I'm having difficulty wrapping my head around a screwy situation.

Plan year is calendar year 2018. Limitation year is 2018. Fiscal year is 4/1/2017 - 3/31/2018. Extended tax filing deadline is 12/15/2018.

Plan excludes pre-participation compensation.  Eligibility is 3 months/250 hours, monthly entry.

Participant is hired in 2018 - let's say on June 14th, enters plan October 1, 2018. Compensation form Date of Participation is, say, $30,000.

Prior TPA has been allocating contributions made for a given fiscal year for the prior plan year, based upon prior plan year compensation. Example - for 2017 plan year, allocations were made based on 2016 calendar year compensation.

I don't see how this can work. While you can theoretically allocate a contribution made in a current plan year, with the fiscal year ending in the current plan year, for a prior plan year, how can you allocate for 2017 (in the circumstances above) based on 2018 participating compensation, when the only participating compensation is during plan year 2018? There is no 2017 plan year compensation.

Am I missing something?

I have a 401k account that was setup thru a divorce QDRO order. I have been making periodic minor partial withdraws from this account for close to 4 years. However the latest request for partial distribution was denied. The plan provider is now claiming that the plan does not allow for partial distributions and they claim that the previous withdraws over the last few years have been an "oversight" on their part. They stated that this "plan rule" can be found in the Summary Plan Description ( which I promptly download from them ) and it DOES NOT spell out any rules regarding partial withdraws for plan participants. I was polite and I asked them to point out exactly where the rule was...but they could not. They then claimed that it is forbidden according to the adoption agreement with the plan administrator and they are legally bound to abide by it. My question is do I have any recourse action I can take ? 

Is anyone aware of a way to request old 8955-SSA's filed from the IRS?  We have a new client who wants to make sure they have D'ed everyone that they A'd as far back as possible (obviously just the ones who have closed their accounts).  they don't have copies internally and the prior provider sent the last couple but that's it.

This question relates to terminating a vanilla C-Corp employee stock bonus plan ("ESBP" not and ESOP) that is almost entirely invested in closely held employer stock.  A 5310 application has been pending with the IRS since Sept.  The company wants to give the participants the choice they have had in the past  (as called for under the plan) of taking their plan termination distributions in cash or in stock. The Company would like to redeem shares from the Plan to raise whatever cash is needed to meet the participant elections. There are non-employee shareholders, so can't compel sale of the stock.

Are they required to not only get an independent valuation but also to appoint an independent trustee to negotiate the redemption price and make a good faith determination that the plan is being treated fairly and receiving "adequate consideration" (not less than fair market value) for its shares?  Is this to be AS OF THE DATE OF THE  REDEMPTION SALE?  If so CAN THE REDEMPTION SALE TAKE PLACE BEFORE THE DATE OF DISTRIBUTION?   What are the mechanics of doing that?  Can the participants make their election now but advise them if they elect cash their shares will be redeemed at the fair market value of the stock on the date of actual share redemption as determined by the independent trustee and an independent valuation? 

Have a "splitting hairs" question.  Plan document reads:

(6)   Return to employment. A Participant may not receive a distribution based on Separation from Service, or continue any Installment distribution based on a prior Separation from Service, if, prior to the time the Trustee actually makes the distribution, the Participant returns to employment with the Employer.

At issue is the meaning of the phrase "Participant returns to employment" in the last sentence.  I contend that the employee has returned on the date he or she begins working.  I base this on the fact that his/her re-hire date is the date he/she begins working, not the date called.  Another party interprets that the employee has "returned to employment" if he or she has been notified they are being called back to work.  A distribution was in process to the terminated employee.  Before the funds were paid out, both parties were notified that the employee had been re-hired with an effective date three weeks in the future.  I contend we should not stop the distribution.  The more conservative party (who by the way is very highly regarded and I have the utmost respect for) states that because we know he will be rehired, he has "returned to employment" and we should stop the distribution. 

I've made my decision but am curious to run this by other experts out there.  Thanks much!

Company A Owns 60% and Company B owns 40% of Company C. The employees of Company B are no longer employee of Company B but now employee of Company C. Company B sponsored a 401k Plan previous. New Company C started sponsoring a 401k plan that allows rollovers. Both Company A and B still exist and neither have employees. All employees from A & B are now employees of Company C.

Do the employees of company B have a distributable event?

