Trading on margin in qualified retirement accounts is considered debt-financed income and therefore leads to UBTI (unrelated business income tax) / UBIT.

Many other forms of leverage (futures, short sales, gains from lapse or termination of short options, repurchase agreements, notional principal contracts) are either explicitly exempt in the code from generating UBTI, or don't generate UBTI by virtue of entailing no borrowing of money in the traditional sense.

What about using the proceeds from options sales (for example options box spreads) on a rolling basis to buy additional equities, will it generate UBTI? Is it debt-financed income, as the short options create an obligation (albeit the size of the future obligation depends on the performance of the underlying); or not, as (by the same argument that applies to futures) it does not entail borrowing money in the traditional sense?

I've been driving myself crazy on this. Question came up as to whether an in-plan Roth conversion/rollover could satisfy the RMD requirements. I know it can't, but I'm having a devil of a time finding "proof" - and I'm sure it is staring me in the face! I recalled that there was guidance a long time ago where it said that for 401(a) purposes, an in-plan rollover was not a "distribution." So I looked back at IRS Notice 2010-84, etc., etc., and while I found SOME of what I was looking for, I couldn't find anything that confirmed this head-on -  (or possibly my eyes scanned over it). Anyone recall the citation for this? There's ample IRS verbiage out there that addresses this in an IRA context, but seems to be a dearth of similar IRS publications answering this same question for designated Roth accounts.

Shoulda stayed in bed this morning...

if a plan has a large number of employees and for sending out the annual sar and disclosure notices, would it be possible to upload these documents to the companies ADP port hole site where all employees have access and mail out a letter to each person and let them know these documents are out on the ADP port hole for their retrieval if they would like to print or review?

We are looking at taking on a new client for 2022.  They have an existing 401k plan; non-safe harbor.

In reviewing the adoption agreement and plan document, the current TPA drafted an amendment in 2021 that provided a waiver of eligibility for one specific NHCE participant.   

The reason being is that participant was allowed into the plan before they were eligible (not eligible until 1/1/2022) and made salary deferrals to the plan in 2021.

I've never heard of this approach of a waiver for a single NHCE employee; thoughts?

Wife owns 100% of a recently acquired business. Husband owns 89% of his business with 11% unrelated owner(niece).  Minor child age 15.   Wife  on husband's payroll but will remove to limit the  only block to the spousal exception being the minor child. One piece I read by a major insurer indicated that if the parent(husband in this case) ownership was less than 80% there would be no problem(i.e., spousal exception could apply). I think in this situation, that unless the father's interest goes down to 50% or less, the child still has effective control of both  businesses(>50%) by attribution and there is effective control of each corp by five or fewer individuals.  Is my reasoning correct here? 

A related question is when determining controlling interest post family attribution, do you count the attributed ownership more than once so that the total ownership can be more than 100%? I have not seen any examples that show how this is done.

Thanks in advance for any responses?

Hi,
My Company was acquired and the acquiring Organization which is my current company has provided a new 401k Plan from different provider. I want to withdraw the 401k, can I do it  (or) should I mandatory rollover to the new 401k Provider

I have the formula to calculate a 'regular' EBAR.  That is, not including permitted disparity.

Where can I find the formula for the permitted disparity? 

Does anyone have excel formulae to calculate either the EBAR given the contribution, or the contribution given the EBAR?

Son is 100% owner of corp, father over 70 ½ has been taking RMDs since 70 ½.

Father owner by attribution, new broker advising him the father does not need to take RMD because he is not an owner, and he is still working.

I think it would have been in best interests of client for broker to keep his mouth shut before volunteering info to client w/o checking with TPA first?

This may be basic but I just wanted to make sure no employees get inadvertently excluded.  Company A is 100% owned by John; Company B is 100% owned by Fred; John and Fred each have 50% ownership in Company C.  All three companies refer business to each other and work together in providing services to common clients.  If Company A wants to sponsor a qualified plan, all three companies would be members of an ASG and would have to all be covered by Company A's plan - is that correct? 

Hi all,

We have a client implementing a 6-month accrual rule for their Cash Balance plan and would like to have the same 6 month requirement for their Profit Sharing Plan. Is it even possible to have a 6-month elapsed time rule in place of the normal 1000 hours? Haven't seen anything yet on this issue.

We're drafting cycle 3 docs for a PSPs receiving excess assets from terminated DB Plan. Under FIS the plan provides that excess assets from a terminated DB can be transferred over. Does this require the distribution options to include J&S provisions? These PSPs  previously paid out lump sum only.  The J&S provisions would be required if Money Purchase Plan assets were being transferred or merged, but I don't believe it is required for excess assets from a terminated pension plan. Is this correct?

I know I am reaching on this, but could you start a safe harbor match effective 1/1/2022 with the notice going out as late as 12/13/2021?  I know that the rules for proper employee notification would require that notice to be distributed no later than 12/1, but is that a "safe harbor (so-to-speak)" notice deadline?  If the safe harbor match notice is given after that date and if the eligible participants then still have enough time to make a decision, receive education material, ask questions, and are ready to go by January 1, 2022, can that still be considered valid enough to have the safe harbor effective 1/1/2022?  For a small group of employees, this could probably be done.  But would it be considered valid?

