A non-key employee is still employed at her company that has a 401k plan.  She turned 70-1/2 in 2017 and would have been due her initial RMD 4/1/18.  But, since she is still employed, chose not to take that.

Given her age, the plan allows for her to take all of her money out of the plan as an ISW.

Although still employed, she wants to roll all of her money out of the 401k plan and into an IRA before the end of 2018.  She would like to avoid taking an initial RMD from these assets until 2019.  

If she were to transfer the plan assets to an IRA before the end of 2018, would she then be required to take a 2018 RMD from the IRA or could that be delayed until 2019?

Thank you

I have a situation where Husband owns 100% of one business and Wife owns 100% of an unrelated business.  They are considering setting up a defined benefits plan for their businesses.

Operation of both businesses is kept completely separate and neither has any involvement in the others business.  Further, neither is an employee or officer of the others business.

They reside in Texas, a community property state.  However, they have a post-nuptial agreement which provides that neither has ownership in the others business and that income from the businesses are also separate property so there appears to be no direct ownership issues.

So long as the property is characterized as separate property, would the exception for aggregation under the control group rules for an independent spousal business apply? 

New 401(k) plan 2015 with pre-tax and Roth deferrals, enhanced SH match and integrated PS - 8 participants including one HCE.

TPA used incorrect formula to calculate SH match - basic tiered match instead of 4% enhanced match.  Match was contributed timely but at least three participants received less than they should have received, totaling several hundred dollars for 2017 plan year.  Plan document and SH notice all say enhanced 4% match.  No discretionary PS contributions made.

2017 can be corrected using EPCRS.  We haven't seen the numbers yet for prior years but it's possible the same error has been made from the beginning. 

What options are available if SH match was under-contributed for 2015 and 2016?

we have a client who has life insurance within the 401(k) plan.  The owner, will be required to take an RMD this year. 

when calculating his RMD, do we include the value of the life insurance, or not? 

Does anyone know if the hurricane extension applies to a TPA firm that is preparing the 5500 if they are in the declared disaster area?  I can't find info on this.  Thanks!

Situation:  the payroll company was calculating elective withholding including unpaid time off which in turn has caused people’s deferral rates to be off.  

For example, if a participant worked 32 hours for the week, and then had 8 hours of unpaid vacation. the payroll company was taking 40 hours X $10 an hour X 5% to equal $20 of withholding.   However, the participant was only paid $320 and correct withholding would have been $16. 

$20 of $320 of comp is actually 6.25% withheld, not 5%.  So the withholding election was technically not followed based on what the person was actually paid.

This has been happening since 2014. Since its unpaid vacation it's not huge $ wise but what correction is to be made.

A prospective client has just approached us to handle their 403b plan.  As it turns out, they are running two plans: a non-ERISA plan that is a deferral only plan and an ERISA plan that holds only the employer contributions.  We have never seen a set-up like this.  Has anyone ever encountered this before?

Does it matter if the Employer contribution is a non-elective versus a matching contribution? 

If anyone can provide guidance, I would appreciate it. 

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.