A Canadian citizen has a 100% ownership interest in a C-Corp which has a 25% ownership in an LLC (taxed as a partnership). The Canadian citizen does not receive a W-2 from the C-corp for wages performed. The C-Corp and the LLC would most likely be an affiliated service group. Could this Canadian citizen participate in the 401(k) plan offered to employees of the LLC?

My thinking is no because Canadian citizen would have no wages to defer. If they somehow received a W-2 from the C-Corp then they might possibly be able to participate.

Thoughts? Am I looking at this the wrong way? Would the C-Corp be disregarded and I would calculate earned income from the LLC earnings to determine eligible compensation?

I have a participant in the plan who has moved back to Italy--he was a resident alien while he was in the USA. He wants to roll his money over to an IRA (or the equivalent) in Italy, or take a lump sum distribution.  How would the tax withholding work if he took a cash distribution?  He has been gone for a couple of years now.

Thank you!

Client had a non-ERISA TDA (403(b)) plan.  The plan did not/does not offer loans.  The client converted the plan to an ERISA plan in 2009.  An employee who is a participant in the plan applied for a loan with MetLife.  MetLife sent the client a form to sign as the plan administrator.  The form relates to the private loan (outside the plan), which MetLife says it will not approve for the employee if she has a loan in a current plan with the client because she is still employed with them.  Can client sign the form as the plan administrator of the current TDA plan and say the employee does not have loans? OR will this invalidate the MOA non-ERISA status?

The old different match rates conundrum. Employer wants to keep existing match level for all current employees, but use a lower match rate for all new employees.

Passes current availability testing just fine (for now) but since current employees include ALL of the HC, I don't see any way for this to pass effective availability.

Anyone have any bright ideas on this?

Say a PS plan holds a life insurance policy. The participant was properly taxed on the cost of insurance each year. Cash value is $100,000 and death benefit is $1,000,000. The plan is the beneficiary of the policy.

I understand under 72(m)(3) that if the participant dies the plan gets the $1,000,000 death benefit and pays it to the participant's PS plan beneficiary. The [edit; typo] taxable tax-free distribution to the beneficiary is $900,000 ($1,000,000 in proceeds less $100,000 in cash value). 

If the participant buys the policy from the plan while the participant is alive, and the values are the same as above at the insured's death, does the life insurance beneficiary get all $1,000,000 in proceeds tax-free under 101(a)? Or do you still need to exclude the cash value from the tax-free portion because the policy originally was purchased by a qualified plan? In other words, is the only relevant variable policy ownership at the time of death?

The $100,000 of (taxable) cash value within the plan in the first scenario is being "replaced" with the $100,000 of cash the participant uses to buy the policy in the second scenario, so there is still a taxable distribution from the plan of $100,000. But there would only be one "bucket" of $100,000 that is potentially taxable ($100,000 from the plan) instead of two (one of $100,000 in cash value within the plan taxable upon distribution; another separate $100,000 that could have been used to buy the policy and potentially taxable upon death). Estate tax is by no means my strong (or semi-strong) suit, so I may be missing something here, but it seems like you get a slight benefit by buying the policy out of the plan. 

Client has 3 plans - a DC plan, DB plan and a TDA plan.  They paid out legal invoices related to all three plans out of one of the plans' unallocated account.  All plans cover same employees.   Is this a prohibited transaction? 

We have an Early Retirement Window for our pension plan going into effect.  We crafted the eligibility requirements and are comfortable that they are fine.

However, today, we discovered that four people at a key position at the company might want to participate.  There are only 4 people in this position company-wide, and having them all leave at the same time would be devastating.  Can we state in the eligibility section that, for this specific position, only two can participate, and the people with the longest service at the company have first dibs?  Thank you.

I am a TPA working at a financial services firm. I do not work on any non qualified plans. My boss seems to think that I should be able to provide him with a sample of boilerplate language for a COLI plan. In the qualified plan area, I can't imagine anyone being willing to share that for free. Is it something that might be available for a non qualified plan?

PSP terminated April 2018.  PSP assets were directly rolled over to a Individual 401k created April 2018.

I401k Summary Plan Description states:
"Can I withdraw money from the Plan while I am still employed?  You will be able to take certain distributions from the Plan while you are still working for your Employer, as indicated below.
In-Service Distributions
You may request a distribution of your rollover and transfer contributions at any time."

Can I do a direct rollover of a portion of the assets in the I401k to my SEP IRA?  Will this trigger the 10% tax penalty?  Anything I should be aware of?

Thanks for your help.

The plan has never filed Form 5500 in the past.

The plan started in 2005 and covered just the owner and his wife. The balance was over $250,000 due to a large rollover contribution in the first year. It continued to cover just the owner and his wife until 2012, when an employee became eligible. So we have late 5500-EZ filings for 2005 through 2011, correctable under Rev. Proc. 2015-32, and late 5500-SF filings for 2012 through today, correctable under DVFCP.

