One person sole proprietor adopted Keogh 401k ( profit sharing /money purchase) in 2005 at fidelity then advised by advisor at fidelity to change to SEP IRA for simplicity in 2015.Based on my income I realize now I would have been able to contribute more had I stayed with Keogh.Never filed 5500 although the balance didn't reach 250,000 until 2012 and was not aware I was suppose to terminate Keogh upon opening SEP IRA.Keogh ( profit sharing /money purchase) has not been funded since opening SEP IRA in 2015.Also I mistakenly since did back door Roth for tax year 2015 to 2018 thinking there would be no tax consequence but realize now there is since I have a SEP IRA..

My CPA does not want to help with this so looking for guidance on who to call for help with this.I assume I need a TPA but wondering if I will be able to find one to help me if I do not have an ongoing relationship.Can anybody recommend a TPA in 32207 zip code area( jax,fl) or one that would be will be able to help remotely.

What are my chances of getting a favorable decision with these issues using the VCP/SCP ? Hopefully I can connect with a TPA to help me soon but if not should I file a 5500 before the 7/31/deadline even if I will be asking for a retroactive termination of Keogh back to 2015 when the VCP is filed.

I took an extension and have not funded my SEP IRA for 2020 .Based on my income and age I would be able to contribute about 10k more to a 401k vs. a SEP IRA for 2020 but wondering if it would be a bad idea to adopt a new 401k for 2020 while  still sorting through the mess with my old Keogh?

Sole prop plan.  Plan terminated 6/30/20.  Profit Sharing only.  Owner wants to make a contribution for the year.

How do I determine the owner's comp?  Sched C won't be ready until next year.

What if it's not PS only, but a 3% SH, or a plan with a fixed match?  Do I have to wait until late-winter or spring? 

We are filing a final short form 5500 for a plan that merged into another plan effective 3/31/20.

In Section VII, question 3a asks 'has a resolution to terminate the plan been adopted?' Should this be a YES or NO since the assets merged with another plan, and did not technically terminate?

Has anyone heard if the IRS is going to come out with any non-amender program as a means of allowing these non-profits to correct the fact that they did not restate by 6/30th?  Already have someone in that situation (not a client I should point out!).

It occurred to me that they did away with all the $325 VCP options so I do wonder if there will be anything...

Owner is thinking about retiring and shutting down his business, no sale.  Since business is terminating would plan still be considered safe harbor even if terminated mid-year?  It's not a sale or merger so I'm questioning myself.  

I have a client that is a closely held business that sold all of its business assets related to its union business and was assessed withdrawal liability by a pension fund.  We argued that the asset sale limitation under Section 4225(a) limited the assessment to 30% of the company's liquidation or dissolution value.  The fund is taking the position that the company is not entitled to this limitation because it did not sell "all or substantially all of its assets" as required by Section 4225(a).  Of course, the company did not sell its cash and A/R but also did not sell its minority stock ownership in a different closely held company (it would be very difficult to sell this minority interest to anyone).  Based on this, the Fund is saying that since Section 4225(a) on its face requires a sale of "all or substantially all of the assets," the limitation does not apply.  If the company had sold its minority stock interest in the other company it would have sold more than 85% of all its assets.  Even without this stock sale, the company did sell 100% of its operating business assets.  I have researched this and could only find one older arbitration case where the arbitrator held that non-operating business assets should be excluded in determining whether all or substantially all of the company's assets have been sold.  Does anyone have any experience with this?  Thanks in advance.   

I am looking at a non-safe harbor 401k plan that failed the ADP test (passed ACP) in 2017 and 2018.  Only 1 of the 3 HCEs were required to take money back and that was done each year.  About 15 total participants are shown in each years ADP test.

However in reviewing that plan now, it seems that from 5-10 non contributing eligible NHCEs were left out of the tests.  Adding them back in will make the test fail even worse.

Can we have the employer make a QNEC for these past years even through we already made a distribution of the excess to the one HCE?  Or do we have make an additional payout to the HCE since we already made what would be a partial refund?   

