I understand that if a cash balance plan (or any defined benefit plan) permits the purchase of life insurance policies that this benefit has to be offered to all participants to satisfy the nondiscrimination requirements. Does this mean a policy has to be issued on behalf of each eligible participant or only that the participant has to be provided the option to have a life insurance policy purchased on their behalf? I thought, unlike a defined contribution plan, a participant cannot make an election to include a life insurance policy in a defined benefit plan.

We have a situation where an owner deferred fully to his own plan in 2017 and 2018 but had also deferred fully in another employer's 401(k) plan where he was just a participant.  CPA is having to amend his 2017 and 2018 returns.  We have read that the distributions must be taxable in both the year of deferral and the year oaf distribution.  Excess contributions plus earnings were calculated for both the 2017 and 2018 deferrals and distributed in Dec 2019.  Question:  Unsure what to code the 2019 1099-R?  Not P but maybe a 8 which is confusing as this signifies that the excess contribution stems from 2019 deferrals......…. Any help would be great!

After years of being a client and after being told about the dangers of this situation several times, the HR manager of a plan with ~500 employees with decent turnover and short eligibility (they need it to stay competitive) admitted that she has a hard time getting back the deferral election forms from people who choose not to defer (the only other contribution is a non-SH match) and is asking how to best protect herself.

While I love the simplicity of it, I presume holding back paychecks until the form is returned is out of the question ("But I can't pay you until I know what you want deferred!").

I'm thinking that having the employee sign something when given the deferral election form could help show an auditor that even if the forms weren't returned, that the participants were at least notified and given the opportunity.

Any other ideas?  Let's assume that automatic enrollment is not an option for them.  Thanks.

Can a company give a bonus to an employee to cover the exercise cost of a stock option or will that make it a discounted option subject to 409A provisions?

In regards to the tax credit for plan startup costs (which just recently increased to $5k) does anyone know how this tax credit works if an employer maxed out this credit on a startup plan, then terminated that plan and started up a new plan a year later? 

Upon establishing that second startup plan would the employer be eligible for that tax credit again on the new plan?

Hi all, happy New Year.

I am working on a PSK plan with a short PY 7/1/19 - 12/31/19.

I am prorating the 415 limit and 401(a)(17) comp limit to 50% of the annual limit.

I did not prorate the 1000 hours for plan eligibility or the 402(g) limit.

I am questioning the other provisions with hours requirements:

Does the 1000 hours for vesting need to be prorated to 500 hours?

The plan requires 1000 hours to receive an allocation of the PSC.  Does this need to be prorated to 500 hours for allocation?

Thank you for the help.  My brain does not seem to be working.  I truly think that I did know this once... long ago....

I had a Plan terminate last year and we were unable to locate about 20 participants.  We went through the searches, etc. and ultimately had the money rolled into IRA in their name so the Plan could terminate.  What is the requirement for 1099-R for these rollovers?  Do we do the 1099 with the last known address and just stick it in a file?  Is the 1099 required in this circumstance?

Thanks everyone!

Situation: $4,000 payroll from April 1 2019, not deposited until January 10, 2020.  Plan year is calendar year, so it requires 2019 and 2020 Form 5330 fillings.  

Calculated interest:

• 2019 $310
• 2020 $34

4975(a) First Tier Excise Tax calculation (entered on Form 5330 line 3a): 

• 2019: $310x15% = $46.50
• 2020: ($310+$34) x 15% = $51.60.

      Calculation from Exhibit 4.72.11-6 on https://www.irs.gov/irm/part4/irm_04-072-011#idm139654188128704

4975(b) Second Tier Excise Tax calculation (entered on Form 5330 line 3b?

• 2019 None
• 2020: 
  • A: 100% of the 2019 Amount of prohibited transaction reported on 2019 filling $310
  • B: 100% of the 2019 amount of total prohibited transaction $4,000 + applicable Interest $310: for the total of $4,310?

Which would make total excise tax due with 2020 filling of either ($310 + $51.60) = $361.60 or ($4,310+$51.60) = $4,361.60?

Thanks for your help!

