I am helping a Non-Profit Terminate their 401(k) and start a SIMPLE IRA.  They only have two employees, admin costs of a 401(k) didn't make much sense.

Is there any way around the 2-year rule for rolling money into the SIMPLE?  I guess Ii don't really understand why people are prohibited from rolling money into a SIMPLE IRA for two years.

Are there any penalties for rolling money in before the plan has existed for two years?  Would it simply be considered a taxable distribution?

Thanks!

I have a takeover DB, the client , a sole prop., recently changed brokers. 

The rollover was done a few years ago, from a previous DB plan, but previous broker incorrectly titled the account "401(k)".  The rollover was approximately $1M.  The broker was from another brokerage firm

I am working with the new broker and we want to straighten this out. This is not a 401K, she does not want a 401(k) and will never contribute to a 401(k); in fact she had always been under the impression this was an IRA rollover; upon further digging, I discovered this was indeed a rollover.

Questions is, since the account was titled incorrectly, and has just been re-titled "IRA' with the new broker, would form 5500 need to be filed, or could the client claim "ignorance", "stupidity" or whatever, and if she were to be audited, explain what happened.

The DB has less than $250K.

one participant defined benefit plan was effective 1/1/2017.  the valuation date is EOY so valuation date was 12/31/2017 for first year.  can the valuation date be changed to 1/1/2018 for the second year of the plan?

I am finishing up a VCP packet for a loan failure.  Along with everything else, I have prepared both the Form 14568 and Form 14568-E.  

When I look at the two forms, it seems we have some redundancy, and I'm wondering if I can toss the Form 14568 and just submit everything with the 14568-E.  

Does anyone have any experience taking such a bold move?  ?

Hello,

I am hoping all of you would be able to give me some guidance.

Facts:

- New plan, effective date 10/1/2018

- "Compensation" means a Participant's Basic Compensation, (which are W-2 wages), actually paid during the Compensation Computation Period (defined in the document as the Plan Year.

-  Compensation excludes pre-participation compensation

- Plan Year is the 12 month period beginning January 1, ending December 31st.

- Limitation year in the document says: " In the case of an initial Limitation Year, the Limitation Year will be the twelve (12) consecutive month period ending on the last day of the initial Plan Year."

- Eligibility is normally age 21, 1-year of service, monthly entry. However, all entry requirements were waived 10/1/2018.

- 4 Employees - 2 hired 5/30/2017, 1 hired 6/26/2017, and one hired 10/15/2017.

Questions:

1) Is the 415 or compensation limit pro rated for 2018? I do not believe so based on my reading of the above.

2) For the employees, do I take compensation from 10/1/2018 - 12/31/2018, or from what their individual entry dates would have been (6/1/2018 for the first two, 7/1/2018 for the third, etc.)

3) This plan will be top heavy, so my understanding is I need to give non-key employees 3% of their annual compensation (1/1 - 12/31) - correct?

Thanks for your help and guidance.

The governmental 457(b) plan finds out that a participant lied on their application for a distribution for unforeseeable emergency.  The truth would have resulted in the application being denied.  Does the plan have to do anything more than file the 1099-R with an "early distribution - no known exception" code?  Do we have to/can we even recoup it from the participant?  Should we file an attachment to the 1099-R about the circumstances?  Any thoughts appreciated.  I'm a newbie here, so please be kind.  

A hospital employee is concerned that his 457 account balance may be jeopardized if the hospital becomes insolvent. He is considering rolling it over to a 403(b) he has.  He is age 70.5. Would it only depend on if the 403(b) allows for 457 rollovers?

A traditional IRA holder has reached age 70.5.  When he passes away he plans on leaving the IRA to his children. Will they be required to continue to take RMD's upon their father's death or are they postponed until age 70.5?

A 1 participant plan owns a tract of land. The trustee is wanting to sell a portion of it and wants to ensure it is done properly.  I believe it is allowed as long as the proceeds are returned to the trust.  Would the remaining portion of the land get a new deed in the name of the plan?  Would any special appraisal be necessary?

A profit sharing plan uses a 6-year graded schedule for it's employer allocations. The plan has never been top-heavy, but in a couple of years it will very likely become top-heavy.

The adoption agreement has a slot for electing a vesting schedule for top-heavy purposes. That section states for any year the plan is top-heavy, the top-heavy vesting schedule applies to the extent that it is more favorable than the plan's regular vesting schedule.

For some reason, the top-heavy vesting schedule is a 5-year graded (0,20,40,60,80,100) - one year quicker than the 6-year schedule. The employer would like the 6-year schedule to be applied when the plan becomes top-heavy.

The document then goes on to say that the top-heavy vesting schedule applies to all benefits within the meaning of 411(a)(7) except those already subject to a schedule that vests at least as rapidly as the schedule above. And only for participants with an hour of service after the plan becomes top-heavy.

