Husband and wife own a small business and sponsor a qualified retirement plan.  Both are over age 70 1/2, and take RMDs.

Husband died in 2019 before taking RMD.   As his beneficiary, wife took his RMD, and also took her RMD.  The balance in the plan was then rolled from the pooled account into an IRA in the wife's name and the plan was terminated, in 2019.

The questions is:  how many 1099-R forms must be filed?  One for his RMD paid to her from the plan as beneficiary, and one to her for her own RMD from her account in the plan, and a third to her for the rollover to the IRA.  Is there any reason to do a separate RMD for his remaining balance in the plan that rolled to her IRA?

Thanks!

I apologize, I'm sure this question has been asked and answered - so if someone could point me to the correct thread, I'm happy to read up on it. 

I also wasn't sure if this question was better suited for the distribution message board or this on. 

I don't deal with PBGC covered plans often - so my apologies in advance if I am using the wrong terminology or asking the wrong type of question. 

PBGC covered plan - terminated and closed. There were a about a dozen participants whose benefit was sent to the PBGC per the lost participant rules. 

We are now preparing 1099-Rs for the plan. The participants who elected something ( lump sum cash, rollover, etc) I have no problem preparing the 1099-Rs. But I don't know how to report those whose benefit was transferred to the PBGC. 

Do they get 1099-Rs? I'm thinking yes - but I've been wrong before

If they get a 1099-R what code goes on the form?

I'm sure there is a publication or guide that deals with this - I'm just not sure where to look. 

I called the PBGC for an answer and was told I would get a call back - but I haven't heard yet so thought I would ask all you smart folks here. 

The flat benefit formula using the fractional accrual rule--the question I am having is when is the 415  comp limit first applied. Is it to the projected benefit first, or  to the accrued benefit. We have  a plan document where it is not specified.  My interpretation has been that without specific language in the plan as to when it is applied, it seems it should be applied to the projected  benefit first since we can't accrue a fractional benefit to something that exceeds 415. In this plan the normal retirement benefit is 300% of average comp for 25 yrs of service at NRA.  Consider an employee who is 40 yrs old, NRA 65 and has $300,000 average salary. 

I am trying to determine the proper calculation for an RMD for a non-spouse beneficiary.

The original account holder was a greater than 5% owner and was taking RMDs before the time of his death. His sole beneficiary, his wife, became the account holder and opted to leave the funds in the plan. She continued to take RMDs using the uniform life table based on her D.O.B.

This beneficiary, now the account holder, died and the account fell to her sole beneficiary, her daughter. Her daughter opted to leave the funds in the plan as well. The beneficiary was 88 at the time of her death in 2017, in 2018 she would have been 89. Using the single life table, this results in a factor of 5.9. The daughter was 68 in 2018 which results in a factor of 18.6 using the single life table.

Is the single life table the correct one to use in this situation?

If so, am I correct to use the greater factor of the two and reduce the 18.6 factor by one each following year?

If not, what is the proper way to calculate the RMD for the daughter?

We have one participant for which RMDs should have been taken for last ten years, and were not.  Since it is only one participant, we think we can use SCP (even though it is several years) to correct.  My question is the correction process and how to report it.  We intend to calculate the missed RMD amounts, with earnings.  When we distribute those amounts, do we just issue a 1099 for 2020 and the participant includes in income for 2020?  Or does he have to amend each tax return and include the individual RMD amounts in the year each one should have been paid?

For the Form 5329:  do we file one form for all of the years?  or do we file a 5329 for each year impacted?  We plan to request a waiver of the excise tax.  My understanding is that we fill out the form and request the waiver without actually paying the excise tax.  The IRS will come back and either grant the waiver; or deny the waiver and then demand payment of the excise tax at that point.  Is that correct?  If the waiver is denied, how do we report payment of the excise tax?

Good Morning,

Have an integrated profit sharing plan, that is top heavy.  It also has basic safe harbor match as well as discretionary match (66.67% up to 6%)

I have a new participant that entered 7/1, the plan uses date of entry comp.  I am trying to determine her profit sharing allocation.

i.e full year comp 30,000, entry date $15,000, she is receiving the SHMT 3.5%, her disc MT is 2.68% of  entry date comp

When i run the profit sharing, (the allocation is 3.22%) should she get 3% of full year, or just the 3.22 of entry date comp? 

