e have a SARSEP that has always passed the testing in previous years. It did not pass. The 2 HCE's are over 50. Can the excess be re-characterized as catch up contributions as in a 401k plan?

A 401k plan closed a bank account and transferred the funds to their Defined Benefit bank account.  Six months later the funds plus interest earned were transferred back to a new 401k bank account.

Should this transaction be reported on Schedule G as a non-exempt transaction?  or can it be recorded as a "mistake" in the auditors report?

I have a client who receives income on a W-2 and on a K-1. For 2017, his W-2 is $140,000 and his K-1 income is -$26,000. Do I need to subtract the K-1 income from the W-2 before calculating the 25% of compensation limit for profit sharing, or can I ignore the K-1 negative income?

Thanks for any responses!

Following a corporate acquisition, the profit sharing plan of Target merges into the profit sharing 401(k) plan of Buyer.   Prior to plan merger, participants of Target profit sharing plan filed beneficiary designation forms.   Buyer's profit sharing 401(k) plan is silent as to the effectiveness of these beneficiary designations.   Are these beneficiary designations effective with respect to Buyer's plan and, if so, participants' entire interest in Buyer's plan (i.e., profit sharing account plus 401(k) accounts accruing post-plan merger), only profit sharing accounts in Buyer's plan (i.e., the profit sharing account from Target's plan plus the profit sharing account accruing post-merger), or only the profit sharing account transferred from Target's plan?

Because IRC section 414(l) provide that a merger of plans is the combining of plans into a single plan, it would appear that by operation of law the beneficiary designations made with respect to Target's plan remain in effect under Buyer's plan, which is post-merger the combination of two plans, until a new beneficiary designation is filed.

Thoughts?   

Dear Experts,

I need to understand a bit as i am not getting some direct answers from anywhere else. Hence seeking your guidance. Also i am not an expert in this subject so hopefully i am explaining this in laymans words so u have a complete understanding on what i am thinking. 

I have with my employer a 403b (tax sheltered) + Money purchase plan (i believe 401A) called as Plan B and a Salaried Retirement Plan / Defined benefits plan simply called as pension plan A. I am clear about the 403b and i understand it well. I wanted to know if the Money purchase plan (401A) and the Salaried Retirement Plan / Defined benefits plan ( Plan A)... are any type of an IRA. Like a SEP IRA, SIMPLE IRA, etc

The reason i am asking is that I plan to open an TIRA (Trad IRA) and i wanted to know if the above plans go in the pro rata rule on IRAs. The Plan administrator is not able to explain what type of plan the so called "Plan A" and the 401A actually are. Bottom line i simply want to confirm that these plans especially the salaried retirement plan are not any type of SEP IRA / SIMPLE IRA or any other IRA of any sorts to be doubly sure so that me opening an TIRA does not have any pro rata applicable from these plans. 

Best Regards and thanking in advance.

Trying to find out what steps are taken when withdrawing a retirement benefits. My EX knew he had not signed the final paperwork of our QDRO (QDRO was awarded in final divorce decree that was signed by judge and filed so I have been told by court it’s a legal binding order regardless of paperwork was not completed). We were in the process of trying to finalize it and submit to his employer when he was apparently in bankruptcy proceedings. Fast forward a couple months, I contacted the State Department that handles QDRO only to find out ALL funds withdrawn. I was asked 3 times to subpoena them to get a full accounting of what happened. Yet I cannot just draw up my own subpoena correct? I was given some info that ex might have forged my name in order to withdraw monies? Possibly ex had to state funds had not been allocated in any legal actions? Ex was fired for embezzlement and is on a 5 year deferred sentence. Cannot have any matters entered into court during this time. Ex states he will pay me but I do not ever believe that. My question, is there a possibility he did have to sign something or possibly forge my name? Not looking to get him in further trouble but want to recoup what I am due. I realize I’m going to have to hire attorney. Not wanting to go this route before trying to get some clarification. 

Assume you are drafting a DB plan.  The client says the only available benefit forms will be the single life annuity, 50% QJSA, 75% QOSA, and 50% QPSA.  The survivor benefits are fully subsidized, and all optional forms are actuarially equivalent. 

