Hi all,

First time post here; therefore, I apologize if this has been previously discussed.

I have a question about vesting in the final 33% of my employer’s match. To my records, I’ll vest in it after 1,000 hours of service, which I should hit on Friday 6/12. The previous 2 years when I vested in the first and second 33%, I saw that amount become vested in my T Rowe account the following pay day, which in this case will be on Friday 6/26.

My question to you is if I put in my 2 weeks notice on Wednesday 6/17 (to resign on Wednesday 7/1), which will be after I hit the 1,000 hours of service, but before I see it become vested in my account on T Rowe, will it forfeit my unvested amount? Sorry for the complicated timing, but it’s roughly $12,000 that I’m set to vest in, and I don’t want to make a mistake and leave it on the table.

Thank you for your time! 

As you already know, Code Section 401(a)(9)(C)(iii) provides that if a participant who is not a 5% owner has his or her required beginning date be the April 1st of the calendar year following the calendar year in which s/he retires, the plan is required to actuarially increase benefits after the employee attained age 70 1/2. When the SECURE Act increased the age for the required beginning date from 70 1/2 to 72, it did not increase the age at which actuarial increases are required to begin to be made. Is this merely an oversight or intentional? Any thoughts about what the IRS or Treasury intended to do in this provision?

Hi all,

Thank you in advance for your input.  Long time lurker, but 1st time poster.

My question pertains to the language of the governing IRS rule, IRC section 408(p)(5)(A)(i) for SIMPLE IRA employee deferrals:

Quote

(A) an employer must—

(i)

make the elective employer contributions under paragraph (2)(A)(i) not later than the close of the 30-day period following the last day of the month with respect to which the contributions are to be made, and

The IRS FAQ states:

Quote

You must deposit employees’ salary reduction contributions to their SIMPLE IRAs within 30 days after the end of the month in which the amounts would otherwise have been payable to the employees in cash

I'm paid monthly, on the first business day of the subsequent month.

For instance:

January-->paid 2/3/20 for January

February-->paid 3/2/20 for February

March-->paid 4/1/20 for March

My interpretation of the IRS regulation is that elective employee salary deferrals should be made as following:

For work performed in January, no later than 30 days from 1/31

For work performed in February, no later than 30 days from 2/29

etc etc.

However, my employer is interpreting this as "since I'm being paid in in February", the employer has 30 days from the end of February (i.e. end of March) to make what were my January salary deferrals.  I strongly disagree and feel that this 60 day window is a clear violation of the law.

What do you think in response to the IRS definition of "in which the amounts would otherwise have been payable to the employees in cash"

Please let me know if I need to clarify.

Hi

My apologies if this was discussed before.

RMD recipient advises their broker to have 15k of the 30k RMD to be provided to charity and 15k to them. But now gets a 1099 for 30k.

Can RMD's still be provided to charities? Does it matter if from a pension plan (any type) or IRA?

Thank you.

I have been searching in vain for discussions concerning the impact of the SECURE Act on the allocation of pension and/or retirement benefits.  

Ex:  May a Participant in a 401(k) Plan elect an annuitized payout of his 401(k) Plan account prior to the divorce and thereby deprive the Alternate Payee of the ability to elect an immediate  lump sum tax free rollover or a taxable distribution? 

Thanks,  

David

We do not work with 457 plans but a financial advisor who refers to us asked me about a 457 plan that they took over management of - specifically what is the plan document restatement cycle like for these plans?  Was there an April 2016 PPA deadline like 401(k) plans?  Or something else?  When was the last required restatement deadline?

Thank you,

Tom

Cross-tested plan. Compensation for allocation purposes excludes certain items such that 414(s) testing is required. Plan requires last day/1,000 hours to receive employer contribution. Pan is NOT top heavy, nor is it a safe harbor. Question is this:

Terminated participants with more than 500 hours, so not excludable - when doing the rate group testing, for purposes of the 70% ratio test for the rate groups, do these people have to be included for purposes of 414(s) testing?  Seems like I recall that they are not included in the 414(s) test for this purpose, as they are not benefiting.  In other words, are they automatically included in the 414(s) test if you go to the average benefits test, or only if 1 or more rate groups fail the ratio test, and you must move on the the ABPT?

The plan in question passes the 414(s) with flying colors regardless, so this is more a question to avoid a future brain cramp. 

Thanks.

Two participants terminated employment in July, 2019.  They are zero% vested.  