Thank you for any replies

Hi,

A owner only DB Plan (owner and wife) is overfunded. He was taking RMD past few years based on Accrued Benefit times 12 (meaning did not elect a particular benefit ie J&S or Years Certain etc.-- this has been discussed on this forum in the past as a method for an RMD for an active participant). He retired now and wants to terminate and rollover into two IRA. The issue of course is that the plan is overfunded.  To avoid any reversion and excise tax he will  keep the plan open and elect a partial lump sum distribution and roll 80% of his benefit into an IRA. The remaining 20% of his Accrued Benefit will remain in the plan. Is this a feasible option? (by opting for  a partial lump sum he is not changing his original election since he never made an election until now, rather he was taking RMDs. In addition, even if this considered a change of benefit election, since he now retired and has a change in status, the change in status should allow for a new benefit election to be made). Thank you for any insights and thoughts on this matter. May we all be safe always. 

Just discovered that client mailed their 5500s for 2018 instead of using EFAST.  Does anyone know what happens to 5500s that get mailed?  I assume they are treated as not having been filed and we need to do a delinquent filing and pay the penalty?

A client is an adopting employer in an MEP. The employer is Top Heavy for 2020 and the keys are contributing. The employer is stating that they will be selling a business unit this year and terminating non-key and possibly key employees. How does this impact the 2020 Top Heavy minimum? Are those employees simply deemed as terminated prior to the end of the year and not allocated the Top Heavy minimum? Or, would the minimum be calculated on compensation until the sale for those employees?

Any feedback is appreciated. Thank you.

My BFF’s husband recently passed away. QDRO with ex wife as AP: should the ex have been paid out her 50% of QDRO at the time of divorce 9 years ago? This is for Pension and 401K only. Life Insurance death benefit is in lieu of remaining balance of alimony upon death (12% only of Life Insurance  policy).

Noe that he is dead, what is my BFF entitled to, especially if QDRO hasn’t been yet paid to the ex? 

seems like the ex is getting all the documentation and my BFF as the current wife and executor of the Estate is getting little to no info or help from her late husbands company.

thank you.

We've received a divorce decree from a participant in Nebraska.  Pursuant to the signed decree: 'For the purposes of continuation of health insurance coverage, the Decree shall become final and operative six months after the Decree is entered."

Question: Has anybody dealt with this before?  I have seen mention of this situation on Benefitslink threads, but curious how it was resolved practically...   because the plan is self-funded would ERISA preemption apply?  Or because of the manner in which it is worded - that for health insurance, the divorce isn't effective until six months, the COBRA qualifying event doesn't happen until 6 moths?

Nebraska Statue Below:

42-372.01. Decree; when final.

(1) Except for purposes of appeal as prescribed in section 42-372, for purposes of remarriage as prescribed in subsection (2) of this section, and for purposes of continuation of health insurance coverage as prescribed in subsection (3) of this section, a decree dissolving a marriage becomes final and operative thirty days after the decree is entered or on the date of death of one of the parties to the dissolution, whichever occurs first. If the decree becomes final and operative upon the date of death of one of the parties to the dissolution, the decree shall be treated as if it became final and operative the date it was entered.

(2) For purposes of remarriage other than remarriage between the parties, a decree dissolving a marriage becomes final and operative six months after the decree is entered or on the date of death of one of the parties to the dissolution, whichever occurs first. If the decree becomes final and operative upon the date of death of one of the parties to the dissolution, the decree shall be treated as if it became final and operative the date it was entered.

(3) For purposes of continuation of health insurance coverage, a decree dissolving a marriage becomes final and operative six months after the decree is entered.

(4) A decree dissolving a marriage rendered prior to September 9, 1995, which is not final and operative becomes operative pursuant to the provisions of section 42-372 as such section existed immediately preceding September 9, 1995.

When participants in a deferred comp plan elect to receive installments over 5, 10, 15 or 20 years, they have been permitted to choose whether those installments will be calculated using a "Level Payment Method" or "Percentage of Retirement Account Method."  Where a participant wants to change from one calculation method to the other without changing either the commencement date of the installments or the number of years over which the installments will be paid, does anyone think 409A's usual rules about changes in time and form of payment -- including the 5-year delay -- would need to be observed?  

Divorced in 2009. Stamped QDRO sent and accepted by ex’s plan. Was told only one of three accounts could be spun off and the other 2 would when ex met a distributable event. Ex just met such event. I called and received a letter telling me that my QDRO is too old now and must be redone?? What?? They are the ones that wouldn’t spin it in 2009 and now it needs to be redone?  Has anyone faced a similar situation?

