Doing a retro amendment for eligibilty to an EGTRRA document. Amendment must be submitted for a D letter when must it be submitted??

Individual A owned 100% of shares of Corp X which owned personal property, etc. used at several geographic business locations. Individual A has set up new corporations for each geographic location and each new corporation has purchased personal property used at its respective location. Individual A owns 66 2/3% of shares in each new corporation. Remaining shares of each new corporation are owned by key employee at each location. Key employee has option to buy all of individual A's shares within certain time period. Corp X maintains a profit sharing plan. CPA has been doing plan administration on basis of all being in a controlled group. I understand some (maybe all) of new corporations have signed participation agreements to participate in Corp X plan and have made contributions thereunder for respective employees. Individual A has asked CPA what happens if key employee of particluar location exercises option and buys all shares from individual A as far as controlled group issues go. Specifically, Individual A has asked when that happens will employees at respective location continue on same vesting schedule or will there be a distribution and a forfeiture? Or, will new corporation continue on as if nothing happened retirement plan-wise, i.e., no distributable event for participants of respective location, and new corporation now has a plan document that tracks the terms of an unrelated sponsor....? Individual A believes each new corporation should go out now and jump on a prototype at brokerage firm so that as key employees exercise options for shares each new corporation will still have its same bucket of plan assets/plan participants to deal with and there will be no separation issues. I have yet to review Corp X plan document, but from the controlled group perspective I do not see how having each new corporation set up its "own" plan now will necessarily change the controlled group issues. In other words, sit tight as-is and let each new corporation peel out of controlled group status as the stock options get exercised.

So, two questions: 1) what happens when respective entity ceases being in the controlled group if assets have been pooled with other participating employers? and 2) will having each new corporation set up own plan now ease the consequences when controlled group status ceases?

Thanks for your replies......

Husband and Wife married in October (2nd marriage for both) the minor kids are from wife's first marriage that they claim as dependants on their taxes. Kids are not adopted my husband.

Husband is a doctor and the medical practice (and all property contained in that) were stipulated as separate property before the marriage. His (husbands) medical group and the his C-corp are in no way associated with his wife's business and are not community property and were completely segregated as such in pre-nuptials before they were married.

Husband has a DB plan and 401k plan already in place with 2 other doctors. He owns 1/3 of the holding company where the DB plan is at. He owns 100% of his C-Corp where his income is passed through the holding company. So his income in his C-Corp is used for the calculation of the DB plan and 401k plan that is housed in the holding company, where he owns 1/3 of.

The wife wants to open her own DB and 401k plan. Does it look like the husband needs to be part of that plan? Since the minor children are not his and his business is totally separate from hers (there is nothing in common with her business) it is hard for me to determine. The husbands income is already being used in a DB plan.

Do I need to test his portion of the DB plan with hers? Would you consider them a control group?

Thanks

Two of my clients have received IRS notices for their 2010 Form 945 saying the amount reported on the 945 does not match what was reported on the 1099R.

On both of these clients, what I reported on the 945 matches what was reported on the 1099R. Evidently something was processed incorrectly in the IRS system.

Has anyone else received any of these 2010 notices?

Good morning, everyone!

Hopefully an easy question...does anyone know if a merged plan has a Form 5500 filing requirement? I know that under Code 6057, that plan must report a change in its status (merging with another plan) on its Form 5500 for that year. Other than that, does it have another Form 5500 requirement? What about the following year? Does it have another Form 5500 filing requirement, once it is merged? I just want to make sure tha I am not missing anything in respect of what seems to be a relatively straightforward question.

Thanks so much for any replies.

The most recent ASPPA Journal supplement comparing qualified plan provisions indicates that Roth IRAs can only be rolled over to other Roth IRAs -- not to a Roth 401(k). It also indicates that Roth 401(k)s can be rolled to either a Roth IRA or another Roth 401(k). If the funds inthe Roth IRA were from a Roth 401(k) initially, (sort of like the old conduit IRA concept) does that change the answer at all?

We have a rather complex controlled group situation. There are over a half dozen companies, two grandparents (primary owners), 11 children and 6 grand children, plus other unrealted individuals owning stock in these companies.

This may be a dumb question, but with a group this big, would the five or fewer rule have an impact on a controlled group analysis? In many cases, there are more than 5 individuals that own stock.

Thank you.

We've amended plans to permit HCE's only to make catch-up contributions - i.e. those HCE's age 50+ during the PY can only make up to the $5,500 and then are not permitted to make any additional elective contributions in order to have $0 contributions for HCE's in year end testing.

Is it possible to amend a plan to count any elective for HCE's age 50+ to be counted as catch-up first and then any elective over $5,500 be counted in the test - I have a plan with a mix of HCE's over / under age 50 and low NHCE participation... could be beneficial for testing with some planning to count the age 50+ HCE's first $5500 as catch-up and remove from the test as opposed to reclassifying (avoiding refund to the under age 50 HCE).

Thanks in advance

We have become the new TPA for a plan that has lumped 401(k) money and the safe harbor match money into the same account for a number of years.

I have gone back to the prior adminstrator of the plan (a CPA firm) to ask for a split of the account between EE and ER funds. They are balking at providing the information.

Can anyone give me guidance on how to proceed? I told the CPA firm that sources should be separate for a variety of reasons, least of all hardship withdrawals and in-service distributions. Any other reasons?

This will be easiest using an example:

profit sharing plan

not top heavy

company intends to make no employer contributions for 2012

pro rata formula

currnet year forfeiture or $10,000

the document allows for the forfeiture to offest contributions (they do not want to use it to pay fees)

Solution: In my mind the client makes a $10,000 contribution and offsets it with the $10,000 in forfeitures. Goal accomplished.