Plan allows for 1 loan at a time.  Participant has a loan, which he took out in 2014 with a weekly payment of $31.38.  In August 2017, the Participant contacts the Investment Company, pays off the loan and requests a new loan.  New payment amount is $140.53.  The TPA approves the loan and it is then approved by the Plan Sponsor.  The entire process is done electronically.  Participant is not married so there is no spousal consent and thus no physical paperwork is generated for the request until the loan is approved and the IC sends a confirmation report to the participant which contains the terms of the loan.  This is a standard procedure.  TPA and IC notify the client that the first loan was paid off and provide the amortization schedule with the new payment amount to be implemented via payroll.  Payments are being made but the IC/TPA do not provide loan monitoring for this particular client.  Fast forward to October 2018 during the 5500 audit, the auditor picks up this loan for his sample and discovers that while payments were made timely, the amount was incorrect.  How does this get corrected?  Would this loan be considered in default, even though payments have been made timely just in the wrong amount?  Does the plan need to file under VCP?  Can the loan be re-amortized so that the loan is paid off by the end of 5 years? 

Client has a DB plan that has a DC component where certain participants have plan accounts. I am trying to figure out if it is possible for those participants to receive an in service distribution of DC component. Would this be prohibited since the DC is a component of an overall DB plan? 

Thank you for any clarification you can provide. 

I apologize in advance if I've missed something in my cursory research of this, but here goes. Also, for simplicity I am assuming the employer in question only has DC plans, but I don't think that makes a difference.

Clearly, to determine whether a plan is top-heavy for a "plan year" you use account balances as of the "determination date," which also quite clearly is the last day of the plan year preceding the plan year for which the determination of top-heaviness, or not, is being made. E.g., to determine whether a plan is top-heavy for a calendar year 2019 plan year, you use balances as of 12/31/2018. There are potentially also certain addbacks to determination date account balances of keys and nonkeys for distributions that were made during the plan year preceding the year for which the top-heavy determination is made (i.e., in my example, during 2018 for the 2019 top-heaviness determination), or potentially during a 5-year period in the case of some distributions. See IRC secs. 416(g)(1), (3), and (4)(C). And of course you have aggregation rules.

So the above gives you your key and non-key participant balances for purposes of determining whether more than 60% belong to keys. But then you have to figure out whether those balances belong to keys or non-keys. IRC sec. 416(I)(1) [Note: the "I" in 416(I)(1) should be lower-case, but I can't make that happen; sorry]  tells you that the keys are the folks who meet certain requirements, e.g. percentage of ownership of the employer, "at any time during the plan year." Just looking at 416(I)(1) [see previous note], it would seem that the "plan year" being referred to for identifying keys is the current plan year, i.e. the year for which you are making the top-heavy determination, i.e. 2019 in my example. At least, that's what I think, because 416(g)(1) tells you that a plan is top-heavy "with respect to any plan year," and to me, when 416(I)(1) says "during the plan year," they are talking about the same plan year. So it seems to me that based on the statutory language you would use ownership and compensation in 2019 to determine who are your keys and non-keys, and then you would go back to 12/31/2018 to see what those folks' determined to be keys based on their 2019 facts had in the plan for purposes of the "more than 60%" test.

But Treas. reg. 1.416-1, T-12 seems to say pretty clearly that the "plan year" being referred to in 416(I)(1) is not the plan year for which you are making the determination (i.e., 2019 in my example), but rather 2018. It does this by adding "containing the determination date" to 416(I)(1)'s simpler "plan year." I guess when, before EGTRRA, you looked back 5 years to determine who were your keys (i.e., the keys were participants who at any time during "the plan year or any of the 4 preceding plan years" met one of the status tests), and under pre-EGTRRA Section 416(g) you were also dragging back in all distributions made during the 5 plan years ending on the determination date, it may have made sense for the IRS to want the same 5 year period for both purposes, i.e., the IRS may have been trying to simplify. But if that was the reason for departing from what otherwise seems the very plain statutory language of 416(I)(1), it no longer seems valid, since using balances as of the end of the previous year, and status as of any time in the current year, seems just as easy to do now.

Has anyone else had an issue with this? To anyone's knowledge, has the IRS ever commented on this, formally or informally?

Co. ABC is acquiring Co. 123 in an asset acquisition.  Co. 123 currently sponsors a 401(k) plan.  There will be a few week period after the acquisition date where the employees remain on Co. 123's payroll and they will be leased to Co. ABC during that time.

Co. 123's 401(k) plan will be terminated.  The employees will participate in Co. ABC's plan.

