Hi to All,

I have been asked to query the group as to whether you fill in the "paid preparer" section of the Form 5330, whether you maintain a PTIN for this purpose, and whether you use the PTIN for any other purpose.

We very seldom prepare this form and every time, these questions come up.

Your advice is appreciated in advance.

It was determined (after year-end) that a large traditional 401(k) plan had a partial plan termination in 2018.  The plan operates on the calendar year.  Additional match contributions (plus earnings) were calculated and deposited to the plan in late 2019 as a correction for the 2018 partial termination. 

The plan administrator had originally calculated refunds to HCEs for failed ADP/ACP.  Now the PA is saying that the plan had to be re-tested  for the 2018 plan year after the correction for the partial plan termination, and additional refunds are due to the HCEs. 

Should the compliance testing for 2018 be re-run as a result of the corrective actions taken for the partial plan termination?

Thanks!

Company merged with Target and now wants to enter into new employment agreement with Target Executive.  The current employment agreement offers $100k severance benefit upon Good Reason termination due to change in employment position, which will occur.  To encourage Target Executive to stay, Company offers new employment agreement with $100k signing bonus and no severance benefit.  Would this be a "substitution" under 409A and thus an impermissible change in the time of payment?  I think not because under the current agreement he does not get the $100k unless he terminates, which he would not do if he signed the new agreement.

Hi, Is there any basis in using a discount rate for the FASB that is determined by taking the effective rate of the 430 HATFA segment Rates (minimum contribution rates---from the Val) ie 5.64%, and the effective rate of the 404 seg. rates (max contribution rates) ie 3.99%, and the average of the two effective rates is the discount rate for the FASB?  Thank you for any insights/opinions on this matter.

We're doing a VCP filing for a client and I have a copy of the adoption agreement, but need to locate a copy of the Approval letter for the Legg Mason Wood Walker, Inc. Standardized Profit Sharing Plan & Trust #03-002.  Any idea where to dig it up? - I've tried the advisor's office, Legg Mason and a call to Citibank.  I wanted to avoid using this particular adoption agreement because it wasn't dated, but it looks like I'm going to have to do that and hope for the best.  Anyone else not be able to locate an approval letter from a large firm like this that obviously had one?  How did you handle it?

I am trying to determine if interest on a 401(k) account is available for someone eligible for a Qualified Reservist Distribution.  Our document language (which mirrors what I am reading in the Code) says that the distribution may be taken from "amounts attributable to elective deferrals described in Code §402(g)(3)(A)…"

So my question is - does that mean the whole 401(k) deferral account can be withdrawn, including earnings?  I don't see anything specifically prohibiting earnings, but I am not entirely sure if "amounts attributable..." is only referring to contributions?

Thanks!

Had a quick question on the withdrawals for birth or adoption section of the Secure Act.

Is this intended to be another in-service withdrawal option, or does the participant need to have a distributable event available? 

Also, in reading the section of the Act it does not appear to say anything similar to "If the Plan permits", or something to the effect so I'm wondering if this is available even if the Plan does not otherwise allow for withdrawals until, say normal retirement age, for example.

Thanks very much.

Hello and Happy New Year. I have a controlled group of two companies. Company B isn't a participating employer. For what purposes is compensation aggregated among controlled group members and for what purposes is it not? When performing the ADP/ACP test, do I only use compensation paid to participants by Company A since compensation paid by Company B isn't eligible for deferral? Thank you.

We have a company that is owned by several trusts at 20% ownership each. Each individual is the primary beneficiary of their respective trust, so they are considered 20% owners of the company. 

However, are the children of the beneficiary of the trust also attributed 20% ownership of the company? 

This scenario has come up due to key employee determination for Top Heavy. 

My initial instinct says yes, but I would appreciate any feedback and/or reg citations. 

Thank you! 

Traditional large 401(k) plan (not safe harbor) with 9/30 year end - original effective date 1987.

Volume submitter adoption agreement defines compensation as W-2 wages and does not exclude bonuses.

This is a new client for us; our firm is doing the audit for the 9/30/2019 plan year end, taking it over from the prior auditor (who recommended us).

We see that various bonuses were paid to employees for performance, safety, etc. at year-end.  However, the plan sponsor did not calculated or withheld deferrals from bonuses.  As far as we can tell, they have never withheld deferrals from bonuses, and did not realize they were supposed to do so.  They are restating the plan to give employees the option to elect out of deferring from future bonuses.

The question is: what to do about the past?  The plan sponsor has been operating in a manner that would have been permissible under law but not in conformity with their plan document.  Does their consistency for the past 20+ years show that they never intended to include bonuses in the definition of 401(k) compensation?  Will that consistency protect them from penalties and sanctions?

