403(b) Plan sponsor wants to start offering a discretionary match in 2019.  The formula they are considering is dollar-for-dollar match up to $250, determined each quarter.  Participant's could received a maximum match of $1,000 for the year.

They want to throw in a twist:  They participant's can take the match either as a contribution to the plan or have it paid to them as cash each quarter.  Is that acceptable?  I think we could try to do something like this if it was pertaining to a PS contribution and we have each participant as a separate rate group.  But for a match, can that option be available?

Thanks

I have a question on what if any amended 1099R is required in the event the plan issued a premature in-service distribution of the vested account and the participant rolled it over. The Trust will be expected to issue a 1099R with the coding for a direct rollover, however this was not an eligible rollover and the participant is being notified per EPCRS 2-8-52 Section 6.06 that the overpayment is not eligible for favorable tax treatment. Does the recordkeeper issue 2 1099R's with the first being the direct rollover and then the second one being a correction showing the full amount of the distribution as taxable? It was a 2018 distribution and the 1099R will be issued in January 2019 however the distsribution has been made and the 20% tax withholding was not taken. So I would think the recordkeeper should issue a corrected 1099R. The other option is for the recordkeeper to contact the IRA custodian, but that approach does not seem as clean. Has anyone worked on this before or received IRS direction?

Thanks!

Just wanted to make sure I've got this right. IF someone qualifies for this, it is a deduction taken on the individual owner's 1040. In other words, for unincorporated owner you would calculate Schedule C income and corresponding contribution as usual, and THEN, when they file their 1040, they would take an additional deduction from the otherwise taxable income (if they qualify).

I have a client whose assets are in a brokerage account. The owner took a loan and never made payments. They apparently never intended to and now  want it defaulted.  I don't have confidence she is going to have a 1099R produced even though she said that's her intention.  My question is: What are the ramifications/fixes for a defaulted loan on a brokerage account when a 1099R is not done?   We do utilize Penchecks, but that may result in 2 1099Rs. 

Thank you in advance-

Hi,  We do 5500s for some of our Health and Welfare clients.  I have a plan where the number of employees benefitting under the H & W programs as of the beginning of the plan year is 80.  Prior year we had over 100 on the first day of the plan year and filed the 5500.  Am I correct that no 5500 is necessary for current year since number of employees benefitting on first day of year is under 100?

Thanks for any help.  

Group Health Insurance - assume small employer not required to offer health insurance.  If it does, is it allowable to require the employees to pay say 25% but provide the owner 100% employer-provided coverage 100% - presumably outside a cafeteria plan?  Would the answer be different for a large employer over 50? 

Cafeteria Testing - when health insurance plan are offered by employers, they are almost always provided under a cafeteria plan so that the portion paid by employees can be withheld on a pre-tax basis.  My question is - what is included in the 25% concentration test?   I'm reading that an "employer contribution" must be included.  Is an "employer contribution" an actual dollar amount funded to the cafeteria plan to help pay for selected benefits?  Or could it also mean the premium portion paid by the employer (presumed to be outside the cafeteria plan?)

Thank you

Tom

Divorcing individual has a defined benefit plan (government) and a pension valuation was prepared by a company.  The pension valuation company used "customary" factors in performing the calculation.  The PV of the pension prepared by the company was $2.1 mil.  The pension plan calculates the PV of the pension  at $1.3 mil.  Clearly, a large discrepancy.  Does anyone know if an argument could be made to use the lower value since that is how it is valued by the plan?     

We represent a church that is exempt from ERISA that filed a Form 5500SF for a funded health plan.  They should not have filed and now we are trying to figure out how to notify the DOL.  If we simply stop filing, the DOL will probably contact us thinking that we should continue filing.  We were thinking about filing an amended return and listing Code 4R on Line 8b but the funding never really changed.  Another option would be to file an amended return and mark it final but then you have to say there were no participants and no assets which really isn't the case either.  Bottom line is how do we get off this roller coaster?

Regarding Code Section 409(p) “prohibited allocations.” An S Corp ESOP provides that HCEs who are disqualified persons for 409(p) purposes (or reasonably likely to become disqualified persons) are not eligible for the annual ESOP allocations. This helps the Plan with 409(p) compliance. Can the Plan Sponsor give an HCE affected by this provision a taxable bonus, in an amount equal to what would have been the ESOP allocation, without any effect on the 409(p) test? The Plan Sponsor could not provide for the allocation under a different qualified plan (it would be treated as an allocation under the ESOP, affecting the 409(p) test), but if it is a taxable bonus—no tax-deferral element at all—thinking it might have no impact on the 409(p) test. Thoughts?

I have a client that owns 1) 100% of a Schedule C construction company 2) 50%/ 50% with another partner of a company that runs the management functions of the construction company and 3) 50%/ 50% with the SAME other partner of an unrelated independent living center.

The owner wants to set up a deferral-only 401k plan covering the 1) Sch C Construction company and the 2) management company (as an affiliated service group).