So I just heard from the enrollment folks at the IRS that they will not grant any CE towards my ERPA renewal, for studying for (and passing) at least one Enrolled Actuary exam during my 2019-2021 enrollment window.  

Guess I've got to download some recorded sessions this month.  Grrrrr......

How is this not legitimate continuing education?  What, it's not a "CE program" with an IRS-issued certificate?

(If there weren't going to be a delay between my ERPA expiring and being able to apply to the JBEA, I'd just abandon the ERPA credential.  EAs get higher ability to represent taxpayers than ERPAs.)

I feel like I should know the answer to this but not sure I've ever seen discussed.  Am curious for thoughts or any insight from actual experiences with similar situations.

Employer established non-qualified deferred compensation plan to permit deferrals of substantial bonus amounts for a wide range of employees.  All amounts in the plan were fully vested at all times and generally designed to provide for distribution upon separation from service.  No employee salary deferrals ever went into the plan.   Of course, there was no trust for the plan.

After several years in existence, former executive with various axes to grind surfaces and says the Top Hat Plan is not really a Top Hat Plan because it includes non-management and non-HCEs.  (Let's assume for this thread that the plan clearly would not qualify as top hat plan and company readily admits this after looking at general guidance.)  Former executive threatens to report the company / plan to the regulators if he doesn't get his way on severance and other points.

The Plan has had a few participants retire and get benefits under the plan after termination but not a lot.  Most of the participants in the plan are still working and have large accrued balances.  While there are definitely some non-Top Hat participants in the Plan, there are not a lot of those and their balances relatively small.  The company feels it could kick them out and deal with them and their accrued benefits outside the plan easily enough if possible.

Does the company have any corrective options?  Could it somehow kick out the non-top hat folks and deal with them outside the plan and continue on even though it was presumably operating without complying with all applicable ERISA retirement plan protections in place?  Does the employer face potential exposure for the fact it was operating such a plan for years without any general attention to minimum coverage and participation rules--i.e, do non-participants have any potential claim they should have been covered by plan?

Thanks

Do health-reimbursement plans provide domestic-partner coverage?

Imagine this not-so-hypothetical situation.  An employer sponsors a health plan of the kind people call an “HRA” or health-reimbursement-arrangement plan.  There is no participant contribution.  Claims for reimbursement of a medical expense are paid by the employer from its assets.  Presume the employer intends the plan to fit Internal Revenue Code § 105(b) and the Revenue Rulings interpreting § 105(b) regarding an HRA.

The employer knows same-sex couples have no less right to marry than opposite-sex couples.  But the employer, for its own business reasons, wants to provide its HRA benefit regarding the medical expenses of an employee’s non-spouse civil-union or domestic partner [26 C.F.R. § 301.7701-18(c)] equally to those of an employee’s spouse.  The employer wants to provide this even if there is no support for treating an employee’s domestic partner as the employee’s spouse, dependent, or child.

1.    Do plan-document vendors set up providing HRA coverage for a domestic partner as a check-the-box choice?

2.    If it is a document choice, what (if anything) does a vendor explain about the Federal tax law implications of providing that the employer will reimburse the medical expenses of an employee’s non-spouse?

3.    If an employer provides domestic-partner coverage, what methods does it use to add an amount for the value of the coverage, or of the reimbursements, to an employee’s wages for W-2 tax-reporting and withholding wage and income taxes?

Here is a new one for me.

DC plan sponsored by Company A

Company A is owned by Dad 75% and Son 25%. They have employees and covered under the plan. MD office

Company B is owned by Son's wife 100%. This company has 2 employees. Dental office

Son and wife have minor children.

2 companies have no connection whatsoever.

This is in New Jersey.

Do I have controlled group issues? I would not be asking if Son owned 100%. Not sure how and if attribution plays a role in here.

To complicate matters, they do not want company B in the DC plan. Company B wants to do SEP.

Thank you

I know we are in the process of doing the Cycle 3 restatements for all non-volume submitter DC Plans.  When are restatements due for any DC non-volume submitter plans due?

Thanks in advance!

This is an actual question I received from a client. I tried to explain that when a loan is taken, the funds are removed from the account and given in cash, so they cannot be invested in the plan because they aren't in the plan. They get reinvested according to the participant's allocation elections as they are repaid. He then asked why the loan balance was shown on a report as an asset of the plan, and I tried to explain that the loan balance was basically an account receivable at that point. After several additional exchanges, he asked for some regulatory information to support what I was saying.  

This left me at a loss, because this is such a basic concept that I cannot fathom there being any regulatory information about this. I even tried but couldn't find anything. Anyone have another way to try to explain it?  

An individual claims he's due a pension benefit from company A.  Company A was acquired by company B and then we acquired company B.  The plan was terminated before we purchased company B and we don't have any pension plan records.  What obligations do we have to the individual?  Thanks in advance!

Have a client who had to wind down his business, terminated the firms  PS/401(k) plan (5 people if that matters) in 2020, last distribution was made 2/19/2021 and a final form has been filed. This was not related to Covid 

Business has started to come around, owner is in his 70's and one employee still works for him that was a participant in the terminated plan, age late 60's.

Now they would like to adopt a Profit Sharing Plan for 2021, assume no deferrals at least not for now, would this violate the Successor Plan rule? Have never been presented with this situation.

Any help is appreciated