If not, what is the fix for this?   How far back would they need to go to "make it right"?  Do they need to include all plan participants who have deferred or can they elect to exclude the HCEs from the fix?

Thanks!

Based on my reading of the ICHRA regulations, it would be mathematically impossible for an employer with, hypothetically, one full-time employee and nine part-time employees, to establish an ICHRA for the part-timers because the "class" for purposes of the ICHRA is fewer than 10 employees.

Is this correct or am I missing something?

Thanks and happy New Year!

A 100% owned ESOP company has some outstanding debt with an unrelated bank.  A outside director of the ESOP Company is willing to refinance the loan at a lower rate.  What legal authority prevents this transaction from being an indirect prohibited transaction between the plan and a party in interest?  I'm thinking the ESOP exception to the plan asset rule set forth in 2530.3-101(h)(3).

This morning when looking at my "unread" message list like I do almost every day, it was automatically showing the expanded view (title and first several lines). I clicked the condensed view to change back, but nothing happened.

Not the worst thing in the world, but not sure why it changed and can't be corrected.

Thanks.

WCP

If a participant and his primary bene are deceased. There are two contingent benes with 50% allocation. If one of the contingent bene passes away, would the surviving bene gain 100%?

Has anyone seen verbiage about a person who took their first RMD in 2019 (when they turned 70 1/2) but now under the SECURE Act  are they required to take their RMD in 2020 or can they skip and take this RMD when they turn 72 (in 2021)? I have seen several articles that contradict each other about what is allowed.

Thank you

Hello all.  I have a question regarding SEP IRAs.  My current employer provided all of their employees with a SEP account.  We have small contributions made monthly, and once taxes and profits are figured for the year, we usually get a larger contribution around March that brings total contributions to 25% of gross income.  
 

I will be leaving said employer in a few days and wanted to make sure I’m eligible.  I worked the entire year, as well as the previous 4.  My only concern is that they are using the monthly disbursements and a work around in case someone leaves.  Any input? 

Say you have an employer with less than 50 employees - they have no intention of ever having 50 employees. Their cafeteria plan offers an opt-out benefit for those who don't elect the employer's group health coverage. As I understand it, there can be three types of opt-out arrangements, unconditional, conditional, or an "eligible opt-out arrangement" - which is a conditional arrangement  that also meets specific additional criteria.

If the employer is a non-ALE, what is the downside, if any, to having an "unconditional" opt-out arrangement, other than possibly affecting the affordability calculation for purposes of whether an individual is eligible for a subsidy for policies purchased on an exchange?

Seems like a conditional opt-out arrangement, for a small employer, may unnecessarily restrict the employee from choosing to buy individual coverage?

I'm sure I'm missing something here. Would appreciate any thoughts.

Fringe Benefits - Can I use Special Accounting Period?

Our HR department just brought over a list of employees that received vouchers for Fitbits. They received the vouchers in late December. Are we able to use the Special Accounting Period for vouchers? I keep seeing it can only be used for Noncash fringes, but was wondering if someone had experience correctly applying that rule to cash/gift cards/vouchers for wellness initiatives.

-John

If a small business has an existing 401(k) but then sets up a cash balance plan, could they use the tax credit for the cash balance plan?  Is the tax credit per employer or plan?

Thank you 

When employed with my previous employer I took a 401k loan(2015 nov) . Then I quit the employer and joined my current employer in  Jan 2018 . Then I setup a auto-debit  with my fund manager (Fidelity) , for monthly deductions from my bank to pay off the loan.

When checking my bank account this Dec 2019, I find that my account has not been debited from January 2019 and doing the research I find that Fidelity had sold it to transAmerica in Jan 2019.

I got a postal mail about the transfer from my old employer  but nothing about the loans, which made me assume that the loans were taken care of.

When I called transAmerica, they say they had defaulted my loan and sent the note to IRS, because they did not receive payment.

They said they sent me a postal mail notifying me of the initial transfer and the  default, which I did not receive. They emailed me a copy and I see the postal address is wrong in their mail.

They do have my correct postal address in their records. But the address in the mail was wrong.So I did not receive it.

The person handling is not very knowledgeable and  everytime after being on the call for about an hour or 2, she says she will check with someone else.

I do see some contradictions in what she says:

1. She says once transferred transamerica does not allow monthly payment of loans and one time  payment of remaining amount should have been made. But  the default letter says the monthly amount was not payed.

2. She says transfer notice and default notice was sent to my house  , but after I requested her to email me the sent default postal mail, I see it has the wrong address 

3. First she said nothing can be done as they have notified IRS. But now she said their research team is researching.

What are my available options. I did not intend to default and I'm also ready to pay the total amount  now to avoid taxes and penalty on remaining amt.

Remaining amount is abt 13000.