Does anyone know if any of the ARA bodies have advocated to the IRS or if the IRS is considering filing deadline extensions due to the pandemic?

DB plans in particular have a 4/30 PPA restatement adoption due date and, if required, determination letter application filing due date.

Just curious, as an unexpected prolonged sickness hitting service providers or their client plan sponsors could derail the timing necessary to complete the process.

Facts:

- 401(k) PS plan

- company is a S Corp

- The plans definition of comp is W-2 (wages, tips and other compensation on form w-2)

- CEO of the company receives 1099 comp and is treated as an outside consultant.

- The above referenced CEO does not participate in the plan.

Question: With the above stated facts, I would think that the CEO does not need to be included in the testing since he did not receive W-2 comp from the company, but I don't feel comfortable making that assumption.

I have a participant who is still employed and at NRA in a Profit Sharing Plan. She would like to take a distribution but the plan document  does not allow for in-service distributions. I have looked in the Pension Answer Book and the 401(k) Answer Book to see if this is allowed because I am being told that the is an "unwritten rule" (LOL) that allows participants at NRA to take their money out of the plan. Can someone point me to the answer? Thank you.

Short question, hopefully the answer is as well.

Can a 401(k) now be merged into a Simple IRA Plan? I know you can rollover a 401(k) to a SIMPLE IRA, however, I cannot find topics on plan mergers.

Thank you

Background: Currently stock market is going through an upheaval

QDRO is defined as a cash value at a certain date, to be adjusted through current for g/l

Distributable amount as of most recent year end was sent to payee, forms signed and returned and waiting for distribution

Plan allows for in-kind distributions

Participant has asked if dollar amount as defined in QDRO can be converted to equivalent shares for distribution

Last year of March I believe,  I took a loan out from my 401k and set it up as a payroll deduction to pay off the loan. A couple months before the end of last year, I received a letter from my 401k c okk money stating that there was a default with one of my loan. So the firs thing I did is call my payroll department and asked them what happen. The lady o spoke to said that it wasn't their fault and that it was the 401k company. So I called  them again and they said that they even send an email to my employer to fox the problem but they never did. Considering that I'm a single mom with 5 kids, I could afford to pay off the amount of $1268 estimating amount of the default payment. So for the next following year, which  is this year, I received a 1099 for the whole entire loan that they reported to the IRS. I already filed my taxes before I even received it coz I didnt get it until last week. So now I have to worry about having penalties and late fees from them. But this wast the issue,  my issue was whe I got my tax from last year 2 weeks ago, I called the 401k company to see if I pay off one of the loans I  have if I can reloan again. I spoke to at least 4 different representatives and I've asked them all the same questions if me having a default will affect me getting another loan. And they all said no. That it shouldn't matter coz my company allows us to get 2 loans out. The reason why I need this loan is to use for my daughter's medical condition. My daughter have crohn's disease that needs an expensive Infusion every month. I havent reach my deductible so I know I have to pay out of pocket. But because my tax wasnt enough,  I called my 401k and asked them about this information. With the information they told me, I went ahead and paid off the smallest loan I have with my income tax so I can reloan for a higher amount. The representative that helped me with my payment told me to wait 7 calendar days and for me to call back on the 8th day so I can process a new loan. With all this issue going on, i spoke to my benefits manager a week ago  to help me out with the setting the payment and to make sure that the payroll department isnt screwing me up again. They called me back on the day before I was gonna call to get another loan and  she said because of the default that the 401k cant give me another loan. I was like,  that's not what they told me. Now shes saying that because of the default with one of the loans,    I cant even reinstate my account. I asked what if they take out the default amount from the new loan I'm getting g to get me caught up, would that work. She said no!!! I m sorry to say this a d use this language but they both F...ed twice! Now.my daughter is about to have her infusion by the end of this month and I dont even have the money to pay for it. Is there a way around this to protect me? I also spoke to the manager of the 401k company and they apologize to whats going on and that she'll file like a case to let me get another loan since I didn't put the stop on the loan but my employer did. So I called today a d the lady I spoke to said they cnt do anything about it. It all depends with my employer. I've been with this com pl any for 19 years and never once encountered anything  like this! Please  tell me if theres a way around all this and how I can reinstate my 401k to get a new loan. I also wanna see if theres a way my employer can fix the report to the IRS that its their mistake not mine. 

