I have a terminated employee who was due an employer match after termination.  The entire participant account balance was distributed prior to the match deposit and the account closed.  There has been a lot of hassle trying to get an account reopened in order for  the match to be deposited and then distributed to the participant.  The broker is saying that the plan sponsor can just write the check directly to the participant and there is no reason to reopen the account.  I have searched and searched but cannot find any guidance on how to handle this.  Any thoughts or guidance would be appreciated.

The Plan Sponsor has a DB and a 401k PS plan with individual accounts.  Husband, Wife and 1 employee participate in both plans.  The husband currently has an investment in his 401k account for a mortgage to an unrelated party.  Repayments are made to the husband's account in the plan.  The Plan Sponsor called today and would like to issue another mortgage to another unrelated party for $200,000 from both the Husband and the Wife's accounts.  The Husband has approximately $990,000 in his 401k account and his Wife has approximately $400,000 in her account.  (They originally wanted to invest in a mortgage of $1,000,000 between them but it seemed too over the top.)  They also inquired about investing in a mortgage in the DB plan.

We do not recommend real estate investments within a plan but if they wanted to proceed with this, how should they go about it?  I personally think they should get an opinion from an ERISA Attorney well versed in real estate investments within a retirement plan.  Any advice, opinions would be greatly appreciated.

A profit sharing plan terminated in 2019.

Owner took RMD beginning of 2019 based on 2018 account balance..

Now that the plan assets are to be distributed, is it necessary for

the Owner to take another RMD  (distribution is being rolled over to an IRA)?  

When is the next RMD due , and what is it based on?

The SH plan in question will be increasing their match at some point during the 2020 plan year (plan year is calendar year).  The match is calculated on a per payroll basis and that will not change.  The plan will need to apply the new matching formula back to the first day of the plan year and re-distribute an updated SH notice.

If the increase happens after the first quarter of the plan year, will the plan also need to consider providing earnings as not all of the match would be deposited on a timely basis (i.e. quarterly)?  I believe that this is the EPCRS fix for late SH contributions when they are calculated on a per payroll basis but not allocated in a timely manner.

I would greatly appreciate any commentary on this.  Thank you.

We are in the process of restating a 403(b) plan for PPA.  It is a Church plan.

Prior AA had language that read:

In order to share in non-elective and matching contribution, the Employees who normally work more than 30 hours per week are eligible for all Employer Contributions and Forfeitures

Is this allowable?  I understand that Church plans are not subject to discrimination testing, but are they allowed to exceed the 1,000 hours requirement to receive an allocation?

The plan terminated 12/31/2018.  Employer failed to make required contributions in prior years and made them in 2019.  Let''s assume that they never deducted these on prior years tax return and we're self-correcting under EPCRS.  Since there are no eligible compensation under 404,  is this subject to excise tax on the 5330?  Or these non-deductible contributions? 

Can a business owner maintain a solo 401(k) plan if the business would be considered an affiliated service group with another company? The other company only has greater than 5% owners. What if the other company had employees with no ownership who would be eligible for the solo 401(k) plan?

Thanks.

Has anyone been successful in avoiding the proposed ESRP for clients who did not offer coverage?  I know reasonable cause is not an acceptable reason for not offering coverage, but I was wondering if anyone has been successful in either avoiding or reducing a proposed ESRP pursuant to a 226-J letter.  Thanks!

When do you complete your compliance testing for plans moving to a MEP?

Unlike a regular plan termination, where we still have the assets and can do all the testing and required corrections and contributions before the assets get liquidated.

How do you handle that for a plan leaving for a MEP?  Just do the annual work and do the corrections/contributions to the new plan?  Hold off on the transfer until it's all done?

Plan year is 7/1/19 - 6/30/20

hce defers on pay date 12/15/2019 $25,000.00  nothing else deferred in the 2019 calendar year

hce defers on pay date 1/15/2020 $26,000.00  nothing else deferred in the 2020 calendar year

is my adp test for plan year ending 6/30/2020 going to show deferrals of $51,000.00 of deferrals?  or will it show $38,500.00 deferrals because 2019 is less $6000 catchup and 2020 is less $6500 catchup?

thank you

We have a client, Company A, who sponsored a safe harbor match 401(k) plan. The plan is top heavy for 2019. On 10/01/2019 Company A sold all Company A's assets to Company B. All the owners of Company A became employees of Company B and have no ownership in Company B. Effective with the assets sale on 10/01/2019, Company B took over sponsorship of Company A's 401(k) plan. Going into 2020 Company B would like to amend eligibility to be immediate upon date of hire for salary deferrals but still require 1 year of service to receive the safe harbor match. Would the plan be considered top heavy for 2020 requiring that participants eligible to defer but not eligible for the safe harbor match be given a top heavy benefit?

Last year, I had significant capital losses in a cash management account held at Merrill Lynch.  I used the $3,000 last year as a way to reduce my taxable income and I still have several thousands that I can roll into 2019 tax year.  My question is, can I use those losses to offset a conversion of funds from my traditional IRA to my roth IRA?  Assuming I transfer 10,000 dollars from my traditional IRA into my roth, and assuming I have a tax rate of 25%, that $2,500 would essentially be nullified by my $3,000 capital loss carryover?  Am I correct with this assumption or do the capital losses have to come from one of the ira accounts?

