Question: An individual cannot contribute to an HSA once they are enrolled in Medicare. However, if they enroll for Medicare on June 1, could they have contributed to an HSA for the first 5 months of the year in question? If yes, how much could they have contributed? Is the maximum prorated for the 5 month period?

Thanks for any replies.

A former employee/participant requested a rollover be made to their new plan at Great West.  They filled out the paperwork with the address/etc at GW.  However, when the former "platform" John Hancock issued the rollover check, they mailed it to the former employer.  They in turn immediately sent the check to the participant.  It was all done in a period of less than 3 weeks.  The former participant is now "up in arms" about the check not be sent directly to the rollover address.  She is hounding the former employer about it.  Someone told her that it should be spelled out in the SPD.  I thought that was an administrative call.  Any thoughts?

The proposed regulations for the affiliated service group rules exclude corporations, other than professional service corporations, from the definition of a first service organization.  I can find any guidance on whether a subchapter s-corporation is a corporation for this purpose.  Is anybody aware of any guidance or has anybody heard anything about this, perhaps informally from the IRS?  

What are the penalties of starting a Qualified Plan in a year when a SIMPLE IRA is in existence? I know you are not allowed to terminate a SIMPLE-IRA mind year but what if no one elects to make contributions to it?

In 2017 on advice of prior accountant, 2 employee shop, both 50% owners set up a SIMPLE IRA for 2017 and continued for 2018.

Contributions for 2017 were funded.

No contributions have yet been made for 2018 and the 2 owners will be the only eligible employees of the SIMPLE IRA in 2018. They are having a much better year than expected and their new accountant would like to do a 401(k) plan with PS component to maximize deduction.

If they establish a 401(k) with PS what is the affect on the following

1 - The existing SIMPLE IRAs that hold only the 2017 contributions?

2. The SIMPLE-IRA if no contributions are made for 2018?

3. The SIMPLE-IRA for 2018 if contributions are made for 2018?

4. The newly formed 401(k) Profit sharing plan?

I know you are not supposed to have a SIMPLE-IRA and Qualified Plan in the same year but if the penalty is remove the $0 of 2018 contributions along with  the $0 of earnings, is there really a penalty for having both?

CPA for an Attorney who has her own plan (no employees) has set up payroll for the end of each month, but plans to deposit 401(k) each month prior to the payroll date (ie the 20th). Is that okay?

When answering yes to this question, it asks us to enter the MyPAA filing confirmation number.  I didn't do the PBGC filing yet.  How do I get by this short of just doing the PBGC filing?  For 2017, it is a new plan and the PBGC filing was due therefore 90 days after plan effective date, mid-March.  Since we are busy with contribution numbers in the spring, we usually just let the first filing be late and pay the very small penalty (1% of the unpaid premium is peanuts)  Since 6c is new, it is throwing me off.  Any feedback?

Hello, 

If an employee quits and gets rehired as a consultant with no benefits, do he/she have the ability to cash out their 401K? 

Thanks for your help! 

I'm prepare a Schedule H (Form 5500) for a 2017 calendar year 401(k) plan. The plan merged with another plan effective on 1/1/18. The majority of mutual funds were liquidated around 1/28/17 which was the trade date reported by the financial institution & received by the other plan on 1/2/18 which would be the settlement date. How should these transferred plan assets be reported on the 2017 Schedule H?

All of the guidance on the IRS website refers to "50% of the participant's vested account balance" when calculating the amount available for a participant loan.  When you are calculating the amount available for a second loan with a first loan outstanding, do you include the outstanding balance of the first loan in the "vested account balance"?  It appears from the example in the EOB that you should include the outstanding balance of the first loan but wanted someone else's opinion?

Thanks

Just took over a new plan and haven't seen this in a long time - the employer reimburses investment fees through thru the trust instead of paying directly.  I believe this is considered a contribution when they do that.  Does anyone have a cite that clarifies this? 

Rosemary C. Raymer, ERPA, QPA, QKA

Prospect sold his company (s-Corp) effective 2/1/2018 - strictly asset sale.

Employees were terminated 12/31/2017 and were not hired by the purchaser.

Remaining employees are seller and spouse, no common law employees

As of 2/1/18, it is the same company but with a new name, employer ID# same.

Seller wants to start a defined benefit plan. Since the corp EIN  the same, is it feasible to start the plan 1/1 under the old corp, then change sponsor and name of plan 2/1?

Or make effective date 2/1 and prorate the salaries 12/11ths and have a short year 2/1-12/31/2018.

How difficult is it to add another benefit to an existing VEBA. We have an existing VEBA and management asked us to evaluate adding the existing retiree life plan. The company pays most of the retiree life premiums, but retirees contribute a portion.

What are the key considerations? Upfront and ongoing legal and accounting costs? Our current annual retiree life premium is relatively small (about $600,000 per year including retiree contributions) so one of my concerns is that the initial cost to move the plan into the VEBA and the ongoing legal, accounting and investment expense could be significant in comparison.