The record keeper is telling me that they have to reallocate it not offset it??? Well you get the exact same outcome, correct? The recordkeeper wants to amend the adoption agreement to "allow for reallocation" isn't that what the offest does? It will be allocated the exact same way regardless of what you call it. I am way off here?

Thanks

CPC, ERPA

I have a client who has been approached by a vendor that provides telemedicine/phone advice services (e.g., the employee calls/video chats with a licensed doctor who then would provide diagnostic advice about the employee's ailment). The vendor has a network of licensed doctors who participate in this program. The vendor has told the client that this program is not a group health plan - not subject to ERISA or COBRA. However, the vendor has provided a HIPAA business associate agreement to the client, which seems odd because HIPAA purportedly would not be implicated unless the program is a group health plan. The client also has a HDHP and contributes to the HSAs of HDHP participants. I think this group health plan should be considered a group health plan, which may provide disqualifying health plan coverage, so HDHP participants should be required to pay FMV for any non-preventive care advice. Does anyone have any thoughts or experience with these types of telemedicine services? Thanks for any help.

An active employee started MRD payments on time. 7 years later, he became disabled and terminated under our plan. At that point, he should have been sent his retirement package and switched from MRD to retirement. Notice the "should". It was caught after 6 years, and he was finally sent a retirement package. Based on the option he selected, his pension would have been less than the MRD payments he received, so he owed $3,000 back to the trust. To avoid having to make the repayment, he selected a life annuity option with a payment $40 higher than the MRD. Now we owe him $3,000.

The question is this... does he have to file IRS Form 5329 to report this $3,000 retroactive payment as excess accumulations of his pension benefit? I realize we're not talking about a lot of money here, but where there is one problem person, there are bound to be more!

A DB Plan is a Cycle B filer and was filed timely during the first Cycle B, deadline 1/31/08. On October 14, 2011, an amendment was adopted changing the Employer's Name (and this Employer has a different EIN). The new Employer is a new entity that was created January 1, 2011. The last number of the "new" EIN is 5.

Rev. Proc. 2007-44 deals with changes in Cycles due to certain events. Am I reading it correctly that due to this change in EIN, the Plan would now be a Cycle E filer, and the next time it would have to amend and restate is by 1/1/2016, and NOT by 1/31/2013, which would have been the Cycle B deadline had the plan not changed cycles?

The first time I read through Section 11 of this Rev. Proc. I got the impression they would have to file again on Cycle E (deadline 1/31/2011) even though they would be granted a 12 month extension on that until 1/31/2012, because of how close the cycle changing event was to the end of the new cycle deadline. But now that I am re-reading it, I dont think that is the case, nor the intent, to have the plan file twice in the same 5 year cycle period (Cycle A through E).

Any help is much appreciated.

generally the plans i work with pass adp test by means of a safe harbor and i dont use and apply qnecs.

with that said:

say a sponsor implements a 401k profit sharing plan in december 2011.

say there are % NHCEs and one owner

the owner earns 245k and defers 5% or 12,250.

no other employee defers in 2011.

the plan then allocates 3% to each NHCE to meet TH.

the plan is not a 401k safe harbor for 2011 and does not have prior year testing method in plan for 2011.

can the above 3% be a QNEC and thus enable the plan to pass the adp test for 2011?

of course it would thus be like a deferral in that it would be non forfeitable

thanks

The Plan provided a salary deferrals cap of $10k for the 2011 plan year. The payroll system was programmed with a previous cap of $8k (cap used in 2010). Certain HCE could have made salary deferrals over $8k but they did not because of the wrong payroll programming. There is no ER match involved here. How do I correct his issue?

I was always under the impression that Defined Benefit Plans could not charge a distribution fee against the participant's accrued benefit in a DB Plan because it was essentially a reduction in their accrued benefit. However, it seems as though a lot of people do this? I'm curious what the consensus is. Is this allowed or not?

For example, we have always processed them such that if the Lump Sum = $1,000, the Participant receives $1,000, and usually the Plan Assets will cover the fee. However, what I am seeing sometimes is the Charge for Distribution Forms = $200 and this is coming out of the Participant's Lump Sum, so they receive $800...

Can a participant keep "restarting" the cure period without ever bringing the loan current? For example, assume a plan provides for the maximum cure period. If a participant is behind on her loan, but is making sporadic payments (let's say 1/2 as often as required), when does the deemed distribution occur?

A. The end of the calendar quarter following the calendar quarter in which she first got behind, or

B. Not until she is so far behind that any payment she makes would be applied to a missed installment payment that was due before the beginning of the current cure period (e.g., such that a payment made after 6/30 would not be applied to a payment due after 1/1.)

Client has a pile of loans that were set up to be repaid at 1/2 the rate they should have been.

All comments appreciated.

Ü

Hello. If a benefits-eligible employee initially waives enrollment in the medical plan because they would pay a higher premium as a part-time employee, must we allow them to make a mid-year election when they move to full-time status, qualifying for the lower premium? I'm stuck on whether or not this would be an eligible event since the employee initially waived coverage, they are not currently enrolled. I understand that if an employee is currently enrolled and a lower cost option becomes available, we would be required to allow the change.

If the change is allowed, does this event (PT to FT) open up special enrollment rights for all (pre-tax) benefits offered, even if the other premiums didn't change?

Thanks!

client has real estate in his plan and wants to make a contribution in order to pay the property taxes due. problem is plan has been recently terminated. can he contribute after the termination in order to pay the taxes?

If a participant in a plan had a qdro to split his account and now the spouse has an account in the plan. Does the spouse count as a participant for lines 5(a-c) on the 5500SF? For example the plan has 21 participants with an account balance but one is the result of a qdro. Do I use 20 or 21 on line 5c?