Good morning to all,

I have been asked to post the following question from a CPA referral source:

"Facts:

1. Individual owns 100% of an S corporation.  Only employees are husband and wife.  They have a solo 401K plan.  They both maxed their elective deferrals and the employer contributed max profit sharing.
2. Husband also owns another business with no employees that is taxed as a sole proprietorship  Sole proprietorship is profitable in 2018.  Can they also do a SEP for the sole proprietorship?"

I have no further information than what is shown in the inquiry.

Thank you in advance to anyone who has had to address this before and knows what is permissible.

If a user of an IRS-preapproved document wants to add an arbitration provision, does any sponsor's document allow a user to specify an arbitration provision through an adoption-agreement choice or other norm of the preapproved document?

If not, is an arbitration provision something a user can add without defeating reliance on the IRS's approval?

Hello - I am trying to get some clarification on terminating a 403(b) plan and starting a 401(k) plan.  This is already an ERISA B plan.  They are a almost at the point of being a large plan filer.  We are trying to avoid that of course.  I have read so many different replies on if the 12 month waiting period applies.  What I would like to propose is terminating the B plan 12/31/2019 and starting a K plan 1/1.  However, the 12 month wait is the question.  Help!  The plan is invested in on the record keeper direct platform of AM Funds just as a side note.  Please, any concerns or issues that occur with this, I would love the insight.

I'm 60 years of age and withdrew out of my 401K for $5000.00 they took out $10.00 for a processing fee and  $998.00 for Fed tax and $99.80 for Calif state tax ending with a check of $3892.20, do I need to worry about having a penalty or paying more taxes on this money?

Client sponsors safe harbor 401K/profit sharing plan was going to be terminated as the employer would no longer be in business.All participants received the safe harbor non-elective.

The non-highly compensated employees were terminated as of 8/30/2019.

Plan is still active, employees have rolled over; owners are the only participants in the plan.

Accountant now tells us the sale was an asset sale, the company is not out of business; he wants to take a deduction for 2019 for only the 2 owners and their sons.

I don't see how he can.

I had a 401k plan for myself and one employee but was told in 2016 that they (Prime Plan Solutions) would no longer service the plan.... the document administrator was DST of kansas City, MO

Prime Plan Solutions then merged with DST.

Long story short  .... I decided to terminate the plan at the end of 2016 however there were some late contributions for my one employee for plan year 2016.  According to the VFCP calculater I needed to put in about $30 into her account which was transferred to a Fidelity IRA after the termination.  So in other words that $30 was not added to her account before the termination. To make matters worse, Prime Plan /DST failed to send in the 5500SF form to the DOL, in 2016 ...which I did not know of util this summer 2019.  I recently did get help to file the 5500 however still not sure what I need to do about getting the VFCP amount ($30) into her retirement account which now sits with Fidelity.

I've got a small pooled PS only plan.  Participant R, who is a 10% owner, has about 80% of the money in the plan.  She has had a medical setback and requested an in-service withdrawal to be paid as soon as possible; she completed the proper form and submitted it.  I advised that the Plan Administrator should consider running an interim valuation, given that the assets are up ~20% year-to-date, and that's when I found out that there is currently a changeover in ownership and management and everything.  So it's been almost two weeks as the other/remaining/new top people argue amongst themselves who will be the Plan Administrator and who will be Trustee and who will get to make this decision, and R has been waiting patiently.

R called to ask where her money is, and noted that she might be separating from service soon.  That triggered an alarm, because terminated participants are eligible to receive a distribution only after the end of the year of termination (to allow for the allocation of gains/losses during the year).  So... if she does terminate while these people are still dithering about who should authorize what, or even if they get their acts together and authorize the interim valuation and she terminates while we're in the process of doing the interim valuation, would you think that invalidates her in-service request?  I don't think so, since she made the request in good faith while she was an active participant, and it was only due to the... well, call it what you will of the people around her that caused it to not get paid timely.

Has anyone else had their Form 5500 extensions denied?  We have had two clients contact us this week regarding the extension letters they just received from the IRS that said their extension was denied.  One client that had two plans had one plan extension approved and the other plan extension denied.

I have never seen this happen before.

My understanding is a more than 5% owner of a business who is still actively working has to take a minimum distribution each year. Does it make sense to contribute to their retirement plan? If they have an IRA, can they aggregate the 401k balance and IRA balance, taking the RMD out of their IRA?

Thoughts?

Company owned 51% by Participant A and 49% by Participant B.

December 28, 2018, Participant A sells shares to Participant B, who is now the 100% owner.

Participant A compensation in 2017 was $108,000.

