I have an ESOP client and here are the facts:

Person A owned >5% of the stock in Company XYZ until 100% of the shares were sold to the ESOP in March of 2018.  The ESOP was effective on the date of the sale of the stock to the ESOP. 

This person was 70.5 in 2018.  He was 70.5 in 2013.   It just dawned on my he got a balance allocated to him as of 12/31/2018.  We didn't get the work done until August of 2019.  So is the 5% rule you are a 5% owner any time during the year regardless if the plan exists or not or do you have to be a 5% owner on or after the effective date of the plan? 

Does this person need an RMD for 2019 because he was a 5% owner in 2018 when he was over 70.5 or does the fact he stopped being a 5% owner on the day the plan was effective change this?

The RMD will be <$30 so the amount is the issue it is a simple compliance question.  I guess the balance could grow to the point the RMDs become more meaningful. 

Hi. I am looking at a 457(f) plan that permits after-tax contributions.  Please help me - why would a person want to give their already-taxed compensation back to the employer?  Deferral of taxation on earnings for a few years does not seem to warrant the risk of the sponsor's bankruptcy.   What am I missing?  Thanks!  This board'S moderators and contributors are the best!

P.S. All I could find on Google and elsewhere was a GuideStone plan adminstrator's guide that had a reference to 457(f) plans that permit after-tax contributions. 

A 401k plan allows for plan loans for any reason.  However, a participant who is requesting a loan recently declared bankruptcy, which the company is aware of because they receive a court order to terminate his wage attachment for child support.  Can or should a Plan Administrator deny the request for the loan since they have reason to believe (bankruptcy) that the plan loan would not be paid back?

Thanks

I have 3 companies, each company is owned 100% by the same person. Two have their own separate plans, one does not (all non key employees). Each plan will pass coverage on it's own, so I don't believe I have to test them together for ADP/ACP, but I do have to perform combed coverage testing. They will fail combined coverage when we include the company that does not have a plan.   We are going to create a plan for the one company that does not currently have a plan. Can the plans have different eligibility -  two have 60 days and one have 1 year?

Can I rely on the otherwise excludable option to carve out anyone who does not meet age 21, 1 year with semi-annual entry into their own "plan" and test them separately for coverage? 

Folks, any help is appreciated!

 

My friend works for Company A (LLC). Mr. X, the firm's partner, owns 100% after Mr. Y passed away a few years ago. Mr. X has a separate company (Company B), a C Corp, into which he transfers the earnings from Company A. The employees in Company B are himself and his wife. He set up SEP IRA in Company B. 

 

From my understanding SEP IRA is under ERISA and when a brother-sister group sets up a pension plan, all employees within the brother-sister group have to be covered in order to satisfy the coverage testing. 

 

In this situation, can she get the same benefit (SEP IRA)  from Company A?

If yes, under what law.

 

Has anyone death with the indemnification clauses that have been added to the plan checklists that require the customer (not the adopting employer) to indemnify Relius in the event Relius fails to notify the customer of required amendments? If you use Relius and haven't seen this language, pull up a checklist and see Section 3.

I'm looking at a situation where I THINK incorrect information was given, but I want to see if y'all agree.

Situation is this - Employer A sponsors a Section 125 plan, that offers various options, including contributing to an HSA. Participant "X" does not participate in A's HDHP, but is covered under the HDHP plan of her spouse, at Employer B. "X" is eligible for all options offered under A's 125 plan.

"X" is being told that she cannot contribute to an HSA under her employer's (A's) 125 plan, as IRS regulations prohibit this - because her HDHP coverage is under her spouse's (Employer B's) Plan.

I don't think this is correct. Agree/disagree? Am I missing something?

I have a off-calendar plan 9/30/19 pye. They started contributing a Match (100% up to 1% compensation) per pay on 4/1/19.  Their Plan Document is a discretionary ER Match & the Period of determination is the Plan Year.  I provided the client with a Match Calculation using Plan year compensation (not 1/2 year) and they do not feel they should have to pay the true-up. Is there anyway around this? I don't think there is because the document indicates plan year compensation not "per pay or 1/2 year compensation, etc.".

I am curious how other TPAs manage this. 

Loans that default throughout the year due to EE termination - Do you update the participant accounts with the loan benefit offset periodically throughout the year, or do you offset their account before year end?

Hi, When setting up a new Plan, in addition to the current census information, how many years back of salary history do most firms ask for? Thank you.

Is there a statute of limitation in Maryland for  filling   to begin to receive credit for  an accumulated Maryland  Pickup contribution after retirement from Maryland State service?

Partner Joe (over age 70) retired in 2017 from partnership XYZ, LLC (a large law firm) and started receiving IRC §736(a) payments (distributive share or guaranteed payment under IRC §707(c)) for a period of 48 months and in form of k-1. These payments are subject to self employment tax.

Joe also has clients on the side that he is consulting with. Not sure how he is paid yet but can assume schedule c.

Joe wants to start a pension plan on both incomes, can he (how about only on the k-1 he is getting from XYZ, LLC)? The plan will be for 2019, 2020 and 2021.

