As title suggests, I have a one-person 401(k) Plan that is closing effective 12/31/18.  We are, of course, getting trailing dividends and interest well into January 2019.  Those div/int are about $1100 out of a 1.9MM plan.

Should I:

1) File a 2018 1099-R with the grand total of distribution (once all those div/int have posted, even though those dollars don't technically leave 401(k) Plan until Jan 2019)?  Or ,

2) File a 2018 1099-R for the total rolled out as of 12/31 and then don't file another 1099-R for 2019 (because those div/int amounts are so de minimus)?  Or,

3) File a 2018 1099-R for the total rolled out as of 12/31 and then a 2nd one for 2019 for those trailing div/int?

Then, the follow-up related question is about a Final 5500!  I do not want my client to have to pay me to complete a 2019 5500 just to report the distribution of those pesky dividends & interest!  The amounts are SOOOO low, relatively speaking.  If I file a Final 5500 for 2018, I should show the distributed amount as the same amount shown on the 2018 1099-R, right?

Sorry this is so long.  I searched for the answer before posting this, but cannot find anything relevant (maybe I'm not great at searching).  Thanks so much for anyone's help.

LLC  taxed as Partnership, has 2 owners in active management.  The 3rd owner is not active and not deferring.  I want to include him in testing because his zero will help. 

Is it correct to include him in testing?

Hello,

Company A purchases Company B in a stock purchase. Company A sponsors a non safe harbor plan, Company B sponsors a safe harbor 3% non elective (both calendar year plans). Purchase transaction has closed and Company B did not terminate its plan beforehand.

I have reviewed Notice 2016-16 and understand there is limited guidance on mergers when safe harbor plans are involved. However, I have a bit of a twist:

1.401(k)-3(g) and 1.401(m)-3(h) provide guidance on a suspension of a safe harbor contribution mid year. Let's say Company B's plan complies with all these requirements to remove the 3% safe harbor mid year.

I don't believe they can be merged mid year because Company B's plan needs to be tested for the entire plan year (1.401(k)-3(g)(ii)E and 1.401(m)-3(h)(ii)E). 

Can the plans merge mid year after the removal of the safe harbor contribution? Could they be merged but then tested in separate groups?

Thank you

The son of a retiree called in to our corporate office and explained the following situation.

His father is drawing social security as well as the company pension. He is applying for certain Medicaid programs that have limits to monthly income. When the retiree combines social security plus pension, he is over the limit for the medicaid program he wants to apply for. The retiree determined that the medicaid benefits are more important than the amount of his monthly pension.

Is it possible to refuse/stop/suspend pension payments? Is it different based on each plan document? Are there overall rules governing this? I reached out to the actuaries we use and they said from their research, it is impossible for him to discontinue receiving the pension payments. 

Maybe I'm missing something - can a 403(b) plan allow a certain class of employees to defer, but exclude them from the safe harbor match? I didn't think so...

Having a brain cramp today.

I have a plan that has 3 month wait, entry is date of event.

Cross-tested 3% SH plan.  Do I have to give the otherwise excludable folks the gateway if I am testing them separately?  GW will be 5%.

I've been drafting QDROs for several years for family law attorneys. I am working on my first Multi-Employer Plan (Carpenters' Union) QDRO. This is my first QDRO with the participant in payment status. The monthly benefit is $3,610.64 (disability) for the lifetime of the Participant with a 75% survivor benefit to the surviving spouse. The Marital Settlement Agreement provides that the monthly benefit is to divided equally. Since the annuity election can rarely be changed, how much does the Alternate Payee receive: 

1. $3,610.64/2 = $1,805.32?

2.  50% of the gross monthly benefit as if the participant had elected a Single Life Annuity? This would provide the AP any possible cost of living increases, etc., but could change the amount of the payment to something other than $1,805.32.

3. If 2 is chosen, what protections can be provided for the AP if the participant predeceases her?

4. Single employer plans are qualified under IRC 401. Is this also true for Multi-Employer plans?

The sample QDRO from the union doesn't really address this? Any comments are appreciated!

Is it a plan failure requiring correction if the wrong Trustee was named in the plan document?

Adoption Agreement lists the Board of Directors of the plan sponsor as the Trustee, but they actually hired a corporate Trustee several years ago. There is a trust agreement in place naming the corporate trustee.  The Adoption Agreement explicitly states that a plan amendment is not necessary to change the information in Trustee section of the agreement. 

A 401k plan converted from one investment product to another product with the same recordkeeper.    A couple, but not all, funds in the plan's core lineup changed and the account number changed.   Discovered that the notice to the participants announcing the change was not delivered.   Is the fix to forward the notice now to communicate the change?   What other correction would / should be made?   Thank you

I googled on the topic, but did not find this situation addressed in the 401k fix-it guide and no articles or citings came up regarding the specific topic.... 

