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.

Our firm took over a floor offset DB plan a couple of months ago.  The plan's formula provides 4.75% per YOS to the business owner, and 0.5% to each other participant.  The benefit offset from the PS plan is limited to 0.5% of pay.  The participants except the business owner receive a 6% contribution in the PS plan.  The prior actuary was treating this as a uniform allocation, I assume because the participant account offset is limited to 0.5% of pay for all participants.  Essentially, the PS account was bifurcated into the portion which provides 0.5% of pay, and the remaining portion.  Does this fly for the uniformity requirement for 401a26?

A further question, does anybody know what requirements must be met to use a preapproved plan document for the PPA restatement for a floor offset plan?  My document seems to allow this, but doesn't elaborate on what requirements the plan must meet to use.   

5 docs have always gotten w2 income from the PC. This year they are also getting pass through income on a k-1. Is this passthrough income treated as earned income for profit sharing plan calculations?

Hello!  I am new to working with 457(b) Plans.   Per the plan document, a terminated participant needs to make a distribution election within 60 days following termination of employment and distributions can commence on or after the 61st day.  The participant can choose lump sum or installments (annual, up to 3 years).  Separately, they can choose to take the distribution as soon as administratively feasible or can delay payment until a specific date.  I understand that they can change this election ONE time prior to the distribution commencement date.

My questions are: 

1) Can they choose any prospective date for the commencement of the distribution, i.e. Can it be 10 years from now?

2) If the participant terminates today (12/4/19), then the distribution is not available until 61 days later, so the distribution amount would be reported on a 2020 W-2, since it is reported when first made available.  If the participant delays the commencement date until 2021, does the distribution get reported on the W-2 in 2020 or 2021?  Likewise, if they opt for installments, does each distribution amount get reported for the year in which it is paid?

Thanks!

Folks, any help is appreciated!

80 year old participant, still active and employed rolled over to an IRA in 2019 (in-service withdrawal).  Retirement/termination date is 1/15/20.  The 401k vendor automatically sent out a RMD even though participant is active and will not terminate until next year.  

What can be done with this RMD?  Vendor will not take the money back, can it rolled into an IRA within 60 days?  What about the tax that was withheld?

THANK YOU!

We have an employee who used to be full time and qualified for and took our employer sponsored group health, dental and vision insurance.  Those premiums were run through the cafeteria plan as pre-tax.   He is now part time and no longer qualifies for our employer-sponsored insurance.  He wants to know if we can run his outside individual insurance premiums through the plan. 

We only have one other part time employee.  She does not qualify for our group insurance either, but she is covered under her spouse's plan and has no interest in additional insurance. 

Can we do this?  how do we do this?   

My question is if a plan has involuntary cash-out provisions set at $5,000 or less and the timing of distributions in the plan document is immediate (meaning as soon as administratively feasible), will the plan sponsor/plan administrator (in all of our plans the plan sponsor is the plan administrator, we are just a service provider) be in violation of their plan document if they aren't processing involuntary distributions (meaning they aren't reaching out to the participant) and they are just leaving the money to sit in the plan? 

I would think they wouldn't be following their plan document; however, I read the following in Notice 2005-5:

Q-9. If a plan that provides for mandatory distributions does not make a distribution to a participant who fails to affirmatively elect direct payment or a direct rollover for a mandatory distribution on or after March 28, 2005, because the plan administrator has not sufficiently established administrative procedures that allow the plan administrator to accomplish the automatic rollover of a mandatory distribution by that date, will the plan be treated as failing to operate in accordance with its terms?

A-9. No, a plan will not be treated as failing to operate in accordance with its terms (including the automatic rollover provisions) with respect to mandatory distributions merely because it does not process mandatory distributions for which the participant does not affirmatively elect direct rollover or direct payment due to a lack of sufficient administrative procedures for automatic rollovers, including establishing individual retirement plans to accept automatic rollovers, provided the mandatory distributions are made on or before December 31, 2005.

any insights?