I guess the process / assumption is as follows

distribution issued, 20% withholding.

so a 1099 exists. so the IRS 'expects' to see the distribution on the tax form, whether or not the person cashes the check or not.

interesting

distribution check not cashed.pdf

Business owner wants to use part of his profit sharing segregated account to make a mortgage loan to an unrelated individual. Proper documentation and an attachment or lien will be filed. Any problem with this type of loan?

Prior plan is an non-ERISA 403b effective from 2009 and terminated prior to 2015. They only had employee contributions, never any employer contributions.

The new ERISA 403b is effective 1/1/2015. The plan excludes vesting service prior to plan's effective date.

Can the new plan exclude vesting prior to 1/1/2015 even though they had another plan during that time?

Anyone who has worked with Applicable Large Employers who have failed to properly file their Forms 1095-C, etc. with the IRS has seen letters from the IRS signed by Shan Montoya, Operation Manager. 

My question is simple:  Does anyone know whether this person prefers to be addressed as "Mr. Montoya", "Ms. Montoya", or something else?  Thanks!

A 9/30 , fiscal year end plan switched to a calender year end after 9/30/14.  To make this change, a short plan year was created from 10/1/14  until 12/31/14. The plan benefit formula  is 2% for each year of service. Question: For the three month plan year is each employee credited with 2% for this additional "year of service"?. Thank you very much.

Anyone with recent experience on the turnaround time for plan termination Determination Letter requests?   I know it will vary, but am hoping to get an idea of others' experience in last few years.

Thanks!

I know you are not able to maintain a 401k and SEP IRA at the same time using SEP Form 5305.  However, if you terminated the 401k on 6/1/2019 (short-plan year) - could the employer then open and fund a SEP-IRA for 2019?   

Some additional facts particular to this question: there was only 1 employee  (in addition to the owner).  The employee left first half of the year and the owner did not want to continue the admin and expense of the safe-harbor 401k therefore provided notice, distributed assets and terminated the 401k 6/1.    It is now just the owner as the only employee. 

If the answer to the first question above is yes.   How would the SEP contribution limits be calculated for the owner being that he made deferrals to the 401k for the first half of the year and received SH matching contributions?    

Thank you in advance! 

Hello,

Our traditional DB pension starts at age 65.  Our vendor has created an option within the systems software to enter a date and allow a late calculation.  When is that permissible?  Does one age out of a late calculation perhaps at RBD date?   I'm going to raise this to the vendor and/or counsel, but I can't find anything about it in the pension answer book I'm using.  

My understanding is back payments to the original retirement eligibility date should be made, and that has been done historically on this plan for years.

Thank you

I have a self-employed client with a Defined Benefit Plan that has been contributing the minimum required amount for the past several years. In the past 3 years, those contributions have not been deducted, since there were no self-employment earnings in those years, (business actual experienced losses). It is expected that 2019 will also be a loss and that the business will no longer exist since the client has retired. I am aware that the contributions avoid the penalty tax under IRC § 4972 due to the special rule under IRC § 4972(c)(4). However, I cannot find anything that addresses how these non-deducted contributions are treated when they are distributed. Distributions, (MRDs) have been made as required by IRC § 401(a)(9) and they were fully taxed on the presumption that the contributions would eventually be deducted .Since there is no expectation of future self-employment earnings it would seem that there is a tax basis recovery of cost (investment in the contract) that should be considered on future distributions. The plan will likely terminate, to eliminate future non-deducted contributions.  Upon termination and after payment of the MRDs the plan would distribute lump sums, which would be directly transferred to IRAs. If the accumulated non-deducted contributions were treated like employee after-tax voluntary contributions then they would be excluded from the rollover and refunded to the participant, which would be the best possible outcome. Assuming  that these are nondeductible contributions for all purposes except IRC § 4972, then it seems that they are not eligible for rollover treatment. One fact that I have left out is that the client’s wife is the only other plan participant receiving a minimum benefit that was fully funded before the plan was improved to generate contributions for the self-employed participant. Has anyone had a similar situation; and how was the tax reporting done on the final lump sum distribution?

A participant took a loan from the plan and the payment was supposed to be withheld from their payroll.  The payment was not.  Besides getting the deduction going so that the loan is paid back, what is the remedy for the lost time... missing payments?  

Mom is 94 (reasonable health) but still needs my time more than what this job would ever permit.

Plus now I will be get to Mass daily, without worrying about the time constraints and work load this job requires, a big plus for me. And time to bake more cookies and stuff to giveaway. My favorite being the springerle.

Have yet to find anyone to turn down one of those.

My deepest appreciation for those to have helped me learn along the way, my apologies to those I may have inadvertently offended by any comments I may have made. In the cartoon Futurama, the character Fry made the comment "You remember Star Trek, 79 episodes, maybe 30 good ones". I figure that might be about how many really good and worthwhile comments I posted.