If Company A acquires Company B in an asset sale where Company B maintains a 401k plan which Company A does not takeover as part of the asset purchase, is it permissible for a former employee of Company B who had an outstanding 401k loan balance as of the date of purchase which will be offsetted; to obtain a loan from his Company A 401k account & then rollover the amount of the Company B 401k loan offset to an IRA within the permitted deadline (due date for filing personal tax return)?

Company A does not accept rollovers of participant loans.

I'm thinking this would be allowed because the requirement of a rollover of a loan offset is that the employee must come up with outside funds to be deposited to an IRA or qualified plan to cover the offset amount.

For a continuing calendar year plan, as of today 1/6/19, can I file a 2017 5500EZ or do I have to wait until the IRS releases the 2018 EZ?

Trying to avoid teaching an 80 yr old how to file an SF or teaching him to scan & email me a signed SF.

Thank you

I am looking at paying off the two 401K loans that I have, but I am concerned that if something came up and I needed to borrow again that I would be able to access enough cash.  I have been reading through information on this forum as well as other sites and I am not certain of the calculation formula when you have two loans.  Here are the specifics:

Total Vested Balance = $73,870

Loan 1 Balance = $10,508

Loan 2 Balance = $15,180

Prior to borrowing Loan #2, I paid a loan off on 2/23/18 with an outstanding balance of $17,679.  Assuming that I payoff the two outstanding loans on 2/15/19 and wait until 3/15/19 to borrow again what would my loan availability be?  My assumption is that it is about $34,000.  Does that sound right?

for a "one-participant" (2 sibling partners in gen. partnership w/ 2 self-employed 401ks under partnership EIN) for question 8a on 5500-sf, is employee contribution of up to $18500 per person (in 2018) to 401k go to 8a(2) participants and the 20-25% go to employee amount go to 8a(1) employers....or does IRS want "one-participant" plans to lump all 401k (employer & employee) contributions to 8a(2) participants because it is not a "single employer plan"

tia

I am having a moment and would appreciate assistance.

Plan is a safe harbor 401k - 3% SHPS + PS allocated based on new comp method.  Each participant in their own group.  Plan document indicates that 1,000 hours is required for a PS allocation.  A terminated participant worked less than 500 hours during the year.  Can the terminated participant receive only the 3% SHPS or must he receive at least the minimum gateway?

Can I amend a 2019 3% SH plan now to exclude a certain class of Employee.  Coverage not a problem.  None of the current Employees thusly situated are eligible for the plan now. 

If you follow the guidelines, you clearly can have any two out of the three at the same time. If your FSA is limited purpose, and your HRA is set up to only pay after reaching the deductible of $1350/$2700, is there any reason you can't have all three? IRS publication 969 seems to indicate that you can - says you can have one or more of the following. Mind you, I have no idea how this would work in practical terms, or whether there is any advantage to it. Perhaps there is - if you meet the $1350/$2700 deductible, and then your other plan(s) kick in, you could theoretically contribute the maximum to the HSA?

Safe harbor match formula is 100% on the 1st 3% and 50% on the next 2%

Match is calculated on a per pay basis

Participants elective withholding is 5%

Total Compensation is $286000

Retirement plan software matched participant 4% of each pay based on the match formula for a total of $11440 for the year

But isn't the max match permitted for this person $10800 which is 4% of $270000

Pretty sure I need to forfeit $640 of match since participant was matched on wages over $270k, but the per pay basis for allocating the match is throwing me off

Any thoughts on this would be welcome...  Thanks

Is there any requirement that participants are notified that their loans will be defaulted once they terminate? I have a large plan whose loans are administered by NW. We as a TPA have minimal involvement.  We used to send out default letters to their participants, but because NW now recordkeeps the loans we are not going to do that. Neither does NW.  NW will deem their loans for non-payment, but again, not send out a notice. Just wondering if a notice is a legal requirement.

Thanks.

Hi all,

CPA here working on a Form 5500 audit (new account for us).

The Plan is a defined contribution profit sharing plan that owns four life insurance policies with a total cash surrender value that comprises ~40% of plan assets. Are these contracts required to be reported on Form 5500 at cash value?

I am being told by the Plan's third party administrator that they have never been reported as Plan assets because Form 5500 Schedule H Part I it states: "Do not enter the value of that portion of an insurance contract which guarantees, during this plan year, to pay a specific dollar benefit at a future date.".

I am hoping to get some insight and/or pointed to some guidance as I am not too familiar with qualified plans that offer life insurance. I have had a few in the past where the value has been reported but the value was not significant to the plan, so it was never a sticking point with respect to our report.

Any help would be greatly appreciated!

A 401(k) plan received transferred assets from the plan sponsor's terminated DB plan. The 401(k) plan has standard provisions allowing the sponsor to allocate, but at least as fast as the seven-year requirement under section 4980.

The assets were put into a suspense account but were never allocated. Still within seven-year period but 401(k) plan is now terminating. 

VCP does not allow correction/relief specifically from 4980 reversion tax. 

Thoughts on whether to attempt VCP based on an "operational error" (i.e., failure to allocate as required by the plan) vs. allocating prior years now (plus plan termination allocation) and filing 5310?