Employee had rollover into 401K Plan in 2010, and did in-plan Roth conversion on entire amount. Since Plan issued 1099R so that participant paid taxes, is the amount reported on Form 5500?

I have a new case - a 403(b) plan that last filed a 5500 in 2001. I'm being retained to file 2002 - 2009 returns under the DFVC. With EFAST I must file all the forms on a 2010 form. I'm wondering if I am going to have EFAST problems/errors because 2002 - 2008 are information only returns so the participant counts are not completed. Anyone have any experience with this? Thank you.

We offer a fully insured non-ERISA global health plan that we are considering changing to an ERISA plan. The vendor has advised us that we must comply with the Health Care Reform act provisions including not charging copays for preventive screenings. We didn't think it would be necessary to make this change and have asked the question several times as to why but are not getting a good answer. Is this requirement simply due to the change in ERISA status? Thanks.

So after spending 3 hours trying to figure out how to report a $114 penalty for "missed" quarterly contributions, I am struck by another round of additional stupidity.

The client has an overfunded plan with a significant carryover balance. Because of the carryover balance, the plan has a funding shortfall and therefore quarterly contributions are due. He elected to use his carryover balance to satisfy the quarterly requirements after the due date of the quarterly payment. Note the plan has enough excess assets to cover the current year's requirements as well.

I am now wondering what type of language people are using, if any, to report this late quarterly payment to the participants. It just doesn't seem right to inform the participants that he missed a quarterly, when in reality, none was really required because he had the carryover balance available. Typically we would add language to the SAR/AFN that lists the quarterly due dates and the payment date, but it seems misleading in this case because he never failed to make a cash requirement. (I know the IRS would argue that cash was required because he hadn't signed the election.)

Just wondering how others are handling this. Do I need to disclose the "missed" contribution? (I think so.) What type of wording are others using to disclose them?

I'm below retirement age, currently with employer A, and participating in their 401k plan, all funds 100% vested. I'm considering starting my own company, company B, with just myself as the sole employee (sub-S corp.), and leaving A. Company B will have a Solo 401k plan.

If and when I do this, I'd be moving my 401k funds (all cash) from A to B, through a direct trustee to trustee /FBO transfer.

The question, is this considered a transfer or a rollover? What's the difference?

Are there any IRS reporting requirements (1099-R, Form 5498?) on behalf of the trustee of company A? In the Transfers section of the IRS 1099-R instructions it appears to say that direct trustee to trustee transfers not involving payments or distributions of funds to the participant don't have to be reported. But further down in the instructions, under the Guide to Distribution Codes chart, it appears that employer A would have to report on a 1099-R using code G, Direct Rollover and Rollover Contribution. (I'm hesitant on asking our plan administrator, because it would tip them off that I MIGHT be leaving the company).

Also, are there any reporting requirements of company B once they've received the funds?

I guess what's confusing as a layman are how the terms transfer, rollover, and distribution are used and defined in the eyes of the IRS.

CarlC

The plan is a 401(k) plan. The employee was first hired in 1995, term'd in 1997 and was then rehired in 2008. He met the eligibility requirements when he term's in '97, but was 0% vested. I don't have a lot of first hand information other than e-mails passed along to me by the investment advisor (with permission). The employer says the TPA wants them to put $15,000 into the employee's account to restore his balance. They are not happy about that. I'm guessing that $15,000 was forfeited due to a deemed distribution following the termination. I have a copy of the adoption agreement, but not the basic plan document. The employee has met the one-year/1000 hours requirement since his rehire and has re-enterd the plan. Whether or not the plan uses the one-year hold out rule or the rule of parity, wouldn't the 5-year break-in-service rule wipe the slate clean?

A money purchase plan is being audited by the IRS. I want to be able to present them with a cheat sheet of sorts showing them the issues the IRS is likely to examine. The goal is to let them get any issues cleaned up before the IRS finds a problem. Does anyone have any information on this or know of any "cheat sheets" out there on this type of audit? I would appreciate any help.

If a participant reaches normal retirement age and retires, takes a lump sum distribution, then decides to work part time (approx 10k annual in this case) would the employer be required to provide this employee with a top heavy minimum benefit for the part time work?

Does it matter if this person was a HCE when employed full time?

I am dealing with a situation where a NQDC plan is going to be terminated pursuant to §1.409A-3(j)(4)(ix). My question is, where the plan (and all other plans aggregated under §1.409A-1©(2)) is terminated prior to the end of the year, how are employee deferral elections for the year of termination treated after the date of plan termination? The following language from the preamble to the final regulations suggests that the termination should be treated as a cancellation of an employee’s deferral election effective as of the date of the plan’s termination: “The termination and liquidation of a nonqualified deferred compensation plan involves both the amendment of the plan to cease deferrals under the plan and provide for payment of all benefits accrued under the plan, and the accelerated payment of benefits accrued under the plan.” See §VIII(B) (first paragraph) of the preamble. Is anyone aware of any other guidance on this issue? Will the answer vary depending on whether the plan termination is under the general rule (§1.409A-3(j)(4)(ix)©) or following a change in control under 1.409A-3(j)(4)(ix)(B)?

