maybe strange but the client terminated his cash balance plan and paid out a few participants who also terminated employment. a couple of years later they want to revive the plan. is it possible to un-terminate and restate the plan or just restate the plan effective January 1, 2019?  trying to avoid having a totally new plan if possible. 

A participant wants to make an after-tax contribution to the plan and then, roll that out the next day to a Roth IRA.  It would sit in a holding account and have no earnings for the one day.  The 401(k) plan does allow after-tax contributions and Roth deferrals.  The participant is over 59.5 and the plan allows in-service of after-tax money at any time.  Assume the plan does not have a testing issue with ACP.  I believe that is possible using a code G on the 1099R and none of it would be taxable b/c no earnings.  Is this right?  Seems too easy to go around the Roth IRA limits. 

Safe Harbor 401(k) with SH match, Roth and pre-tax deferrals; PS contributions allowed but none made. 
Plan assets are held in a pooled account with annual valuation.

100% owner has 2/3 of plan assets allocated to him as of 12/31/2018; 2019 deferral contributions show roughly same percentage being contributed by owner.
Owner/plan sponsor wants to amend plan document to add plan loans, so that he can take out maximum loan.  He is aware that this opens the door for plan loans to other participants.

My question:  In an account with separate accounts, interest from loan repayments would be allocated to the participant who took out the loan.  In a pooled account, is the loan considered just another plan asset, so that the interest is allocated across all participants?  Or is it allocated only to the participant who took out the loan?

Also, are there fiduciary issues related to the fact that the owner has 2/3 of plan assets allocated to him?

Thanks!

We have a client who owns a small business. The small business operates a SIMPLE IRA with the 5305-SIMPLE form being the governing document.  She wants to move her account to our firm to manage the investments, but not force the other partners & employees to move their accounts.  Obviously this would mean amending the plan to be governed by a 5304 document. Can she amend the plan to be a 5304 whenever, or would it be subject to the 11/2 (60 Day) notices?

Are there any other issues I am not thinking of that could be of concern?  I thought about the two year rule, but this is SIMPLE IRA to SIMPLE IRA so we are good and I think her account is older than 2 years. 

Hello everyone - I'm double-checking my understanding of the nondiscrimination testing rules with respect to separate plans maintained by members of a controlled group. Each spouse has a separate business and sponsors a plan. Husband receives compensation from his wife's business. When performing nondiscrimination testing for the wife's plan , I believe you only use the compensation paid to the husband from the wife's business, correct? In other words, you don't aggregate compensation paid by two different business even though those businesses form a controlled group. Thank you for your comments. 

What happens if a plan has a termination date of 12/1/2018, but not all the assets have been distributed by 12/1/2019?

It's a DC plan.  401(k).

When there is a reduction in fees (paid from plan assets), what is the required timing to inform participants/sponsor?

I own my company (100%) and have my parents as employees (no ownership). My company sponsors a pension plan.

Under 318 attribution rules, my parents are 5% owners therefore RMD's are required.

Please let me know if I missed anything.

Thank you

The plan document has a cash out provision at age 62 for balances that are greater than $5,000. 

"Involuntary cash-out of a terminated Participant's Account balance when it exceeds the cash-out amount specified in F.11a ($5,000) is deferred under Section 7.03(b)until: Later of age 62 or NRA - payment made in lump sum only". 

Some participants have money purchase and their balances are greater than the $5,000 cash out threshold. As the money purchase is subject to J&S and spousal consent is required, does this mean that I cannot cash out those participant who have a balance greater than $5,000?

A beneficiary of an IRA has been taking distributions for many many years. For 2019, the divisor (subtracting 1 for each year) is 1. The IRA balance at 12/31/18 was $50,000, and currently has a value of $60,000.

MRD for 2019 appears to be $50,000. But what of the remaining balance?

Never have seen the divisor get to 1. Any thoughts would be appreciated.

The model Rabbi Trust from the IRS seems to limit TRustees to the following.

"a bank trust department or other party that may be granted corporate trustee powers under state law,"

Does this preclude an individual from service as the Trustee of a Rabbi Trust? I would not think so, but I note that they use the terms "granted CORPORATE trustee powers..."

Also, Do people agree that an individual cannot serve as the Trustee of his own accounts because in so doing he would have constructive receipt of the funds?

We have a case where the client had a db plan for many years, which became very overfunded. A new db plan was created, with the idea of a carve out or offset between the plans. Plan A  covers 2 participants and provides a benefit of 6% x service accrual and plan B provides a benefit of 8% x participation. In Year 1& 2, the benefit accrued in plan A is fully offset by the Plan B accrual, and the question is how to satisfy 401(a)(26) for plan A for these years. From what I have studied, 401(a)(26) might not be satisfied until both plans can be aggregated for (a)(26). 