The plan document says if participant’s vested account balance is zero, the participant is deemed to have received a distribution.  (Plan allows for “immediate” distribution upon termination of employment.)

Document further says that participants receiving a distribution shall forfeit the non-vested portion of their account as soon as administratively feasible after distribution (but no later than end of plan year during which distribution occurred). 

Plan sponsor decides to make a profit sharing contribution for the 2019 plan year.  It’s new comparability with each person in their own class.  The goal is to maximize the owner’s contribution.  In order to do so, the terminated eligible participations require an allocation to pass non-discrimination.  Plan does not have a last day or hours requirement to receive an allocation.

Contribution has not been deposited into the plan yet.  Under normal circumstances, I would think the contribution needs to be deposited to the plan, but since they term’d with zero vested balance, the amount can be forfeited.

Here’s the kicker:

Sponsor is terminating the plan in 2020.  

One thing I read is that anyone with an account balance is fully vested upon plan termination.   Do these term’d employees have an “accrued” account balance?

The other thing I read says “In General Counsel Memorandum 39310 (1984), the IRS ruled that participants who separate from service and are paid their vested accrued benefits need not become further vested if the plan terminates.”

Should the two terminated participants become 100% vested in this instance?  

We have a client who wants to condition the annual matching contribution for a terminated employee on the employee having worked 520 hours (obviously OK) AND having given and worked 2-weeks notice before he leaves. 

I have never seen a plan condition an allocation for a terminated employee on the employee giving/completing notice.  I can't really find a reason why this would not be allowed though.  Any thoughts on this?  I do realize this adds an additional wrinkle for coverage testing, as far as an additional element we are tracking in making the determination as to whether a terminated employee is benefitting for the match.

Thanks!

Hypthetically,    You see multiple factors pointing / leading to inevitable Market crash   ..........     but,   before that you manipulated your 401K to have in place  45% cash,  45% bonds, and 10 %  stocks  in order to reduce the overall loss to your 401K.     My question is ,    the 45 %  Bonds that you moved into   . .    what type of commitment comes with making that particular move  ?  When someone does that ,   are you now held accountable to remain in those particular Bonds for a particular amount of time ( maturity ) .    What is a minimum amount of time a person can participate in a Bond   ?

signed,      BUG

An employer can have a 401a, 403b and 457b plan,  a DB plan and a 401k plan or separate 401k plans for employees covered under a collective bargaining agreement and all other employees, but I have had the understanding that there can not be more that one 401k plan covering the same employees. This was based on the premise that it is impossible for an administrator to serve two masters. I.e. which plan's participation requirements, plan features, etc... would apply.

Is this correct or am I wrong.  Is there any IRC, CFR or other IRS guidance confirming this either way. Or is there some level of inference that drives this.

I have employees that submitted Educational Assistance forms prior to the cut off date in December for 2019. However due to a clerical issue it is only being processed in 2020. Can I count this towards the 2019 IRS limit and would it have to be included in 2020?

10 Docs own MD Practice, Inc.  Those same 10 Docs own "Surgery Center Holdings, Inc." which in turn owners 60% of "The Surgery Center, Inc.".  The other 40% is owned by an unrelated hospital. Each Doc owns 10% of MD Practice and Surgery Center Holdings.

Here is my question.  MD Practice Inc. would be the A-Org and The Surgery Center, Inc. would be the FSO.  Does the A-Org Satisfy the requirement that it have an ownership interest?  I presumed the answer would be yes and set out to find the justification but came up empty handed.

In order for a corporation itself to be treated as owning somenthing that is owned by a shareholder, that shareholder has to own at least 50% of the corporation.  So it seems to me MD Practice, Inc. is not treated as owning any part of Surgery Center Holdings, Inc. and tehrefore does not meet the requisite ownership interest.

Make no mistake, my question is "What am I missing?"  This has to be an ASG.

I believe this was discussed in another thread quite a while ago, but...

Plan participation as the January 1st or July 1st following completion of age 21 and 12 months of service.  Participant hired 1/2/2018.  Eligibility computation period is 1/2/18-1/1/19.

Would not the individual enter 1/1/19, rather than 7/1/19?????

