I have a terminating plan with 4 remaining participants, none of which can be located.     The recordkeeper will not set up an IRA for them without a address.    Can anyone recommend a rollover company that these participants balances can be put into and the plan closed?   It's 4 participants and $361 total between the four.   Each participant has less than $100.    Any other suggestions on how to get this plan closed?  

Hello.  A plan sponsor erroneously put in a stop date in payroll system for a participants loan. Last loan payment September 2017. This loan is past the cure period of December 31st.

The loan is set to be re-amortized over the terms of the loan. But do they have to file through VCP or can they just self correct since it is within two years?

Good morning -

I have a few very basic questions about benefits, rights and features (BRF - IRC - 401(a)(4)).  I believe it applies to all stock bonus, pension or profit sharing plans.  However, it does not apply to governmental 457(b)  plans.  Does it also not apply to governmental 401(a) Plans?  What about 403(b) Plans? My understanding is governmental plans are not required to comply with 411(d)(6) either, correct?  Finally, if BRF does not apply, then is there a similar standard to look to with governmental plans?

Thank you!

The regulations say a separation from service occurs when a participant's level of service drops to 20% of less of what it had been (I know that's simplified).  It also says you can choose a different percentage so long as it is greater than 20% but no larger than 50%.  This makes sense, because an employer could set it at 1% and then the parties could agree the employee will hardly do anything but still not have a separation as a method to control the payment date.  This also implies that you can have a broader definition of separation from service, but not a narrower definition of separation from service.

So here is my problem:  I have two related companies -- they are related, but they are not related enough to be considered the same employer under the regulations.  The Plan says separation from service is determined according to 409A, but a transfer between the companies is not a separation from service.  This appears to be a narrower definition of separation from service -- is this allowed under the regulations???

NOTE:  I understand that under the separation regulations, companies only have to be 50% related (not 80% like under the normal rule).  I also understand the plan can provide that the companies can be as little as 20% related.  We can't do that here, as the companies are not even 20% related -- and, even if they were, our plan doesn't state this, and any amendment to reduce relations to 20% is only applicable for future elections to defer.

I have a client that is part of a controlled group.  There are two members of the controlled group:  Company A and Company B.  Each Company maintains their own profit sharing plan.  They are able to pass coverage annually under the ratio test, taking into account the employees from the other company in the coverage group.  They did so for the 2017 year.  In 3/2018, Company A acquires Company C via a stock acquisition.  Now, all three (A,B,C) are members of the same controlled group.  For the 2018 year, they are looking to take advantage of the transition rule.  My question is:  Does the transition rule dictate that the plans for both A and B are automatically deemed to satisfy coverage (assuming that no significant changed during the transition period) and no coverage testing is required at all OR does the coverage testing still need to be run for the plans of A and B taking into account the employees in A and B and not C? 

Thanks in advance. 

What if a plan offers a BRF but only to employees who are participants as of a certain date,  but not to any new participants.  For example, participant loans.

Is BRF testing required?  I couldn't find anything specifically in the EOB.

A 403(b) plan would like to establish a loan interest rate of the prime lending rate, in effect as of the first day of each calendar quarter, plus 1%.

Do you see any problems with this policy?

How to report Direct Rollover from Designated Roth Account from 401(k) Plan to Roth IRA on Form 1099R?

I search this forum to see if similar question has been raised but I didn't find direct answer I was hoping for.

I also spend some time reading the reg. & the code that deals with Designated Roth Account with no concrete satisfactory result.

https://www.law.cornell.edu/cfr/text/26/1.402A-1

https://www.irs.gov/retirement-plans/retirement-plans-faqs-on-designated-roth-accounts

According to the 'instructions for Forms 1099-R and 5498(2017)' page 5, I need to enter the designated Roth account amount rolled over in box 1, 0 (zero) in box 2a, and Code H in box 7.

https://www.irs.gov/pub/irs-pdf/i1099r.pdf

I don't feel this will be satisfactory to inform the investment firm that will be receiving the designated Roth account distribution  about the basis.

Can someone help me how they will report on 1099R Direct Rollover from Designated Roth Account of 401(k) Plan to Roth IRA?

A plan failed to allow deferrals for some participant beginning in 2015 and continuing to 2017.  On plan correction, how do we interpret Rev. Proc. 15-28, which allows correction using a 25% QNEC if within the SCP time limit for significant errors (last day of the 2nd plan year).

It is clear that for 2015, the 50% QNEC correction applies, since 2018 is beyond the 2-year deadline.  The question is for years 2016 and 2017.  Are each of the missed deferrals treated as discrete and therefore eligible for the 25% safe harbor correction or are all missed deferrals considered part of a continuous whole and all subject to the 50% QNEC correction?

Please direct me to any citations to support your answer.

I've got a participant in a plan with deferrals, safe harbor, profit sharing, and merged old money purchase money.  The participant is an owner and needs an RMD this year.  Can he opt to have his RMD come from his profit sharing 'portion' and therefore avoid the QJ&S hassle?  If he can do that and then move to deferrals and safe harbor, that should buy about two or three years, and I'm hoping he retires by then and takes it all (yes, I know he'll have to do the QJ&SA mambo at at that point, but at least it's only once).  Thanks.

Can a plan allow for in-service distributions, but limit the distribution to a rollover to an IRA?  I realize this doesn't make sense, because once the money is in the IRA the participant can just take a distribution.  Also, they are not looking to avoid the 20% withholding.  The client wants to allow in-service distributions, but does not want to allow participants take their cash and go on vacation or whatever.   

