A plan has 401(k) & safe harbor on a mutual fund recordkeeping platform, and the profit sharing in a pooled account.  Participant P has a current balance of $200K in his individual accounts and $50K as of the latest valuation in the pooled account, and the segregation amount is slated to be $130K.

For the sake of ease, obviously, it would be awesome to pay out the QDRO from the platform.  The attorneys are writing that into the QDRO.  Do they have that right?  Isn't that the Plan Administrator's authority to decide where to pay the QDRO from?  As long as the dollar amount is satisfied, that should be all they care about, I'd think.

Any thoughts?

Hello,

I am almost 100% positive- but please confirm that a Profit Sharing Plan only is not subject to successor plan rules as there are not 401k and or other qualified contributions in the plan?

Thanks!!

The employer has 200 participants and 1 HCE (the CEO) in a 401(k) plan. They ran their 2017 ADP test; it failed; they processed the ADP refund and forfeited the related employer matching contributions of the 1 HCE in March 2018. Late in the 2018 year, they determined that the ADP test was run incorrectly--ineligible employees who were not participants were included in the ADP test as 0% deferring.   As a result, the plan would not have failed the ADP test by as large of an amount and the HCE received too large of an ADP refund.  The HCE was distributed in 2018 more of his salary deferrals than he should have been (and more of his employer matching contribution were forfeited than should have been if the ADP refund were less) for the 2017 plan year. As a side note, the board of directors of the employer gave the HCE additional comp during 2018 to make-up for the HCE not being able to fully defer into the 401(k) plan and receive the full resulting employer match.

First, I believe the ADP test must be rerun correctly so that a correct ADP test is maintained in the employer's files  (even though we know that it will not indicate additional refunds that must be made, but an overdistribution of refunds)? But then what is the employer required to do? I've never seen this happen.

I have a question. I realize that LLC can be taxed as either Partnership/Sole Proprietorship or a Corporation. What about PLC? Can it be taxed as either one as well or can it only be taxed as a Corporation?

Thanks,

We have a client that wants to change the allocation method of their recapture account effective 12/31/2018.  Currently the service agreement (not addressed in the plan document) states that after expenses are paid from the account, the account will be reallocated pro-rata based on account balances.  We have not yet seen a copy of the 404a-5 disclosure to see if it contains such details.  

The client wants to change the reallocation method to be based on the investments of the participants and whether those investments generate revenue sharing income.  If the allocation method of the recapture account is not included in the initial 404a-5 disclosure, can the employer change the allocation method without a 30 day change notification to participants?

A Solo 401(k) sponsor wants to add a Cash Balance Plan.  Is this OK, or is it advisable (or necessary) for the sponsor amend the Solo 401(k) into a regular 401(k) to have any overlapping provisions coordinated?

Client just called and one of his employees works for another company and the employee has determined that he contributed too much in salary deferrals and now has a 402g limit issue.

Can the funds with earnings be returned now or do we have to wait until 2018 has ended and return the funds in 2019 before April 15, 2019?

Plan sponsor elected to terminate their 401(k) plan effective December 31, 2018.  The termination paperwork was signed in May 2018.

When does the 100% vested rule come into plan?  The effective date of termination of December 31, 2018? Or the date the termination paperwork was signed,?

If this is a breach of protocol I apologize in advance.  I first tacked it on to the end of an old thread and then I decided that maybe nobody reads old threads and that maybe I should start it as a new topic.  Thank you.

Hi to all!  I'd like to tack my new question on to this old thread because they related to each other and even though I have read this 5 times I am still not sure how to handle my situation.

I have an employer who wants to motivate his employees to defer more and in his ideal world they would defer 15% of pay and he would match 10%.  No, for real, I really do have someone this generous!  For 2019 he has already distributed a SH Match notice promising the employees dollar for dollar up to 6% of pay - already really generous.  He's trying to figure out how to structure a discretionary match on top of the SH for 2019 that would reward employees who put in more than 6% of pay, in such a way that if someone put in 15%, they would end up with a total of 10% in employer match.  He understands that at least some if not all of the match would be subject to the ACP test and that if the test fails, refunds might have to be made, and he doesn't care.

At first he, and we, were thinking that he could do a discretionary match of 44.44% on deferrals between 6.01% and 15% of pay.  For the guy who defers $15,000 on a $100,000 salary, this would get him a $6,000 SH match plus a $4,000 extra match for a total of $10,000.  

Then we started reading passages about having to calculate the discretionary match on all of the deferrals, not just the percentage over 6% of pay.  In that case, the extra match would be 26.66% of all deferrals up to 15% of pay deferred.  This would get our $100,000 person the $6,000 in SH Match plus the extra $4,000 in discretionary match for a total of $10,000.  However, of course, it would increase the cost of the lesser paid/lower deferring people.  I don't think this employer minds doing this, if the rules require it.  He just wants to know what to do within legal parameters to achieve his goal.

