I just received an email from a client regarding distributions that were made from their plan in December, 2017 and need Forms 1099R issued.  This is a plan that has the investments via brokerage accounts, which we (TPA) provide the recordkeeping for.  We also produce the Forms 1099R each year, however the client never alerted us of these 2 distributions in January when we inquired.  Now they want us to prepare the Forms, and I can see that there will be a penalty to the IRS for filing paper copies late ($100?).  I've never experienced this, so does anyone know what the process is to file these late?  Is there an addiitional form to file with the penalty, anything else?  

If in a New Comparability plan where each participant is in their own allocation group, is it permissible to provide an HCE with no allocation?

A participant bought a life insurance policy from a plan several years ago. During the time the policy was in the plan, he paid income tax against the "PS 58 cost" portion of the premium each year. Several years later he cashed out the policy, and there is now gain (relative to the original exchange price) that will now be taxed. For purposes of determing the gain, is the participant's cost basis the exchange price, or is it the exchange price plus the sum of the PS 58 costs?

Say a fully insured group health plan covers 100+ participants. The company (plan sponsor) is sold during 2017 and the group health plan ends, and the policy expires, on December 31, 2017. The employees are hired by the acquirer effective January 1, 2018.  

The 5500 instructions say not to check "final return" if "the plan is still liable to pay benefits for claims that were incurred prior to the termination date, but not yet paid." 

Two questions:

1. Is 2017 the final return, or does the fact that the insurance company may still receive and pay claims require another 5500 for 2018?

2. If the answer above is yes, presumably the active participants at the end of the plan year would be 0, even though the policy ended at 11:59 p.m. on December 31, 2017, correct? You can't file a final return with a participant count >0, so this seems logical. 

We've got a SP dentist who sponsors  a  SHM 401K, he contributed for 2017 as well as 2018 in 2018 toward the employer match.

Of course the fund-holder directed the funds to the proper participant accounts.

Now that the employer has learned he contributed too much, he wants to either have the excess removed and a check cut back to him or to have the funds transferred to his own account.

We explained no-can-do, the money has already been deposited into the participants accounts and you can't remove it by claiming it was a contribution made in error.

As far as removing and re-depositing into his own account, we cited 401(a)(4) benefits, rights and features.

He wants to know why he can't contribute to his account now and to the employees' either later in the year, or by tax filing deadline for 2018.

Need a cite, please.

A new (to our TPA firm) 403(b) client has not filed 8955 SSA in the past due to confusing "instructions" sent by internet by a vendor supposedly doing administration.  Our TPA firm is filing for the 2017 year (the first year for which we are responsible) and the client is anxious about the possible penalties.  We know that there are possible penalties, but also note comments which say don't "self- file" on the penalty payment ("According to the IRS website, you should not voluntarily mail in any payment of penalties. If they decide to assess a penalty, they will contact you directly with details.").    Please share any experience with this.  We would like to be able to tell the client whether or not to expect assessment of penalties.  Thanks!

At the beginning of 2017 the client's compensation definition was W-2 wages excluding fringe benefits. A bonus was paid to one NHCE, from which they did not withhold deferrals or pay the match. After being reminded by the TPA (me) that they were supposed to treat bonuses just like any other pay check, things got out of hand.

The payroll person withheld the amount that should have come from the bonus check from the next regular pay check.

Not realizing this had occurred, we instructed them to make a 50% QNEC and 100% of the match. (Too late for reduced QNEC.) Instead, they deposited a 100% QNEC and 100% of the match.

All deposits were made in 2017.

How do we fix this?  And which amounts do we use in the ADP test?

My husband passed away on 2/19/18.  I was able to access his account 2 days later and saw the amount that was in his 401k at Vanguard.  Once I notified Vanguard of his death, I was locked out of the account.  I am the beneficiary.  I repeatedly called to try to get information about how to proceed with my claim.  Several calls resulted in un-returned voice mails.  I finally was directed to someone in "Life Events" and that person was on vacation.  I was told by husband's employer's Human Resources department that I would need the death certificate. When I received that I sent it to Vanguard (on 3/22/18).  I called Friday (3/29/18) and they were closed for holiday.  I called today (4/2/18) and finally got a call back telling me that in 3 to 5 days I will have access to the account and was given the amount that is there now.  In all this time (6 weeks since his death), my husband's 401k has decreased by $8000 from the amount I saw when I viewed the account shortly after his death.  It was my understanding that his account would be frozen as of the day of his death.  Instead it remained  active.  Is this the way it is usually handled or should they have frozen the account?

