Anyone tried to transfer a plan out of TIAA? We;re aware of the tiaa-traditional account and the 10 year surrender period, but I was wondering about those plans set up with "RA" contracts, versus GRA contracts. Am I correct that there's really no way to transfer existing RA money because it is a contract with an individual?

A client of ours sent us an 18 page survey they recently received from the GAO. The survey title is "SURVEY OF 401(K) PLAN SPONSORS FEES". The survey is very detailed and specific to investment and plan fee information. It does not appear to require a response as there is no Due Date. Has anyone else learned of this?

Client wants to terminate its profit sharing plan. However, there are several years where there were testing problems that have to be corrected under EPCRS. They want the termination effective 10/31 (the end of the upcomong plan year). Can you submit the Form 5310 with the voluntary compliance submission similar to what you do with the Form 5300? I assume the approval of the voluntary compliance submission and the determinatino letter will take more than a year. Is the audit still required with the Form 5500 after termination?

Client (Husband/wife) hired an employee who probably never become eligible due to minimum hours. Do I have to switch now from preparing an EZ to a 5500SF because of this ineligible employee? Thanks for your help.

A current client has just posed a question on some pretty str ange facts.

This person acted as plan administrator of a small (less than 30 participants) company 401(k) at a former job. The former employer is now being dissolved, and the 401(k) at issue (a prototype document) was terminated in 2004.

Also in 2004, prior to plan termination, however, the mistress of a former/terminated employee with serious mental health issues presented a Power of Attorney in connection with the former employee's request for payment of his benefit (amount was just under $2000). Plan administrator paid the benefits to her (!). Note that former employee was married. (QJSA is not applicable).

Employee has since died. His widow has now contacted the former plan administrator to ask where the benefit it.

I'm trying to gather more information to see if plan document had a provision permitting payment to a power of attorney in the event of incompetency (but am still worried that he wasn't legally incompetent). Sure looks like an improper distribution to me.

The client is asking if he should tell the widow (1) that the amount was paid to the mistress, and (2) the mistress's name.

My bigger concern is his personal liability for making a wrongful distribution.

Still trying to gather more info, but wow. Any suggestions?

To me the options appear to be (1) try to get bankrupt company to pay the widow the benefit amount, (2) say that amount was paid to decease husband in 2004 under terms of the plan (omitting mistress detail - and thereby avoiding liability for any resulting violence, etc.), or (3) doing a John Doe EPCRS application for IRS guidance on proper correction.

I suspect client will prefer to try to take the position that distribution was properly made to employee. But if the wife were to get the full story and go the DOL, I don't see how he avoids liability, other than by standing behind a plan provision (that I hope exists) permitting payments to be made to a power of attorney.

Don't see facts like this every day....

Does anyone have a IRS Trouble Shooter number available? In a Kafkaesque situation from hell with a bogus late filing. We sent followup letter in May (started in February) where client had paid the erroneous penalty. They just received a letter providing credit for the erroneous payment, then a second letter adding the penalty back. God help us when the IRS has to start tracking Health Care coverage in 2014.

We have a governmental 401 P/S FICA Alternative Plan with mandatory pick-up contributions of 7.5% of compensation. Plan wishes to allow participants to take distributions on account of a serious financial hardship. In order for an employer to avoid FICA tax liability, its FICA Alternative Plan must satisfy certain design and benefit requirements. A FICA Alternative Plan:

-must provide a benefit of at least 7.5% of compensation;

-contributions must be credited with a reasonable rate of interest; and

-benefits must be 100% nonforfeitable

In reviewing Treas. Reg. §31.3121(b)(7)-2 and IRS Publication 963, I was not able to determine if such distributions would be permitted under such an arrangement.

Do you know of any reason why such distributions would not be allowed?

I think this plan needs to file a 5500, but I'm hoping someone tells me differently. First year plan is effective was 2009. The only contributions for that year were elective deferrals made at the end of 2009 and not deposited until first few days of 2010. The CPA did not file a 5500 for 2009 under the theory that there was no money in the plan, so no need to file. I want to say that there is an asset and that is the deferrals receivable and a 5500 should be filed. Which is it?

We have a controlled group of 3 companies.

Fiscal and 401k plan year end is Oct 31

Bought a new company with an existing Profit sharing plan – fiscal and plan year end is Dec 31

The new company will be an adopting employer of the parent company. Can we keep at Dec 31 plan year or need to change to Oct 31? Thank you

My nephew just turned 18 and is headed to the university this fall as a freshman. As part of his financial aid package he'll work part-time on campus and be issued a W-2 at year-end. Maximum earnings are $3000.

Is he old enough to start a Roth IRA all on his own? Could he contribute all $3000 of his earnings?

In the case of a trustee who embezzled from his employer, and contributed some of the embezzled funds to his 401k account, once the court order is issued convicting the trustee, how does the plan distribute this? Is court order sufficient for the vendor to cut a check to the employer, or does the convicted participant have to sign off this distribution?

Any help would be great!

A client contacted us while looking at their 2010 return and noticed that their EIN was wrong, ok fine we will fix it. We then look back and see it has been the same EIN on all returns that have been filed since the plan started in 2002!

