We have a defined benefit plan that is a lawyer and his employee. They are not covered by the PBGC. Do we have to file the standard termination process in the PBGC instructions for terminating the plan including the 60-90 day notice prior to the termination date? If not, what is the timeline? Thanks!

With the Social Security Administration announcing its COLAs on the taxable wage base as well as the increased Social Security retirement benefit, the IRS now has all the information it needs to be able to announce the 2020 dollar amounts as indexed for the cost of living. Any indication of when this will happen?

Thank you in advance for any help in this matter. Client with DB floor offset plan left and went to new firm. The new firm is asking for written explanation of how the offset calculation (ie accrued benefits after offset was determined). Question: How much work and time are we required to spend in explaining how the plan was administered.  2. Can there be a charge for our time etc. in putting together this information? Thank you.

Do you have to do a QDRO if your ex-husband is deceased and the court ordered that you get half his retirement. Years ago I started the paperwork for the QDRO because  I was granted  half his retirement on the day we divorced. The only thing was my husband never finished them.  Now he is deceased and I am getting his social security.  The social security informed me of my entitlement to his companies pension.  I have the paperwork pleading for joinder and summons. Do I still have to do a QDRO????

Is it allowable for a participant in a 401k plan to max out his ROTH  deferrals in the plan, and also contribute to a ROTH IRA for the same year?

A participant did not remove his 2019 IRA RMD prior to the rollover to his 403(b) earlier this year. Approximately $4000 was not eligible for rollover. I understand the 2019 IRA RMD cannot be satisfied by simply cashing it out of the 403(b), but can the IRA RMD amount be treated as an excess in the 403(b) and pushed to the participant that way? That is how the sending firm wants it to be treated. Would treating it as an excess also satisfy the IRA RMD?  I am not familiar with treating RMD amounts as excess and could use some guidance. TIA

Anyone familiar with a tax strategy using an ESOT?  Gist of the strategy is payments are made to an administrative services company (S corp) owned 100% by an ESOT.  No income tax due at the ESOT level obviously but then they say only 15% of the profits are allocated to the rank & file.  That's the part I'm struggling with as I would assume allocations would need to be based on compensation???

Large Payroll company has both payroll services and PEO.  Sponsor A signs up with payroll service in 2016.  Sponsor A has its own 401k Plan.

Sponsor A's 401k is mistakely moved to PEO 401k plan (don't ask me how).  Sponsor's employees have been making contributions to the PEO plan since 2016.

1. I assume this is a VCP Correction under transferred assets.

2. Who makes the application for VCP.  Sponsor A, PEO, or both?

3. Assuming it can be self corrected, is the money in the PEO treated as if it were in Sponsor A's 401k plan all along?  Or, are the contributions and its earnings taxable as that money didnt belong in PEO plan in the first place?

4. Can the money that is wrongfully in the PEO, be moved to IRAs?

Thanks in advance.

We are looking at a prospect, small law firm, one 100% owner, his wife and about 6 staff.  Entity is an S-Corp.  It's been a while since i've dealt with an S-Corp, but back then i remember the S-Corp owner being paid by W-2.  I remember, I hope correctly, that they had be paid by W-2 for plan purposes.  This S-Corp has K-1 income.  Can that be used for similar to partnership calc for retirement plan contribution purposes (without SE tax)?   Or must it be be W-2 comp?  Thanks in advance for all replies.

In July, our team filed Forms 5558 on multiple plans that would need to be extended.

However, we had a new one-man plan that we filed Form 5558 for that didn't end up needing to file a Form 5500 because his assets were below $250,000.   Client received the acknowledgement letter stating the extension of time was received.  

Will we receive a notice stating the filing was late?  Are we better off to just wait and respond to a notice when one is received or attempt to call the IRS or write a letter in response to the extension letter?

The situation is simple. Nowadays many people will roll their retirement funds (401k, 403b, IRA, etc.) into a ROBS account to self-fund a business. So imagine for a moment, you take out retirement funds, self-fund a business. The business technically is 95% owned by your Retirement Accounts (call them 401k for simplicity) and 5% funded by you. 

As a business owner, you take an SBA loan, your bank of course never gives the correct amount of working capital, so you end up using personal credit cards, personal funds, etc. to help your business succeed. And in fact your business does succeed. But you are left in the unenviable position of being essentially bankrupt. But you have a business that has a great chance of success. You still have monies in your 401k funds. And to survive you need to consider personal (not business) bankruptcy as your debts exceed your ability to pay them. And you are not taking a salary from your business because it needs the working capital to continue growing successfully. So the question becomes, if this individual files for personal bankruptcy, and if there 401k retirement funds are protected, and it so happens that the 401k owns 95% of the business, is that business protected??