Is there a 10% penalty for a late refund of a year-end 401k match funded after March 15 that fails ACP ?

Hi. I have a 2030x 403b plan with my previous employer that I will soon rollover into my new job. Of course like everybody else I am losing money very fast. What should I do at this point? Should I withdraw funds or should I keep my funds in there? 

Secondly, what happens when your stock hits rock bottom and there is nothing left? Do you lose the stock or just the value of the stock? 

Thanks in advance. 

A company was acquired and their 401k plan was amended for plan termination. The notice went out to participants and all assets have been distributed to participants except for the owner. The owner of the company is working on buying back the practice and wants to stop the plan termination and keep the plan.  

I saw that this topic has already been discussed and that if there were no distributions, the replies were that the plan could adopt a resolution to revoke the plan termination.  However, in this case, the participants received a distribution of their accounts. 

In my opinion, this plan would need to continue the plan termination process and consider a new plan 12 months from now.  Would that be accurate?

Has anyone had an audit where the owner was at the 100% of comp limit and took more than one distribution?

Owner took an in-service distribution at NRA 62. He rolled over the LS to an IRA.

He continued working and his avg comp increased and he accrued additional benefits.

At age 65 he elected 12 monthly payments of his  accrued benefit with a retroactive annuity starting date to the beginning of the year to be paid from the trust.

He subsequently took the commuted value of the annuity payment in a lump sum. Plan was terminated and excess assets were allocated to him.

The method we used to account for the MASDs in illustrating that his 415 limit had not been exceeded was from a presentation by Michael Preston and Kurt Piper at the ACOPA Advanced Actuarial Conference in June, 2014.  We consider this a good faith effort to comply with 415 when MASDs are concerned.

The IRS actuary is challenging the calculation siting Reg 1.415-(b)-1(b)(iii) that requires the plan to actuarially adjust past and future distributions when determining the annual benefit as of a particular annuity starting date.  The audit is ongoing.  

Since the participant is at the comp limit, we don't think an actuarial adjustment is necessary.

So, we were wondering if anyone had been through an IRS audit where someone was at the comp limit and there were MASDs.  

Any comments or guidance would be appreciated. 

Compensation currently defined as full year compensation.  Plan sponsor wants to amend Safe Harbor plan to use compensation from date of plan entry, effective immediately.  Calendar year plan with semi-annual entry dates. 

Since it is March, the amendment would affect only employees who are not yet eligible for the plan.  I would generally apply the same principal of the IRS approved example of changing entry dates...if it applies to future participants only, it would be permissible.  Do you agree?  Or do you think the fact that the definition of compensation applies to all participants causes us an issue?

Hi.  I need help understanding how the 415 limits work with multiple plans.  We are a local governmental entity.  We have a 457 plan and a 401a plan.  We have a participant that defers the max allowed to his 457 plan account ($19,500) and catch-up ($6,500).  I know that the catch-up is not taken into account with the 415 limit ($57,000).  Does that mean that the $57,000 limit is imposed on the 457 deferrals and any contributions he receives under the 401a plan?  In other words, he could receive up to $37,500 in employer contributions in the 401a plan, correct?

Thanks.

We have a former employer whose severance package includes payments over several years and health insurance. The employee has a HDHP and no other health insurance. Can they make HSA contributions through payroll deductions from their severance payments?

We are making all of the payroll tax withholding and basically treating the severance payments like wages except they are not for services rendered, so they are not eligible for our 401K plan.

Hello

Sponsor has an overfunded DB plan (active and accruing benefits). It is a family business only spouses (owners) and their children (all over age 21). It is a corporation (Sub-S).

Sponsor wants a deduction for 2019.

As DB is not a viable option for deduction and since no DC plan was input as of 12/31/19, the only option is SEP for 2019.

4 participants with a combined eligible salary of 500k where 25% deduction limit is 125k. As one participant is making 265k, limited to 56k which leaves 69k as additional deductible contribution.

The other salaries are

150k

75k

10k

Can they each get over 25% of their salaries on a pro-rata basis as long as the total does not exceed 69K? It can be done is a PS plan but not sure how SEP works here.