So, amendments are in order for the past 8 years. Am I understanding the instructions correctly that I use the 2010 forms for all of the amendments, inserting the correct plan years at the top? They all have to be filed using EFAST2, right? The EFAST website is not very helpful regarding this topic.

Is there anything else I should be aware of?

Thanks!

Have a client who's CPA is recommending they change from C-Corp to S-Corp and do it through some sort of "late filing" process. The question is how to handle the Cafeteria Plan in the current plan year.

My gut feeling is that more than 2% shareholders will have to terminate their elections immediately as they will be S-Corp ineligible for at least one day out of the plan year. But does this necessarily have to be the case? Via a "late filing" process, can they look like a C-Corp for the rest of the plan year and maintain their elections intact? Is immediate termination of elections for more than 2% shareholders the proper way to handle this?

Thanks

When doing a QDRO and the ex-spouse still has the balance in the plan, when the participant quits, can the ex-spouse still leave the balance in the plan?

HIPAA exempts from the Privacy Rule a plan with fewer than 50 participants that is self-administered by its employer-sponsor.

An employer with fewer than 50 employees self-administers its health FSA. It is looking at moving the health FSA records to an off-site warehouse location. Assume that all ERISA and Code record retention requirements are met. Will the use of the third-party warehouse cause the plan to cease to be "self-administered" for purposes of the Privacy Rule's exception?

Fortunately, I survived the EGTRRA restatement period last year and didn't have anyone miss the 4/30 deadline. However, a local CPA firm called me last week and said they had one client who last amended their plan at the end of 2002 with the GUST document and the EGTRRA good faith amendment. They have asked me to prepare the necessary amendments and EGTRRA restatement so that they can go to the IRS under the Late Filer program.

Not having done this before, I am wondering ... what should I use as the effective date for the EGTRRA restatement and PPA/HEART/WRERA, etc. amendments??? I am using the Corbel volume submitter document. I know that during the EGTRRA restatement period, we were advised to use the first day of the plan year in which the restatement was being adopted and the document itself contained the various regulatory effective dates. Just not sure what to do with the late amender situation.

Thanks for any input!!!

I know that if a plan fails the Top Heavy test in its first year of existence it will also fail the second years test as well due to the determination date being the same for both plan years. Does the same thing apply to a failed ADP test in a plans first year of existence? In other words if the plan fails ADP its first year does it automatically fail in its second year?

Given an overfunded plan - due to contribution = 150% of FT

The owner dies and the assets is rolled over to an inherited IRA of a child.

Is there an excise tax in this situation? Is there a "reversion of asset"?

Thanks for all responses.

I've been semi-retired for a few years, just now getting back in the game, and am a little rusty about the rules that apply when a present value basis is changed.

We've got a new client that is using the old (pre-1999 or something like that?) rule for calculating lump sums via 100% (up to $25,000) or 120% of the PBGC rate, together with UP84 mortality as the primary basis for determining lump sums. Once that amount is calculated, they then compare to the PPA segment rates with applicable mortality, and the highest amount wins.

They'd like to get rid of the old method and just go by the PPA present value. My question is -- assuming someone gets a higher PV from the old formula, to what extent must that be grandfathered? One consultant told me you had to grandfather the old basis for one year, but could not give me a cite. In my experience, I can't recall needing to GF present values. It would be surprising that, if it IS necessary to GF the PV, that there would only be a one year period.

Can anyone shed any light on this? Citations appreciated.

Hi folks,

I was sent here by the suggestion of some folks at the Bogleheads Investment Forum. They thought some here might be able to make suggestions w/ regard to our inquiry to follow...

My wife and I are real estate sale associates. We each get a 1099 from our employer. We file taxes jointly and I think we are considered sole proprietorship(s).

We get paid with commission checks. To balance social security we designate to which one of us the commission should be made out to based on prior commission checks and how the social security estimated benefits look.

We would like to open at least one Vanguard Individual/Solo 401K and make ROTH contributions only. No employer contributions.

I wanted to do it last year but got caught by the requirement that the account be open by Dec 31, 2010.

The difficulty is we do not know if either one of us will show a profit until our taxes are done which doesnt happen until after Dec 31.

For example, can I open a Vanguard Individual 401K in my name tomorrow and make a contribution even if I do not know if I will show a net positive profit for 2011?

I mean do you HAVE to show a profit in order to be able to open an account and make a contribution? My concern is I open an Individual 401K account now with a small contribution just to get it open. Then come April 2012 we/I show a loss for tax year 2011. Is that a no, no?

In 2010 I showed a profit of $53000.00 and hers was $36000.00. We could have most of the commission checks made out to one person so that that person would be more likely to show a profit but that would throw the social security out of whack.

Can some one tell me based on 2010 profit of $53000.00 what my max ROTH contribution amount to the Vanguard Individual 401K for 2010 could have been? Just to make me feel bad.

If I could open an Individual 401K this year could I make contributions to it with money from tax year 2010 profits which we have set aside?

If any one has any guidelines or strategies on how we might make this work I sure would appreciate your input I am confused.

Kind regards, Capt. Mike