically, almost free falling. I would guess in 2013 the business gross profits would be in the range of $350K - $500K. Then in 2014 gross profits in the $200K range. Again these are gross profits and just guesses and the could be lower. It would be a true miracle if they are higher and extremely doubtful since I want to work a lot less. In 2015 thru 2020 (retirement age for my DBP is 55 which is year 2020) I want to work very little and I could keep the business running even if this means selling items on ebay (whatever it takes to qualify that the business is still in existence). So if I do make a contribution for 2012 to my already overfunded DBP I think I could have several years ahead to adjust for overfunding issues.

Also any contribution to the DBP is limited to my compensation - 1/2 SE Tax so how would this effect the overfunding issue if my compensation from my business is $50K in years 2015-2020?

For 2013 the contribution the actuaries gave me were even broader with $595K and this time a minimum of $100K. I definitely want to make a contribution in 2013 because of the higher taxes. So if this means zero contribution for 2012 I guess I need to do this. I would rather pay taxes in 2012 verses a 93% overfunding tax penalties.

Hopefully people on this forum can reply back with a strategy for me to follow to maximize my contributions for 2012 and 2013 which will be my higher earning years and then in 2014 and beyond a true drop in business income. I really would like to stop operating my business and retire in 2017 but I think with this overfunding I'll need to have the business start open until 2020.

I know about the strategies of Adding Plan Participants, Transfer Assets to Replacement Plan, Increase Plan Benefits and Merger of Plans but none of these will work for me. My strategy if allowable under IRS and ERISA regulations is to make contributions in 2012 thru 2014 and the DBP will be grossly overfunded and then make no contribution from 2016 - 2020 since I'll let the business run part time and will generate very little income, but during this time the trust assets to return to the maximum distributable amount.

Company sponsors Safe Harbor 401k plan and has executive who wants to make catchup contribution for 2012. I advised that it must be from pay. Company is about to pay bonuses, and plan does allow for separate election for bonuses. I also advised that in order for catchup contribution to be credited to 2012, the bonus would have to be included in 2012 pay. Is this correct? Is there a way for bonus to be included in 2013 pay but catchup credited for 2012?

Apparently Company has already finalized W-2s and all tax report, and doesn't want to redo everything.

Thanks for your help.

Just heard from pension State of NJ that the amended qdro I filed a motion for and won because the first erroneously stated the numerator as the total length of marraige in months when I was not in the plan until 10 yrs after the marraige so I had to get it to read 123 as numerator instead of 246...when judge wrote the amendment he did not write the entire qdro just the corrected paragraph now that I have filed they are rejected it wanting it in its entiriety submitted...Is this considered a motion I have file as I did with the original pro se amendment to qdro or merely a letter to judges clerk to type up in entiriety??

I'd like other's opinions...Plan did a payout in December of 2012. Check for participant and check for withholding were cut in 2012. Plan investment statements show the disbursement in 2012. This was not the only payout in 2012.

Plan fits into the monthly filer definition. The tax portion of the payment was made in January of 2013 to the IRS via EFTPS. For completion of the #945 - total withholding for 2012 was over $2500 and therefore must be broken down by month. The Plan assets say the tax withholding was done for in December and the tax payment made in January 2013 was coded for the 4th Q 2012.

Is it ok to put the tax amount under December on the #945? I really think I am overthinking this whole thing, but don't want the client to get a letter saying that the taxes weren't paid in. I think as long as the tax payment was coded for the 4th Q 2012 and was not late, it should be ok, but you never know with the government!

An HCE who was still employed died in 2012. His total plan assets are $2,000,000. He had a life insurance policy as part of his plan assets. He was also receiving RMD. Now in 2013 his spouse wants to rollover his death benefit. The total life insurance proceeds were $400,000. The cash surrender value was $225,000. So the non-taxable portion of the life insurance is $175,000. The spouse also has to receive a RMD for 2013 for $113,000. I know the 1099r code on the on the rollover will be 4G.

Since she's receiving $175,000 as a non-taxable distribution does she also need to receive the RMD as a separate taxable distribution? If not, would she receive 2 1099r forms? One for the RMD code 7 and one for the balance of the non-taxable life insurance code 4?

401(k) Profit Sharing Plan, employer was a sole prop with employees. Upon the death of the owner (a lawyer), the business is no longer in existance. The plan document does not provide for what happens if there is only one Trustee and no one is appointed prior to his/her death.

The spouse was appointed as Representative of the Estate. As such, she signed paperwork with investment companies to become the authorized signer on the accounts and did distributions to the other participants.

Spouse also has an attorney helping her with the estate, and the attorney says she does not have the authority (nor will they recommend she take on the authority) to sign the amendment to terminate the plan (since the business no longer exists). Side note on the plan - the deceased owner may have had some prohibited transactions involving the assets of the plan. We are thinking that the attorney is trying to protect the spouse from dealing with this.

The two actions seem contraditory to me.?? Either you have the authority to approve distributions AND to terminate the plan, or you cannot do either. Yes, No?

Would the plan have been considered an abandoned plan? Is there something in the regs that I can cite with this attorney to explain the spouses position here?

Thank you in advance for your help!

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.