Can a service provider agree to pay fees that would have otherwise been charged by a different provider and taken from plan assets?

I have just inherited a new client, and, in looking at their documents, there was never a PPA restatement filed before April 30, 2016; the last document that I was provided was the EGTRRA restatement.

The client searched their records and they agree that the PPA restatement was never prepared, and have authorized the preparation of the PPA document and the VCP filing.

In 35 years in this business, I've never had to do a VCP filing, thankfully. My only question on this is: What should be the effective date of the PPA restatement? Is it something before 4/30/2016 (like 1/1/16), or should it be current, say 1/1/2022?

Thanks for any replies.

Is there a minimum 402g excess that does not require the Plan Administrator to provide a notice to the participant regarding making a withholding election?  We have a 402g excess of $12.  

Thank you.

A Money Purchase Plan invested in art work that has appreciated in value. The art work will be sold by the Plan in state. Typically when art wok is sold within state, sales tax must be paid. Are there any justifications for to a qualified ERISA plan being exempt from state sales tax upon sale of a plan asset, art work? I don't see an ERISA preemption argument since the art work will leave the plan and be taxed as a non-plan asset when distributed and sold. 

What's the best way to word the definition of the pay credit in a Cash Balance Plan, if you want to allow it to rise each year?  I'm not an actuary, but I've seen charts that show limitations for Cash Balance contributions based on their age (like a 40-year old may only be able to contribution $100,000).

I know it's not the 415 limitation, so just trying to figure out the best way.

I apologize for all of the questions, I'm just trying to learn more about these plans so I can be more helpful to the people in my office.

Thanks in advance!

Hi - these scenario pertains to ROTH IRA's - issues center around the role/rights of a surviving spouse beneficiary and also multiple beneficiaries when one is not an eligible designated beneficiary.  

Husband & wife each have Roth IRA's and are both older than 72.  Primary beneficiary on each is the spouse and there are 6 contingent non-spouse non-child beneficiaries who share equally.  5 of the contingent beneficiaries are  <10 years younger (thus,  eligible designated beneficiaries) and one is >10 years younger (thus, a non-eligible designated beneficiary).

Husband dies first - wife survives and changes ownership of his Roth IRA to wife before the end of the year following his death.   She names the 6 people (per above) as her beneficiaries.

 Questions: 

1.  Must wife take any RMD's from this Roth account during her lifetime?

 2.  Since one beneficiary is a non-EDB, upon wife's death, do the other beneficiaries lose their ability to use the 10 year exception (lifetime stretch)?  See  §1.401(a)(9)-4 (e)(2) multiple designated beneficiaries.

 3.  If after wife's death each beneficiary rolled their respective amount to a separate inherited IRA (in a manner similar to that outlined in §1.401(a)(9)-8(a) for separate accounting in a qualified plan), would the EDB's be able to use the 10 year exception (lifetime stretch)?

 4.  If 2 & 3 don't preserve the 10 year exception (lifetime stretch) for the EDB's, is there some other way to preserve it?

 5.  If the non-EDB rolls over her portion to an inherited Roth IRA, would RMD's be needed in years 1-9, or just full distribution by year 10?

 Thanks for your input/help!

A private US based company has two equity plans, one for granting options in the US and one for granting warrants in an EU country.  (As I understand it, they grant warrants to comply with local law).

I would think the foreign grants are included in the Rule 701 analysis, but I'm getting a different story from a record keeper and I can't seem to find any guidance on the matter. Anyone have thoughts or a good resource to point me to?

A few years ago, sponsor amended plan to exclude by name two partners (there are several other partners in the plan).

Now they want to remove that exclusion.

Are there any discrimination issues given the fact that the amendment only affects HCEs?

I wouldn't think so because the HCEs aren't getting special treatment per se.  They've otherwise satisfied the age/service conditions.  It's not like they are being let in early.

I just want to make sure I'm not overlooking anything.

          I have a medical practice as a client maintaining a 401(k) plan. One of the doctors owns 100% of the practice. Another doctor, age 33 and not an owner just an employee, is also participating in the plan. This 2nd doctor has a W-2 in excess of 3.3 million dollars. He also maintains an LLC which does medical consulting (totally separate from the original medical practice) that generates about $100,000 @ year. He would like to shelter more money than he is currently doing.

Question: Is there anyway that he can shift some of his earnings from the original practice, where he is an employee, to the LLC that he owns 100%? 

Non taxable fringe benefits - not eligible for 401(k) per plan comp definition but plan applied rate of 401(k) election and deposited it into the plan.

Amount has been refunded and 1099-R will be issued. Does this now become taxable income for year of refund?

Plan has online enrollment, but from time to time they get hardcopy enrollment kits mailed out.  The sponsor is billed $x for each hard copy.