Can a severance plan be included as part of a H&W wrap plan document

We currently have a separate severance plan document but are restating our H&W plan as a wrap plan

we would like to avoid additional Final  5500 filing for the severance plan each year

Thx

there's  company  A and B. As of 12/31/19 all nhce's of company A "terminated". They were all hired 1/1/20 by Company B.  There are two remaining  hce's ( the two owners). They are not expected to have any ownership in company  B.  The two entities are  still hashing out what to do with company  A (asset sale, etc). The  two owners of Company  A (only two employees)  are expected  to have capital gains from at least the sale of goodwill in 2020. 

Question. Can you count that as plan compensation for 2020 and in so doing make contributions in 2020?

Several years ago a Mississippi Chancery Court judge ordered in a divorce decree a QDRO, as a separate interest stating, "Counsel for the defendant is directed to draft the QDRO in compliance with federal requirements. The parties shall cooperate in the drafting of the QDRO and in its approval process by the plan administrator in a timely fashion."

Points of note:

1. The counsel for the defendant has to date (5 years later) not drafted the QDRO as directed.

2. The separate interest concerns interest in the plaintiff's Mississippi PERS account. He has not yet retired. PERS membership handbook states,  "Your right to your benefit is exempt from levy, sale, garnishment, and attachment; and is not assignable. Furthermore, PERS has no authority for recognizing, implementing, administering, or enforcing the provisions of any domestic relations order or other actions decreed by a court in a divorce settlement." 

So a couple of questions arise:

1. If counsel for the defendant does not draft a QRDO prior to the plaintiff retiring can that be done after he retires or is the door closed?

2. As the MS PERS states they will not recognize or enforce and thus not qualify the DRO is the plaintiff still responsible getting to the defendant their "separate interest" when there is no QDRO?  This is assuming that another court would find that the judge in the decree ordered something that is not legally possible thus the counsel for the defendant cannot be held at fault for there not being a QDRO but as the judge did find that the defendant does have a special interest in the PERS as a marital asset the amount is still owed. 

Any thoughts from anyone?  

I have a plan that is terminating and has liquidated all its assets that were held at a national carrier earlier this year.  Funds were disbursed properly, per participant instructions.

They did this before we could calculate the 2019 Safe Harbor contribution for them.  The national carrier, as expected, is reluctant to re-open the plan.

Our solution was to just have the client open up a bank account using the TIN obtained for the trust.  The bank cannot seem to understand the nature of this transaction and is saying they need to "register" the the name as a new entity thru their CPA.  And they said "alternatively, you can have business documents registered (articles of incorporation or short form) to the name [you] are looking open the account under." [sic]

Any talking points to get these guys off the ledge?  I've never had such trouble (or, rather had a client get so much push back) trying to open one of these accounts.

This is a big, international bank, so I'm mystified as to why they cannot understand the process.

Plan X (PN 001) was effective 1/1/2012 and was made up of two entities (A and B) in a controlled group.

During 2020, Company B is sold to unrelated buyer. Will spinoff / restate as of 12/31/2020 as Plan Y. 

Will the plan number for Plan Y have to be 002 or is 001 okay?

Original effective date is 1/1/12, so for the "new" spun off plan, this is not considered a "first return/report", correct?

Would Line 4 (of the 5500-SF) be completed with the info of Plan X on Plan Y's 2020 return?

Is it permissible to request a participant to sign a release that he accepts the calculation of his benefit from an ERISA pension benefit plan?

Long history short--the participant terminated employment over 15 years ago, and disappeared with a vested balance remaining in the Profit Sharing Plan. The employer could not locate the participant, and so after 5 breaks in service the employer decided to forfeit the entire account balance including the vested amount, with the understanding that the vested amount and earnings would need to be restored if this participant were found. This forfeited amount was used to reduce the employer contribution for the year it was forfeited, in accordance with the Plan provisions.

Fast-forward to last week--the employer was contacted by this missing participant.

We (third-party administration firm) have calculated the investment earnings on this benefit. I have suggested that the benefit statement show the amount of earnings by year, so that the participant understands how his final benefit amount has been determined. After all, the participant would have received a benefit statement each year had the employer been able to locate him.  The amount involved is under $10,000.

I am not comfortable that the employer wants to condition payment of this benefit on a release by the participant. The employer does not require any other participants receiving benefits to sign such a release. I'm not sure what they are concerned about.

Have any of you faced this situation? Thank you for any thoughts you care to share.