I'm looking for confirmation on the new 2018 1099-R distribution code 'M' for reporting loan offsets from qualified retirement plans:

1. If a participant receives a cash distribution that includes a loan offset, we now issue two 1099Rs: one for the actual cash received that would reflect withholding on that portion (distribution code of 1 (assuming non-Roth, under age 55), and a second one to report the loan offset with any applicable tax w/h applicable on that portion (same assumptions, distribution code M1).  Prior to this new code coming out, we reported this scenario all on one 1099R.  Is my understanding correct? 
2. If the cash was from a Roth account and the outstanding loan balance was also from the Roth account,  we don't include code M since only 2 codes are allowed.  Roth loan offsets would continue to use codes B1 using the age example above.  Correct?
3. Do we have to go back and correct  2018 1099Rs on loan offsets processed prior to this new code coming out?  

Thanks!

I have a solo 401k plan that now has employees.  The solo plan has filed Form 5500-EZ for past several years.  Can I transition the tax return automatically to the 5500SF since they now have employees or do I have to do anything with the 5500-EZ?  Thank you.

Can an HRA base the reimbursement levels upon health insurance status? By that I mean, can it be $1,000 if you are enrolled in the health insurance as a single, $2,000 if as a 2-person, and, say, $3,000 if you have family coverage?

We were TPA for a plan that transitioned from small (5500-SF) to large (5500) in 2012.  We completed all work for the 5500 and were just waiting for the audit, which was never done.  After repeated follow-ups, we eventually resigned.  Periodic checking of the EFAST website confirmed that nothing was ever filed on the plan after the 5500-SF for 2011 which we handled.

Apparently due to a personnel change, the sponsor has become aware of the missed filings and contacted us.  If we bring them into compliance, it would involve a DFVC filing for 2012-2017 (6 years).  My question is, does the sponsor have to get 6 separate audits - one for each year - or can he get one comprehensive audit covering the entire 6 year period?

And if he can get one comprehensive audit, how does this work on EFAST?  Do we attach the same audit reports to each year's filing, or is there some way to override the missing audit and submit it only with the final 2017 report?

I’ve got a potential new client who owns a carpentry business. He and all of his employees are collectively bargained, and participate in a Union Money Purchase Plan (they also get collectively-bargained health coverage).

If the owner were not collectively bargained, I’d feel comfortable saying that he could set up a new DB plan just for himself, since all of his employees are collectively bargained and therefore excludable from N-D testing. What’s not clear to me is whether he can set up a new plan just for himself, given that he himself is collectively bargained.

For reference, here is the general rule from 1.410(b)-6 (highlight is my own):

(1)General rule. A collectively bargained employee is an excludable employee with respect to a plan that benefits solely noncollectively bargained employees. If a plan (within the meaning of § 1.410(b)-7(b)) benefits both collectively bargained employees and noncollectively bargained employees for a plan year, § 1.410(b)-7(c)(4) provides that the portion of the plan that benefits the collectively bargained employees is treated as a separate plan from the portion of the plan that benefits the noncollectively bargained employees. Thus, a collectively bargained employee is always an excludable employee with respect to the mandatorily disaggregated portion of any plan that benefits noncollectively bargained employees.

Any insights are welcome.

I have a 406(b)(2) transaction (payment of plan expenses out of the wrong plan).  Instructions for filing the VFCP indicate that you can be exempt from the excise tax if you fall under the PTE 2002-51, which we don't (2002-51 says exemption applies for payment of settlor expenses; our expenses are administrative non-settlor expenses).  We will file the 5500 Schedule G.  Do we need to file the 5330 and are we subject to excise tax under 4975? 4975 does not list a provision parallel to 406(b)(2) as a prohibited transaction subject to the excise tax.  

Is it possible to file the VFCP and report the transaction on the 5500 but not be subject to the excise tax and not have to file the 5330?  Note instructions for the 5330 under prohibited transactions do not list the transaction listed under 406(b)(2).

Any help appreciated.  Thanks.  

Client owns 100% of a construction business (company A) which currently has a 401(k) Plan.  The client just purchased a 50% interest in another construction business (company B).  The companies work together in both referring work and the completion of jobs but are not exclusive and provide services separately. 

The owner of company A would like to have company B join his plan.  I can't see this falling under an ASG or a controlled group.  Is there any issue with company B becoming an adopting employer of company A's Plan?

Thanks  for your input!

Non profit #1 sets up non profit #2 and runs payroll for them. #1 lets a #2-ee into #1's plan. I see provisions in EPCRs regarding how to fix letting employees in early, but this doesn't seem to fit that. She seems ineligible to me, though she's on the payroll...

Any thoughts? 

We are setting up an early retirement window in our pension (DB) plan -- retire within a specified time an you get two additional years credited service and two additional years age.

Our actuaries are wondering if it would make sense to add a statement in the early retirement window amendment that the early retirement window enhancements are subject to meeting non discrimination testing requirements. By doing this, they think it gets out of paying the benefits out of the plan if the discrimination test is failed or by giving non HCE’s additional benefits in the plan to allow discrimination testing to be met.

This seems unnecessary to me -- wouldn't both of those things be options if we fail nondiscrimination testing anyway?  Why do we need to include it in the amendment?