Thank you

When processing new loan requests for daily valued plans, I'm curious how others are determining the maximum amount available.  Assume a brand new loan, no previous loans.  If a participant requests a $5,000 loan with a $10,000 balance, but the account is valued at $9,750 at time of processing, do you process the original $5,000 request or adjust the 50% to the new balance?  The delay in processing may be due to receiving paper forms or else waiting for an employer signature or if there is missing information with an online request.

Per the ERISA Outline Book;

4.d. Difficulties experienced by daily valued plans. Daily valued plans can experience significant swings in the value of a participant’s vested account balance between the time the loan process commences and the time the loan is disbursed from the plan. As a practical matter, how should the plan apply the 50% loan limit (or any lesser limit under the plan) in this context? IRS Notice 82-22 does not provide any guidance here, primarily because in 1982, when that notice was issued, daily valued plans weren’t on the radar screen. IRS Notice 82-22 does say however that “a valuation of the participant’s interest within the last twelve months may be used, provided it is the last valuation available.” Reasonable administrative procedures should be established to ensure that the most recent daily valuation possible is used. For example, the value in effect when the loan obligation becomes fixed (i.e., necessary signatures and consents are obtained) should be a reasonable approach in the absence of more formal guidance from the IRS. In addition, the employer should consider addressing the issue in the loan policy. An approach used by some employers is to set the plan’s loan limit at less than the statutory maximum (e.g., 40% or 45%).

This isn't an issue with our balance forward plans.  We use prior valuation plus contributions minus withdrawals, no earnings adjustment.

If a client has both a defined benefit plan and a 401K plan.

Is the top heavy requirements satisfied by the DB plan if each plan participant annually accrues a benefit of 4% of compensation,

The 401k plan has the 3% non elective contribution, but the plan document says the defined benefit plan will satisfy the top heavy minimum?

I am just curious how others handle this.

I terminated years ago from a CPA firm.  I had some pre-tax and Roth money in their 401(k).  They used a well known and large platform for their plan.  I tried twice to get all of my money rolled over to my Roth IRA at E*Trade.   Both times it wasn't possible to do it online.  In fact the first time I was told by the person on the phone it isn't legal to roll pre-tax 401(k) money to a Roth IRA. 

I got forced out of the plan after being gone for 7 years this last December.  

The part that still bugs me the most is I got two distributions to Millennium Trust (MTC) and the large platform that had the 401(k) plan charged me the $90 distribution fee per check not for the single distribution event. 

Every place I have ever worked the distribution fee by event not per check.  So if you ask for a payment from a plan and one check goes to an IRA and one goes to you the fee is the same as if you asked for just one check to an IRA.  

But in the end between those fees and the MTC fees I lost around 10% of my money.  I paid those two $90 fees, paid two account set up at MTC and now two distribution fees to MTC to get my money to E*Trade.  To me MTC's fees are more justified they would always set up a pre-tax and Roth IRA on a force out like this and they really had to run two accounts at this point. 

It is the large platform that bugs me.  One because Roth 401(k) money has been around long enough that it seems like it ought to be easy to get an account with a mix of money sent to one place via an online election and two I just don't care for the per check fee.

So once again how often do you see a per check fee vs a per distribution event fee? 

Just because I am sure it will come up, there is no way to reduce refunds for losses in 2020, correct?  Our notices tell participants that there refunds are being increased for gains and I wouldn't blame them for asking if that should not reduce their refunds.  I just want to make sure I am correct when I say it is impossible.

Potential client is a non-profit and we want to set up a 403b plan instead.  Can they "terminate" their sliver of the PEO 401(k) plan to create a distributable event?

The Plan uses the safe harbor definition of hardship.  Participant submits receipts for repair of flooring to primary residence.  Does this qualify under repair of damage to primary residence for loss qualifies for casualty deduction?  There was no reference to a cause of damage, such as a fire, flood or storm.  I think this is actually a home improvement project.  If that is the case, would it still qualify since the IRS website says that under the Bipartisan Budget Act of 2018 a plan can permit hardship distributions for repair of the participant's primary residence, even though it would not qualify for as a casualty deduction (see "Changes Coming for 2019" https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-hardship-distributions).  Is that reference only provided to remove the need for the damage to be related to a federal disaster zone, or are rules being relax to even allow for home improvement projects on a person's primary residence?  Thanks in advance for any insights!