Post Secure - an IRA inherited by a non EDB is subject to a 10-year payout.  

Pre-Secure - an IRA inherited by a DB can stretch based of their life-expectancy

All successor beneficiaries that inherit an IRA on or after 1/1/2020 are now subject  to the 10-year payout 

Question:

Does the 10-year payout start fresh upon an successor beneficiary inheriting?  Or.. does the (beneficiary of the beneficiary) only eligible for what's left of the original beneficiaries 10-year payout?

I have a participant who exceeded the $56,000 limit in 2019 due to employer contributions.  He made both Roth and pre-tax deferrals for a total of $19,000.  Does the refund of the deferrals need to be prorata or can he elect to have the Roth distributed?  This is his first Roth year so the earnings would be taxable.

I have a 3% SH cross-tested profit sharing plan that seems to work best at this time using an integrated allocation method.  Is it mandatory to use the full taxable wage base as the integration level?

I know this topic has been covered, but figured I'd start a new thread for this year.  Two questions:

1) Are we expecting a faster response on renewals since they can be submitted through pay.gov?

2) Do we have to wait until 4/1/2020 to use the 20-prefix or should we start using it as soon as our application is filed (assuming we meet all relevant criteria of course)?

I understand that the new law increased the start-up plan credit for tax years beginning after 12/31/2019.  How would this work for a plan started in 2019.  Would their maximum credit be 500 on their 2019 tax return, but then 5,000 in the next two years?  Or do they stick with the 500 credit for all three years.  

A client is considering beginning to contribute a match. However, they are considering different ways to fund it. They have asked about offering the option of receiving the match in cash or in privately held company stock.  The administrative complication is obvious.  But would this funding arrangement be permissible?

Can a money purchase dc plan maintained by a municipality offer elective salary deferrals and matching contributions in addition to 457(b) plan?  Not eligible for 403(b) or 401(k), so I think not.  Am I missing something?

This is one of those issues that comes up periodically and I never think I have a full grasp on it--likely because I don't but also in part because I've never found what I thought to be a clear, authoritative, and fulsome discussion of the issues.  Can you help?

Situation this time involves a true Mom and Pop employer with husband and wife owners (both highly compensated) and a handful of other employees--3 or 4 full-time working more than 30 hours a week and a couple part-time working 15-20 hours per week.

The company offers a fully-insured group health plan for full-time employees.  Of those, only the owners and a couple of the full-time employees have elected to participate.  The company has always "covered" 100% of the owners' group health premiums but historically only 60% of the others' premiums with the employees required to contribute the remaining 40%. 

Mom and Pop seem confused about the existence of an actual cafeteria plan but it appears they have been deducting the 40% of employees' premiums from pay on a pre-tax basis so seems they likely have a POP whether they realize or not.  (Our understanding is the company has just paid 100% of the total premiums over to the insurer, including 100% of the premiums on behalf of the owners, plus the combined 60/40 contributions for employees without considering the premiums paid on behalf of the owners to be salary to them or a deferral from their pay in some way.  In other words, it's just been employer-paid fully insured group health insurance coverage.

As I understand the current rules, it does not seem like there is a per se problem with charging varying rates for the fully insured coverage from a group health insurance,  HIPAA, ERISA, or other perspective.  (The 60% contribution satisfies the 50% minimum employer contribution amount required by the insurer / underwriting so insurer is fine with arrangement.)

Cafeteria Plan discrimination testing would appear to be a potential issue here, however.  Even though they presumably only have a POP, my understanding is POPs are still subject to Section 125's "Eligibility Test" as part of the streamlined safe harbor testing.  And based on some less than clear 125 examples and discussion in EBIA, the Eligibility Test arguably includes something of a "benefits" component that could be construed to prohibit an employer paying a greater percentage of benefits for HCs than NHCs.  So that's potentially an issue here.

However, in this situation, the HCs are not actually participating in the Section 125 plan--because the company is paying their full cost and they have no need of the 125 Plan.  In essence, the NHCs are arguably getting more benefit from the Section 125 plan than the HCs because the NHCs are actually getting a benefit.  I'm not wild about that argument for obvious reasons.  However, what if we took this one step further and actually amended the Section 125 Plan to exclude all HCs from participation.  There's no practical impact on the owners (the only HCs now and likely forever) because they are not participating in the Section 125 Plan.  Under that approach, it seems impossible for the Section 125 plan to have a discrimination issue since no HCs could participate?  But it also seems the company should still be able to pay 100% of the owners' premiums for the fully insured health coverage and not treat that as taxable compensation. 

I understand that could all change if and when the new Section 105(h) rules are extended to fully-insured group health coverage but, in the interim, are there nondiscrimination or tax issues with this sort of approach to having the company pay 100% of HCs' premiums and a significantly lower percentage of NHCs' premiums?

