n-20-52.pdf

Hot off the IRS press....

Small plan is filing a delinquent 5500 for years 2002-2008, delinquent 5500-EZ's for 2009-2012 and 2018, delinquent 5500-SF's for 2013-2017, and will file a timely 5500-SF for 2019. Essentially, this company downscaled after 2008 but continued operating with a few part-time employees each year since then. There were some years where only the business owner & spouse were eligible & covered under the plan. 

I think this plan will need to file under both the DFVCP and the 5500-EZ late filer programs and pay the maximum fees under both programs. Is there any way around this?

Also, is there a good way to indicate on the 5500-EZ and/or the 5500 & 5500-SF's to explain the gap in filings when it is switching back and forth between ERISA and non-ERISA filings?

How would you report a distribution from a church plan that was made associated with housing allowance and the minister was under the age of 59.5 on a 1099R.  Would use code 1 or 2?  Also, does anyone have the guidance on why that code would be used?

Hi

Plan document excludes non-resident aliens - standard language.

Employee is residing and working in the US, working under h-1 visa and paid a salary thru payroll from his employee in the US.

As far as I remember, he is included in all pension related matters like all non-discrimination testing (he is excluded under a job category but part of all testing).

Also, if he was not excluded, he would get what contributions due to him including option to defer.

Please let me know if I missed anything.

Thank you

Small plan, 20 ee's.

Just discovered that expected accrued deposit of 401(k) (for owners only) at beginning of prior yr do not match their 5500 as well as personal and company taxes.

contemplating 2 options:

• Amend all taxes and 5500 to match actual deposit
• Deposit the 401(k) amount (~5000 in total), over a year later

Looking for some expert opinions on a strange case (at least for me). A 401(k) plan has enhanced Safe Harbor Match (100% - 4%) that only satisfies ADP. There is a discretionary match of 25% up to 20% for a small group of NHCE so ACP testing is required (don't ask why - a previous TPA let them put it in without explaining the ACP issue). There is a large population of Service Contract Act employees who receive prevailing wage contributions in the plan. The plan document specifies that prevailing wage contributions are QNEC's that offset Safe Harbor Match.

When running the ACP test, should all of the prevailing wage contributions be included for all of the SCA employees - with the 10% limit taken into account? I am having difficulty finding an answer and our software doesn't want to do it. I can usually rely on our software to do the right thing, but I think the prevailing wage contributions should be included in ACP based upon the Safe Harbor Match offset.

Looking into a new plan. The first plan year will be from 7/1/19 to 6/30/20, same as corporate fiscal year.

One employee is in question with the following salaries

7/1/18 to 7/1/19 109k

Calendar 2018 105k

Calendar 2019 126k

7/1/19 to 6/30/20 125k+ or 130k+

Using lookback, looks like non-HCE for plan year beginning 7/1/19, agree? Is there anyway I can make the employee HCE for plan year beginning 7/1/19.

Also, to determine the HCE status for plan year beginning 7/1/2020, his salary has to be at least 125k+ as of 6/30/2020, agree? Or had to be as 12/31/19?

Thank you

The plan document specifies that the $1,000 limit for mandatory cash outs and $5,000 limit for mandatory rollovers. What if the participant has about $1,020 in the account and the distribution processing fee is $50 (so the amount after the fee is $970). Would a direct distribution or a rollover be processed?

A university maintains an ERISA-governed § 403(b) plan, and is the plan’s administrator.

The plan allows a choice of three investment vendors—TIAA-CREF, Fidelity, and Vanguard.  The plan has no common recordkeeper; each vendor keeps records to the extent a participant uses the vendor’s annuity contract or custodial account.

The plan provides hardship distributions, using only the Treasury rule’s deemed needs.

The university asked me to write a form on which a participant would specify which of the deemed needs is the claimant’s reason for the requested hardship distribution.  The university knows a vendor has its forms, yet asks for this form besides the vendors’ forms.  Completing this form would not relieve a participant from completing her vendor’s form.

Is a plan-level hardship form a good idea or a bad idea?

Employer has two plans.  HCEs are supposed to participate in the 403(b) plan.  NHCEs are supposed to participate in the 401(k) plan.  Each year, HCE or NHCE status is determined for the following year, and the person is supposed to be put into the correct plan accordingly.

However, errors have been made in some instances, in both directions.  Thus, for example, HCEs have contributed to the 401(k) plan, and NHCEs have contributed to the 403(b) plan.  Obviously, this violates the terms of both plans.

Does anyone have any experience as to the corrections IRS might be willing to accept in these circumstances?  What we'd like to do is to treat this as a mistake of fact, withdraw the incorrectly contributed amounts from each plan and contribute it to the other plan.