Company A acquires Company B 5/1/2017.  Company B's retirement plan is merged into Company A's effective 5/1/2017 and the Company A plan is amended to credit Company B employees with eligibility and vesting service for time worked at Company B (which had not been a related employer). 

Can Company B people be treated as otherwise excludable employees for testing purposes for 2017 (based on real hire dates of 5/1/2017)? 

Can Company B be excluded for 2017 testing purposes by using the acquisition transition rule?

If Company B is tested separately under the transitional rule, would the employees count in the top paid group determination?

A one life individually designed designed DB plan wishe to terminate in 2018.

The plan was restated in 2012 for PPA. No changes have been made to the plan.

Does the plan need any amendments before it can be terminated?

A long time client with a Profit-Sharing Plan inquired (late 2015) about setting up a 401(k) Plan because of employee interest.  I suggested he do a survey to see what employees might defer.  He never got back to me.  In the meantime, Plan needed PPA restating so I turned on the 401(k) switch.

Early 2018, client wants to "discuss the next ten years" with me.  During the meeting, he nonchalantly says that he started a 401(K) Plan in 2016 with his Payroll Company.  Only he deferred, ADP test failed and he was told he'd get a refund.  (Same in 2017, except one other HCE deferred and was due a refund as well.)

Client had a MP/PS combo forever.  MP (Plan 001) merged into PS (Plan 002) in early 2000's.  We filed the 5500 for 2016 on time (assets ~$500k).  Payroll Company prepared a 5500 for 2016 showing only the owner deferral and match of $498.39 + interest as assets.  Client tried to submit Payroll Company prepared 5500 a number of times and it was rejected.

I asked if he had signed any paperwork, he put me in touch with Payroll Company (dude that set up the new Plan was long gone) and they sent me an Adoption Agreement.  I found a number of inconsistancies with the AA, including "New Plan 001"  instead of restated Plan 002, immediate eligibility instead of 1 year and a 5% of deferral match where it was discretionary in the PPA restement.  I also requested and received the account valuations for 2016 and 2017.

Dilemma #1- Payroll Company took $498.39 out of owners pay in 2016 and shows the amount in their accounting as $474.69 deferral and $23.70 match.  The match amount equals 5% of deferral, by magic.  Owner wrote no checks; funds were taken from Company account.

Taken by itself, the New 001 Plan is Top-Heavy (Super Top-Heavy w/002).  Don't even know what Owners Net C was in 2016 (since no contribution, no census) but assume it's over $200K.  So $23.70 / $200K is 0.01185% of pay Top-Heavy contribution for all employees.  But wait!  Owner's 5% match is forfeited under ACP. 

Question - Is everyone due a Top-Heavy contribution even if the Owner's match, after forfeiture, is 0% of pay?  (As an aside - Why wouldn't the 2016 deferral have been refunded?)

My ex was awarded a specific dollar amount when our divorce was finalized in March 2016 (NYS).  The amount awarded was to equitably distribute our assets.

In April 2018, his attorney drafted a QDRO specifying the dollar amount plus investment gains and losses.  I argue that he is entitled to only the amount specified in the divorce.  Can I win this argument?

Per the divorce decree, the ex is responsible for preparing the QDRO (which has been done); am I correct in assuming he is not responsible to cover the $600 processing fee charged by my 401-K plan?

Thank you.

A plan is an owner only plan until 8/1/2018, at which point an employee become eligible.  The owner has an individual brokerage account, but, starting 8/1/2018 and in going forward, all new contributions will be deposited into individually directed accounts at one of the larger online providers.

The owner's brokerage account balance will be transferred to his new account at the new investment provider, but this will likely not occur until September.  Is a blackout notice required?  It is no longer an owner-only plan, so blackout rules should apply, but the owner is the only participant affected by the blackout, so it seems unnecessary.

The Plan provides that if a participant works past age 65, no retirement benefit will be paid until actual retirement, subject to any required minimum distributions. Once the participant retires, distributions begin and the participant receives an actuarially increased benefit. The Plan is frozen. The Plan Sponsor wants to amend the Plan to force distribution at age 65. Would such an amendment be an impermissible cutback?

Good morning -

401(k) Plan document was restated a couple of years ago when moving to a new provider.  This is the only plan sponsored by the employer.  Top paid group appears to have been inadvertently selected on the adoption agreement.  I say that because it was not selected on any of the prior plan documents, the sponsor states that there were supposed to be no changes on the restatement other than a change to the new provider's document and it was not included on the initial draft restatement.  In looking at the census data from prior years and this year, it would never have been advisable to select this option.  The plan parameters set-up on the system left off top paid group, so it passed testing with flying colors the past couple of years without this selection.  When going back to re-test with that option selected, it fails badly each year. 

The sponsor will amend the plan prior to the end of the plan year to eliminate this option.  However, any thoughts on correcting this operational error without having to correct past years based on this inadvertent selection?  I know VCP is an option although my understanding is the IRS will not approve if request to retroactively amend to remove top paid based on this reasoning. 

Thank you!