However, we are still waiting for the client to find the end of year account balances for 2005 through 2007. Without that info we cannot prepare the EZs for those years.

My question is, should we do the DFVCP filings now, in order to close the door on the DOL penalties, at the risk of potentially alerting the IRS to missing past EZs? Or should we wait until the client is able to find their old account statements, and do both submissions at the same time, hoping that neither the DOL nor the IRS come knocking at their door before then?

Has anyone had a similar situation in the past? Am I just paranoid thinking that the IRS will see a "First return/report" with an opening balance greater than $250,000 and immediately come looking for the past EZs?

Hello!

so I have a 401k loan for 15,000.  I have 25,000 left in my 401k.  I just got laid off from my job....  

i called and asked what to do and how to repay the loan , but they were not very helpful and I still have questions.  They mailed me a letter that says I can repay it by November 20, or December 20.  If I repay in December it is an extra 100$.

obviously, I can’t afford that right now.  My question to them was what if I can’t repay it by December 20?  She told me they would report the earnings to the irs and I would have to pay the taxes.  

Does that mean that for my income tax I would have to pay the 15,000 plus the tax.  OR does that mean they will include the 15,000 as income I earned on the income tax, but I would only have to pay the taxes?

thaanks for your help!!

  Daycare ,solely owned by single parent through 100% ownership of Corp stock, has a 401k plan that allows for deferrals and profit sharing with immediate eligibility. Single Parent hires her three children, ages 23, 21, 19, who all immediately begin deferring salary.

Do the Section 318 stock attribution rules apply from the parent to all three children such that all three children are Key employees as well as the parent. OR can the parent's 100% ownership of the stock only be attributed to one child?

Section 13613 of the TCJA amended § 402(c)(3) of the Code to provide an extended rollover deadline for qualified plan loan offset amounts (as defined in § 402(c)(3)(C)(ii)). Any portion of a qualified plan loan offset amount (up to the entire qualified plan loan offset amount) may be rolled over into an eligible retirement plan by the individual’s tax filing due date (including extensions) for the taxable year in which the offset occurs.

Question - Am I correct in saying the new guidance extends the time participant can rollover the value of the offset loan?  The participant is not rolling over the actual loan to the new retirement plan and making loan payments?

core assets rolled over   $40,000 - paid 9/18/2018

Offset Loan                       $10,000

Participant would have until 4/15/2019 to deposit  $10,000 to the account. This would be earmarked as a rollover.

Can anyone explain the rules moving forward in plain English (after the elimination of the 5 year remedial cycle)? 

I cant seem to find anywhere when is necessary to restate and FTW is not much help.

Thanks in advance

Plan sponsor wants to amend its current non-safe harbor 401(k) plan to change from quarterly entry dates to semi annual.  Can this be done for 2018? Or would it need to be done effective 1/1/19?  

It doesn't "feel" right to  me that it would be permitted this late in the year.

I would think that if they have employees that have met the age/service to enter 10/1/18, they wouldn't be able to make them wait until 1/1/19.

Thanks!

Is there any prohibition on amending a benefit formula in a NQDC Plan subject to 409A?

(When) Did gap period earnings get removed for 415 excesses? If so, when?

Thanks so much everyone...

Short story, plan approximately 7 years old.  Alcohol maker in the south.  Business is a single entity (LLC) but the operations are split between a Schedule C (alcohol production) and a Schedule F (Farming operations).  Every year there is a significant profit on the Schedule C and a loss on the Schedule F.  

Schedule F has never been included in the numbers reported to the actuary until this year.  In looking back, it appears as though there are going to be significant excess contributions when the losses on Schedule F are subtracted from the profits on Schedule C.

What should be done about this error?  

One of the requirements for a pick-up arrangement is that the "employer  must  specify in writing (e.g., minutes of meeting, a resolution, or an ordinance) that “contributions on behalf of a specific class of [its] employees . . .  although designated as employee contribution , will be paid by the employer  in lieu of employee contributions.”

 Is there any guidance on what constitutes a "specific class of employees"? It appears that the employer need not cover all employees, just a "specific class." Is anyone aware of any guidance on this point?  For example, it would appear that the employer could commence pick-ups after two years of service and have different rates of pick-up for different classes of employees covered by the plan.

Can the employer prospectively change the amount of the pick-ups, provided the employee doesn't have a cash or a deferred election right? 

We have a payment that is supposed to be paid 10 days after vesting, so it is subject to the short term deferral exception.  We want to accelerate the vesting, which would mean we are accelerating the payment as well, but it will still be subject to the short term deferral exception.

I believe I recall some guidance saying this still violates the anti-acceleration rules even though at no time was it technically deferred compensation (since it was under the exception in both cases), but it's not in the regulations.  Does anyone know if I'm correct that this guidance is out there, and does anyone know where this guidance can be found?