The plan document spells out some rules for amending the plan's vesting schedule. Since the plan is not top-heavy yet, do those rules for amending the schedule apply to the top-heavy vesting schedule?

If they do apply, the plan states employees with 3 years vesting "may elect to have the nonforfeitable percentage computed under the Plan without regard to such amendment." With the plan currently not top-heavy, that election does nothing - they are still on the 6-year schedule. What choice are they making, for example, between schedule A or B: what would be vesting schedule A vs. what is vesting schedule B that they get to elect from?

Physician works for hospital as W-2 employee and maxes out in the hospital 401(k); same physician also operates small clinic as Sch C using off-duty nurses (1099 workers) and has SE income from Sch C.  Can physician establish SEP for himself for SE income from Sch C?   if yes, do 1099 workers have to be included in SEP?  Is physician limited on SEP contribution due to participation in 401(k) at hospital?

Thanks!

Deferred vested participant died after RBD.  When calculating his actuarially-increased benefit (from NRD to RBD), the lump sum amount is below the Plan's threshold for a mandatory cashout.  RBD was 4/1/10, DOD was 11/6/17.  We've already established that his Estate is due the mandatory cashout, however, would interest need to be applied to that lump sum and if so, from RBD to death or RBD to distribution?

The document for a plan sponsored by an S-Corp where the only employee is the 100% shareholder states "If this plan is not subject to ERISA, the Employer shall deposit elective deferrals to the Trust as of such time as is required by the IRS and DOL."

The DOL 7-day rule does not apply to a non-ERISA plan, right? So what is the deposit deadline for any withheld deferrals?

In a 403(b) plan, we have a participant that exceeded the 2018 402(g) limit by $84. Since the time of the deposit, he has had a loss of $3 on the $84. There is some confusion as to what we send back to him and what is reported on 1099-R. Do we issue a check for $81 and report $81 on the 1099-R? Do we send him $81 and report $84 on the 1099-R? Do we issue a check for $84 and report $84 on the 1099-R since that is the amount he exceeded the limit by? Or something else? TIA for your comments.

Hoping someone can provide some input on a rather obscure split dollar issue. 

Employer extended one loan to employee's ILIT to buy second-to-die life insurance policy. Everything occurred before 2002/2003 and arrangement has never been modified. The arrangement was unsecured, i.e., no collateral assignment, just a note from the ILIT to the employer promising to repay with interest. Payment is due upon earlier of (1) sixty years later; or (2) 90 days after death of employee and spouse (both still living). Loan obligation now far exceeds cash value; significant additional premiums would need to be paid in to maintain policy. ILIT has no other assets. 

It appears that any loan forgiveness by employer would create compensation income to employee. 

It also seems to me that if the policy lapses (again, no collateral assignment or documentation at insurer), then both employee and spouse die later, the last one to die would have income (or income in respect of a decedent) at some point. 

Any way to complete a rollout without taxing the unpaid/forgiven loan amount?

My 22yo daughter is quitting her job where she had a 401(k). She already has a SEP IRA and a Roth IRA from before.

Will she be allowed to roll over her 401(k) balance directly to Roth IRA (Yes, I understand it'd be a taxable conversion)? If not, and she must roll over to a Traditional IRA first, may it be her SEP IRA, or must she open a separate Traditional IRA just to hold the rollover from her 401(k) for a few days till she converts it to her Roth IRA?

Please advise on the simplest legally-allowed way to get her 401(k) balance into Roth.

Thank you,

MK

Hi all.

Company A acquires Company B, Company B's 401(k) plan merged into Company A's plan as of 1/1/18.  In looking at HCES for 2018 Plan Year, do 5% owners of company B now employed by Company A with no ownership in Company A count as HCES?  What about employees earnings $120,000 or more in Company B in 2017?

Any help would be greatly appreciated.

Thank you  

The effective date of a restatement is generally the first day of the plan year in which the restated document is adopted. However a retroactive amendment, particularly an -11(g) amendment, can be effective back to the first day of the prior plan year provided it is adopted in time. For example you could adopt a restatement in April 2019, effective 1/1/19, then adopt a corrective amendment in September 2019 effective 1/1/18.

Are there any issues with adopting an amendment with an effective date prior to the effective date of the document being amended?

Hello all.  I have a participant who had an account at Morgan Stanley.  His vested account balance was less than $200 so the client, after many tries,  had him cashed out; however, despite many emails from me to Morgan Stanley that he was only 20% vested, they cashed him out at 100%, so he got around $800 too much..  It's a 10/31 plan year and I only discovered this last week when I did the valuation and looked at his March statement.  Is there any recourse? Pretty sure the participant is not going to give the money back and the client has since moved the funds to Charles Schwab, so this person doesn't have an account at CS.

Assuming the top-hat exemption was filed with DOL when the plan was established, is there a requirement to notify them of a termination?

Any sites on this would be tremendously appreciated...