Wouldn't that be nice.  We have seen two letters come back so far showing the tax period as 2/28/19 (for CALENDAR YEAR plans) and granting extension until 12/15.  What's going on with the iRS anyway?

Has anyone dealt with filing corrections for entities that filed Form 1095-Cs under the wrong entity? For example, entities A and B are part of the same controlled group. B pays this group of employees (and provides their Form W-2s), but their Form 1095-Cs were filed under entity A. This means that entity B has filed Form W-2s but no corresponding 1094-Cs or 1095-Cs, which is likely to trigger a letter from the IRS. 

Is there a way to correct this before the IRS sends the penalty letter? I read the Publication 5165 correction rules to say no - you need an original record to correct. In this case, there's no original record to correct. 

Anyone have experience with this? TIA!

I have an issue with a case involving 2 concurrent pension plans covering an employee who is 72 years old and has 6 years of service and 5 yrs participation ( at NRA). Both plans are being terminated in 2019.

Plan A was started 1 year before plan B. Both have the NRA = 65 +5 participation.

Plan A NRA for this employee is 69 1/2, Plan B it is 70 1/2. High3 is about $170,000 so the C Limit will apply. In order to compute the dollar amount  and equalize the benefit and retirement ages, I actuarially adjusted the 69 1/2 benefit in plan A to age 70 1/2. Then computed the LS for both plans with the  age 70 1/2 APR and the distributions were made earlier this year. I think I blew 415 since I actuarially increased the benefits before the LS payment and under C limit which doesn't adjust; not sure what to do to correct them. Have any of the actuaries faced this before?

Key Questions--1) How do I avoid blowing the C limit if I have to compare both benefits as of the same age? 

2) Also, since a forfeiture occurred by not paying out the LS at the NRA, do I have to produce a benefit notice? Is there a sample notice others have used?

A married participant in a DB plan retired and elected a Joint & 75% Survivor annuity. Several years into retirement, he and his wife divorce. I was retained to draft the QDRO, which split the participant's monthly payment 50/50. If the participant dies first, the alternate payee receives the survivor amount of 75%. If the alternate payee dies first, the participant reverts to his full benefit. Pretty simple. The plan administrator supplied the language and of course pre-approved the QDRO.

The participant won't sign it, saying it is unfair. The plan administator now says that the J&S can be removed. The participant and the alternate payee would each receive a higher monthly benefit, which sounds like a life annuity. If the participant dies first, the alternate payee continues to receive the same amount for her lifetime. If the alternate payee dies first, the benefit reverts back to the participant, which doesn't sound like a life annuity. I recognize that none of this is my business and I should revise the order as directed, but I'm curious.

1) I has been my understanding that an elected DB benefit can rarely be changed once in payment status, especially by QDRO. Am I missing something?

2) Does my rough description of the single life payment for the alternated payee but an increase for the participant if the alternate payee dies first make sense? I'm not an actuary or anything, so thought I'd ask.

Thanks.

Is there a specific exception to the rule that an ESOP participant must have the right to receive a stock distribution that applies to an ESOP termination related to a merger/acquisition?  I feel like I've seen this before, but can find nothing on it.

Here's the situation - ESOP plan sponsor was acquired in a stock purchase transaction and merged into the buyer. ESOP was terminated prior to the close of the transaction. Stock of plan sponsor was exchanged for stock of buyer. Question has arisen as to whether the shares owned by ESOP can be liquidated following the plan termination and all plan participants paid distributions in cash?

Thanks in advance for any insight.

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?