From an article I found online written in 2017 (not the code - could be related to 736(b) - no taxation of income - not posting the article not sure if can be done - please let me know if possible and will do so): Note: The type of retirement program (between Joe and XYZ, LLC) discussed here is not a tax-favored partnership retirement plan such as a 401(k) plan, Keogh plan or SEP plan. Instead, we are talking about a relatively simple written arrangement (generally unfunded) under which payments are made by the partnership directly to its retired partners. Such an arrangement is not subject to any of the complicated funding and nondiscrimination rules that can potentially apply to a tax-favored partnership retirement plan.

Thank you for your comments.

Plan Doc indicates that deferrals can be changed semi-annually and at year end may increase the deferral over the last 2 months to increase the deferral to the maximum.  It makes no reference to increasing deferrals at year end for someone who wants to put in more at year end but not the maximum.  The Plan Sponsor has a participant who is a sales person and he wants to increase his deferral for the next 4 weeks by $500 per pay period.  He currently contributes $100  per weekly pay period.  They do not pay bonuses at year end to anyone.  Based on the way the plan is written, can he increase his deferral for the last 4 weeks of the year even though he will not be anywhere near the maximum?

I remember someone once telling me that if Plan Assets were under $250,000 the Plan was not required to file Form 5500 but I don't see it in the actual instructions.  Is that no longer the case or does it only apply to those who file Form 5500-EZ?

Thanks everyone!

Can a person "roll over" her US 401(k) Plan balance into a UK based plan tax free?

Situation where census provided by client showed incorrect DOB for an individual, from inception, and it was never caught by the client. Employee terminated, left funds in plan. Now turns out that former employee is in fact several years older than 70-1/2, so multiple years missed RMD's.

So, you self-correct, but under SCP you can't get a waiver of the excise tax, so you file the 5329 with the "reasonable cause" statement. Any thoughts as to the relative merits (or risks) of submitting under VCP solely to try to get a formal waiver of the excise tax? The total tax involved would likely be "only" a couple of thousand dollars more than the VCP fees. I know the IRS has historically been pretty reasonable about waiving excise tax in missed RMD situations, but not sure about a multiple-year situation where VCP is otherwise available.

Also, would you file multiple 5329's - one for each year RMD was missed, or just one 5329 using the total of missed RMD's plus interest as the RMD for, say, 2019?  I'd say the latter, but others may disagree.

We took over a profit sharing plan with 3 pooled accounts.  We have not dealt with pooled accounts in so many years, I do not recall how this had been handled.  In the past, participants had been given account balance statements combining the total of the three.

Like most plans, December lost money.  One participant is questioning her % of the loss and wants to know not only her breakdown of the three accounts (2 are CDs and one is invested with a broker), but her breakdown of the underlying investments in the brokerage account.

Furthermore, she says her attorney told her she has a right to see her portion of the breakdown of the underlying investments in her account balance statement.

A client has a defined benefit plan with 390 participants (all term vesteds, retirees and beneficiaries) and slightly under $2 million in assets. The plan would like to issue an RFP to solicit bids for a single premium group annuity contract for all of the plan's participants. Does anyone have an RFP they could share as a template for creating such a document?

I have a situation that I have not encounted before. A couple's divorce was final on July 16, 2019. I am retained in August by the attorneys to draft two QDROs, one for a cash balance pension plan and one for a 401(k) plan. All parties approve draft QDROs by late September and they are submitted for pre-approval to the plan sponsor on October 9. The plan administrator acknowledges receipt and freezes the participant's accounts, but wants several changes to both QDROs which are made and both are resubmitted on October 22. On November 27, the plan administrator pre-approves the 401(k) but wants one revision to the pension QDRO, which it did not mention in the first revision request. I'm used to this, so I made the minor revision and resubmitted the pension QDRO today. 

Meanwhile, the Alternate Payee dies on November 26th! Both QDROs have language covering this contingency. Because of the alternate payee's health, signature pages were signed the by both the participant and alternate payee when they approved the drafts in September, but before submission to the plan administrator for pre-approval. Since pre-approval is not complete, the QDROs have not been submitted to the court yet. Of course, the alternate payee does not have a beneficiary form filed with the plan sponsor.

1. Are the signature pages valid? I would prefer to revise the pages to reflect the personal representive of estate's signature. I guess it's up to the attorneys since they are filing them, but thought I'd ask.

2. Should the plan sponsor be made aware of the death of the alternate payee before the court signed QDROs are submitted for payment? 

3. Does anyone have advice/thought in this situation?

Thanks.

Plan auditor determined late/timely based on a time frame of 5 business days (apparently that was what the client told them).  All of the corrections were done based on 5 business days and now we are helping with a VFCP.  Would you file a VFCP application using 5 business days as the criteria for lateness?  [They ask right on the VFCP application essentially "when do you think your contributions are due?".  I'm concerned if I file it's going to open a whole other can of worms.  i.e., "Seriously, it takes you 5 days??  Please provide a 27 page memo describing why you are so slow! And let me see ALL of your deposits so I can use it as evidence to disprove your ridiculous assertion!"  I embellish of course, but probably the only question is to what degree I embellish.  There is a kernel of truth I am sure?

Beginning in 2019 by the way their new standard is 2 business days.