So here we go:

1. Must we structure the discretionary match to include all deferrals from the first dollar?

2. What exactly goes into the ACP test?  The discretionary match only, or the total match including the Safe Harbor?

We mostly deal with employers who won't even pay a Safe Harbor match, let alone do more, so it just hasn't come up before.

Thanks in advance for helpful advice!

A retirement plan's accounting and reporting year is the calendar year.  The plan's administrator would like to file its report on 2018 as early in 2019 as it can.  The administrator does not have its own filing credentials, and has in years past authorized its TPA to do the submission.  Apart from the TPA's service availability, is there any about Form 5500 software that would make it impractical to file in January 2019?

Anyone else having issues with the system being able to calculate one year of service eligibility provision correctly? Im on my 4th incident to relius and they keep coming up with reasons on why its not calculating correctly. The reasons they explain to me have not been the way the system has handled the calculation for the last 15+ years. 

I am helping a Non-Profit Terminate their 401(k) and start a SIMPLE IRA.  They only have two employees, admin costs of a 401(k) didn't make much sense.

Is there any way around the 2-year rule for rolling money into the SIMPLE?  I guess Ii don't really understand why people are prohibited from rolling money into a SIMPLE IRA for two years.

Are there any penalties for rolling money in before the plan has existed for two years?  Would it simply be considered a taxable distribution?

Thanks!

I have a takeover DB, the client , a sole prop., recently changed brokers. 

The rollover was done a few years ago, from a previous DB plan, but previous broker incorrectly titled the account "401(k)".  The rollover was approximately $1M.  The broker was from another brokerage firm

I am working with the new broker and we want to straighten this out. This is not a 401K, she does not want a 401(k) and will never contribute to a 401(k); in fact she had always been under the impression this was an IRA rollover; upon further digging, I discovered this was indeed a rollover.

Questions is, since the account was titled incorrectly, and has just been re-titled "IRA' with the new broker, would form 5500 need to be filed, or could the client claim "ignorance", "stupidity" or whatever, and if she were to be audited, explain what happened.

The DB has less than $250K.

one participant defined benefit plan was effective 1/1/2017.  the valuation date is EOY so valuation date was 12/31/2017 for first year.  can the valuation date be changed to 1/1/2018 for the second year of the plan?

I am finishing up a VCP packet for a loan failure.  Along with everything else, I have prepared both the Form 14568 and Form 14568-E.  

When I look at the two forms, it seems we have some redundancy, and I'm wondering if I can toss the Form 14568 and just submit everything with the 14568-E.  

Does anyone have any experience taking such a bold move?  ?

Hello,

I am hoping all of you would be able to give me some guidance.

Facts:

- New plan, effective date 10/1/2018

- "Compensation" means a Participant's Basic Compensation, (which are W-2 wages), actually paid during the Compensation Computation Period (defined in the document as the Plan Year.

-  Compensation excludes pre-participation compensation

- Plan Year is the 12 month period beginning January 1, ending December 31st.

- Limitation year in the document says: " In the case of an initial Limitation Year, the Limitation Year will be the twelve (12) consecutive month period ending on the last day of the initial Plan Year."

- Eligibility is normally age 21, 1-year of service, monthly entry. However, all entry requirements were waived 10/1/2018.

- 4 Employees - 2 hired 5/30/2017, 1 hired 6/26/2017, and one hired 10/15/2017.

Questions:

1) Is the 415 or compensation limit pro rated for 2018? I do not believe so based on my reading of the above.

2) For the employees, do I take compensation from 10/1/2018 - 12/31/2018, or from what their individual entry dates would have been (6/1/2018 for the first two, 7/1/2018 for the third, etc.)

3) This plan will be top heavy, so my understanding is I need to give non-key employees 3% of their annual compensation (1/1 - 12/31) - correct?

Thanks for your help and guidance.

The governmental 457(b) plan finds out that a participant lied on their application for a distribution for unforeseeable emergency.  The truth would have resulted in the application being denied.  Does the plan have to do anything more than file the 1099-R with an "early distribution - no known exception" code?  Do we have to/can we even recoup it from the participant?  Should we file an attachment to the 1099-R about the circumstances?  Any thoughts appreciated.  I'm a newbie here, so please be kind.  

A hospital employee is concerned that his 457 account balance may be jeopardized if the hospital becomes insolvent. He is considering rolling it over to a 403(b) he has.  He is age 70.5. Would it only depend on if the 403(b) allows for 457 rollovers?

A traditional IRA holder has reached age 70.5.  When he passes away he plans on leaving the IRA to his children. Will they be required to continue to take RMD's upon their father's death or are they postponed until age 70.5?

A 1 participant plan owns a tract of land. The trustee is wanting to sell a portion of it and wants to ensure it is done properly.  I believe it is allowed as long as the proceeds are returned to the trust.  Would the remaining portion of the land get a new deed in the name of the plan?  Would any special appraisal be necessary?