I am unclear on how the new RMD rules apply to someone caught in the transition:

Ex 1:  DOB 10/27/48 (turned 70 1/2 in 2019, turns 72 in 2020):

• If participant in DB plan would have had first RMD due for 2019, but chose to delay until 04/01/20.  Now since she hasn't yet started benefits yet, is 2020 now her first RMD (which could be delayed until 04/01/21), or does she still have to start by 04/01/19?

Ex 2:  DOB 04/01/49 (turned 70 1/2 in 2019, turns 72 in 2021):

• If participant already took 2019 RMD, does she still have to take RMD for 2020 or does she skip that and pick up again for 2021?
• If participant hasn't yet taken 2019 RMD (delayed until 04/01/20), does she still take it or wait until 2021?  And if taken again the question does she also take for 2020 or skip that. 

A self-employed individual over age 50 has net Schedule C profit of $22,000 and sponsors a 401(k).  No other employees and he has no wages or other business income.   He and his spouse have lots of other taxable income such that they would like to maximize  his 401(k) contribution/deduction.

His SE tax deduction is $1,554.   Is his maximum 401(k) deferral:

1.  $22,000
2.  $22,000 - $1,554 = $20,446
3.  Other?

Plan compensation definition in this plan includes the deferral.

Thanks. 

It's my understanding that a plan that fails ADP/ACP testing using the prior-year testing method cannot allocate QNECs as a corrective measure, but is there any way around this? Can an SCP amendment be done to retroactively change the testing method to current-year so that the plan sponsor can do a QNEC?

Assuming that the plan sponsor has authorized SECURE Act qualified birth or adoption distributions under the plan, may a terminated employee who maintains an account balance in a plan receive a qualified birth or adoption distribution? I think Yes - - I could not find anything in the statutory text (or the Joint Committee on Taxation Report) that limits qualified birth or adoption distributions to active employees. But wanted to see if others read feel different.

Facts:

- SH plan.

- HCE had deferrals deducted and never deposited to the plan.

- It's march of the following plan year and the deposit has still not been made.

Is this just a matter of funding with missed earnings or would greater compliance measures need to be taken?

I have a corporation with two 50% owners.  On the census, one owner is listed with $27,000 in compensation and 0 hours worked.  When questioned, thinking there was an error in the hours listed, I was told that this is a year-end bonus for the owner, reported on a W-2 issued by the employer, and 0 hours worked is correct.  The owner is not terminated and this is not any sort of severance pay.    In prior years this owner has worked 1,000 hours and has satisfied the plan's eligibility requirements.  The 50% owner with 0 hours deferred $6,000 into the plan from his bonus.  I do not know if he can defer on wages with 0 hours worked.

The adoption agreement counts "Hours of Service" on the basis of actual hours for which an Employee is paid or entitled to payment.  Compensation definition is 3401(a) - W-2 Compensation subject to income tax withholding at the source, with all pre-tax contributions included.  There are no exclusions from compensation.

I could not find anything similar to this situation in the ERISA Outline book, ERISAPedia, or research on this forum.  Thank you.

Here are the simple facts:

-> Dental Practice is sold - asset sale - all employees stay at their positions

-> New owners take over the plan to keep a status quo ... so the employees can continue to defer and receive the SH match

The new owners adopted a new plan which is a mirror of the existing plan.  All employees are given credit for their service with previous company.  

They want to merge the old plan with the new plan.

Q - Do we need to, are we required to give the participants the option to take their money? Take a distribution? (or of course roll their accounts to the new plan)

Thanks

Is there any restriction on transferring assets from a non-ERISA 403b plan of an employer to the newly established 403(b) plan of that same employer?  Assume of course that both plans permit such transfers. 

Am I making this up is this a technical term?  I though if you were IBM with 10,000 people, if you excluded 2 people out of your test you were still ok becauyse there was a recognition that you were never going to have perfect data, and essentially close enough was ok.

