Hello all!

Participant turned 70 1/2 on 9/1/2019.  In 2018, he was an over 5% owner, but sold his ownership in June 2019, prior to turning 70 1/2.  He is still working.

I have looked in the ERISA Outline book, and it seems pretty clear that he would not have to take an RMD since he was not a 5% owner upon attainment of age 70 1/2.

BUT!!!!!

His son (with whom he formerly shared ownership) is now the sole owner. 

Is this 70 1/2  participant still considered an over 5% owner due to family attribution, and therefore would need to start taking his RMD's?  I cannot see this answered clearly in the EOB's.

Thank you to all for the help!

Can anyone provide any citation or guidance regarding the definition of modified cash accounting for Form 5500 reporting purposes. It was my understanding that this method reports all activity on a cash basis with the exception of employer/employee contributions & distributions which are accrued. However, I've seen audit reports completed stating the Form 5500 was prepared on a modified cash method & that contribution receivables are not required to be reported.

Would uncashed checks still be considered assets of the plan if they remained uncashed into a new plan year?

For example, 401(k) plan terminates on September 15, 2018. All checks are written and other distributions made by September 14, 2019. Someone doesn't cash their check until January 2020. 

Does the plan need a 2020 5500 and audit?

Does the uncashed check mean all assets are not out of the plan within 12 months and the original termination date of September 14, 2018, is no longer valid?

It was discovered in 2019 that a rollover received in 2017 from an outside plan into a 403b plan included after tax contributions.  The Plan that received the rollover specifically says in the document and SPD that it does accept after-tax dollars as rollovers into the Plan.  Can the current Plan distribute the ineligible after tax money to the participant, with earnings, and do 1099R for the current calendar year?  Or does the plan try and send the ineligible after tax funds back to the original plan and ask them to correct the 2017 1099R?  What about the earnings?  Are they taxed in the year distributed, or 2019? 

Could the participant do an In Plan Roth Rollover or Transfer in the current Plan?  

The IRS says the SPD has to be delivered within 90 days after the Participant enters the Plan. If the participant is given the SPD prior to becoming eligible for the Plan, does that satisfy delivery requirements? 

(NYS) My ex- wife received a portion of my annuity (via the first executed QDRO), medical benefits through me for life, and cash as part of our divorce settlement in the 90s. The QDRO was signed by all parties, the judge, and filed.

Flash forward to now. we recently began to process of receiving my pension and annuity and my union demanded we send a waiver for signature to my ex wife. She refused to sign, lawyered up, and filed another DRO (already accepted by the plan administrators) with the judge who has also signed and delivered the papers on to me. 

I would like to fight this, as I’ve seen the chances of her winning aren’t great, and want to know what the logical and rational response to the judge should be.

id planned to file a motion indicating, among other things, that the pension was NOT a part of the divorce settlement.

no minor children involved...

any help will be greatly appreciated!

ESOP was terminated 8/1 due to an acquisition and a request for favorable determination letter was filed.  Trustees (execs of plan sponsor) have been operating as the Plan Administrator based on the plan terms stating that if the Company fails to appoint a Committee as Plan Administrator the Trustees shall act as the Plan Administrator. 

Is there any issue with appointing other individuals to serve on a Committee as the Plan Administrator after the plan has been terminated, in order to oversee the distribution and wind up activities?  That's not something that must be "frozen" on the termination date, is it?

I just need a reality check, as I'm getting push back from high-level executives on this...

Company A acquired Company B in a stock transaction.  Company B's ESOP was terminated by Company B just prior to the transaction, as required by the purchase agreement. Company A is now responsible for winding up the ESOP, right?  Because Company B no longer exists...

Company A executive keeps telling HR not to worry about the Company B ESOP because it was terminated before A bought B, but in a stock transaction that is irrelevant, correct?  

Someone please confirm...I want to make sure I'm not missing something...

Thank you!

I have an ESOP that defines Normal Retirement Age (NRA) as age 65 and 5th Anniversary of Participation.   When the plan started it was a 9/30 PYE.  The first PYE was 9/30/2015.  In 2016 they switched to a 12/31 PYE.  So they have a short plan year of 10/1/2016 to 12/31/2016.  

I have a person who entered on 10/1/2014 the Effective Date of the Plan.   As of 12/31/2018 he is over age 65.  

Does he have his 5th Anniversary year? 

Do you count it as PYE 9/30/2015, 9/30/2016, 12/31/2016, 12/31/2017 and 12/31/2018  which comes to 5.

Or

Do you count actual anniversaries 9/30/2015, 9/30/2016, 9/30/2017 and 9/30/2018 which comes to a count of 4 by the time the person terminates. 

It makes a difference as his YOS for vesting are at 5 as he got a YOS in the short plan year.  However, this is a 2/20 vesting scheduled so by YOS he is 80% vested.  If he has hit his NRA he is 100% vested.  

It isn't entirely clear to me as to  who can be excluded when performing the eligibility test. 1.105-11(c)(2)(iii) lists certain categories of employees who may be excluded. But, if some of these people are already eligible to participate, it doesn't make any sense whatsoever to exclude them. For example, you can exclude employees with less than 3 years of service. However, suppose the plan already allows everyone with 1 year of service to participate. I'd include anyone already eligible to participate, in the testing.