Assume further that the client asks the following.  He says he knows an employee is going to submit a QDRO that says the alternate payee is considered the participant's spouse solely for purposes of the QJSA, and not for any other purpose (including not for purpose of the QPSA).  He asked what will happen if the participant dies after submitting a distribution election form for the QJSA, but before payments actually begin.  He says in this regard he does not want the plan to offer one penny more or any option more than the law requires.

What is your response? Will the alternate payee receive the 50% survivor annuity under the QJSA or nothing because the participant died before the annuity starting date, i.e., pre-retirement, and the participant is not the spouse for purposes of the QPSA?  

After upgrading to version 2018.01 (and again still with 2018.1), statutory excludables are not being determined correctly when eligibility is run. 

The issue appears to be limited to employees hired in the first half of the prior plan year, and whose stat entry would be in the second half of the current plan year.  After the initial eligibility run, these ees are incorrectly included in the excludable group.  Running an ADP/ACP with the "Recompute statutory exclusions prior to test" checked correctly puts the ees into the non-excludable group.  (We are using stat entry dates for the determination.)

However, if you have to run eligibility again the same ees are back in the excludable group. 

At first we thought this was limited to our 2018 mid year tests, but in going back to clients for whom we prepared a 2017 ADP test earlier this year, and now are going back to recalculate a profit sharing contribution, for example, we are having the same issue.

Support has determined that this is an issue that is being worked on, and hopefully a fix will be coming shortly, but I was wondering if anyone else was having this issue, and if so, how you are dealing with it in the interim.

Thanks.

Has anyone ever heard of Student Loan Genius?     They say employees make their student loan payments and based on a payment, the company makes a pre-tax contribution into the employee's 401(k).   I was just wondering how this would work and if anyone has any experience with it.    

Is a Form 6088 still required to be filed with the Form 5310 for a terminating 401(k) Plan?

I have not been able to figure out what happened to the old company.  But it seems to have gone out of business and the assets acquired by another bigger company.  Small company's plan was merged into big company's plan.

Is big company responsible for final 5500. etc of small company's plan?

Is there a requirement that participants must receive a notice every quarter that states that info regarding their account may be provided to them via multiple statements (e.g., a statement from the investment company and one from the TPA)?  

I have a client with a SEP IRA plan that is maintained on a calendar year basis, however, my client has a 9/30 fiscal year end. How do I calculate the client's contribution deduction on his tax return? Do I deduct a percentage of his annual contributions (e.g. 75% of 2018 contributions)? Or do I simply deduct his annual 2018 contributions, regardless of the difference in fiscal year and SEP plan year?

Thanks,

Justin

I am on a committee that is the plan administrator for a defined benefit plan.  A decree of divorce was entered ending the marriage between Employee X and spouse.  The next day, Employee X committed suicide.  Weeks later, spouse applied for and obtained a QDRO for 1/2 of X's benefits.  For the plan, the committee denied the QDRO.  Our denial was based on the advice of our ERISA attorney and actuary.  They explained that the entire benefit "died with X" because he died single and before the plan received or even knew of any QDRO might be coming.

The spouse has applied to the divorce judge who decided to vacate the decree of divorce, restoring X and the ex-spouse to married status, due to the "unique and compelling circumstances", including that the Decree had not even been delivered to either X or the spouse by the time of X's suicide.  Of course, it's obvious that the motivation for the divorce judge vacating the decree of divorce and pronouncing them married at the time of X'd death is to obtain for spouse a part of the benefits.

Our ERISA attorney and actuary both have never heard of an attempt by a divorce court to manipulate a pension benefit in this way, or whether it would be effective to do so.  What say you? 

401k plan considering safe harbor match formula of 100% of the first 4% - would only apply to NHCE. The plan allows for discretionary match. The plan sponsor wants to fund HCEs with similar 4%  discretionary match but retain vesting on HCE as well as last day rule. 