However, by the literal terms of the IRS Fix It Guides, the HCEs have been impermissibly denied the right to make contributions to the 403(b), and the NHCEs have been impermissibly denied the right to make contributions to the 401(k), which would require QNECs in both cases.  And then the HCEs have made impermissible contributions to the 401(k) and the NHCEs have made impermissible contributions to the 403(b), all of which would have to be disgorged.  

All of that just seems to be excessive, given that no one has been denied the right to make contributions.  And the investments of the two plans are the same, so no one has lost out in that area, either.

What has been your experience?  Will the IRS allow for a reasonable correction, or does it insist on following the technical terms of the Fix It Guides in this situation?

I want to make sure I'm understanding the Prohibited transaction/disqualified person plan rules correctly. If I have a client where the ownership is as follows:

A - 40%

B - 40%

C - 20%

A & B are siblings and not related to C.  A & B own interest in property (the same property) in their individual 401(k) SDB accounts.  They want to sell the property. Since they aren't related and neither own more than 50% of the company, are they disqualified persons? Assuming not, can they personally buy the property from the plan to remove the investment?

Now it time to receive my retirement  starting in April 2020 I have not received any payment yet due to  divorce settlement decree with no QDRO on file with the courts. How long can the pension broad hold my retirement since the ex did not do the QDRO?

Hello.  I am working on a PSP that uses W2 compensation with no exclusions.

I have the payroll report and W2s for all employees.  There is an employee who had child support payments deducted from payroll.  The payroll report shows his gross compensation of $5,000 and child support payments of $1,000.

His W2 reports $4,000 taxable income in Box 1. I thought it should be $5,000, since the garnishment is post tax, not pre-tax.

Does anyone out there agree with my thinking?

Thank you!

I've looked everywhere with no luck, and while I've placed an incident request, I was hoping maybe someone here can tell me what I'm missing.  I want to email pp statements for a small plan.  I've checked boxes allowing electronic statements in plan specs and census data.  I've entered the correct (I think) smtp info in the email under system admin.  I've got a valid email for the pp.  When I print the statement to email the pp, I get a timeout notice.  (When I used another SMTP, I'd get a server can't be found error, which is what makes me think I've got that portion set up correctly.)  It's like I'm missing an execute step, or need to authorize my mail client to send the email on Relius' behalf?  Any ideas what might I be missing?  thank you!

Wow, suffering from terminal brain cramp. Suppose an employer has a Money Purchase plan with standard last day/1,000 hour requirement. Employer is terminating a group of employees, many of who are  HCE's. Employer wants to amend the plan to waive the 1,000 hour/last day requirement for THIS GROUP OF EMPLOYEES ONLY. Contribution level will be the same as for everyone else.

This shouldn't inherently cause a coverage testing problem, right? They will just all be included in the coverage test, and the plan will pass or fail as usual. But it'll have to be tested for nondiscrimination? Something is bothering me here, but I can't put my finger on the correct citation.

Maybe what's bothering me is 1.401(a)(4)-2(b)(4)(iii). This amendment would take you out of design-based safe harbor status, and then you'd have to general test?

Hi 

I am never comfortable with providing prior service for the following situation but there are different schools of thoughts out there.

Working on a new DB plan. Have employees and the owner as eligible. I am now told that the owner's spouse have been working for the company and never drew a salary. He has been employed since 2000.

Assuming that he always worked 1000 hours, any issues in providing 1 to 5 past YOS (have not totally determined yet on how many years I will need for the plan design) for benefit accruals (under safe harbor rules)? I believe, the lack of salary history will be of an issue especially for 415 and testing but let's put that aside for the time being. I just need to determine if I can provide prior service.

Thank you

Husband and wife DB plan, both passed NRA of 62, are looking to terminate the plan, but plan asset value has exceeded 415 lump sum by 1 million. What are the ways to solve the overfunding issue so they can terminate the plan? 

One way an actuary suggested to me is having both participants start taking in-service distribution, which can be treated as eligible rollover distribution and rolled over to IRA without tax implications. But it seems to violate one of the exclusions of an eligible rollover distribution: "a series of substantially equal periodic payments over a period specified in section 402(c)(4)(A)". Is this really workable? 

Group:

Plan has had an investment in gold coins for several years. These are not qualifying investments, I don't think.

So, all along they should have been filing a "regular" 5500 with a Schedule I attached.

All along, the bond was for mare than the value of the gold.

Any harm or foul here?  Maybe next year file the I?

Did we really commit perjury by saying all the assets were qualifying in the past 5500's?

I have a DC plan with a 12/31 PYE and a terminating DB combo plan associated with the same employer. I know plans of the same employer with different plan years may be aggregated for ABT testing purposes under 1.410(b)-7(e), but do you just follow the rules of 1.410(b)-5(d)(5)(ii) and add the DC contributions divided by calendar year compensation to DB benefits divided by partial year compensation? Is it that easy or am I missing something? Any different rules when the plan is a short plan year versus just a different plan year?