A question is raised regarding the impact of an increase in the 415 limits for a frozen plan. Situation is as follows: Sole Prop pension plan, 10% per year of service formula. At 12/31/18, participant has 6 years of participation and 18 years of service. Comp is $160,000 and accrued benefit is $11,000 per month ( eg 60% x $220,000 dollar limit). The plan is frozen 3-15-2019 before accruing  1,000 hours. The 2019 415 limit is increased from $220,000 to $225,000. The question is what is the benefit used for the FT for 2019?

The regs under 430 state that the FT is based on the benefit that has been accrued, earned or otherwise allocated to yrs of service prior to the first day of the plan year. The regs further say that the TNC is based on the benefit that has been accrued, earned or allocated to service from  the 1st day of the plan through the val date, which in this case would be the freeze date.

The regs are silent with regard to the impact of 415 changes in the dollar limitation.  My interpretation is the benefit for the FT is $11,250, e.g. increase in the dollar limit goes to the FT.   Any opinions?

Eligibility for rehired employee. Plan Eligibility states '90 days of service' (no hour requirement is stated), plan uses actual hours, not elapsed time. Entry date 1st of month following.

DoH: 1/28/19

DoT: 4/15/19

Rehired: 11/11/19

I think DoP is rehire date, or 12/1, after they worked the actual 90 days of service was completed.

I believe the intent of the employer was 90 days of actual service but I don't see where a day is defined to credit service. I have read other posts regarding situations like this but most say the document uses elapsed time, in this case the doc states actual hours. Would the spanning service apply in this case? So, other than amend the doc to match what the employer intended, some general opinions?

Thanks for the assistance.

If a plan run by a partnership uses forfeitures to fund a QNEC or really any other employer contribution I would assume that forfeiture amount should not reduce partner compensation up to that amount??  The contribution reduced partner comp in prior years.

Is there any safe harbor contribution which can be made that excludes ACP testing for a Plan which is allowing voluntary after-tax employee contributions?

We have an Employer who is making a 3% Safe Harbor non-elective contribution (applied only for ADP purposes) with an HCE making such a voluntary after-tax contribution and it is causing an issue with the potential ACP test.

Thanks ahead of time for any guidance you can provide.

Hi to All. I'm new here.  

I'm have not reviewed the forum thread to see if this has been address and i hope you don't mind me poising my question / concern.

Facts:

1) My Employer has a sponsored retirement plan - 401K / Roth

2) Any changes to my elections can be made on the Plan Sponsor or thru my employee

3) I been contributing the maximum required wherein my employer with match my contribution (6%/3% employer)

4) The website where I can see all the investment and also where I can make changes provides the opportunity to enroll on another plan. This plan is the Roth Plan

5) I added another plan and elected a 3%

6) I kept my initial plan and did not make any changes.

7) Payroll comes and my employer changed my 401K elected percentage of 6% and changed it to Roth 3%

? I didnt make any changes to my 401K plan nor did I deactivated/suspended my election to contribute.

9) I contacted the Plan administrator and inquired.  She then informs me that my employer only allows one type of plan

10) Informed her that I was not aware of such and that I request documents in Black and White to show such which she is saying

11) I requested also about the employer matching fund and how is that going to be rectified as I did not elect that my initial contribution be stop.

12) Told her that in addition to my current contribution, I elected to contribute to a Roth IRA 401k at 3%

13) Question any issues that you may see regarding this?  What can be done.

14) I reviewed the Annual notice and it provides the following: "You may make either Regular 401(k) deferrals (pre-tax) or Roth 401(k) deferrals (after-tax)."

This does not say that only one plan can be done.  

15) I reviewed the Summary Plan and it is a general disclosure.  

16) Payroll is coming next week and the cut off to make any changes so that it be reflected in the next payroll is today, Friday.  

When I left my employer many years ago, I took a lump sum for my pension. Now I'm rehired by the same employer, and my service pension may be restored if I make a one time repayment to the pension plan. My question is what the tax implication is for this event. I was told I could not rollover a 401k distribution as the repayment. Therefore, the repayment will come from after-tax money. If I take a lump sum pension distribution again upon retirement, the lump sum distribution will be taxed again. Will my repayment be double taxed, or is the repayment amount deductible from the future lump sum pension distribution? 

For example, if I make a repayment of $50k (which has already been taxed) today to restore the pension, and I retire next year to take a lump sum distribution of $60k. Will the total amount of $60k be subject to tax next year (in which case $50k will be double taxed), or just $10k (= $60k - $50k ) will be taxable? Or is $50k tax deductible in this year's tax return?