Assume an employer, X. maintains two tax qualified 401(K) plans, A and B, which both have calendar year Plan Years.

Both Plans use the "current year method" of performing the ADP test. X wants to merge A into B, effective July 1, 2011.

Question: In view of the fact that Regulation 1.401(k)-5 is still shown as "Reserved", how does X perform the ADP tests for A and B for 2011?

Should X do an ADP test for A's short year ending June 30, 2011 and a separate ADP test for B for ALL of 2011?

If so, does B need to take into account the deferrals by the former participants of A for its short 2011 Plan Year, as well as for the period July 1, 2011 - December 31, 2011, when performing the 2011 ADP test for B for 2011, or, alternatively, should B only take into account the deferrals by such former participants of A from July 1, 2011 - December 31, 2011?

Thanks.

A participant in a nongovernmental 457(b) plan passed away. In accordance with the plan document the beneficiary (the spouse) elected to receive the benefit in the form of a single lump sum distribution.

I'm hoping that I can get input on the following questions:

1. It is my understanding that the distribution must be reported on a 1099-MISC form. Does this get reported in Box 3 as "Other Income" or Box 7 as "Nonemployee Compensation"?

2. Is the distribution subject to SS and Medicare taxation? If so, does the employer pay their portion, or does the beneficiary need to pick up both the EE and ER portion under "self employment income" (1040-SE)?

Any help would be appreciated.

EBSA Auditor conducting investigation of union pension fund asked for social security numbers of people who received W2 forms from the Union's General Fund. We don't believe he has the authority to ask for this information and that we cannot just provide this information due to privacy issues.

Any guidance from anyone out there? Any opinions with or without support are appreciated!!!

Hi, everyone,

Just need to make sure I'm not missing something here.

I know that under 1.401(k)-1(d)(3)(iv)(E)(2), a 401(k) participant who takes a hardship distribution must suspend deferral contributions for six months.

I can't find any corollary deferral suspension requirement in connection with a non-hardship distribution after age 59 1/2 under a plan that allows in-service distributions.

Can anyone confirm that this is correct? (i.e. that no deferral suspension applies to a non-hardship in-service distribution)

Thank you!!!

Has anyone gotten their EA renewal response from the Joint Board? If yes, when did you get it?

Has anyone not gotten the response?

Thanks.

A retirement plan holds a key-man life insurance policy. The plan is the owner and employer is the beneficiary. The question I was just asked is can someone else be named as the beneficiary of the difference between the current value of the policy and the death benefit amount? I've never had a good grip on the nuances of life insurance in a plan. From my perspective, the plan is the owner and beneficiary -- period. When the participant dies the proceeds go into the plan and are paid out in accordance with the beneficiary form on file. I haven't been able to find information on how key-man insurance is handled in a plan. Thanks for any insights you can offer.

Has anyone given any thought or seen any guidance related to the definition of "retire" for purposes of delaying required minimum distributions? We've just discovered an individual who is only working a handful of hours per year, but has never been formally terminated under the payroll system, so has not yet started RMDs.

I believe I am over complicating this, but I need assistance on how other cafeteria plans calculate imputed income for the children of domestic partners.

Example - Employee is covering his/her "152" qualified children on the plan today and adds their domestic partner and domestic partner children. I can easily figure out the pre and post tax cost of adding the domestic partner and the imputed income for the domestic partner. I am having trouble trying to figure out the pre and post tax cost along with the imputed income for the domestic partners children.

This is the first time our plan is offering this and any assistance or examples would help.

Thank you.

Hi All, I'm curious if anyone knows whether a 457(f) SERP (maintained by a tax-exempt entity) will impact other qualified plans held by the same employer. Specifically, if this 457(f) defined benefit plan will disqualify or have any negative effect on a 401(a) qualified defined benefit plan held for the same employees. Any guidance/suggestions are greatly appreciated!!

Governmental entity has 401a plan that excludes overtime and bonus from compensation. Is this subject to same non-discrimination testing as non-governmental entity with 401a plan?? Thanks.

