It isn't entirely clear to me as to  who can be excluded when performing the eligibility test. 1.105-11(c)(2)(iii) lists certain categories of employees who may be excluded. But, if some of these people are already eligible to participate, it doesn't make any sense whatsoever to exclude them. For example, you can exclude employees with less than 3 years of service. However, suppose the plan already allows everyone with 1 year of service to participate. I'd include anyone already eligible to participate, in the testing.

Anyone else have a different opinion?

Thru attribution, if an NHCE is offered a 5.001% (more than 5%) stock option, the employee's status changes to an HCE. Is the company required to draft an official stock option or is it enough if the company simply writes an official letter on their stationary (notarized, witnessed  etc) addressed to the employee offering him the option to purchase 5.001% of the company? Thank you.

I've been drafting QDROs in Wisconsin for several years. I am now working on my first Minnesota QDRO (Hennepin County). I have the Judgment of Divorce, property settlemt, etc. Does anyone know where I can get a model Minnesota QDRO, if there is such a thing. Otherwise, I'll use my Wisconsin template and revise as necessary. Thanks. 

A CPA firm has several non-equity (CPA) partners each of whom are paid from their own P.A.  Neither do these CPAs, nor their own P.A.s, own any of the CPA firm and the CPA firm has no ownership in the non-equity partner's P.A.s  Because there is no common ownership, I don't see this as an affiliated service group.  But I am having trouble with classifying them leased employees.

Regarding a Leased Employee and the control test, the EOB states "On the other hand, professionals who regularly make use of their own judgment and discretion on matters of importance in the performance of their services and are guided by professional, legal or industry standards, generally do not satisfy this test."

Question: Are these CPAs who are employed by their P.A.s considered leased employees?  part of an affiliated service group?  Or are they their own separate employer tested as if an unrelated employer? 

https://www.irs.gov/retirement-plans/fixing-common-mistakes-correcting-a-roth-contribution-failure

The IRS link above states that if a participant requested deferrals be withheld as Roth, but the employer inadvertently withheld the deferral as pre-tax, then the employer MUST transfer the erroneously withheld funds from pre-tax to Roth - corrected tax forms, etc.  Conversely, if a participant requested deferrals be withheld as pre-tax, but the employer inadvertently withheld the deferral as Roth , then the employer CAN transfer the erroneously withheld funds from Roth to pre-tax - corrected tax forms, etc.  

Does anyone else agree with the interpretation that the correction is not necessarily REQUIRED when the participant requested pre-tax and the funds were inadvertently withheld as Roth?

Since it's not spelled out in EPCRS, I'm not sure how I want to interpret this.  The IRS isn't necessarily the best at drafting their materials....

Plan sponsor rolls over his wife's plan benefit into his own personal IRA under his SSN.  How can this be corrected.  This happened in 2017.

A client has insurance in a defined benefit plan which names the sponsor as beneficiary.  One of the insureds died and the benefits were paid to the sponsor consistent with the beneficiary designation.

Intuitively, I believe that having a beneficiary other than the plan, itself, represents, at minimum, a prohibited transaction.  I have been unable to find any citations or guidance to support this.

Does anyone have any insight here?

New company estblished Feb 2018, wants to establish SH401k effective Jan 2019. Asset purchase of previous employer, no prev employer plan. Wants eligibility to be 12 mos/1000 hours, dual entry dates.

There are numerous parttime staff.

There are 2 or 3 who work at least 1000 hrs / year, will refer to them as fulltime.

In order to make owner and other 1 or 2 fulltime employees eligible as of 1/1/2019, need to create a nondiscriminatory waiver for eligibility that won't cause parttimers to also be eligible.

Can a plan provide an open elig provision as of 1/1/2019 that is for employees who are credited with at least 1000 hours in the previous year irrespective of 12 months requirement? In other words even though they may have less than 12 mos of service, if they had at least 1000 hrs credited, they are eligible 1/1/2019.  My concern is whether the 1000 requirement in less than 12 mos could be deemed discriminatory.

Thank you

Our Firm is setting up a Company SIMPLE IRA plan with 10 participants.  We chose to complete a 5305 form and designate a Financial Institution. These two questions are on the Advising side: 

1. Since these plans are Participant directed, should we follow the same guidelines as the 401(k)’s whereas we can offer guidance and education but not specifically advise on the investment selection?  With this program with Amer Funds, there are about 20 mutual funds to choose from.
2. What about random current clients that are a part of SIMPLE IRA plan (that we are not managing as a company) but they would like for us to review and advise on their account? I just want to make sure we're handling the fiduciary duties correctly.  Would welcome any thoughts.  Thank you.

This employer is correcting failed nondiscrimination testing for a prior plan year using the one-to-one method under Revenue Procedure 2013-12, Appendix B, section 2. When allocating the QNEC to eligible NHCEs should the employer use the plan's definition of compensation for the year of the failure or total compensation for the year of the failure? IRS guidance does not appear to address this specific question (the revenue procedure merely states it must be a uniform allocation as a percentage of compensation).