Any feedback would be greatly appreciated.

Here's the hypothetical situation that a plan fiduciary faces:

Her predecessor obviously breached his duties to the retirement plan, and it is clear that the breach caused a loss of at least $1 million. The fiduciary found that the predecessor has sufficient assets so that he could pay a judgment up to about $5 million. The small plan lacks money that it could use to pay lawyers to pursue the plan's fiduciary-breach claim. The fiduciary asked a few law firms if they would take the case with no current fee payments but the right to court-awarded fees. Each of the law firms said "no dice; the case is too small for us to take any risk." The fiduciary also talked about this situation with the Labor department, and it too said that the Department lacks the resources to litigate this fiduciary-breach claim.

Any bright ideas about what the fiduciary can or should do?

Plan Year begins on 10/01/2011.

Safe Harbor Notice given timely (30 days before plan year begins). Can the Plan's definition of compensation, for safe harbor allocation purposes, be amended prior to PYB 10/01/2011? A supplemental notice would be provided.

An employee (non-owner) turned 70 1/2 this year. Since he is still working, he does not have to take an RMD. However, he has a 410(k) account at a former employer. If he transfers his former employer 401(k) to his current employer 401(k) account can he avoid a RMD from the former employer 401(k) account this year? Next year?

Thank you!

Its always a takeover! Plan sponsor put in a new plan effective 1/1/2011. THey were give and signed a GUST non-standardized prototype document with all of the trimmings except PPA and HEART/WRERA.

We think they had to be put onto an EGTRRA document. The question is - can we do this before the end of this year by using a Remedial Amendment Period (if one exists) for a new plan?

Otherwise, we think this can be corrected under EPCRS. What else can the client do?

Good afternoon all. I love a thicket of crazy. Not really but here we go again.

Client terminated a profit sharing plan in 2006 and distributed all the assets. Unsigned form in our file indicates FINAL box was checked on the 5500. FreeERISA shows no final box being marked. No forms filed after PY 2006. It was PN 001.

Client has a 401(k) and DB plan, both if which received extension letters for this cycle's 5500. Timley filed 5558s and so on.

The profit sharing plan ALSO got an extension letter, even though a request for one was not filed by our office. So now PN 001 is back in play, sort of, with the IRS.

I am thinking we need to file under voluntary compliance with DOL to correct the final filing to show FINAL back in the mists of time for the profit sharing plan, and do it before the extended due date for the current 5500. And then pray that the IRS does not go looking for the 001 filing for 2010 (and perhaps backwards).

Any better idea? I suspect a processing glitch (no, really?) but an IRS glitch as we all know can lead to a TPA's worst nightmare. Thanks in advance for your good ideas.

Good Morning,

I'm a lot over my head with this topic...I tried to read the code sections regarding earned income; self employed individuals and my eyeballs just glazed over. So, I've come to those who can help me with little words and clear meaning for a simple mind like mine.

This LLC has a pay arrangement with one of the partners that is getting me tripped up. The partner receive a K-1 but they also receive a 1099 for commissions. Can the K-1 and the 1099 be combined together to get to their eligible compensation for deferrals?

I appreciate all the help and any comments offered.

Plan terminated in 2010. Partners do not want to make SH contributions for 2010 for themselves. They did not defer and did not realize that they still were required to deposit the SHNEC for themselves. Plan has two partners/HCEs and two non-HCEs. SHNEC was contributed for NHCEs.

Other than advise them that this a violation of the terms of the written plan document and that they are risking disqualification, what is my responsibility?

They seem willing to take this chance. Must I report this failure to contribute?

Thanks!

Small C Corp is owned by a son and his wife, another son and his wife, and mother (her husband is deceased). Only one employee (one of the sons) works and draws W2 pay. Can the C Corp establish a Solo/Individual 401k with the working son being the only participant in the 401k....or must all owners participate in the 401k even though they don't draw any pay?

Has anyone seen or heard anything on the status of the 2011 Form 5500 release? Thanks...

PEO decides to change providers. Some of the employers using the PEO are relatively new to the relationship, and the change of provider causes the employee accounts of those employers to bear a deferred sales charge. As it turns out, the new provider will not cover those deferred sales charges. If the PEO also decides not to pay those deferred sales charges, would it be appropriate to spread those sales charges among all accounts (including even those whose employers will not suffer the sales charge) as an administrative cost resulting from the change in providers (under the theory that a few specific employers should not bear the brunt of a PEO's administrative decision to change providers)? Are there other solutions to this issue?

We found out today that there was a 401(k) deferral deposit that was not made at all from 2009.

After the amounts are paid to the plan and the interest allocated, we need to file Form 5330 for the late amount.

From what I understand, I will have to file THREE forms, one for each tax year.

But, the form says that the form is due "by the last day of the 7th month after the end of the tax year of the employer (or other person who must file the form).

So, are the 2009 & 2010 forms LATE?

The instructions say there is a penalty on the unpaid tax. But you might not have to if "you can show that the failure to pay on time was due to reasonable cause."

Is "we didn't know about this until today" a "reasonable cause"?