I don;t think I made the term up.  Anyone have a definition?

I was married for 25 years.  When we got divorced my ex warn me not to go after any of his finances or he would come after me.  When I went to the court date the judge saw I wasn't asking for anything and said "Oh no honey, I don't agree with this so I am leaving it open in case you change your mind".  My ex worked for 30 years for the same company and does have a pension.  While my ex was on vacation he had a massive heart attack and died in August 2018.  My ex never paid attention to important paperwork so when he died my 3 kids had to go to probate court to get ownership of his 2 homes.  I decided to get an attorney to go after the pension, so she has amend my divorce from 2005 requesting his 401k and pension, she also did a death QDRO.  I go to court on March 16th of 2020.  Is there anything any of you can recommend I ask the judge for?  My ex was 60 years old when he died and had not retired.  Thank you for any advice you can give me.

I have a two S Corporations (employee-shareholder) and I have three unrelated employees.

My wife has a sole proprietorship (schedule C).

We have kids under 21, so we are part of a "controlled group."

One of my S Corporations (the one with employees) has a safe-harbor 401(k) with 3% employer contribution (regardless of elective deferrals).

I want to make sure I'm doing this right . . . . my salary from the first S Corporation is $60,000 and is $20,000 for the second S Corporation . . . . my employer contributions is 3% x (60,000 + 20,000) and my employee contribution is $19,500.

My wife has self-employment income from her sole proprietorship of $50,000. She is able to be a plan participant under the "controlled group" rules and her employee contribution is $19,500 and her employer contribution is 3% x $50,000.

The Safe Harbor 401(k) I have set up include profit sharing as well. If we decide to do a 10% profit sharing one year, I would have an additional $8,000 (10% x ($60,000 plus $20,000)) and my wife would have have an additional $5,000 ($50,000 x 10%). 

Does that all sound correct?

Hi,

I'm new to the board and I have a bit of an odd question. I'm dealing with an employer that was a party to a CBA in the past and part of the CBA required contributions for health and welfare to a multi employer trust. The Union unilaterally decertified some years ago, which prompted the Trust to perform an audit. In performing the audit, the trust determined that health and welfare benefits were owed on certain individuals. However, those individuals expressly opted to not receive the health and welfare from the Trust, because they could not afford their employee portion. As a result, these employees received health benefits through the employers non-CBA health insurance plan used for non-union employees. The Trust indicated that employees could refuse benefits, but they needed to file a form to do so. Obviously, these forms were never made available to the employees, nor did the employees know about this form. However, the employees expressly refused the Trust benefits to the employer, and did not want money withheld from their checks for contributions to the trust. The trust is seeking past due contributions from October 2010 through October 2017. The trust admits that no health and welfare benefits were paid to these employees, and it is clear that the trust will never (nor can it ever) provide health and welfare benefits to these individuals pursuant to its own Trust agreement. Anyone aware of any cases where a trust is seeking contributions for unpaid health and welfare benefits where the Trust never paid for the benefits in the first place? I will also note that the trust was not a self insurer in this instance. Pursuant to the CBA, the Trust was to purchase health and welfare insurance for the employees. It was not utilizing a pooled account. Let me know if anyone has any thoughts. Thank you.

We have a client with two plans (DB & 401k), and there are only two participants - the owner and his mother.  They have asked if they must have a bond.

I think that since technically it is an ERISA plan, a bond would be required, but it is only owner and momHow would you suggest I respond?

Group:

I am looking for studies performed after 2008-2010 market crash/recession that shows a greater number of employers wanting to set up an ESOP

vs. that of having employees retirement at risk of wall street casino.  I have found a few but not sure they are exactly what I'm looking for.

Thoughts and comments appreciated.

Thank you

Just because I don't generally handle SEP.

Participant has maxed out on his 401(k) at his employer, but he also has a side business where he has a SEP.  I don't believe that he can put any EE money into the SEP, but even if he's hitting the $56k between EE/ER in the 401(k) he could also maximize the ER in the SEP right ($56k)?