We have a defined benefit plan, covering only a Key employee, and then  in 2016, 3 other employees joined the plan and accrued at least a 0.5% accrual. The plan was frozen 12/31/2016.  No other employees.  The question I am dealing with whether I am satisfying 401(a)(26) for this frozen plan since 2016 as there are no accruals as the plan is a hard freeze. Since there are 6 "participants",  am I satisfying 401(a)(26) since 2016? I find the reg hard to follow for db plan subject to a hard freeze.

I know of the 30-days rule for providing notices.

But what if someone decides in December to start a SH 401(k) plan?  Can they not do it?  What if it's the first week or two of the month?  Wouldn't that be like an "as soon as administratively feasible" situation?

Curious to see thoughts on this - client is switching recordkeepers, and has a guaranteed fund with a market value adjustment option for termination. Client wants all assets to come over... the guaranteed fund contract states:

"Unless the Company (listed as the guaranteed fund provider) receives payment of any applicable market value adjustment from the Group Contractholder (listed in the document as plan sponsor) prior to the Distribution Date, Company will remit to the Group Contractholder or its designee the lesser of the Guaranteed Fund Value or Guaranteed Fund Value adjusted pursuant to the Market Value Adjustment Factor."

The recordkeeper has given the sponsor the option to wire the amount of the MVA prior to the distribution of assets, so that no plan assets will be adjusted. Would this be considered a contribution, even if no assets are moving into the plan and no assets are being adjusted from the plan?

Let's look forward to 2020. Suppose corporation X and Corporation Y are a controlled group, each owned 100% by Winnie the Pooh. Corporation A is the Plan sponsor, and Corporation B is signed on as a Participating Employer.

Winnie decides to sell Corporation A to Tigger on 6/30/2020. Tigger has no interest in maintaining a plan, because he's bouncy and fun, and 401(k)'s are not. So Corporation A's plan will be terminated effective 6/30/2020.

Winnie, however, wants to maintain the Corporation B plan (it invests primarily in honey pots, which Winnie deems Socially Responsible Investing), so will spinoff the Corporation B portion of the Plan.

Because this is a 401(b)(6)(C) transaction, the Corporation A Plan should qualify as a Safe Harbor Plan through 6/30/2020, the termination date. Corporation B adopts a new plan document with identical provisions for the initial short Plan Year of 7/1/2020 to 12/31/2020, and the Spinoff assets are transferred to the new Plan - for the Corporation B employees, this is not a distributable event, and 100% vesting is not required. This Plan should also qualify as a Safe Harbor for the 2020 short Plan Year.

Am I missing anything here? Whenever something seems relatively straightforward in these situations, it makes me nervous.

Hope you all have a great Thanksgiving holiday - drive carefully, and hopefully the weather won't interfere with your travel plans!!

P.S. - just for the heck of it, suppose this transaction takes place on, say, 11/30/2020 - can corporation B still have a Safe Harbor plan for the 1-month plan year? I'd argue that they can, since the spinoff plan, although a "new" plan document, is considered to be a continuation of the prior plan. Since the provisions will be identical, seems reasonable. But on this subject, what about the 5500 forms - do you show it as a "new" plan 001? I lean toward that, as otherwise, seems like it will confuse the DOL system if you don't show it as a new plan. Also, would you set up your new document as a "new" plan, or an amendment/restatement of the existing plan? I lean toward amendment/restatement, even though for 5500 forms, I lean toward "new" plan.

A small non-PBGC traditional defined benefit plan terminated 3 1/2 years ago without applying for a DL. I know, all assets need to be distributed within one year. However, they did have significant problems with one private investment in the plan. All is recovered now and they are ready to distribute.

Question: Can they make a deductible contribution now (so very late in the game) to make plan whole? Otherwise the owner employee will need to take a reduction in his benefit.

Thanks.

Here is the fact pattern: Husband is 100% owner of S-Corp A, Husband & Wife are 50/50 owners of S-Corp B, Wife is 50% owner of LLC C, the remaining 50% is owned by an unrelated 3rd party. They do have minor children together. 

It is believed that S-Corp B & LLC C are considered an Affiliated Service Group, S-Corp A is not an ASG with any business. Based on that, S-Corp A & S-Corp B are a controlled group and S-Corp B and LLC C are a controlled group, correct?

We are trying to determine if husband can establish an Individual 401(k) for S-Corp A without the need to perform coverage testing from LLC C.

Any help would be appreciated.

Plan has 3% SH and a discretionary match.

Can they exclude "junior executives" from the match?  Most of these will probably be NHCE.  Coverage is not an issue.

I was doing a little digging on a cafeteria plan issue and I came upon this paragraph:

While cafeteria plans have much in common with their qualified retirement plan counterparts...there are significant differences. For example, failure to correct an administrative error in a qualified retirement plan could result in taxation of all future (otherwise deferred) benefits as well as a loss of exemption for trust earnings.... Cafeteria plans, on the other hand, by their very nature restart each year i.e., an administrative error should not affect prospective exclusions once correction is made.

This is kind of a head-scratcher from my qualified plan perspective, where an error is an error until it's fixed. Does anyone have a cite for this restarting notion?