My question then is whether there are any rules that would prohibit a plan provisions that would allow participants who are employed to request and receive a rollover distribution, but the employed participant cannot take that distribution as a taxable, cash distribution.  

They also do not want to have any in-plan IRAs.  

 A small employer (church) with less than 15 W-2 employees offers health benefits to their full-time, salaried employees.  They have two hourly employees that work about 30-35 hours during a 9-month period of time.  My understanding was they would need to be offered health benefits.  Do you agree and could you provide regs to support this?

An 8/31/2016 5500-SF was never filed.   Client received a letter from IRS letting them know it was never received. .   They are going to file it today, under DFVCP.    The letter gives them the option of filing under DFVCP, and it asks for the date applied.    What date would they put in there when replying?   The date the 5500 was actually filed? 

Also, do they pay the fee right away, or do they wait for a reply from the DOL? 

Thank you,  this is the first time for filing under DFVCP. 

For retirement plans that provide a benefit due to disability (e.g., accelerated vesting, earlier distribution than otherwise available) ...many employers would prefer to avoid the new disability claims Regulation, if possible, but may not find it practical to leave the determination to the SSA or an LTD carrier.  What your thoughts on whether the following would work. Amend the plan to provide that a licensed physician will make the disability determination; the physician would be presented with the Plan's definition and would have to certify the individual satisfies that particular definition. Plan Administrator will not take any action other than confirming that the certification has been signed by a physician. In this scenario, is the Plan Administrator sufficiently removed from the determination process such that the disability claims Regulation does not apply? There are several related issues. Does the answer differ if the plan provides that the physician must be acceptable to the Plan Administrator (a common term and one that is often preferred by employers)--meaning would this approach work but only if the Plan Administrator has no discretion as to the physician? Does it matter if the plan is a qualified plan or a non-qualified plan (both are subject to the claims Regulations)? Some plans use this approach if the sole reason for a disability determination is whether there is a disability for purposes of a "qualified distribution" for Roth purposes; however, that is essentially a tax issue, not a Plan benefit issue, so the fact that it works in that scenario may or may not have relevance for the broader question. Thanks in advance.

A small office has 2 owners and 2 employees.  As of 7/1/18, one of the owners is selling his share of the business to the other owner.  The former owner will still continue to work as an independent contractor for the business and will report to the same office  and be paid via 1099.

As of 7/1/18, should the former owner be considered an employee given that he is still doing mostly the same work as before even though he is being paid via 1099 and considered himself an independent contractor?  He also expects to make some payments to the business to cover a portion of the costs of the other 2 employees who may do some work for him that could include work not related to the company business (but directly for him).

The company has a 401k plan that he participates in so whether he is an employee or not needs to be determined after 7/1/18 to know if he can still actively participate in the plan.

If not an employee and if he starts his own business (self-named) as a sole prop, given he is paying some fees for the other 2 employees, do you think there is a concern that he would have to include them in his own 401k plan?

Thanks for any advice.

Sole prop, one-participant plan,  since inception 1/1/2005.  Original document is a GUST document.  Has been amended for all good faith required amendments up to EGTRRA, but was not restated for EGTRRA or PPA.

Is the appropriate VCP correction to adopt retroactive EGTRRA and PPA restatements (without any PPA good faith amendments), and can this be accomplished with one "VCP Kit"?  In other words, one set of forms, including Form 14568-B, checking off the appropriate boxes for the EGTRRA restatement and the PPA restatement, with one $1500 fee?

Also, will the IRS disallow the application if the sole prop cannot locate the advisory letter for the GUST volume submitter?

Thanks very much.

Company A is a corporation and owns 100% of another corporation Company B. 100% of Company A's stock is held by an ESOP, no employee has a more than 5% ownership interest in the ESOP shares. Does a controlled group exist?

The IRS sets FSA and HSA limits based on calendar year.  Our benefit year is 10/1 to 9/30.  Can we setup our plans so the limits follow the benefit year rather than the calendar year?  I've not seen this done but have been told that our legal department has approved this process so long as we stay consistent.

A financial advisor asked for help where an ERISA 403b plan is with one of the less-than-friendly 403b providers, and the plan sponsor is fed up with them.  However, the plan sponsor learned that most participants will get hit with a large back-end fee if they move their money at this point.

I suggested that we create a second set of accounts at a more friendly recordkeeper and call it all one plan under a new document (which I've done with plans on this provider before), but the financial advisor said that he has had better luck freezing the accounts where they are and creating a new 403b plan that allows transfers into it from the old plan (but not back the other way!).  All new contributions will only go to the new accounts, and the FA can monitor when the sales charges have dwindled down to zero or some other acceptable number and advise each participant individually as to when to move to the new accounts.  Eventually, when everyone moves over, they can terminate that plan.

I have to say, the idea of not having to fight with Ye Olde Unfriendly Recordkeeper for information is appealing, but this seems like it's too good to be true.  So we'd be leaving them with two plan documents (presumably that rk is going to help with the restatement of their plan, but I don't know that for sure), two 5500s, and each person getting two statements, and of course 2x the risk for an audit.  The current accounts do allow loans, which might make things a little harder.  What other pitfalls could there be in this arrangement?

Participant is telling me that they did not receive an ink/sealed version of the QDRO.  She emailed me a pdf that clearly says "ELECTRONICALLY FILED" at the top of the page.

What is a plan administrator to do?  Generally, the paper signed version with the court seal and everything is received, at least in my experience.