Let's say you have a 401(k)/PS, Safe Harbor nonelective, with 1 month eligibiity for deferrals, (entry date first of month coinciding with/next following satisfaction of eligibiity requirement), and 6 months/500 hours (entry date  1st of month coinciding with/next following satisfaction  of eligibility for both SH and PS. Plan IS top heavy. PS plan is cross tested, everyone in own group.Compensation for SH/PS is from date of participation.

So some people enter on 10/1/2019 for deferral purposes, and therefore get top heavy. Therefore, unless the "plan" of employer nonelective contributions is disaggregated, they are also required to get gateway. However, they have not yet satisfied the eligibility requirement to be able to receive a PS. Now let's suppose the "plan" does disaggregate the OEE's, so they are no longer required to get gateway. 

Two items to see if my memory serves: If the employer does NOT disaggregate the OEE's, how would one allocate a Gateway - seems like this situation would preclude cross testing. Agree/disagree? And IF the employer disaggregates the OEE's, and WANTS to contribute a PS for them, I recall the employer would be able to allocate to those OEE's who have otherwise actually satisfied plan eligibility, (say they were hired in February of 2019, for example) but gateway would still not be required, and this disaggregated "plan" could still not cross test. Agree/disagree?

Sometimes I think I remember things, and find out I don't...

P.S. - I suppose I should have considered document provisions that allow a gateway allocation  to participants who are not otherwise eligible to receive it. Some documents even allow it to people who are disaggregated if it is necessary to satisfy 401(a)(4). That wasn't available in the really "old" documents, and I think the "old" documents are what I'm remembering.

Questions re due date for corporate contributions to DC plans:

• We know corporate contributions now due 15th of 4th month (04/15 for calendar year).  Does this apply to both S Corps and C corps?
• Does extension now extend them to 10/15?
• We have plan with fiscal YE 05/31/19.  This means we file 2018 version of 5500s.  I can't find anything that tells me when that contribution is due - would it be 02/15/20 (old rules) or 03/15/20 (new rules)?
• Exactly when was this change effective?

I am just having a lot of history researching it to find out the history.  Everything I find just addresses current rules. Thanks for the help.

Company has two plans (A) 401k/Match (B) Profit Sharing.

Together they are top heavy (and individually, too).

Plan (B) states the TH will be made to Plan (B)

Plan (A) is silent on the issue.  The section in the Adoption Agreement does not even mention the existence of the other plan, it's entirely blank.

Does that mean technically the TH is due in BOTH plans?

Client has frozen plan with a subsidized lump sum interest rate using the 30-year Treasury less 50 bp. 

Plan is currently partially restricted under IRC 436, but in the current environment lump sums are valued at 1.16% - OUCH!

Does anyone have experience with or knowledge of getting a PLR allowing removal/changing of an unsustainable provision such as this? We know this is otherwise protected, but in the interest of protecting the future viability of the Plan we are looking into options.

Thanks

Group:

Clients' retirement plan (ESOP) is being audited by DOL for tax year 2017 to present.

As a side note, clients' same retirement plan (ESOP) has two audits running concurrently with TEGE and SBSE. 

My queries relate to properly responding to initial IDR and whether stating request is outside of statute of limitation is appropriate. 

1. Per IDR, DOL is requesting records (such as articles from plan sponsor entity which was set up approx 10 years ago). 

Is it appropriate to state in response: Outside of statute of limitation. 

How do other practitioners respond?   Send everything?

2. Also, IDR is requesting service provider fee agreements which would include my own attorney engagement letter. 

I've read conflicting articles and research saying that attorney fee agreements are not protected by atty-client privilege and other resources saying they are. 

I'd prefer not to give the govt carte blanche. 

Thoughts and comments appreciated.   Warm regards 

Joe Dadich, Esq.