My inclination is that Co. 123's plan should be terminated prior to the acquisition date.  However, if Co. 123 continues the plan for the few weeks that the employees are leased to Co. ABC is there then a potential successor plan issue?  My inclination is yes that the "leased" employees are really common law employees of Co. ABC at acquisition.

Thanks for any guidance.

Would you be permitted to have two matches where the first match would go to everyone but the second one would only go to employees employed on the last day (meaning the active employees would get both matches).

I am trying to think if there are any discrimination issues.

Does the primary beneficiary requirement that a spouse must be named unless spousal consent is provided also apply to "common law marriage" or common law spouse?  The particular participant resides in CA as does the Plan.  

Thank you

Company A sponsors a MEP with unrelated company B adopting. During 2018, participant X, who is a non-owner employee of company A and over age 70.5, transfers to company B, .e.g they are terminated from company A and hired by company B. Is this person required to take an RMD by 4/1/2019?

I have a client ALE who has not offered coverage to any of its FTEs or FTE equivalent.  Of course they have now received a 226-J letter for 2016 because 8 ees have received a PTC on the Exchange.  Their argument is that they could not afford to offer coverage because 2018 is the first year they turned a profit (they took over a company in 2015 and never offered coverage).  I'm just curious to know if anyone has successfully made a hardship argument on behalf of a client who has never offered coverage to their employees.  Of course I am requesting W2s from the client to make sure the IRS did not mistakenly offer the PTC to these employees, but I'm afraid that they are going to get hit with penalties for the past 3 years and likely go out of business.  Thank you!

Owner of the company passed away.  Was Age 85.  Money was in pooled account and funds are requesting be disbursed to his charitable trust per beneficiary form.

Questions

1. Does the pooled account have to be revalued to date of death?  It is audited plan with 250 employees and multiple brokerage accounts.

2. How is the rmd handled before the disbursement to the charitable trust?

Thank you.

Hello,

Is the administrator allowed to change past paid COBRA premium rates (and without notice)?

For example, if our plan year runs Sep - Aug.  Premiums had been $1000 per coupons/notice.  Faithfully paid for the past year 2017 Sep year thru Aug 2018.  Everything is fine, insurance is fine.  New COBRA premiums are noted for Sep 2018 going forward, say $1500, okay. 

But can they/administrator also change the past premiums?  That is, they now, along with new forward rates, say COBRA premiums for past "2017 Sep - Aug 2018" is changed to $1100.  (without notice, just changed history in online billing)

And then either (a) ask for top-up payment for the past year of paid premiums, or (b) reassign your past payments and claim you were thus short a few months back and attempt to cancel your health insurance back to that date?

Yes, this happened to us.  And seems just wrong.  So, are past paid premiums allowed to be changed?  A pointer to any relevant official documents/paragraphs on this is appreciated to.

Thank you.

My question is about the alternative wellness credit rule and how that impacts biometric screenings in remote work locations. 

We would like to use a national Lab to do our Biometric Screenings. Unfortunately, some of our job locations do not have a national retail lab nearby them. The national lab could send electronic interfaces that would allow wellness credits to be provided to employees without using to much of the benefit department staff. Are we required to provide an alternative solution for biometric screenings for remote work sites that would not have a national lab near them or could those employees be excluded, unless they are willing to drive several hours to a lab retail location, to avoid manual payroll credit entries. In other words, possibly avoiding giving credits for each employee doctors lab work with manual upload files for small town remote locations. At some point we would like to maybe do mail order kits, but not right now.

Where a trust/trustee is located in one state, but the plan and its beneficiaries and the unrelated business are located in another state, what state law applies when considering taxation of UBIT?  

A state government offers a Section 125 cafeteria plan to state employees.  However, I have the same question even if it's a private employer.  A sales person from another company is approaching the state/employer, saying that his company can offer a second plan that will supplement or compliment the first plan.  I'm very leery of promises that seem to be too good to be true from sales people.  Can the state/employer tack on another plan without running into trouble?  Even the logistics of trying to operate 2 plans seems confusing, but just because it's beyond my scope of understanding doesn't mean it can't be done, I suppose.

In considering whether tax legislation has a realistic possibility in the lame-duck remainder of the current Congress, do we know whether Congress can use budget reconciliation to act on a simple-majority vote?  Or is once-a-year reconciliation used up (so that action in the Senate would require the cloture-granting supermajority)?