This plan has a 1 YOS, age 21, 1000 hours with monthly entry dates.  It uses the anniversary date of hire for the first and all subsequent years for eligibility.  An employee hires 8/28/16, terminates 9/14/16 and rehires 2/25/17.  He does not work 1000 hours in his first year (8/28/16 to 8/27/17).  The client wants to use the 2/25/17 date as his hire date.  The plan document only discusses the original hire date.  I haven't found anything that indicates we could use a rehire date to determine eligibility.  If the 2/25/17 hire date is used, he enters on 3/1/18.  If we continue with the original hire date, he enters on 9/1/18.  Does anyone have any input on using a rehire date vs. the original date of hire to determine eligibility?

Many court decisions about a theft from an employee-benefit plan include an order that a wrongdoer is barred from serving as a fiduciary of an employee-benefit plan.  But how (if at all) is such an order practically enforced?

Am I right in guessing a TPA might not spot a problem?  Leaving aside a 3(16) TPA, an ordinary service provider might not be a fiduciary, and might have no duty or obligation to guard against an ineligible person's service.  And if a TPA runs a check on its new customer, would the TPA's check spot this problem?

If a Form 5500 annual report includes an ineligible person's name as a signer or authorizer, does anything in EBSA's error-checking or post-filing review catch a problem?

Are cash balance participants required to receive an interest credit after their NRA?  If they do not, do we have to give the participant a suspension of benefits notice?   This is not a question of what the plan says.  It is question of what the plan must say.  

The owner of the company in a non-resident and has a E-1 visa.  Can he serve as trustee.  Doing  research it looks like he can but you have to have a second trustee that is a US citizen.  Is that correct.  

If we miss an increase in deferral, we put in a QNEC for the missed deferral plus a QNEC for earnings.  My question is about calculating the earnings.  We have always used the DOL Calculator.  Is this what everyone else does?

Are there any times when actual investment returns are required?

How about if the market drops?  Are we allowed to put in zero earnings if the actual investment return was negative?

HI folks,

Need some help from the experts.

I had two employers last year in 2017 and mistakingly overcontributed around $5200 in employee contributions across two distinct unrelated 401k plans. My second employer originally told me that I could not remove the excess from their unmatched account, so I removed it from my previous employer's 401k.  In doing so, I lost out on an identical match from my old employer.

My current employer now tells me that I may, in fact, be able to remove the excess from my unmatched supplemental retirement plan.

Is there any way to reverse a distribution of excess contributions from my previous employer? The distribution to me occurred about a week ago and I still have not cashed the check. Is this an allowable transaction? If so, I'd like to undo it and take the funds from my current employer's unmatched plan.

Thoughts?

Thanks in advance.

SR

Sole Prop, sponsor of SH Match 401k Plan, makes 401k and match contributions to himself during year.

Turns out he has loss for the year.

I feel pretty comfortable refunding the 401k to him as a 415 violation but what about the match. 

Can that be refunded also or should it be reallocated?  (Causing TH SH exemption to be voided and then requiring a TH minimum to a number of employees .)

Thank you for any comments

Prior trustee probably committed prohibited transaction but not all facts are in so there is small chance he did not. Has either the IRS or DOL published any guidance as to when prohibited transactions must be reported.

I am the beneficiary of my late husband's defined pension annuity.  The pension began as an early retirement pension but was converted to a disability pension when he received the SS award letter.  When the pension first started, we elected the 50% husband and wife. Nearly three years later, the plan sent new elections forms.  We  changed the form of payment to 120 certain payments.  The plan is denying my claim for the remaining twenty payments saying they are using the earlier annuity starting date, not the date nearly  3 years later. That was not explained in any of the election notices or correspondence.

Also, he had reached normal retirement age when he passed by three months.

My husband divorce in NYS in 2000. We married in 2005. Ex wife filed QDRO 3 months prior to our marriage in 2005. My husband retired 2012. She began receiving her portion of the QDRO benefit when my husband retired in 2012. She is on SSD also. We found out she remarried on 3/24/18. Is she still able to receive QDRO, SSD and be remarried? We are struggling????

I have client who provides supported services to people in need in California.  Part of the employees hours are billed to the company and part of the employees hours are billed to the government program IHSS.  The government pays the employee directly.  Does the client have to include the government billed hours into the 1,000 hour eligibility calculation?  Lastly, I don't know if this makes a difference but it is a for-profit company.  For the life of me I cannot find anything online that provides guidance and if anyone knows the answer I will be eternally grateful!!!  

Sole Proprietor age 72 has $0 in account on 12/31/2017.

Schedule C is prepared and he will now, 3/30/2018, make a $17,000 401k contribution.  That will be the total contribution.

Is that amount considered a plan asset on 12/31/17 causing an RMD requirement for 2018?  (or can he just rollover the entire amount.)

Thank you