1. Permissible Safe Harbor as match for NHCE = 4% and overall match for all  =4%?

2. Is the discretionary still subject to ADP (which it would fail, obviously)?

I’m looking for some thoughts/assistance on a somewhat unusual situation I’ve come across:

Situation: Small Medical Practice Non-PBGC Plan Term with Asset Surplus. As of DOPT just the owner/participant had an accrued benefit. They also have 7 non-excludable employees that have been excluded from benefiting in the plan. Not as familiar with Non-PBGC Plan Terms and I’m trying to re-allocate the excess in a non-discriminatory manner.

Benefits and Participation frozen on 4/30/12; Amended excess assets to be re-allocated to participants eff 8/30/17; Non-PBGC Plan Termination eff 8/31/17. The document is a prototype with standard language on excess assets if a plan is not covered by the PBGC. States “…if elected in the Adoption Agreement, excess assets shall be reallocated to the Participants on the basis of their Present Value of Accrued Benefit…”

To allocate the excess, I used a safe harbor formula covering the owner and three other employees. (Three of the non-excludable, excluded employees) I came up with .62% x HI3 Comp resulting in accruals that produce a large enough total in PVABs for all four participants to cover the Excess Assets. (Still have four excluded employees) Note that 415 is not an issue for the owner. So, the excess ends up being allocated on a pro-rata on the PV of that .62% x Hi3.

Thoughts on this excess allocation method?

This formula satisfies 401(a)(26) and is a safe harbor formula satisfying 401(a)(4)/410(b).  The plan was frozen and met top-heavy requirements before and after the freeze.  Granted this accrual can be considered anew allocation. Thoughts on T-H requirements?

On a side note, Rev. Rul. 80-229, Paragraph 2 of SEC. 3. ASSETS NOT LESS THAN PRESENT VALUE OF ACCRUED BENEFIT states:

“If the assets as of the date of termination exceed the present value of the accrued
benefits (whether or not nonforfeitable) as of such date, the plan will not be considered
discriminatory if such excess reverts to the employer or is applied to increase benefits in
a nondiscriminatory manner. One method of applying the assets to increase benefits in
a non-discriminatory manner is to amend the plan to provide a new benefit structure
such that (1) the benefit structure would not be discriminatory if the plan were not
terminated and (2) the present value of the revised accrued benefits (whether or not
nonforfeitable) as of the date of termination equals the value of plan assets, and to
distribute assets equal to the present value of the revised accrued benefits. The new
benefit structure must satisfy other requirements of the law such as sections 411(d)(6)
and 415 of the Code.”

I would think an amendment explaining how the excess is allocated, along with the formula, and included participants would work in this situation. Thoughts? 

Thanks in advance for reading through this whole thing.

--Jeff

Record-keeper provides a one-time payment to its TPA partners based on a new plan that comes over (based on asset size).  For example, in 2018, one new plan is placed with the record-keeper.  Based on the asset size, the one-time payment to the TPA totals $6,000.  It is paid out of the general assets of the record-keeper.  This amount is not paid by the plan, participants or investments held in the plan.  Does this need to be reported on the Schedule C of the Form 5500 as indirect compensation to the TPA?  Does this need to be reported on the 408(b)(2) disclosure?

Thank you!

X is sponsor of 401k plan (solo; H&W).  X wants to invest both personal and plan money in a managed account with a major broker.  The account requires a minimum investment of $500,000.  X would like to form an LLC with 40% owned by 401k and 60% individually to own and make this investment.

My understanding is that it would not be a prohibited transaction for a plan and a party-in-interest to form a new entity and have that new entity make investments, which would naturally split according to membership interests.

I haven't been able to find any support or prohibition thus far.  Opinions? Citations?

Thank you.

Non-5%-owner is well past 70-1/2.  Wishes to take an in-service distribution from employer's DC plan and roll to an IRA.  (Please don't ask why.)  Must some portion of that distribution be withheld as an RMD or can it all go to the IRA?  

If a campany has an existing serverance plan already in place and outlined in an employee handbook, and the WARN act is initiated, can the employer reduce the amount of servernce an employee receives by the WARN benefit?