Anyone else have a different opinion?

Thru attribution, if an NHCE is offered a 5.001% (more than 5%) stock option, the employee's status changes to an HCE. Is the company required to draft an official stock option or is it enough if the company simply writes an official letter on their stationary (notarized, witnessed  etc) addressed to the employee offering him the option to purchase 5.001% of the company? Thank you.

I've been drafting QDROs in Wisconsin for several years. I am now working on my first Minnesota QDRO (Hennepin County). I have the Judgment of Divorce, property settlemt, etc. Does anyone know where I can get a model Minnesota QDRO, if there is such a thing. Otherwise, I'll use my Wisconsin template and revise as necessary. Thanks. 

A CPA firm has several non-equity (CPA) partners each of whom are paid from their own P.A.  Neither do these CPAs, nor their own P.A.s, own any of the CPA firm and the CPA firm has no ownership in the non-equity partner's P.A.s  Because there is no common ownership, I don't see this as an affiliated service group.  But I am having trouble with classifying them leased employees.

Regarding a Leased Employee and the control test, the EOB states "On the other hand, professionals who regularly make use of their own judgment and discretion on matters of importance in the performance of their services and are guided by professional, legal or industry standards, generally do not satisfy this test."

Question: Are these CPAs who are employed by their P.A.s considered leased employees?  part of an affiliated service group?  Or are they their own separate employer tested as if an unrelated employer? 

https://www.irs.gov/retirement-plans/fixing-common-mistakes-correcting-a-roth-contribution-failure

The IRS link above states that if a participant requested deferrals be withheld as Roth, but the employer inadvertently withheld the deferral as pre-tax, then the employer MUST transfer the erroneously withheld funds from pre-tax to Roth - corrected tax forms, etc.  Conversely, if a participant requested deferrals be withheld as pre-tax, but the employer inadvertently withheld the deferral as Roth , then the employer CAN transfer the erroneously withheld funds from Roth to pre-tax - corrected tax forms, etc.  

Does anyone else agree with the interpretation that the correction is not necessarily REQUIRED when the participant requested pre-tax and the funds were inadvertently withheld as Roth?

Since it's not spelled out in EPCRS, I'm not sure how I want to interpret this.  The IRS isn't necessarily the best at drafting their materials....

Plan sponsor rolls over his wife's plan benefit into his own personal IRA under his SSN.  How can this be corrected.  This happened in 2017.

A client has insurance in a defined benefit plan which names the sponsor as beneficiary.  One of the insureds died and the benefits were paid to the sponsor consistent with the beneficiary designation.

Intuitively, I believe that having a beneficiary other than the plan, itself, represents, at minimum, a prohibited transaction.  I have been unable to find any citations or guidance to support this.

Does anyone have any insight here?

New company estblished Feb 2018, wants to establish SH401k effective Jan 2019. Asset purchase of previous employer, no prev employer plan. Wants eligibility to be 12 mos/1000 hours, dual entry dates.

There are numerous parttime staff.

There are 2 or 3 who work at least 1000 hrs / year, will refer to them as fulltime.

In order to make owner and other 1 or 2 fulltime employees eligible as of 1/1/2019, need to create a nondiscriminatory waiver for eligibility that won't cause parttimers to also be eligible.

Can a plan provide an open elig provision as of 1/1/2019 that is for employees who are credited with at least 1000 hours in the previous year irrespective of 12 months requirement? In other words even though they may have less than 12 mos of service, if they had at least 1000 hrs credited, they are eligible 1/1/2019.  My concern is whether the 1000 requirement in less than 12 mos could be deemed discriminatory.

Thank you

Our Firm is setting up a Company SIMPLE IRA plan with 10 participants.  We chose to complete a 5305 form and designate a Financial Institution. These two questions are on the Advising side: 

1. Since these plans are Participant directed, should we follow the same guidelines as the 401(k)’s whereas we can offer guidance and education but not specifically advise on the investment selection?  With this program with Amer Funds, there are about 20 mutual funds to choose from.
2. What about random current clients that are a part of SIMPLE IRA plan (that we are not managing as a company) but they would like for us to review and advise on their account? I just want to make sure we're handling the fiduciary duties correctly.  Would welcome any thoughts.  Thank you.

This employer is correcting failed nondiscrimination testing for a prior plan year using the one-to-one method under Revenue Procedure 2013-12, Appendix B, section 2. When allocating the QNEC to eligible NHCEs should the employer use the plan's definition of compensation for the year of the failure or total compensation for the year of the failure? IRS guidance does not appear to address this specific question (the revenue procedure merely states it must be a uniform allocation as a percentage of compensation).

Participant turned 70 1/2 in 2019.

Participant rolled over his Traditional IRA to his Employer's 403(b)(9) in April 2019.

The IRA custodian did not remove the participant's 2019 RMD amount prior to the rollover to the 403(b).

The participant is requesting his IRA RMD from the 403(b) because "Edward Jones said he could do it that way". (sigh)

He has no other IRAs to aggregate and pull the 2019 IRA RMD.

I realize that an IRA RMD cannot be taken from a 403(b) but I am curious, what is the next step here?

TIA for you comments.