Participant turned 70 1/2 in 2019.

Participant rolled over his Traditional IRA to his Employer's 403(b)(9) in April 2019.

The IRA custodian did not remove the participant's 2019 RMD amount prior to the rollover to the 403(b).

The participant is requesting his IRA RMD from the 403(b) because "Edward Jones said he could do it that way". (sigh)

He has no other IRAs to aggregate and pull the 2019 IRA RMD.

I realize that an IRA RMD cannot be taken from a 403(b) but I am curious, what is the next step here?

TIA for you comments.

Employer terminated employee.  Reached a settlement agreement to pay former EE a certain amount of money upon termination.  ER is thinking they now don't have to pay the former EE any 2019 safe harbor non-elective or subsequent gateway minimum in the profit sharing because this agreement stipulated that if she took this settlement money the employer was not obligated to give her any additional funds of any type - including plan contributions for the 2019 plan year in which she terminated.  I don't think this is permissible but wanted to see if someone had any idea if this was even possible to do.

An existing governmental 401(a) plan holds matches as well as allows employer nonelective contributions. Is there any problem with describing multiple different allocation formulas with different eligibility and vesting schedules for match, nonelective, or both?

Since it's governmental, we don't need to worry about 410(b), 401(a)(4), or other nondiscrimination testing. Any variations in vesting schedules will be more favorable than the longest permissible vesting schedules and will slightly favor non-HCEs. 

So, for example, people in category A get a match, but no one else does. People in category B will get a nonelective contribution of X% of compensation, with a six-year graded vesting schedule. People in category C will get a nonelective contribution based on years of service with a two-year cliff vesting schedule. And so on. 

Appreciate any thoughts. 

We’re being forced out of our rental we had tried to buy because the appraisal fell short. We’re trying to buy a different house and my husbands 401k provider keeps denying it and wanting more info. We have sent the the purchase agreement signed at the real estate agency as well as a loan estimate. We have the purchase price, close date and everything they previously asked for. I just don’t know what to do or why they’re doing this to us. We’re weeks from being homeless if they don’t release our funds. Does anyone know who I can contact for help or what we can do? 

I have a client that let a new employee enter the plan before meeting the eligibility date. I know EPCRS allows the plan to be retroactively be amended to waive the eligibility conditions as long as it meets the conditions of EPCRS. However, they don't want to do this because it would trigger a top heavy contribution for the employee.

Can we claim that her 402(g) limit with respect to this plan was zero and process a taxable distribution as a corrective distribution for exceeding the 402(g) limit or do we have to return the money to the employer and have them make her whole? The problem with that is dealing with payroll taxes as it would be taxed a second time if you process a taxable bonus.

Anyone do something different?

Thanks.

James

I was terminated from my job in July, however, I was told I am eligible for re hire as long as my 401k loans were paid back.  I have more money in my 401k than the loans that I borrowed.  I do not owe the employer the money, it was MY money that I was contributing to the plan, that I borrowed from.  Since I am unable to pay back the loan, I have to let it roll over as earned income in my taxes.  Why am i being told i have to pay back MY money before i am eligible to re apply and be considered for employment again with the same company. I could understand if I owed the company money, but it was my money.  Is this legal? (And I know, why fire me if you're just going to tell me "you're eligible for rehire..")

A client is interested in having their existing VEBA reorganized as a 501(c)(3) organization? Has anyone ever heard of this being done? Even assuming that the IRS would agree to grant this type of request, what are the pros and cons of going down this route?

This employer is correcting failed nondiscrimination testing for a prior plan year using the one-to-one method under Revenue Procedure 2013-12, Appendix B, section 2. When allocating the QNEC to eligible NHCEs should the employer use the plan's definition of compensation for the year of the failure or total compensation for the year of the failure? IRS guidance does not appear to address this specific question (the revenue procedure merely states it must be a uniform allocation as a percentage of compensation).

HI everyone, 

I am currently working on a 401(k) audit at my firm. The client changed their TPA and Custodian in Feb 2019, and I am needing to disclose it as a subsequent event. Do you know where I can find a sample disclosure? 

Thank you!

Anyone have experience with an IRS audit or a citation on what are facts and circumstances around providing the 'effective opportunity' for a participant to defer?

Hypothetically: we have a client who will sign a new plan document with SH basic match on 9/30/19.  The recordkeeper chosen by the client has previewed that it will likely take 60 days to set up the new plan and to provide enrollment materials to the participants.

So the participants will likely only have 1 month of match.  Of course the owner will max out.  So the plan will be in existence for 3 months, but...

Again, i'd really appreciate anyone who's been challenged by the IRS on this point (if anyone!), or if you have a citation that says more than  "Whether an employee has an effective opportunity is determined based on all the relevant facts and circumstances" 1.401k-1(e)(2)(ii)

And i don't think this is an EPCRS issue, as the reason for the  Employee Elective Deferral failure is NOT due to the plan improperly excluding anyone. EPCRS App A .05(10)

Anybody??