I want to make sure I'm not crazy. 409A DEFERRED income is not included in W-2 compensation for 401(k) plan purposes, right? We've got a payroll company including these deferred wages as eligible income. I could understand it if the employee was receiving taxable PAYMENTS of 409A amounts previously deferred, but this makes no sense at all for income currently being deferred.

Agree/disagree? Thanks.

Question #1 - Under the provisions and requirements enacted by the Secure Act for 2020 and beyond, if an IRA owner dies in 2020 or after, and was past their RBD at the time of their death, must a designated beneficiary (who does not qualify as an eligible designated beneficiary) continue to take an annual RMD beginning by 12/31 of the year following the death of the owner, but then also deplete the account by the end of the 10th year after the death of the owner?  Internal discussions in my workplace differ, some saying the RMDs are suspended at the owners death, and that the beneficiary can let the balance sit untouched for the 10 year period. Others, believe RMDs must continue but account must be depleted at 10 years.

Question #2 - If an eligible designated beneficiary or designated beneficiary (if the answer to #1 above is yes)  fails to take a RMD, by the required date after the owner's death, is it merely a failed RMD subject to the 50% excise tax/penalty for the shortfall, or do their payout options default to something else, like the 10 year rule? 

Does the RMD change for the Secure Act require an amendment to adopt for Plans?  I know things like the $5,000 distribution for a newborn requires an amendment, but I haven't seen anything where it says if the RMD changes also need one or if it's just an automatic change.

Thanks!

We have seen many circumstances where an employer has an existing rabbi trust and now has a 2nd or 3rd deferred compensation plan that they want to add an account for under the existing rabbi trust.  Is this an acceptable amendment?  Would consent of the existing beneficiaries be required?

Participant term'd  December 2019.  The company wants to now give her a severance package of $30,000 and wants her to be able to defer from it.  My inclination is she cannot defer from it.  They want to instead now say it's a bonus, but I still say no based on this wording under Compensation: The payment would have been paid to the Participant prior to a severance from employment if the Participant had continued in employment with the Employer.    Which it would not have been.

Every audited plan I have seen used accrual accounting where you would indicate receivables on the schedule H. Can an audited plan use cash basis accounting for 5500 purposes?

If a plan has a Simple and then converts to a 401k plan, can they still use the tax credit under the SECURE Act for the new 401k Plan?

I used to work at Wells Fargo, and have about 200k in 401k over there, took a new job at BofA.

I haven't explored much fund returns in BofA yet, any suggestions if its better to move or leave there.

Under the SECURE ACT, can an "actively employed" over-70 1/2 who has been receiving RMD for 4-5 years make IRA contribution starting in 2020? Would they have to take their RMD and then turn around and contribute to an IRA?

401(k) Plan has failed the ADP test for 2015, 2016, 2017 and 2018.

We have a Safe Harbor 401(k) Plan client that currently has a three percent nonelective contribution and wants to change to a safe harbor match contribution.  I referenced the EOB and it referred me to Notice 2016-16.  Under Notice 2016-16 Mid-year Changes to Safe Harbor Plans and Safe Harbor Notices, I see where this might be possible but don't find any specific examples that address this scenario.  I feel I could argue either way - for or against and would like input from anyone that may have some insight/advice?

I have a question regarding the retirement account for my company which is a Profit-Sharing Plan, 100% employer contribution. I have a former employee who is 100% vested in the plan though has not worked for me for several years. He had elected to keep his money in my profit-sharing plan, without additional employer contribution. At this time, this former employee is electing to have his distribution rolled over to an IRA account. By definition in the SPD, the plan year is 1/1 to 12/31. The valuation date is the last day of the plan year (12/31). The valuation is calculated annually, and this is usually done around October of the following year. Right now, we have the numbers for the valuation up to 12/31/2018. I know that the profit-sharing plan gained money in 2019, but do not have those exact numbers calculated yet. The employee is asking for a partial distribution based on the 12/31/18 valuation and then a total distribution for the 2019 gains once that number is calculated (around October 2020).

What are the rules pertaining to this type of distribution? I do not want this former employee to miss out on the profits earned in 2019. Is it possible to do a partial rollover for the 12/31/18 amount and then give him the final 2019 profits once this is calculated? Thanks.

Single participant with no spouse or dependents dies with large balance in HRA account.  Employer is subject to Davis Bacon Act so funds cannot revert back.  Employer contributions to HRA are held in trust.  HRA plan document does not provide for payment of dependent medical expenses after the death of the participant.  What do we do with the funds in the participant's HRA account after his death? 

Hi to All,

I have been asked to query the group as to whether you fill in the "paid preparer" section of the Form 5330, whether you maintain a PTIN for this purpose, and whether you use the PTIN for any other purpose.

We very seldom prepare this form and every time, these questions come up.

Your advice is appreciated in advance.

It was determined (after year-end) that a large traditional 401(k) plan had a partial plan termination in 2018.  The plan operates on the calendar year.  Additional match contributions (plus earnings) were calculated and deposited to the plan in late 2019 as a correction for the 2018 partial termination. 

The plan administrator had originally calculated refunds to HCEs for failed ADP/ACP.  Now the PA is saying that the plan had to be re-tested  for the 2018 plan year after the correction for the partial plan termination, and additional refunds are due to the HCEs. 

Should the compliance testing for 2018 be re-run as a result of the corrective actions taken for the partial plan termination?

Thanks!

Company merged with Target and now wants to enter into new employment agreement with Target Executive.  The current employment agreement offers $100k severance benefit upon Good Reason termination due to change in employment position, which will occur.  To encourage Target Executive to stay, Company offers new employment agreement with $100k signing bonus and no severance benefit.  Would this be a "substitution" under 409A and thus an impermissible change in the time of payment?  I think not because under the current agreement he does not get the $100k unless he terminates, which he would not do if he signed the new agreement.

Hi, Is there any basis in using a discount rate for the FASB that is determined by taking the effective rate of the 430 HATFA segment Rates (minimum contribution rates---from the Val) ie 5.64%, and the effective rate of the 404 seg. rates (max contribution rates) ie 3.99%, and the average of the two effective rates is the discount rate for the FASB?  Thank you for any insights/opinions on this matter.

We're doing a VCP filing for a client and I have a copy of the adoption agreement, but need to locate a copy of the Approval letter for the Legg Mason Wood Walker, Inc. Standardized Profit Sharing Plan & Trust #03-002.  Any idea where to dig it up? - I've tried the advisor's office, Legg Mason and a call to Citibank.  I wanted to avoid using this particular adoption agreement because it wasn't dated, but it looks like I'm going to have to do that and hope for the best.  Anyone else not be able to locate an approval letter from a large firm like this that obviously had one?  How did you handle it?

I am trying to determine if interest on a 401(k) account is available for someone eligible for a Qualified Reservist Distribution.  Our document language (which mirrors what I am reading in the Code) says that the distribution may be taken from "amounts attributable to elective deferrals described in Code §402(g)(3)(A)…"

So my question is - does that mean the whole 401(k) deferral account can be withdrawn, including earnings?  I don't see anything specifically prohibiting earnings, but I am not entirely sure if "amounts attributable..." is only referring to contributions?

Thanks!

Had a quick question on the withdrawals for birth or adoption section of the Secure Act.

Is this intended to be another in-service withdrawal option, or does the participant need to have a distributable event available? 

Also, in reading the section of the Act it does not appear to say anything similar to "If the Plan permits", or something to the effect so I'm wondering if this is available even if the Plan does not otherwise allow for withdrawals until, say normal retirement age, for example.

Thanks very much.