Does the addition of the management company as an affiliated service group extend the control group requirements to it as well? In other words, by including the management group, are we now required to include the 3) independent living center because it is a control group with the company that was brought in as an affiliated service group?

I'm running up against an issue that I've never had before.  The financial institution requires the Plan Trustee to sign off on any distribution.  We have a terminated participant who has requested a distribution of his account (which includes 401(k) deferrals) and it appears that the Trustee is refusing to authorize it.  I'm not sure if there's a reason behind it, bit what are the ramifications if the Trustee refuses to ultimately approve it?

Thanks in advance!

In a defined benefit plan, we located missing participants and validated current address.  They were non responsive to begin their benefit so we defaulted their election and began payment.  Two participants, who are 70.5, have not cashed their checks.  Do I stop payment and not reissue so that a 1099 is not generated or should we continue making payments knowing the checks aren't being cashed? 

Our client terminated their defined benefit plan.  There are excess assets that they want to roll into their 401k plan and allocate, ratably over the next seven years, as a profit sharing contribution.  I  don't see any language in my Datair document that covers this kind of "suspense" account, or whatever I should call it.  Does anyone else know of a document provider whose  plan has language that supports this qualified  replacement plan?

A corp. made numerous contributions to their DB Plan during the months of January thru September 2018. These contributions can either be used for the 2017 year-(of course must be within the min/max range) (as made by extended due date of 2017 return -sept. 15, 2018) or for the 2018 year. Question: Can you use contributions made in January, February, and June 2018 for the 2017 tax year and then use contributions that were made in March, April and May 2018 FOR THE 2018 tax year, or must you go in order (ie contributions made from Jan thru April 2018 for the 2017 tax year and then contr. made from May 2018 thru Sep 2018 for the 2018 tax year). Thank you.

Plan sponsor has not made their safe harbor non-elective contribution deposit for the 2017 Plan Year. It is my understanding that they have until 12/31/18 to make the deposit and keep the safe harbor status for 2017. Is that correct?  (I’m not sure if they deducted it on their 2017 tax return, but it would not have been deductible since it was not made by their 2017 tax filing deadline.)  

Question 1:  Is it deductible for 2018?

Question 2:  Do we have to apply lost earnings?

Would anyone happen to have a calendar of important plan due dates for a 6/30 fiscal plan year end?  It's easy to find material to give to a client on due dates for a calendar year end plan but I am not finding off year end information without manually preparing myself.  Looking for anything someone might have before I completely reinvent the wheel.   Thank you in advance.

An employer sponsored a 401k plan long ago - pre 2010.  They terminated the plan and everyone was distributed.  The employer then started a Simple IRA and has been using that ever since.  They have discontinued the Simple IRA and want to start a 401k again for 2019 (traditional 401k, non safe harbor).  The new plan would be treated a NOT Top-Heavy because all the distributions were more than 5 years ago.  The owner wants to rollover money from an IRA that contains the original distribution from the prior QUALIFIED plan (not the Simple IRA money - I don't think there is any question that should be excluded from the TH calc).  Would doing this make the plan TH immediately (assuming his account is more than 60% of the EOY account balances)?  It seems it would be a related rollover and by putting it back into a plan sponsored by the same employer, it would have to be counted in the TH calculation.  Does this sound correct?  Am I missing something important here?  

Hi there,

I have a small business LLC S-Corp. I have a one person defined benefit in place for the last 5 years. Funded till 2017. In 2018, I am unable to fund the required amount owing to significant personal losses and am considering closing the LLC. I was told by my retirement plan folks that there would be an excise penalty and would still have to fund 2018. That does not seem right. What is the penalty and the process of closure? Thank you in advance!

Forgive my ignorance here, as I don't deal with these issues often.

Can a small employer (fewer than 50 employees) reimburse a portion of an employee's out of pocket expense without running afoul of ACA and/or tax law?

Employer currently pays 80% of medical insurance premiums.  Employee has $1,500 deductible with $3,500 out of pocket max.  Employer has been covering the second half of that out of pocket max (dollars 1,751 through 3,500) in the form of a check to the employee. 

Any guidance is appreciated.

A 403(b) has been sponsored by an ineligible employer for many years. Had it been sponsored by an eligible employer, 5500's would have been required due to employer involvement. However, no audits were performed and no 5500's filed since the inception of the plan. 

We will proceed with the VCP procedure outlined in Rev Proc 2018-52. Under Section .03 it states:

(3) A plan that is corrected through VCP or Audit CAP is treated as subject to all of the requirements and provisions of §§ 401(a) for a Qualified Plan, 403(b) for a 403(b) Plan, 408(k) for a SEP, and 408(p) for a SIMPLE IRA Plan (including Code provisions relating to rollovers). Therefore, the Plan Sponsor must also correct all other failures in accordance with this revenue procedure. 

Does this mean delinquent 5500's should be filed even though the employer was ineligible to sponsor a 403(b)?

Thank you