Participant in plan that has brokerage accounts took a distribution of all her funds in 2019.  We are just finding out about this like last week.

She took the money to herself and there was no withholding.

Is there a penalty for not withholding?  How does it get assessed?

I know there's gonna be a late fee for the tardy 1099-R.

New subscriber here. In a safe harbor match plan, a previously full time employee that now goes part time can continue to defer AND receive the safe harbor match. However, Im not sure if this is the case with a NON-Elective 3% safe harbor plan? This same employee can contunue to defer BUT are they still entitled to the end of year 3% non-elective? TX

Did the CARES Act change the requirements/ability to make changes to your Safe Harbor Plan?  A client asked me this, thinking a change could make up to December 1.  I don't seem to see it in the regulations, but just wanted to clarify.

Thanks!

Retiree has multiple Roth IRA annuities with lifetime income riders.  Retire wants to start lifetime monthly annuity income streams, and have it deposited to his Roth (non-annuity) IRA (as a direct trustee-to-trustee transfer) to continue sheltering earnings from taxes, until the funds are spent for living expenses.  While payer custodian is willing to do the transfers, they insist that  each monthly transfer request for each contract be accompanied by a fresh Letter of Acceptance from the payee trustee.  They say that IRS "requires" an LOA for each transfer and that a standing LOA is not permitted.

I've done some research on this - IRC Section 408, IRC Section 402(f), IRS Publication 590-B, IRS Form 1099-R Instructions, IRS website, etc. and can find nothing about an LOA requirement.  I can't access it, but I'm pretty sure that Revenue Ruling 78-406 (1978-2 C.B. 157) introduced the direct transfer concept and elaborated on the distinction between a direct transfer and a rollover.  Don't know if there's anything in it about "required" LOA's.

As you can imagine, with multiple contracts and monthly transfers, it's burdensome on the retiree and also on the payee trustee.  It's definitely got to be painful & expensive for the payer trustee to process these monthly transfers manually as one-off transactions.

Can anyone confirm or dispel the myth of IRS "required" LOA's for direct transfers (with cite)?

 Thanks for your help!!

Mimecast has a feature whereby it scans outgoing emails for SS#'s.  The problem is that there are too many false postives, the most annoying of which is that it seems to scan even things like peoples Facebook links.  So there are some clients every time I email them I have to delete their signature to avoid getting bounced.

Is that commonplace with all of these tools?  Is there a better mousetrap out there?

Wanted to see how others are handling this. Client is invested in Mutual Funds (A Shares) in their Qualified Plan. They take a loan for $20,000 and start making repayments on the loan. The repayments are reinvested into the A shares but they are being assessed the Sales charges associated with A shares. Do others follow this process or do you not charge the Sales charges associated with A Shares?

I assume the IRS has made a decision about whether or not they will extend the Auto Enrollment missed deferral corrections in ECPRS which sunset at the end of the year.  Has anyone heard what that decision is? 

Two different employers run separate 401k plans under a controlled group and the transition rule is ending soon. Is it correct that if the plans continue to operate separately, they won't be pulled together at all for testing purposes if the plans independently pass testing on their own?

If yes, it seems both could be Safe Harbor with different matching formulas and could stay separate and pass all testing. Too good to be true?

Prior to the SECURE Act, plans could choose which beneficiaries to apply the 5-year rule to. The default was to only nonperson nonspouse beneficiaries. Some plans would apply it to all nonspouse  beneficiaries. With the SECURE Act, can plans apply the 10 year rule to all nonspouse beneficiaries, including eligible designated beneficiaries (EDBs)? Or must EDBs receive RMDs starting the year after death?

Hi

Having a bit of brain freeze.

DB/DC combo, both plan t/h. DB does not provide t/h and also no t/h for key under DC. Plans tested together

I have owner, a non-owner HCE and NHCE, total 3 participants.

Non-owner HCE gets 0.05% in DB for 401(a)(26). NHCE is only covered under DC.

For 2020, gateway requirement is 5%. The owner does not want any PS allocation and will only get 3.5% of compensation as AB in the DB plan.

Under gateway, NHCE gets 5% in DC.

What is the minimum t/h I have to provide to the non-owner HCE under the PS plan?

3% or 3.5% or 5%

Thank you

Does anyone know what the repercussions are for failing to include a Schedule SB? Is it similar to failing to include an auditor's report on an audited plan and the client will receive a letter from the DOL providing 45 days for the client to correct the filing?

Does a 412(e)(3) Plan get an extension to 12/31/20 to make a 2019 Plan contribution, and, if so, does the Plan have to file a 5500 by 10/15 not showing the contribution or is it extended also. 

Thanks all.

Hoping someone out there has also experienced a DB plan termination (covered by PBGC) where the investment firm has refused to cut checks to participants who are on the US Treasury's OFAC (Office of Foreign Access Control) list, presumably due to drugs or terrorists involvement.

In our client's case there are two participants, total lump sum = $110K.  The participants are working with an attorney who has signed distribution election forms on their behalf.  One or both of these individuals are no longer in this country.  They both have elected a lump sum payment.  Not sure that the PBGC missing participant program is a viable option since they are not missing.  In addition, the client is not happy that the cost under the missing participant program = $135K rather than the 110K lump sum amounts.

Does anyone have a suggestion.  The client wants to close out the plan as soon as possible but does not want to end up with a legal nightmare.   

I have a few clients who signed Profit Sharing documents for 2019, but due to COVID opted not to make their contributions and instead plan to start in 2020.  Since there were no contributions in '19 and the assets are $0, is it necessary to file a Form 5500 with $0 assets?

Thanks!

Are you able to freeze a 412(e)(3) Plan that is fully funded with life insurance and annuities?

If so - what about the premiums that are required?

A client just purchased/re-organized various companies so that we now have a controlled group due to family attribution.

                              Company A&B                   Company C

Dad                       51%                                    100%

 Son                      49%

 Currently we have three different plans with different entry dates, all are safe harbor match plans.

A--after 3 months immediate entry at the beginning of the month.

B—immediately upon hire

C--1 year, due entry 

 All companies have roughly the same number of employees—5 to 10.

The client is resisting one plan document with the same entry date for all participants.

 Won’t the different entry dates most likely cause testing to fail?  Which tests will most likely fail? 

 Am I required to have only one plan document?

Thanks

Hi,

Can anyone tell me if the increased loan limits under the CARES Act has been extended past September 27? 2020?

Thanks.

Takeover 401k PS plan - never had a TPA apparently.  There has never been tracking of balances by money source (401k & PS only). Terminated participant wants to take a full distribution. For tax purposes upon distribution only, does it matter that there are no defined balances between sources?

Does anyone know if DFVCP filling fees can be paid to the DOL from plan assets (ideally, forfeitures), or do they have to be paid directly by the plan sponsor?

I haven't seen a lot of discussion of this issue. That's likely because of at least two reasons: first, in DC plans where most people terminate and take a full distribution on or before NRD, there are thankfully relatively few death distributions, and second, Covid has thrown everything into a tizzy this year.

At any rate, recordkeepers are beginning to send out their "default" provisions - so it seems like a good time to think about the subject in more detail.

My own preference, from a plan admin point of view, and for most of our clients, is the desire to get such amounts paid out of the plan sooner rather than later. Beneficiaries GENERALLY want the full lump sum amounts ASAP (whether in cash or rolled to an IRA) so I'm really talking about a limited number of situations. Do you plan to allow the full range of allowable distribution options, or restrict it to a lesser time period (for example, the current 5-year limit)?