Between all employer sources she is receiving greater than 3% of full year comp. 

I just want to make sure meeting the top heavy requirements for an integrated plan.

Thank you for your help!

I know quite a few years ago the rules were changed by getting rid of the 3-day rule regarding the length of some 80-26 loans, but I have not been able to find any guidance regarding how long such a loan can remain unpaid.  Also, seemingly absent is anything addressing the amount of the loan in relation to the amount of ongoing expenses.  For example, a large profit sharing plan is constantly making distributions to terminating participants.  The plan's assets are held in two accounts, one with TD Ameritrade for all of the equity investments, and a bank account specifically for payouts.  The trustees are reluctant to liquidate securities to make the payouts and would prefer to make 80-26 loans to the bank account. The trustees, who try to pay terminees asap, try to invest as many assets as possible in stocks, thereby sometimes leaving the plan cash poor.  Would it be acceptable for the employer to loan the plan $40K so that terminees over the next few months can be paid out when the actual amount of cash needed is currently unknown (which could result in the cash just sitting there for months)?  How long can the loan remain outstanding? 

I'm guessing there may not be any restrictions regarding how soon an expense must be paid after the plan receives the loan.  In the absence of any guidelines, I would be curious to hear how such loans are typically handled, especially since loans lasting over 60 days must be in writing and I'm not sure how to word the promissory note.  All help is greatly appreciated. 

We have a 401(k) plan that terminated effective 03/31/19.  Last contributions were paid to John Hancock 03/04/19 and last participant distributions made 08/19/19.

For the final 2019 ADP testing, do we use comp only through 03/31/19 or the full year, or is it our choice?

We have a 401(k) plan that terminated effective 03/31/19.  Last contributions were paid to John Hancock 03/04/19 and last participant distributions made 08/19/19.

For the final 2019 ADP testing, do we use comp only through 03/31/19 or the full year, or is it our choice?

A large payroll company (10,000+ payroll clients) marked box 13 with an X for a 401(k) participant who made no elective deferrals to the plan nor receved an employer contribution for 2019.  There is no DB plan.  So the employee received no employee or employer contribution into the plan account in 2019 nor was there any employer accrued contribution 2019.  The employee was planning to do a deductible max IRA.  the employer specifially told them - no X for this person.  The Payroll company said because there were 401(k) loan payments they had to mark Box 13 with an X.  That has to be wrong in my opinion.  I gave them the IRS instructions on this with examples of no employee nor employer contribution but it doesn't say anything about loan payments - probably didn't think it needed to!  Comments?

We are part of a CPA firm, and perform plan administration and reporting services for clients of the firm.  Mid-2019 we billed plan sponsor for 2019 plan work.  Plan Sponsor was not happy with the amount of the bill and told CPA they were going to find someone else to do TPA work, but CPA would continue to do their accounting and tax work.  Today we learn they did not like other TPA options and so decided to stay with us.  Unfortunately, they did not inform us (or the CPA) of that decision.  They want us to continue to perform TPA work and reporting for their plan for 2019 and going forward.

During the time we thought we were fired for TPA work, we prepared the SH notices for our clients, but did not prepare one for this particular client, thinking they had another TPA doing their retirement plan work.  So I think it is highly probably that no SH notice was distributed to participants.

They have had a SH 401(k) plan for several years, and deposit the SH contribution along with the employee deferrals every pay period.

Can they still be a SH plan for 2020?  Any options??

Thanks!

We had a large plan client that stopped communicating with us and stopped filing 5500s several years ago.  Now they have contacted us to bring the plan up to date.

This will mean DFVC filing for 7 years (thru 2019) - all large plan 5500.

Q:  Do they need a separate audit for each year or can they use one comprehensive audit for 01/01/13 through 12/31/19?

Plan Sponsor changes name and plan name in middle of the year.

What name should be used on 1099R forms and 1096 forms?

Old name or new name?

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....