In a discussion with a CPA who says a partner who receives a K1 cannot exceed the 2019 limit of $56,000--that catch up contributions never come into play because they have no salary from which to defer. Can anyone point me to IRS rules that dispute this?

I should probably know this but if you are submitting a 2019 Schedule SB before you receive your EA renewal letter, do you use the 17 prefix or the 20 prefix?

I have a client whose plan document states the profit sharing formula is integrated with SSTWB at 100%. They have not done a profit sharing contribution in the past and have decided they want to do one for 2019. There is no one with compensation in excess of the SSTWB. Could we do the profit sharing using a cross tested formula with everyone in their own groups as long as we pass ABT? I don't think we can, but I wanted to check to be sure. Thanks.

(stealing Belgaraths topic to try out the poll feature )

There is a SH plan and a Non-SH plan in a control group. They both pass coverage on their own, so aggregation for ADP/ACP is not required. However, there is at least 1 key employee in each plan, so they must be aggregated for Top Heavy purposes. The plans are top heavy. My question is this: do the Non-Key employees in the SH plan have to receive the Top Heavy minimum contribution? Since that plan is SH, my thinking is that they don't. Do you agree?

Taxable third party sick/disability pay (e.g., where the premiums are employer paid or are treated as such because they are made pre-tax through a cafeteria plan) would be included in a W-2 definition of plan compensation.  As a practical matter, how are deferrals on these amounts handled where the amounts are paid by the third party insurer directly to the participant?  Do any insurers actually withhold deferrals and forward to plan sponsors for deposit in the plan?  I have seen this issue discussed on a number of threads, but I haven't found any that reached a conclusion.

Thanks!

ER uses a uniform formula for allocating profit sharing contributions. The formula utilizes various classes of employees based on years of service. The ER wants to further prorate each employee's share by the number of weeks in the year that the employee is actively employed. Is this what is intended to be allowed under 1.401(a)(4)-2(b)(2)?  If not, is there another basis for allowing the proration? THANKS!

Does anybody know of or have a template for a Permanent Opt-Out Form? 

Thanks.

I am trying to determine when the first RMD is due for this participant in a Cash Balance Plan.

Details:

- Participant is 100% owner of the plan sponsor.
- Participant turns 70 1/2 in 2018.
- Plan's original effective date = 1/1/2018.
- End of year (12/31) valuation date.
- Plan excludes service prior to the effective date of the Plan for vesting purposes, and the vesting schedule is a 3 year cliff.

Would the first RMD be due 4/1/2021?

My mom had a Pension. A QJSA. She divorced in 2006 and retired in 2011. In her divorce they each retained their own retirement acts. Free and clear from any claims of one another. Through her employer I was her beneficiary on her life ,ad&d, 401k while she was working. She has passed and the company said the beneficiary had been notified without another word spoken to me. Her attorney said that state law (Ohio) predeceases the ex in retirement plans with decree which she thought all would go to me (pension and other acts) I am her only child. Now, her employer said I was not the beneficiary although I showed them paperwork that I was, which was done at her retirement in 2011. EVEN THOUGH THEY NOW SAY, after 5 months of back and forth, that I’m not the beneficiary they want me to send in her death certificate? It does not make any sense. 
 

Not only am I dealing with the death of my best friend but her employer is making me feel like crap to be honest. It’s all so very sad and don’t know what to do at this point. Do I just give up? Do I let it go? My mom did not want him to have anything because he had his own and it was always her intentions for me to have her acts. I was also her power of attorney and we had bank acts together. I have taken a full notebook of notes with the conversations I have had with her benefits center and Human Resources.  Any insight would be appreciated. Thank you so much! 
Quinan

I don't think this is the proper forum for the question, but ... do TPAs ordinarily require that a participant sign that they received a copy of an SPD?

If so, any samples available?

Does the 10 year rule to non spousal beneficiaries apply to death benefit payments after 12/31/2019 or to deaths after 12/31/2019.

That is if a participant died prior to 12/31/2019 but the distribution is not elected or processed until after 1/1/2020 can the non-spouse beneficiary still take advantage of the old "stretch IRA" rules by rolling to inherited IRA or are they locked into the new 10 year payout rule?