My brother wasn't careful sending money from his Vanguard "Our deceased dad's name inherited IRA" to a new bank cd that is now titled "Brother's name IRA". He asked for the Vanguard check to be sent to new bank in his personal name. Went directly to them, not thru him. The bank he opened it in doesn't even offer inherited IRAs so he checked off "traditional ira" on application. Money was never comingled with his regular IRA elsewhere.

CD was opened 18 months ago, and Vanguard is indicating they aren't going to help. 

RMDs have been taken based on stretch method (dad died 4 years ago).

If we cant get banks to retitle is there any other recourse? Since IRS will be getting same tax from RMDs either way, would they even notice or care about title on the 1099 R? Thanks.

EDIT I believe there is a code 7 vs code 4 on 1099r indicating it is inherited vs traditional, but would IRS even look at that to compare to previous year, as long as correct rmd taken?

EDIT 2 he just noticed his Form 5498 from bank listed entire cd as IRA contribution for 2020, when the money came from vanguard. I assume my brother never even gave this form to our accountant.

Participant terminated in 2018, in 2021 agreed to a settlement, part of which wage income of $6k monetary consideration for disputed lost wages. The wages were paid as w-2, nothing in the settlement addresses plan contributions.  I am on the fence if this should be considered back pay and allocated an allocation based on 2018, I read 415(c)-2(g)(8) but wondering if the 'disputed lost wage' would have otherwise been included (such as underpaid for hours worked).

I don't have access to the EOB at the moment, I thought this was addressed in there.

Participant terminates December 28, 2020,  but the next pay date is January 5, 2021.

Is she in the 2021 ADP test even though she did NOT perform services for the employer in 2021? 

We filed 2 extensions for 2 plans with plan year ending 4/30/21.  The extensions were sent to Ogden, Utah, return receipt requested on November 3, 2021.  One envelope, two extensions. We typically file extensions one month before the due date.  Today, one of our clients received a denial of the extension request.  Upon closer review of the crumpled, torn-up return receipt from the US Post Office, the stamped date of receipt was December 6, 2021.  While this is after November 30, most assuredly the envelope was mailed in time as the US Post Office could never deliver anything from Florida to Utah in 6 days!    So we notified the other client that they would likely receive a denial as well.  Well, guess what?  They received their letter from IRS today, too!  But theirs WAS APPROVED!

It's a darn shame that we are at the mercy of IRS and the US Post Office.  This is totally unfair to all of us and our clients.  IRS should immediately develop a system to electronically file extensions!  Or do away with the 7 month deadline all together!  It is painfully obvious that they do not have the manpower to conduct their "business".  It took them 2 1/2 months to process a form!  We are basically powerless to do anything other than pay $750 and file under the Delinquent Filing program.  Not worth the aggravation to fight it or risk it for our client.  I guess we need to file these 2 months early to TRY to avoid the problem we had with the 2019 filings.  I don't think they got around to processing those requests until the following year!

Has anyone figured out how IRS is able to have their letters delivered on the date they issue them?  Time travel?

Plan specs:  age 21, 2 mos service, monthly entry.

Participant:

DOH  3/7/21

DOT  4/29/21 (not 2 month svc)

RH  10/5/21

When is entry date?  Rehire date or 11/1/21?

Slight change

DOH  3/7/21

DOT  5/17/21 (2 months but did not make entry date)

RH  10/5/21

When is entry date?  Rehire date or 11/1/21?

Client sold business  in 2021.  They have a 401k Plan with a discretionary match (calculated after year end)  The three owners are all over the age of 65 (NRA per the plan doc); their plan does not allocate the discretionary match to terminated participants.  Could we consider them retired instead of terminated at the date of the sale, and allocate them a match for the year?  I know at the time of the sale nobody was focusing on the plan.....  

In some volunteer work for a charity designing a new retirement plan, here’s a question I’m thinking about.

Assumptions

The plan’s investment alternatives are Vanguard and other managers’ mutual funds, with superior share classes obtained through the (independent) recordkeeper’s and its custodian’s omnibus purchasing power. None of the funds pays over any revenue-sharing or other indirect compensation.

The employer pays nothing toward plan-administration expenses. (The charity’s executive director and board chairperson both tell me they can’t get grants or fundraise for any contribution to, or expense of, a retirement plan, and can’t budget for either.) So, all expenses are charged to individuals’ accounts.

The absence of an involuntary cash-out provision won’t risk putting the participant count near the number that would invoke a CPA’s audit of the plan’s financial statements. That’s so for at least the next few years.

Beyond maintaining former employees’ goodwill (which the charity cares about), does such an employer have its own economic stake about whether low-balance participants involuntarily exit the plan, or may, by choice, remain in the plan? Are there factors I’m not thinking about?

For a participant who has only her $3,000 account, which is better: Staying in the former employer’s plan, or choosing a rollover into an IRA? (To simplify the comparison, assume the individual has no next employer, or the next employer has no retirement plan.) Is the individual’s choice as simple (mostly) as comparing the account charge under the former employer’s plan to the account charge of the IRA the individual could or would buy? Or are there more factors to consider?

Your thoughts?