I have a CPA who is telling me he wants a "sophisticated" plan design option for a doctor who is an employee of a practice and also has his own business on the side with self-employment income.  The side business has a net loss, so I told him there is no income to take a deduction on for the SEP, therefore no way to fund a SEP.  The CPA thinks he can use some of the doctor's W2 income to fund a SEP contribution (?)  This is not permissible, right?  I am just questioning it because the person asking about this is a CPA so...

Plan excludes Taxable fringe benefits and bonus from Comp.  Problem is, I don't have them segregated from the client.  Client has a straight 5% profit sharing contribution. I can probably get away with rate group testing using the total comp, but can I try and pass the 414s testing, by dividing eligible comp by total comp (including taxable fringe?).

My denominator is a safe harbor 415 definition of  comp so I suppose so.  Agree?

Good evening

My wife is 55 and is resigning from the State of Maryland after 34 years of service.  She has excepted a job with a contractor for the State of Maryland that pays her much more and she will be doing what she love doing DLP Analyst investigator. How long can she leave her 457 Retirement plan with the State of Maryland instead of taking the distribution or transferring it to another qualified employer Plan. It is rumored that her contractor position will become a permanent State Gov position and she then will return back to Government service with same 457 Deferred Compensation Plan. Thanks in advance

Doctor w/own practice (no control group or ASG issue) uses PEO for all employees.

Doctor has own solo 401(k) Plan.

Doctor has not adopted the multiple employer plan for the employees from the PEO working for him so it appears they are not covered under any plan.

I'm thinking the ee's must be covered under Dr.'s plan, but not sure?

Is there a limit (with the exception of the 50,000 and or 1/2 the vested value)   that  should be followed regarding  the number of times a participant can refinance a loan?

For a 401k plan that begins  10/1/2017 and ends 9/30/2018 - are they limited to $54,000 or $55,000 in contributions (exclusive of the catch-up)?  Compensation - 270,000 or 275000?  I always get confused on this. 

Thanks 

Does anyone have any thoughts on the meaning of "offset arrangement" on the Form 5300?  We've got a defined benefit plan that offsets benefits by the benefits under another defined benefit plan.  (There are complicated reasons for this structure.)  I'm seeing lots of discussion that a "floor offset" plan involves only a DB plan that is offset by a DC plan, not by another DB plan.  But I can't find a specific definition of "offset arrangement," without the "floor" part.

We have a participant who terminated employment with an outstanding loan.  He is requesting a partial direct rollover of his account balance excluding the loan; wants to take the balance of his account as a taxable distribution.

Obviously he will receive a 1099R, code L for the loan offset with $0 withholding.

Somewhere I recall that the 20% withholding would be calculated on the total account balance excluding the loan - the total being the amount rolled over plus the amount not rolled over.

Does that sound right??

I've only seen two uniform points plans in my life. We've just been given a situation where such a plan failed nondiscrimination testing, cause the formula (which has apparently always worked well in the past) heavily weights contributions based on years of service. One of the owners retired unexpectedly one month into the year, and the plan waives the normal 1000/last day requirement for retirement on or after NRA. Since his comp was so low, (only one month comp) former owner gets something like 60+ % of pay, so the average for the HCE's is too high to pass testing. Although I don't have hard data, it appears that restructuring won't work, or at least not at a contribution level that is possible/palatable. (Query - does the prohibition against uniform points n one of the restructured plans apply if the plan is uniform points to start with, or does it apply only if you are attempting to restructure to a uniform points plan where it isn't ALREADY a uniform points plan?)

Ok, so you go to rate group testing, which also fails. An 11(g) amendment could be done, but here's my question: when you do such an amendment for this type of plan, I assume that any corrective amount/increase to the necessary number of NHCE's must still be allocated (or calculated) on the uniform points allocation formula in the plan? Or to ask it another way, can you simply assign random amounts to random participants like you can in an "everyone in their own group" profit sharing plan, or must you somehow amend the plan to increase the formula for a select group of NHCE's, so that they get (x) points for each unit of compensation, rather than "y" units that they get under the current formula? I suppose it ultimately has the same effect, as the formula would be adjusted for those selected individuals to achieve a passing percentage, so it is ultimately the same thing.

Ugh - if now going to the rate group test, is it going to have to pass gateway? Or is the fact that the basic formula is a uniform points allocation which isn't subject to gateway a saving provision?

Or, is there a better way to do all this?

I know the 11(g) amendments are pretty flexible, but I've never run into this particular situation.

Thanks!

Employers can match employees' contributions to their FSA's, up to the limit for that year.

Can employers place their own limits based on plan type? In other words, can an employer match up to $2,600 for a family plan, up to $1,500 for a 2-person plan, & up to $500 for a single plan?

Along the same lines, can the employer match be different if an employee selects a Cadillac vs. a HDHP plan?

Thank you.

It appears that Roth 403(b) contributions in included in the W2 Box 1 calculation of wages and also noted with code BB in box 12.  Can the employee Roth 403(b) contribution be used to satisfy the earned income test associated with making contributions to a outside traditional or Roth IRA. 

Said another way... Assuming no other earned income, if MFJ, can a $13K after tax employee contribution to a Roth 403(b) be used to meet the earned income test to allow additional 2x6.5k contributions to a couple's Roth IRAs?