I had a forfeited unvested balance showing on my 401k statements, which resulted in my ex and I calculating different figures for our QDRO. The unvested balance was forfeited by a 5 year service break before filing the divorce petition.  The company kept the forfeited balance in my account for a few months before transferring it back to their account.

My position is that the forfeited unvested balance had no value to the marital estate prior to filing for divorce and should not be included in QDRO calculations. What is your opinion?

We are looking into taking over the third party administration of a plan that currently has a QACA that utilizes the 3% non-elective contribution safe harbor method that vests after two years of vesting service.  We are exploring changing the ADP safe harbor method to traditional 3% non-elective which is 100% vested immediately, but if the administrator is already successfully administering the QACA, I am thinking this may not be in their best interest?  I think my question is, "is the ability to administer the QACA properly the only difference between a two year difference in vesting requirement, or are there other considerations?"  A two year vesting schedule seems like a huge benefit for a small trade-off.  The end goal of the program design is to add nonsafe harbor non-elective contributions to the plan and potentially also adopt a DB plan, I want to use the QACA safe harbor contributions towards top-heavy and 401(a) testing if i can, and if it makes sense to continue to maintain the QACA.

If a retirement plan makes a loan to an unrelated operating business, and the interest is a fixed rate plus a percentage of the business profits, would that trigger UBTI?  Does it make a difference if the business is a corporation, partnership or LLC?

Thanks.

Doctor is W-2 employee and partial owner (somewhere between 10% and 15% ownership) for the first few months of 2019.  Quits, sells his stock, and starts a sole prop that is still in existence at the end of the year which appears to be throwing off around $300,000 for 2019 but won't be generating much in the future.  Accountant thinks it is a perfect fit for a defined benefit plan!  Let's assume that one course of action is to adopt a defined benefit plan that generates a deduction of $200,000 for 2019 and a minimum required contribution for 2020 through 2023 of zero [easily accomplished if sole prop throws off minimal income.

Come November 15th or so, Doctor is presented with an opportunity to purchase 100% of the stock of a medical practice where he can hang his hat.  Very little income from this entity for Doctor for the balance of 2019. Fly in the ointment? Stock is of a long-standing (more than 10 years) practice which employs 15 employees, each of which have been with the practice for a long time.

Two scenarios present themselves: a) DB plan signed sealed and delivered before November 15th resulting in reliance on 410(b)(6)(C) for the balance of 2019 and 2020 and generating a permanance busting termination on 12/31/2020 due to changed business circumstances. b) DB plan thought about long and hard but not documented until 12/15/2019 [long after stock purchase] meaning no reliance on 410(b)(6)(C) and qualified status of DB plan dependent on satisfying non-discrimination aggregating the sole prop and the 100% owned medical practice.

Too restrictive?

Does it get any less restrictive if a SEP-IRA with a contribution of $55,000 is substituted for the DB plan in (b), above?  Or does it get more restrictive because the SEP-IRA will no doubt involve a 5305 which requires aggregation?

Thanks 

A Plan handed out the NOIT 60 days prior to the proposed termination date. Assume they did not sign the plan termination amendment within that 60 days. But they do sign it within the 90 days. Can they distribute a revised NOIT with the new termination date, and still rely on the date the original NOIT was sent out? Or does the 60 day clock re-start on the day they hand out a revised NOIT with the new termination date?

457(f) plan provides for substantial risk of forfeiture solely on the condition that the participant perform substantial services for the employer through the initial or extended vesting date. In addition, the plan permits participant and employer to agree to an extension of the substantial risk of forfeiture in accordance with the requirements of the proposed 457(f) regs.  More than 90 days before the initial vesting date of January 1, 2020, the parties in fact agree to a materially greater benefit that will vest on January 1, 2022.

It would seem that the proposed regs would permit the participant and the employer to once agree to extend the risk of forfeiture in the same fashion provided they enter into the agreement at least 90 days prior to the January 1, 2022 vesting date. Yet, there is no explicit statement to that effect and all of the examples provided only deal with the first extension.

Any limitations on (or traps inherent in) doing a second extension?

Hoping for some advice.  We just took on a client earlier this year with a DB plan that had been in place for a while.  We outsource the actuarial work to several actuaries.  The actuary who previously worked on this plan has subsequently passed away this year.  In looking for another actuary to take over the case, we are finding the previous work is difficult for the takeover actuary to figure out and they are declining to take on the work.  I believe the issue relates to a freezing or capping of benefits that occurred several years ago.  Unsure how to proceed.

1. Loan procedure has the standard cure period...... last day of the calendar quarter following the calendar quarter ......

2. Loan procedure states loan will become payable in the full on termination of employment

3. Employee has  an outstanding loan and terminated 7/10/2019.

Question:

Does the loan become due and  payable (taxable since the employee can not pay it back) as of the termination date.  Or does the plan sponsor have to wait until the end of the cure period (12/31/2019) to default the note?

thanks