Dave Baker is going to be glad because he won't have to listed to complaints about the bad jokes, humorless songs and awful puns I occasionally posted.

My favorite takeaways after all these years:

I know a few have said I'm a bit crazy for giving away stuff for free, but has been a big highlight for me. Hopefully the few Relius reports I have posted have proved useful and a time saver to some, along with the excel file for projecting the new limits. Someone else can worry about updating that every year. Ha. Over the years it has been kind of neat to see postings on the internet about projected limits. And I had the nicest comment years ago from FT William about the SSA report to pull the data from Relius into their system.

The best advice I can provide, something I have always tried to keep in mind with my dealing with others:

God has a benefit plan that is out of this world, so store up for yourselves treasures in heaven, not the things here on earth.

A pension plan covers Bill and Jill. Bill owns the business, Jill is a secretary.  The plan was set up in 2010 using a unit benefit accrual of 10% x High3 x Service ( including all past service). The plan is amended  as follows in 2017: the new formula is 20% x High3 x Service ( including all past service). We can't explain why this change was made ( takeover case this year), but question whether  the 133% rule was violated.

 In fact the amendment has no practical affect since the benefits are already at the 415 lints based on original formula! But my question is whether a retroactive change in the accrual rate for all current employees for all years could affect the safe harbor.  I don't see any violation since the change applies to all years of service. Checking the available vals there are no terminated employees since plan started.

Any thoughts anyone?

How long after I repay my 401k loan in full do I have to wait to apply for a new loan

If a quarterly participant statement reflects all fees and expenses deducted from a plan does that meet the annual 404a participant disclosure requirements? 

Does anyone know what is required to be submitted for the summary documentation for VFCP filings?  I know my client meets the requirements to file summary documentation, but not sure what constitutes summary documentation.  Does it have to be authorized by the plan's recordkeeper to reflect that the contributions were deposited and the amounts, or is a report of the contributions deposited to the recordkeeper sufficient?

Company A buys 80% of Company B, effective 10/1/2019; Company B's owner retains 20% ownership of B.

Both companies sponsor calendar year 401(k) plans, but B's employer contribution is not as generous as A.

After Company A buys 80% of B, they become a controlled group.

Can A and B continue to maintain separate 401(k) plans with different ER contributions?

Do they have to be tested together or can they be tested separately?

If they have to be tested together, when must that begin?

Thanks for any help!

So hey, anyone see this new addition of a Paperwork Reduction Act notice to the DOL's model Summary Annual Report?

Not sure how half a page of unrelated text reduces paperwork.  Also.....is there a deadline where this becomes mandatory?  It's enough of a slog to get an SAR to fit on one page after it's been generated by our software.

I feel like deleting it until something more obvious and official dictates it has to , has to, be in there.

What say the rest of ya?

Thanks!

--bri

I think the long week is getting to me because I keep questioning whether I'm looking at this correctly.  Any input greatly appreciated

• Plan has pooled/trustee directed investments
• Participant loans are allowed
• loans are NOT treated as a segregated investment

Im looking at the mechanics of the loan itself rather than fiduciary issues, but there is some disagreement in my office and this is one of those days where I would gladly take a coffee-IV.

The way Im looking at it, it is still a participant loan secured by the participant's balance. The loan interest is credited to the plan trust as a whole rather than back to the participant account.  

• Bud Weiser has a $100,000 account balance and borrows $50,000.
• for 2018, Mr Weiser has repaid $10,000, $1,000 of which was interest.
• Before Mr Weisers account is credited for 2018 earnings, his 12/31/2018 balance is still $100,000, $59,000 in pooled investments and $41,000 as a participant loan.
• The $1,000 Mr. Weiser paid as loan interest is added to the plan trust gain/loss to be allocated among pro rata for all participant ending balances
• Mr Weiser's share of the pro rata investment earnings is limited to the $59,000 that is part of the pooled investments

The opposing view is that the trust made the $50,000 to the participant as an investment, and it did not actually come from the participants account balance.  

• The 12/31/2018 balance for Mr. Weiser is $100,000 before it is adjusted for earnings
• The loan should be tracked separately from Mr. Weiser's account balance in the plan

Am I crazy, or is the opposing view describing an extension of credit (secured by plan participant assets?) as a plan investment rather than a participant loan?

Thanks

J

Participant is older than 70.5 and still working. The plan only allows withdrawals with an RMD, so if they take a withdrawal this year they will also take an RMD. If they take a withdrawal + RMD this year, and continue working next year but don't take any withdrawals next year, will an RMD be required next year? are the RMDs permanently triggered? thanks.

 I have gotten loans in the past and not had any problems but last week I tried to get a loan to try to pay off credit card debt and the 401(k) company says hardship only and clearly in my addendum it says there is no restrictions on my policy  no hardships can they do that?