The Integrated Benefits Institute released a report last week on workplace health programs and thought it may be of interest to you given your coverage of workplace and HR topics. Some highlights of IBI’s analysis include:

• Only 46% of workplaces offer health programs
• Employers are not measuring critical metrics of success, such as absenteeism, presenteeism, and turnover
• Only 50% of workplaces collect data at all to measure success, and half use data to decide which programs to offer
• Offering workplace health programs can help employers gain a competitive edge in attraction/retention, especially important during the Great Resignation

For more information, the report and infographic are available on IBI’s website.

Imagine that an employee at a startup is granted a number of ISOs, which are early-exercised with an 83(b).

A few years later, with those partially vested, and the fair market value of the shares substantially higher, he comes to a shared agreement with the CEO of the company to increase his stock compensation.

Is it possible to increase the rate at which the fully-exercised stock grant is vested, or would there need to be an additional grant issued at a different price to run concurrently?

It's unclear to me how the early exercise would interact with 424(h)3c—were the ISOs here "options not immediately exercisable in full"? 

Hi

Joe and Mary are spouses and have no children under age 21. They do not live in a community state.

Company A is owned 100% by Joe and has employees. No pension plans.

Company B is owned 50/50 by Joe and Mary but Mary is not an employee. There are no other employees, just Joe. No pension plans

Company C is owned 100% by Mary and Mary is the only employee. A DB plan is in effect covering Mary only.

None of these companies interact with each other and they all do different lines of work.

What issues are there?

Thank you

Client company sold and all of the HCE's terminated in May 2021.  They immediately took distributions.  Now as I run the ADP/ACP test I find that a corrective distribution was due one of them.  Do they need to have the Platform reissue the 1099R and if they rolled the funds - do they have to withdraw it from their IRA?  

I did post an incident to FIS but in the meantime am wondering if anyone else has heard when they are going to update the log in for ASP to use something more updated than Internet Explorer?  We are getting the messages now that Internet Explorer will no longer be supported after June, 2022.  We are surprised that FIS had not already migrated ASP to another browser...

Thanks in advance!

I have a client that wants to fund a discretionary profit-sharing contribution and would like to include terminated participants. The plan has the last day rule. Can this be done by adding language to the declaration? It is not taking any benefit away from active participants such as lowering the allocations they are receiving.

This doesn't come up very often, so I appreciate any insight.

I have an ESOP where the family that sold the stock to the ESOP received warrants when the sale was closed.  That is clearly synthetic equity. 

In 2021 the family give some of the warrants to a charitable trust they control but the assets in the trust have to be used for charitable purposes. 

Are those  warrants still synthetic equity?

Am am leaning towards no since no one in the family is a beneficiary of the trust but I am not finding a direct cite.  Does anyone know of a direct cite or has a thought let me know. 

Hi,

A DB Plan at year end receives the following statement in regard to their plan assets:

                                                                                                                            Levonte Capital                                                                                                                                                                                                                                                                                            Capital Statement 12/31/2021

                                                                                          Asset 1 -Howard Avenue  $250,000

                                                                                         Asset 2  Clearstream            500,000

                                                                                         Asset3  Flushing Ave             600,000

                                                                                          Total Plan assest               $ 1,350,000

Is this considered eligible assets for an SF? Thank you.

I'm having a tough time finding it in our document, but are you allowed to exclude compensation received prior to becoming a Plan participant in Cash Balance Plans (specifically in the EBAR calculation)?  We have it set that way for the Profit Sharing Plan, just wanted to see if we could for the Cash Balance as well?  I'm leaning no, but wanted to confirm.

This may seem like a stupid question.

Suppose a plan currently has a last day/1,000 hour requirement, but allocation requirements are waived for anyone who terminates after attaining NRA or Early Retirement Date. Now they want to amend the plan to eliminate this waiver.

Clearly, if someone already terminated employment this year and has attained ERA/NRD, this amendment won't apply to them. But what if someone has attained ERD/NRA, but has not yet terminated employment? Is it ok to apply to them for 2022, or can it not apply to them until 2023?

Is the determining factor the termination of employment - in other words, since they haven't terminated employment yet, is there no cutback? Or would you interpret it similar to a plan where there is a 500 hour requirement with no last day, so that as soon as you get 500 hours, you are eligible for that year? (So that in this case, as long as you have already attained ERD/NRA, you are eligible for this year?) I incline toward this latter interpretation, but I can see the argument for the "dark side."

Granted that the plan is everyone in their own group, not a safe harbor, and not top heavy, so that it may be possible to exclude them anyway...

I've been drafting QDROs for 6 years and haven't seen this situation before. I'm told by the attorney who retained me to draft the QDRO that the Participant/Petitioner's address cannot be in the QDRO due to a restraining order or something against the Alternate Payee/Respondent. It can be excluded from the body of QDRO but listed in the Appendix to the QDRO . The Appendix is not filed with the court but included when the QDRO is sent to the plan administrator for processing. A GAL has been appointed by the court to represent the minor children.

1. If the attorney does want not the Participant's address even in the Appendix, does anyone have an opinion on whether or not the plan administrator will qualify the DRO without the Participant's address anywhere?

2. Does the GAL need to sign the QDRO? 

Thanks.

Is it permissible to have a DC plan in which employer contributions are a flat amount per hour worked? i.e., $2.50 per hour?  I can't find anything that specifically prohibits this approach, but I am not comfortable that it is allowed.  

Employer is trying to move away from a union pension with an hourly accrual rate. 

Thanks in advance!