I have no experience with 457 plans, but a question came to me. A governmental 457 plan excludes overtime and bonus from compensation. Is this subject to the same discrimination testing as a 401(a) plan?? Thanks.

A DB Plan sponsored by law firm is terminated. The multiple owners each own less than 50% of the partnership. Full benefits paid to non-owner rank/file employees. The owners wish to waive all or a portion of their benefits due under plan (it meets the funding requirements but the Plan is not fully funded to pay all benefits to owners).

Plan being reviewed by PBGC now. PBGC generally accepts these "waivers" but only if the owner is a majority owner (more than 50%). PBGC willing to accept these waivers if the owners have the ability to possibly become a majority owner such as if the Firm allows owners to buyout other owners. However, the firm does not allow owners to purchase other owners interest in the firm when they leave, rather their interest goes back to the general partnership - which as I understand - is the more common scenario.

Has anyone been faced with this issue and have they been able to get the PBGC to accept the "waivers" regardless of the majority ownership issue?

I realize there are IRS issues as well - but right now dealing with the PBGC.

Thanks

If a plan participant defaults on a loan which is treated as a deemed distribution and reported as such, what happens when the participant later takes an actual distribution of his account balance (assuming he never repaid his loan after it was deemed distributed)? For example, if a participant had a deemed distribution of $5,000 and upon actual distribution of his account balance the account consisted of $60,000 cash and the $5,000 loan receivable, does the participant receive the entire $60,000 cash or is the loan receivable offset so that the participant receives only $55,000 cash upon distribution? If the former is true and the participant is to receive $60,000 cash, why does anyone ever pay back a loan after a deemed distribution? If the latter is true, how is the amount taxed considering that the regs provide that the participant has no basis in his plan related to the $5,000 deemed distribution and appear to provide that the participant has $60,000 of gross income.

Can a Simple 401k plan allow for designated Roth contributions?

They want to start administering the plan without an agreement during a "discovery period". We question "what's to discover?" This is just routine administration. We don't see why we can't have an agreement before they take over.

Has anybody had an issue with them over this?

I have a client who wants the following safe harbor formula: 300% of the first 1%, then 100% of the next 5%.

With the ACP safe harbor requirement that the plan limit the actual match to no more than 4% of comp, is there anything wrong with stating the formula this way? I suggested they use the regular enhanced formula with an addt'l discretionary match but they insist on the formula stated above.

Any thoughts?

I need some input. I have a profit sharing plan that funds their contributions monthly. However in order to receive you have to be there on the last day of the plan year. Therefore anyone who terminates mid year has to give back every contribution they received through the year (no earnings are considered), even if they are 100% vested. Basically the client is making the participants meet "eligibility" every year. So this would technically make the contribution an ineligible contribution. The contributions are not considered "forfeiture". They are reallocated among the remaining participants immediately. I have never come across this scenario in 10 years of recordkeeping and am not sure how to go forward.

And, the formula that they use is 10% of compensation up to 120,000. If the comp is over 120,000, it's 20% up to the max contribution limit of 49,000. Is there any guidance out there in regards to last day rules and funding contributions other than annually?

This is a group of doctors and support staff.

I am seeing conflicting information on whether the various employers in a multiple employer plan can have different age/service conditions and different vesting schedules. I realize that all service must be counted for all employers for these purposes, but is it permissible for each adopting employer to use a different eligibility or vesting provision than the sponsoring employer?

I took a look at 1.415(g) on plan disqualification to try to guess what happens if a qualified plan is established during a year in which a SIMPLE 401(k) exists.

One section says the employer chooses which plan goes out first, but another section says if a simple plan exists, it goes last (that is, the qualified plan is disqualified first!)

Is this the general understanding? I know there was a thread on this a while ago, but my search criteria was of no help in finding it. Bad (too general) keywords I think.

Thanks all.

We have a client who established a profit sharing plan effective in 2010 but never made any contributions to it so there are no assets. Should we still prepare a 5500?