I that an acceptable expense that can be paid out of the forfeiture account?

Under the SECURE Act, Lifetime Income Illustrations are required to be provided to participants in participant-directed plans.  The first illustration is due on any quarterly statement up to June 30, 2022.  For plans on platforms such as Voya or the American Funds, the fund company is providing this illustration.  How is anyone handling the illustrations for participants self-directing in brokerage accounts?

Hi folks.

Doctor does some 403(b) deferrals at the hospital.  But he also has his own practice.  (No deferrals for him there.)

I know that the 403(b) deferrals count against the 415(c) limit under the practice's profit sharing plan.

But would they also get included in the 401(a)(4) average benefits percentage test for the practice's cash balance and 401(k)/profit sharing plans?

Thanks.

--Bri

A single employer maintains two calendar year plans to avoid the audit. On January 1, 2022 Plan A has 90 participants and Plan B has 90 participants and both plans are identical from a benefits standpoint. On July 1, 2022 Plan B will merge into Plan A (waiting until 1/1/2023 to merge is not an option due to other business reasons).

On July 1, 2022 Plan A will have 180 participants approximately. 

Is Plan A a large plan filer beginning on January 1, 2023? Or does the mid year merger have any impact on making them a large filer for 2022? I am being told they will require an audit for 2022 and can't figure out the reasoning why and the person telling me this can't provide any support for their reasoning. 

Thank you 

Hi, 

Good Morning!

One of the plan is terminating due to stock acquisition and the term date and sale date happens to be the same date 01/2022, however there has been contribution (employees) coming into the plan until 03/2022.  As per their counsel this is not a successor plan and they have filed for VCP, also the acquiring company is part of a controlled group and they counsel has also stated a consent to terminate the plan was adopted BEFORE closing and before the entity became part of a controlled group with other entities. 

Couple of things. 

1. Participants from the terminating plan will not be moving into the acquiring plan. Instead they are moving to a new 401k plan that will be set up by using the same EIN. 
2. They could wait to transfer amounts from the old plan to the new plan until the IRS has responded to the VCP filing However, there’s no guarantee of that. If it takes longer than that, they would reevaluate

3. As per they counsel the plan was terminated BEFORE closing. The options for distributions/transfers will be different for pre-closing contributions and earnings versus post-closing contributions and earnings.

   Counsel has stated Contributions and earnings for pre-closing payroll period: Participants must be given the right to take a distribution of their accounts for pre-closing contributions and earnings. They will be offered the option to have these amounts transferred/rolled over to the new plan. Contributions and earnings for post-closing pay periods: These should not be distributed. Post-closing contributions and earnings would be transferred automatically to the new plan (if approved by the IRS).

I've handled successor plan previously however this is something completely new, this is something doable? Will there not be a successor plan situation?

Thanks

Since the new rule with trustee agreements not being pre-approved, I have seen some things I am not accustomed to.

Specifically, I have seen documents executed with the only trust agreement being one for a directed trustee So no corporate discretionary trustee and nothing with the employer acknowledging their responsibilities. Perhaps I am just having amnesia since last restatement period, but doesn't there have to be something beyond just a directed trustee?

Would it be permitted to make a Minimum Top Heavy Contribution in a non-top heavy plan?

Plan A - PS Plan with no keys

Plan B - PS Plan with keys

Plan C - CB Plan that includes some from Plan A and some from Plan B (including the key employees)

Plan A requires B/C to pass nondiscrimination. Plan B/C does not require Plan A to pass nondiscrimination. Based on this, we would say that B/C forms a required aggregation group but does not need to include A.

Plan B/C is Top Heavy. However, the plan sponsor would like to make the minimum Top Heavy contributions for B/C in the two PS plans - this would include making contributions to A for those who are participating in A and C.

Thanks in advance for your thoughts!

Hello everyone,

Does the 10% excise tax apply to the post March 15th refund of a discretionary match that was calculated and deposited as a lump-sum after the end of the plan year? Thank you all. As always, I appreciate your assitance.

it's been a while since I've had to deal with a 1099 for a 402g failure.

If done by 4/15, does the participant get 2 1099's?  One with code P for the excess and one with code 8 for the earnings?

Afterward, it's just one for code 8 for the earnings, right?

Pooled 401k plan, client deposited the match true up as instructed in Feb 2021 (Jan YE) then forgets he's done that when reporting is finished in November and deposits the full true up again.  I think this could be considered a mistake in fact and returned to the client or held to utilize for the following plan year.  Thoughts?  He's also deposited more than he needs for the 1/31/22 PY deposits though room for PS and I'm thinking he can take out the $11475.67 that was the duplicate 1/31/21 match true up but has to allocate $8300 additional deposited during the year as PS.  Agree?