Thank you.

[edited to fix link]

https://www.forbes.com/sites/davidrae/2018/09/20/rich-person-roth/#4b7ddee471fe

Whenever I read "backed by life insurance" I just think used car sales man.  Is this legit?  I have a client who is doing this.

Although it is intended that Qualified Birth and Adoption Distributions are permitted to be taken from any defined contribution plan (Code Section 72(t)(2)(H)(iv)), is anyone considering adopting one for a money purchase plan? According to Section 72(t)(2)(H)(vi)(IV), a Qualified Birth or Adoption Distribution is treated as meeting the distribution restrictions of specific Code sections (which apply to 401(k) plans, custodial 403(b)s, annuity contract 403(b)s and eligible deferred compensation plans). Does the latter section citation concern anyone who has been asked to consider whether to allow Qualified Birth and Adoption Distributions for a money purchase plan? How about as applied to a profit sharing plan without a 401(k) feature?

Employer A deducts a $10,000 profit sharing contribution on his 2018 1120.  The contribution was inadvertently never deposited, and is just being discovered now.

Is there any way to "Cure" the deduction or is the only option to amend 2018 to remove the deduction and pay the new taxes?

I need some direction and thoughts.....

A Partner passed away in May 2019 and, evidently, ceased to be a Partner per the partnership agreement.

Fast forward to year end and previous Partner is owed the 3% SH and Profit Sharing per the plan document.

Who pays the 3% SH and PS for 2019?  The other partners? The previous partner's estate?  I lean to the other partners, but I just don't know.  Where do I go from here?  What do I ask?

Thanks

What are the considerations regarding terminating a 457(f) Plan.  I am obviously aware that we need to be concerned with presumption of a substantial risk of forfeiture.  Are there guidelines?  Let's say for example scenario A) is the organization voluntarily terminates the Plan; and scenario B) is the organization is actually ceasing operations (perhaps because they lost their primary grant).  These are hypotheticals, but I am curious to know what the rules are concerning terminating one of these things.

We have a client with a Profit Sharing plan that includes 2 life insurance policies.  Can they still file 5500-SF or do they have to file full 5500?

Plan document says one month lookback to determine 417e rates.  It is early in January and the December rates are not yet entered.  Any good guess on the rates?  It looks like they will be a small amount higher than November rates.

A participant wants their lump sum right away (probably to use their LS for immediate bills).  25 year olds have no understanding nor patience.

We have a participant who is receiving a Premium Tax Credit. As such, we have suspended his retiree HRA account for the time period he is receiving the PTC. Participant sends in reimbursement request for expenses incurred prior to receiving PTC. Currently, we deny participants from receiving reimbursement because the account is in 'suspension'. Therefore, no activity allowed in HRA period. Participant is claiming that expenses were incurred prior to receiving PTC so they should be eligible for payout even while account is suspended. 

IRS PTC Q&A states the following:

What if the retiree coverage consists of retiree only health reimbursement arrangement (HRA)?

If an individual is covered by an HRA, including an individual coverage HRA, for a month, regardless of the amount of reimbursement available under the HRA, the individual is not eligible for the PTC for that month.

Looking for clarification on "for that month" - does this mean that only expenses incurred and submitted for reimbursement while receiving PTC 'for that month' are not eligible or does this also include any previously incurred expenses while the account is suspended or frozen?

Thanks

Betty 

An employee was excluded from plan.

I know they must receive a nonelective employer contribution, but how do you determine the amount?

It is also a 3% safe harbor plan, so they get that piece as well.

Plain language of SECURE Act prohibits loans from a 401k plan using credit or debit cards, effective for loans made on or after 12/20/19.  Despite this, plan sponsor issued loans to multiple participants after this date using credit card method (but has since ceased doing this).  Any other remedy other than issuing 1099-MISC to these participants who got loans via credit card after 12/20/19?

I believe this is permissible, but am hoping someone with more testing experience can confirm. 

Say Company A acquires the assets of Company B. Company B employees will become Company A employees at closing. Company A has a safe harbor match 401(k) plan, and Company B has a safe harbor nonelective 401(k) plan. If Company A assumes sponsorship of Company B's plan, can both plans be maintained separately (for their respective pre-acquisition employee populations) during the 410 transition period without any adverse testing consequences? 

Thanks in advance.

I have a successful QDRO in place that cover both the debt incurred in marriage and my 50% hence my ex husband did have a loan balance that incurred during our marriage that he has now paid back into his 401K in the state of Missouri. He is now behind on child support hence he hasn't filed income tax for the last 2 years. I can guarantee that he's not going to file for 2019. 

My question is how can I amend the judge signed QDRO to collect on the arrears he has incurred? Is it possible to collect on 3 months of future payments as a safety net that he doesn't fallback in the near future?