For the 12/31/2018 Plan Year, both A and B are HCE's.

Is Participant A considered a Key Employee or a Former Key Employee, since there is no ownership as of 12/31/2018.

Thank you!

My understanding is a more than 5% owner of a business who is still actively working has to take a minimum distribution each year. Does it make sense to contribute to their retirement plan? If they have an IRA, can they aggregate the 401k balance and IRA balance, taking the RMD out of their IRA?

Thoughts?

If plan allows for Loans, can an employee who is on active duty (and has been 3 years) take a loan?  Plan does allow for distribution for deemed severance of employment, but client wants to give loan option to employee if allowed.

Thanks.

Good morning-- I hope someone can help with this -- Larry Starr maybe?    We have a plan who does not fund their discretionary match until 2 years past  the plan year end (12/31) Ex: the match for 12/31/16 was funded on 6/5/2018.     The auditor is saying that earnings should be calculated on the late matching contributions.  I cannot find anything on this other than making the ER contribution prior to the filing deadline of the employer’s income tax return, including extensions, if they want to take a tax  deduction, which they didn't.  Has anyone heard of this, or can anyone site a regulation?

Thanks!

Owner only pension plan. NRA is 75 (65+5). MRD will be taken as an annual single sum payment equal to 12 x prior year monthly accrued benefit in December each year. With an EOY valuation, the actuarial equivalent of the MRD must reduce the accrued benefit used to compute FT under 430(d)-1(c)(1). Didn't use cliff vesting. Is there another way to do the MRD without a funding impact?

This question concerns the timing of a Roth amendment. We are financial advisor for a plan that uses a TPA. A recent restatement of the plan adds the provision to defer on a Roth basis. The restatement has not yet been adopted, but the TPA is telling the sponsor that participants can defer on a Roth basis now because the effective date of the restatement is 1/1/19. Somehow it doesn't seem quite right that they are able to do this before the amendment is executed. Sanity check?

We are looking at an employer who terminated a plan earlier this year and recently paid everyone out.  He wanted to start a new one but he's got to wait at least 12 months.

But he also owns 2 subsidiary companies.  If either or both of the subsidiaries were not participating in the original 401k plan, could they start a plan up immediately, even though the owner of the main company and the 2 subsidiaries had sponsored the original plan?

Thanks for any replies.

Participant has existing accounts in 401k plan and wants to convert part of the pre-tax accounts to in-house Roth, accepting tax consequences.

They get sloppy and check the box to convert all of their account. Trustee has completed the transfer in the past few weeks.

Participant realizes their error and wants to reverse the transaction.  Trustee wants an opinion on what is allowed and what is taxable.

Simple answer would be that it was already done, no looking back. But can the Trustee allow the correction and restore part of plan accounts back?

This one goes into the category....just doesn't seem correct.

2 plans:

Plan A:  Age 21, no service requirement: Excludes all EEs except Pharmacists and Managers

Plan B:  Age 21, 1 YOS no exclusions

Both plans are safe harbor.

After 1 YOS, the pharmacist/managers move over to plan B (at least in payrolls eyes). 

I am not sure of several things.  1) what provisions makes the Pharmacists and   manager "no longer" eligible for Plan A.  I believe there are still eligible 2) What about coverage? Can the plans be aggregated for coverage purposes? If so, are they still safe harbor since less than 1 YOS ee except Pharmacists and mangers are not eligible.  How do I count those non manager/pharmacist ees in combined coverage?

I think that the manager/pharmacists are still eligible for Plan A and therefore they will not pass coverage..  It just seems a bit fishy to me.

The NRA is 62. For funding assumed the two partners will actually retire at 64. If the plan is underfunded based on 62, however, based on 64 it is not underfunded (plan does not give increases  past NRA). Since the partners are legally entitled to their benefits at 62, and the assets are not sufficient to cover this, would this plan qualify for the Underfunded frozen PBGC Plan exception to 401(a)(26)? Thank you.

I represent a large defined benefit master trust which has been advised by its tax adviser that it may need to file a Form 5471 (Information Return of U.S. Persons With Respect to Certain Foreign Corporations) because it owns over 10% of a foreign investment that qualifies as a CFC.  This form is supposed to be filed with an income tax return (or, if applicable, partnership or exempt organization (Form 990) return).  The trust is not otherwise required to file a Form 990 because it has no income to report.  Does anyone have experience with a trust taking the position that a Form 5471 is not required under these circumstances because there is no required tax return?  Or is the trust required to now file a Form 990 (reporting no income) so it has a tax return to which the Form 5471 can be attached?