The question posed here - Is a 401k funded business (ROBS) protected or exempt from personal bankruptcy???

If a loan is delinquent with loan payments (or in default for that matter), the situation can be corrected by either making a lump sum payment to bring the loan current or re-amortizing the loan within the maximum loan amortization period permitted for the type of loan.  Or in the alternative a combination of both methods. 

My question is can the loan be re-amortized if the plan specifically does not permit a participant to refinance a loan?  Could you make a distinction between re-amortizing and refinancing if there is no addition amount added to the loan amount?  Say for example the participant or the plan sponsor pays any accrued interest on late loan repayments and only whatever remains of the original loan amount is re-amortized?

Thank you to anyone who wishes to respond.

A calendar year plan still hasn't deposited its Safe Harbor Non-elective for 2016. The operational failure can be Self Corrected as long as it's done within the Correction Period. Regs say the Correction Period starts the year after the failure occurred......but in this case, did the failure occur in 2016 (the year the contribution is for), or 2017 (12/31/17 was the latest the contribution would have been considered timely)?

Thanks

I have a client with a safe harbor match only plan, which excludes union employees. The union plan is DB. Employer now wants to include only one of their 14 union employees in the 401k plan. All union employees are NHCEs. Assuming the CBA allows it, and aside from creating dissention in the ranks, is this ok?

Hi! First-time poster, ERISA-newbie here. Here's the situation:

Parent Non-Profit Company sponsors a 403(b) plan and Subsidiary For-Profit Company sponsors a 401(k) plan. The company wants to transfer a group of employees from the Subsidiary to the Parent (i.e., within the same controlled group). My question is this: What are the options for transferring assets from the 401(k) plan to the 403(b) plan?

I realize that the IRS generally does not allow mergers or transfers of assets between 401(k) and 403(b) plans. I also conclude that transferring employees to the Parent would not automatically create a distributable event in order to rollover assets from the 401(k) to the 403(b) plan, as they are transferring employment to a member within the same controlled group. Thus, there is no severance of employment that would allow for the distribution.  

I'm exploring other options, including a complete termination of the 401(k) plan, but I'm having trouble finding a viable solution. Any ideas?

Part of the newly issued hardship regulations in determining whether an amount satisfies an immediate and heavy financial need was to replace the facts and circumstances test with the three requirements here: 

Amount Necessary to Satisfy Need. A distribution will be considered as necessary to satisfy your immediate and heavy financial need only if:

(1)          You have obtained all distributions, other than hardship distributions, under all plans maintained by the Employer;

(2)          The distribution is not in excess of the amount of an immediate and heavy financial need (including amounts necessary to pay any federal, state or local income taxes or penalties reasonably  anticipated to result from the distribution).

(3)          You have represented in writing or by electronic medium that you have insufficient cash or other liquid assets to satisfy the financial need.

My question is, in regards to (1) above - does this mean theoretically that a participant who is age 59 1/2 or older and thus eligible for an in-service distribution, must take the in-service distribution and get hit with a 20% withholding prior to taking a hardship distribution? 

Small plan-professional corporation, 2 owners (husband and wife).  Everyone is paid via W2, including owners.  They just moved from a SDBA with individual accounts  to Nationwide.  The owners  typically deposit their 401k contribution out of one payroll check (max amount).  Their plan year is 10/31.  They are still trying to decide whether to defer for  PYE 10/31/2019.  They insist they have until their tax filing deadline.  Since they are not a partnership, and don't receive K1s, I believe their 401k contribution needs to be deposited by 10/31/19, or a couple of days after.  Yes? No?

Do individually designed 401(k) plans still need to be restated every 6 years, even though they cannot request a new determination letter?  Or are required amendments sufficient?

Curious if disaster relief applies to other things, in particular notices.  We have a notice due by this Saturday, but due to the fires and power outages in CA, the notice may not get distributed in time.

A business unit with a frozen NQDC plan was sold to private equity several years ago. Seller retained the NQDC plan as part of the deal, but the seller missed the one-year window to begin distribution of all accounts still left in the plan. Therefore, seller still administering frozen NQDC plan for non-employees.

The private equity firm recently sold that same business unit to another private equity group.

Can the original seller take the position that this new transaction is a distributable event (i.e., terminate the plan with respect to those involved in the transaction)? It's clear from my perspective that the Seller had the right to distribute the accounts upon the original transaction (but did not proceed because of lack of awareness of that provision), so can the same analysis apply in the second iteration?

The plan document indicates that the Company (the original seller in this case) can accelerate distributions upon a change in control. It's not clear if this second transaction could be considered a change in control since the affected employees don't work for the plan sponsor (the original seller).

External counsel so far has taken the position that we cannot liquidate the plan in light of the new transaction, but I continue to seek other opinions.